As Filed with the Securities and Exchange Commission on February 14, 1997
Registration Nos. 33-59261, 811-5626
==============================================================================
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. 6
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 42
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:
As 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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CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
<S> <C> <C>
PART A
N-4 Item Prospectus Heading
Item 1. Cover Page . . . . . . . . . . . . . . Cover Page
Item 2. Definitions . . . . . . . . . . . . . Definition of Terms
Item 3. Synopsis. . . . . . . . . . . . . . . . Summary of the Contracts
Item 4. Condensed Financial Information . . . Condensed Financial
Information
Item 5. General Description of Registrant,
Depositor, and Portfolio Companies . . Facts About the Company
and the Account
Item 6. Deductions and Expenses . . . . . . . . Charges and Fees
Item 7. General Description of Variable
Annuity Contracts. . . . . . . . . . . Facts About the Contracts
Item 8. Annuity Period . . . . . . . . . . . . Choosing an Income Plan
Item 9. Death Benefit. . . . . . . . . . . . . Facts About the Contracts
Item 10. Purchases and Contract Value . . . . . Facts About the Contracts,
Charges and Fees
Item 11. Redemptions. . . . . . . . . . . . . . Facts About the Contracts
Item 12. Taxes. . . . . . . . . . . . . . . . . Federal Tax Considerations
Additional Considerations
Item 13. Legal Proceedings. . . . . . . . . . . Regulatory Information
Item 14. Table of Contents of the Statement of
Additional Information . . . . . . . . Statement of Additional
Information
</TABLE>
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<S> <C> <C>
PART B
Statement of Additional
N-4 Item Information Heading
Item 15. Cover Page . . . . . . . . . . . . . . Cover Page
Item 16. Table of Contents. . . . . . . . . . . Table of Contents
Item 17. General Information and History. . . . Description of Golden American
Life Insurance Company
Item 18. Services . . . . . . . . . . . . . . . Safekeeping of Assets,
Independent Auditors
Item 19. Purchase of Securities Being Offered . Distribution of Contracts
Item 20. Underwriters . . . . . . . . . . . . . Distribution of Contracts
Item 21. Calculation of Performance Data. . . . Performance Information
Item 22. Annuity Payments . . . . . . . . . . . Part A
Item 23. Financial Statements . . . . . . . . . Financial Statements of
Separate Account B, Financial
Statements of Golden American
Life Insurance Company
</TABLE>
PART C
Items required in Part C are located therein.
EXPLANATORY NOTE
The Contracts covered by this Registration Statement are being offered
through two different distribution systems. Therefore, there are two
Prospectuses and corresponding Statements of Additional Information
("Version 1" and "Version 2") for the Contracts covered by this registration
statement, one pertaining to each distribution system. Version 2 differs
from Version 1 in the following respects: (a) Version 2 offers different
variable funding options (specifically, Version 2 offers the Travelers
Series Fund Inc. and Smith Barney Series Fund in lieu of The GCG Trust); (b)
Version 2 is intended to be used in New Hampshire only by a different retail
distribution system, receiving different compensation, than is the case for
Version 1; and (c) because Version 2 is to be used only in New Hampshire,
whereas Version 1 is used in all 50 states, Version 2 deletes Contract
features, options or procedures described in Version 1 that are available in
other states but not in New Hampshire. In particular, Version 2 does not
include the market value adjusted fixed account option included in Version
1 and covered by an effective registration statement on Form S-1 (File No.
33-23458).
This Post-Effective Amendment includes only the text of Version 2 of the
Prospectus. Version 1 was contained in Post-Effective Amendment No. 5 to this
Registration Statement filed on February 7, 1997 and remains unaffected by
this Post-Effective Amendment.
- -----------------------------------------------------------------------------
GRANITE PRIMELITE
- -----------------------------------------------------------------------------
GOLDEN AMERICAN LIFE INSURANCE COMPANY
Golden American Life Insurance Company is a stock company domiciled in
Wilmington, Delaware
DEFERRED VARIABLE
ANNUITY PROSPECTUS
GRANITE PRIMELITE
- -----------------------------------------------------------------------------
This prospectus describes individual deferred variable annuity Contracts (the
"Contract") offered by Golden American Life Insurance Company ("Golden
American" "we" "our" or "us"). The Owner ("you" or "your") purchases the
Contract with an Initial Premium and is permitted to make additional premium
payments.
The Contract is funded by Separate Account B ("Account B" or the "Account").
Eight Divisions of Account B are currently available under the Contract
offered by this prospectus. The investments available through the Divisions of
Account B include mutual fund portfolios (the "Portfolios") of Equi-Select
Series Trust (the "ESS Trust"), Travelers Series Fund Inc. (the "Travelers
Fund") and Smith Barney Series Fund (the "Smith Barney Fund").
This prospectus describes the Contract and provides background information
regarding Account B. The prospectuses for the ESS Trust, Travelers Fund and
Smith Barney Fund (individually, "a Trust," and collectively, "the Trusts"),
which must accompany this prospectus, provide information regarding investment
activities and policies of the Trusts.
You may allocate your premiums among the eight Divisions 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
investment performance of the Divisions selected by you. Therefore, you bear
the entire investment risk for all amounts allocated to Account B.
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 Account that investors should know before
investing. A Statement of Additional Information, dated February 14, 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 Statement of Additional Information may be found on the last page of this
prospectus. The Statement of Additional Information is incorporated herein by
reference.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
CONTRACTS AND UNDERLYING SERIES SHARES WHICH FUND THE CONTRACTS ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
MARKET FLUCTUATION, REINVESTMENT RISK AND POSSIBLE LOSS OF PRINCIPAL INVESTED.
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS NOT VALID
UNLESS ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR THE ESS TRUST, THE
TRAVELERS FUND AND THE SMITH BARNEY FUND.
ISSUED BY: DISTRIBUTED BY: ADMINISTERED AT:
Golden American Life Directed Services, Inc. Customer Service Center
Insurance Company Wilmington, Delaware 19801 Mailing Address:
P.O. Box 8794
Wilmington, Delaware
19899-8794
1-800-366-0066
PROSPECTUS DATED: FEBRUARY 14, 1997
TABLE OF CONTENTS
PAGE
DEFINITION OF TERMS
SUMMARY OF THE CONTRACT
FEE TABLE
CONDENSED FINANCIAL AND OTHER INFORMATION
Financial Statements
Performance Related Information
INTRODUCTION
FACTS ABOUT THE COMPANY AND THE ACCOUNT
Golden American
The ESS Trust, The Travelers Fund and The Smith Barney Fund
Separate Account B
Account B Divisions
Changes Within Account B
FACTS ABOUT THE CONTRACT
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
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
CHARGES AND FEES
Charge Deduction Division
Charges Deducted from the Accumulation Value
Charges Deducted from the Divisions
Trust Expenses
CHOOSING YOUR ANNUITIZATION OPTIONS
Annuitization of Your Contract
Annuity Commencement Date Selection
Frequency Selection
The Annuitization Options
Payment When Named Person Dies
OTHER CONTRACT PROVISIONS
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
Voting Rights
State Regulation
Legal Proceedings
FEDERAL TAX CONSIDERATIONS
Introduction
Tax Status of Golden American
Taxation of Non-Qualified Annuities
IRA Contracts and Other Qualified Retirement Plans
Federal Income Tax Withholding
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents
THIS PROSPECTUS DOES NOT CONSTITUTE AND 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.
DEFINITION OF TERMS
ACCOUNT - Separate Account B.
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 premiums paid, investment experience of the Divisions,
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 turning age 80, as
adjusted for additional premiums and partial withdrawals.
ANNUITANT - The person designated by the Owner to be the measuring life in
determining Annuity 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 Payments.
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.
CHARGE DEDUCTION DIVISION - The Division from which all charges are deducted
if so designated by you. The Charge Deduction Division currently is the Smith
Barney Money Market 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 endorsements.
CONTRACT ANNIVERSARY - The anniversary of the Contract Date.
CONTRACT DATE - The date on which we have received the Initial Premium and
upon which we begin determining the Contract values. It may or may not be the
same as the Issue Date. This date is used to determine Contract months,
processing dates, years and anniversaries.
CONTRACT PROCESSING DATES - The days when we deduct certain charges from the
Accumulation Value. If the Contract Processing Date is not a Valuation Date,
it will be on the next succeeding Valuation Date. The Contract Processing
Dates will be once each year on the Contract Anniversary.
CONTRACT PROCESSING PERIOD - The first Contract processing period begins with
the Contract Date and ends at the close of business on the first Contract
Processing Date. All subsequent Contract processing periods begin at the close
of business on the most recent Contract Processing Date and extend to the
close of business on the next Contract Processing Date. There is one Contract
processing period each year.
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.
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.
FREE LOOK PERIOD - The period of time within which the Owner may examine the
Contract and return it for a refund.
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.
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.
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 otherwise. The Specially Designated
Division currently is the Smith Barney Money Market Division.
STANDARD DEATH BENEFIT OPTION - The death benefit option that you will receive
under the Contact unless the enhanced death benefit option 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.
SUMMARY OF THE CONTRACT
This prospectus has been designed to provide you with information regarding
the Contract and the Account which fund the Contract. Information concerning
the Portfolios underlying the Divisions of Account B 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
prospectus and in the Contract. The Contract, together with any riders or
endorsements, constitutes the entire agreement between you and us and should
be retained.
This prospectus has been designed to provide you with the necessary
information to make a decision on purchasing the Contract. You have a choice
of investments. We do not promise that your Accumulation Value will increase.
Depending on the investment experience of the Divisions, 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,
distributions 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
Annuity 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
qualified plans, except for rollover contributions). The minimum Initial
Premium is $5,000 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
Sponsored Arrangements.
The minimum additional premium payment we will accept is $500 for a
non-qualified 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 annuities that you maintain with us to exceed $1,000,000.
THE DIVISIONS
Each of the eight Divisions of Account B offered under this prospectus invests
in a mutual fund portfolio with its own distinct investment objectives and
policies. Each Division of Account B invests in a corresponding Portfolio of
the ESS Trust, managed by Equitable Investment Services, Inc. ("EISI"), the
Travelers Fund, managed by Smith Barney Mutual Funds Management Inc. ("SBMFM")
or the Smith Barney Fund, also managed by SBMFM. EISI has retained a Portfolio
Manager to manage the assets of the Portfolios of the ESS Trust. See Facts
About the Company and the Account, 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.
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
Commencement Date. See Facts About the Contract, Cash Surrender Value and
Surrendering 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
Accumulation Value of your Contract. You may elect in advance to take
systematic partial 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 annual basis.
Partial withdrawals are subject to certain restrictions as defined in this
prospectus, including a surrender charge. Partial 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
transferred from the Smith Barney Money Market Division to the other Divisions
of Account B on a monthly basis with the objective of shielding your
investment 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
administering our allocation and certain other administrative rules, we deem
this period to end 15 days after the Contract is mailed from our Customer
Service Center. Some states may require that we provide a longer free look
period. In some states we restrict the Initial Premium allocation during the
Free Look Period. See 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 is a
Standard Death Benefit Option and the Annual Ratchet Enhanced Death Benefit
Option. See Facts About the Contract, Death Benefit Options. We may offer a
reduced death benefit under certain 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 you select, subject to certain restrictions we impose. See
Facts About the Contract, Restrictions on Allocation of Premium Payments. We
then may deduct an annual Contract fee from your Accumulation Value. See Other
Contract Provisions, Charges and Fees. We may reduce certain charges under
group or sponsored arrangements. See Other Contract Provisions, 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.
FEDERAL INCOME TAXES
The ultimate effect of Federal income taxes on the amounts held under an
annuity Contract, on Annuity Payments and on the economic benefits to the
Owner, Annuitant or Beneficiary depends on Golden American's tax status and
upon the tax status of the individuals concerned. In general, an Owner is not
taxed on increases in value under an annuity Contract until some form of
distribution is made under it. There may be tax penalties if you make a
withdrawal or surrender the Contract before reaching age 59 1/2. See Federal
Tax Considerations.
FEE TABLE
TRANSACTION EXPENSES
Contingent Deferred Sales Charge(/1/) (imposed as a percentage of premium
payments withdrawn upon excess partial withdrawal or surrender):(/2/)
<TABLE>
<CAPTION>
<S> <C>
COMPLETE YEARS ELAPSED SURRENDER
SINCE PREMIUM PAYMENT CHARGE
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%
</TABLE>
Excess Allocation Charge $0(/3/)
ANNUAL CONTRACT FEES:
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.)
SEPARATE ACCOUNT ANNUAL EXPENSES (percentage of assets in each Division)(/4/):
<TABLE>
<CAPTION>
STANDARD ANNUAL RATCHET
DEATH BENEFIT ENHANCED DEATH BENEFIT
-------------- -----------------------
<S> <C> <C>
Mortality and Expenses Risk Charge 1.10% 1.25%
Asset Based Administrative Charge 0.15% 0.15%
-------------- -----------------------
Total Separate Account Expenses 1.25% 1.40%
</TABLE>
THE ESS TRUST ANNUAL EXPENSES:
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
OTHER TOTAL
FEES (/5) EXPENSES (/6) EXPENSES
--------- ------------- ---------
<S> <C> <C> <C>
OTC, Research, and Total Return
Portfolios: 0.80% 0.40% 1.20%
</TABLE>
TRAVELERS FUND INC.'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES
----------- --------- -------------
<S> <C> <C> <C>
Smith Barney Income and Growth Portfolio 0.65% 0.08% 0.73%
Smith Barney International Equity Portfolio 0.90 0.20 1.10
Smith Barney High Income Portfolio 0.60 0.24 0.84
Smith Barney Money Market Portfolio(/7) 0.60 0.14 0.74
</TABLE>
SMITH BARNEY FUND'S ANNUAL EXPENSES
(as a percentage of the average daily net assets of a Portfolio)
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
FEES EXPENSES EXPENSES
----------- --------- -------------
<S> <C> <C> <C>
Appreciation Portfolio 0.75% 0.10% 0.85%
</TABLE>
(1) 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 partial
withdrawals or on the Annuity Commencement Date. See Premium Taxes.
(2) 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 premium
payments. See Charges Deducted from the Accumulation Value, Surrender Charge
for Excess Partial Withdrawals.
(3) 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
Excess Allocation Charge.
(4) See Facts About the Contract, Death Benefit Options, for a
description of the Contract's Standard and Enhanced Death Benefit Options.
(5) Prior to October 6, 1995, EISI waived its management fee for the OTC,
Research, and Total Return Portfolios.
(6) Other expenses shown take into account the effect of EISI's agreement
to reimburse the Portfolios for all operating expenses, excluding management
fees, that exceed 0.40% of their average daily net assets. This reimbursement
agreement commenced February 3, 1997. Prior to February 3, 1997, EISI
reimbursed the Portfolios for all operating expenses, excluding management
fees, that exceeded 0.75% of their average daily net assets. 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 Total Return Portfolios for
the year ended December 31, 1995.
(7) Smith Barney Mutual Funds Management Inc., the Fund's investment
manager, waived part of its Management Fees for the year ended October 31,
1996 for the Smith Barney Money Market Portfolio such that the actual total
annual expenses charged in 1996 was 0.65%. This voluntary fee waiver can be
terminated at any time.
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
surrender charges if you choose to annuitize within the first three Contract
Years.
If at issue you elect the Annual Ratchet 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>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
<S> <C> <C> <C> <C>
OTC $97.11 $143.18 $181.81 $300.42
Research. $97.11 $143.18 $181.81 $300.42
Total Return $97.11 $143.18 $181.81 $300.42
Smith Barney Income and Growth $92.41 $129.04
Smith Barney International Equity $96.11 $140.19
Smith Barney High Income $93.51 $132.37
Smith Barney Money Market $92.51 $129.35
Appreciation $93.61 $132.67
</TABLE>
If at issue you elect the Annual Ratchet 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>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
<S> <C> <C> <C> <C>
OTC $27.11 $83.18 $141.81 $300.42
Research. $27.11 $83.18 $141.81 $300.42
Total Return $27.11 $83.18 $141.81 $300.42
Smith Barney Income and Growth $22.41 $69.04
Smith Barney International Equity $26.11 $80.19
Smith Barney High Income $23.51 $72.37
Smith Barney Money Market $22.51 $69.35
Appreciation $23.61 $72.67
</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 Annual Ratchet Enhanced
Death Benefit Option. If the Standard 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
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN, SUBJECT TO
THE GUARANTEES UNDER THE CONTRACT.
CONDENSED FINANCIAL AND OTHER INFORMATION
No condensed financial information is presented because the Divisions
available in connection with the Contracts offered by this propsectus became
available for investment on September 3, 1996 with respect to the OTC
Division, January 20, 1997 with respect to the Research and OTC Divisions, and
as of the date of this prospectus with respect to the Smith Barney Income and
Growth, Smith Barney International Equity, Smith Barney High Income, Smith
Barney Money Market and Appreciation Divisions.
FINANCIAL STATEMENTS
The audited financial statements of Separate Account B for the years ended
December 31, 1995, 1994 and 1993 (as well as the auditors' report thereon),
the unaudited financial statements of Separate Account B for the period ended
September 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
Additional Information. The audited financial statements of Golden American
prepared 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 also contained in the Statement of Additional Information. In
addition, the unaudited September 30, 1996 financial statements of Golden
American prepared in accordance with generally accepted accounting principles
are contained in the Statement of Additional Information.
PERFORMANCE RELATED INFORMATION
Performance information for the Divisions of Account B, including the yield
and effective yield of the Smith Barney Money Market 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 Smith Barney Money Market Division will be based on
income received by a hypothetical investment over a given 7-day period (less
expenses accrued during the period), and then "annualized" (i.e., assuming
that the 7-day yield would be received for 52 weeks, stated in terms of an
annual percentage return on the investment). "Effective yield" for the Liquid
Asset Division is calculated in a manner similar to that used to calculate
yield, but when annualized, the income earned by the investment is assumed to
be reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of earnings.
For the remaining Divisions, quotations of yield will be based on all
investment income per unit (Accumulation Value divided by the index of
investment experience, see Facts About the Contract, Measurement of Investment
Experience, Index of Investment Experience and Unit Value) earned during a
given 30day period, less expenses accrued during the period ("net investment
income"). Quotations of average annual total return for any Division will be
expressed in terms of the average annual compounded rate of return on a
hypothetical investment in a Contract over a period of one, five, and ten
years (or, if less, up to the life of the Division), and will reflect the
deduction of the applicable 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 certain contractual charges, such as the surrender
charge.
Performance information for a Division may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P
500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market
Institutional Averages, or other indices measuring performance of a pertinent
group of securities so that investors may compare a Division's results with
those of a group of securities widely regarded by investors as representative
of the securities markets in general; (ii) other variable annuity separate
accounts or other investment products tracked by Lipper Analytical Services, a
widely used independent research firm which ranks mutual funds and other
investment companies by overall performance, investment objectives, and
assets, or tracked by other ratings services, including VARDS, companies,
publications, or persons who rank separate accounts or other investment
products on overall performance or other criteria; and (iii) the Consumer
Price Index (measure for inflation) to assess the real rate of return from an
investment in the Contract. Unmanaged indices may assume the reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs and expenses.
Performance information for any Division reflects only the performance of a
hypothetical Contract under which the Accumulation Value is allocated to a
Division during a particular time period on which the calculations are based.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the Portfolio of the
respective Trust in which the Division invests and the market conditions
during the given time period, and should not be considered as a representation
of what may be achieved in the future. For a description of the methods used
to determine yield and total return for the Divisions, see the Statement of
Additional Information.
Reports and promotional literature may also contain other information
including the ranking of any Division derived from rankings of variable
annuity separate accounts or other investment products tracked by Lipper
Analytical Services or by rating services, companies, publications, or other
persons who rank separate accounts or other investment products on overall
performance or other criteria.
INTRODUCTION
FACTS ABOUT THE COMPANY AND THE ACCOUNT
The following information describes the Contract and Account B. Account B
invests in mutual fund portfolios of the Trusts.
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
Delaware and is an indirect wholly owned subsidiary of Equitable of Iowa
Companies ("Equitable of Iowa"). Prior to December 30, 1993, Golden American
was a Minnesota corporation. Prior to August 13, 1996, Golden American was a
wholly owned indirect subsidiary of Bankers Trust Company. We are authorized
to do business in all jurisdictions except New York. We offer variable
annuities and variable life insurance. Administrative services for the
Contract are provided at our Customer Service Center, the address is shown on
the cover.
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
American.
As of September 30, 1996, Equitable of Iowa had over $11.9 billion in assets.
THE ESS TRUST, THE TRAVELERS FUND AND THE SMITH BARNEY FUND
The ESS Trust is an open-end management investment company. Currently, the ESS
Trust's shares are not available to separate accounts of other insurance
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.
The Travelers Fund is an open-end management investment company underlying
certain variable annuity and variable life insurance contracts. Prior to
September 3, 1996, it was known as Smith Barney/Travelers Series Fund Inc.
The Smith Barney Fund is a diversified, open-end management investment
company.
Shares of the Travelers Fund and Smith Barney Fund are issued and redeemed in
connection with investments in and payments under certain variable annuity
contracts and variable life insurance policies of various life insurance
companies which may or may not be affiliated. The Funds do not foresee any
disadvantage to Owners arising out of the fact that they offer their shares
for products offered by life insurance companies which are not affiliated.
Nevertheless, the Boards of Trustees of the Travelers Fund and Smith Barney
Fund intend to monitor events in order to identify any material irreconcilable
conflicts which may possibly arise and to determine what action, if any,
should be taken in response thereto. If such a conflict were to occur, one or
more insurance company separate accounts might withdraw its investments in the
Travelers Fund and Smith Barney Fund. An irreconcilable conflict might result
in the withdrawal of a substantial amount of a Portfolio's assets which could
adversely affect such Portfolio's net asset value per share.
You will find complete information about the ESS Trust, the Travelers Fund and
the Smith Barney Fund, including the risks associated with each Portfolio, in
the accompanying Trusts' prospectuses. You should read them carefully in
conjunction with this prospectus before investing. Additional copies of the
Trusts' prospectuses may be obtained by contacting our Customer Service
Center.
SEPARATE ACCOUNT B
All obligations under the Contract are general obligations of Golden American.
Account B is a separate investment account used to support our variable
annuity Contracts and for other purposes as permitted by applicable laws and
regulations. The assets of Account B are kept separate from our general
account and any other separate accounts we may have. We may offer other
variable annuity Contracts investing in Account B which are not discussed in
this prospectus. Account B may also invest in other Portfolios 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
investment accounts. As required, the assets in Account B are at least equal
to the reserves and other liabilities of that account. These assets may not be
charged with liabilities from any other business we conduct.
They may, however, be subject to liabilities arising from Divisions whose
assets are attributable to other variable annuity Contracts supported by
Account B. If the assets exceed the required reserves and other liabilities,
we may transfer the excess to our general account.
Account B was established on July 14, 1988 to invest in mutual funds, unit
investment trusts or other investment portfolios which we determine to be
suitable for the Contract's purposes. Account B is treated as a unit
investment trust under Federal securities laws. It is registered with the SEC
under the Investment Company Act of 1940 (the "1940 Act") as an investment
company 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. Currently, each Division of Account B
offered under this prospectus invests in a Portfolio of the ESS Trust, the
Travelers Fund or the Smith Barney Fund. EISI serves as the Manager to each
Portfolio of the ESS Trust and SBMFM serves as the manager to each Portfolio
of both the Travelers Fund and the Appreciation Portfolio of the Smith
Barney Fund. EISI has retained a Portfolio Manager to manage the assets of
the Portfolios of the ESS Trust. EISI (not the ESS Trust) pays the Portfolio
Manager a monthly fee for managing the assets of the Portfolios. See the
Trusts' prospectuses for details. There may be restrictions on the
availability and/or the amount of the allocation to certain Divisions based
on state laws and regulations. The investment objectives of the various
Portfolios in the Trusts are described below. There is no guarantee that any
Portfolio will meet its investment objectives. Meeting objectives depends
on various factors, including, in certain cases, how well the portfolio
managers anticipate changing economic and market conditions. Account B also
has other Divisions investing in other portfolios which are not available to
the Contract described in this prospectus.
Each Trust pays its respective Manager for its services a fee, payable
monthly, based on the annual rates of the average daily net assets of the
Portfolio as shown in the Fee Table. In addition, EISI pays its manager for
its services a fee, payable monthly, based on the annual rates of the average
daily net assets of the Portfolios shown in the table below.
<TABLE>
<CAPTION>
<S> <C>
THE ESS TRUST
Portfolios Fees
- ------------------------------------------- -----------------------------------------
OTC, Research, and Total Return Portfolios: 0.80% of first $300 million;
0.55% of amount in excess of $300 million
</TABLE>
The following Divisions invest in a designated Portfolio 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
The following Divisions invest in a designated Portfolio of the Travelers
Fund.
SMITH BARNEY INCOME AND GROWTH DIVISION
SMITH BARNEY INCOME AND GROWTH PORTFOLIO
OBJECTIVE
Current income and long-term growth of income and capital.
INVESTMENTS
Investment primarily in common stocks offering a current return from
dividends and interest-paying debt obligations and high-quality short-term
debt obligations.
SMITH BARNEY INTERNATIONAL EQUITY DIVISION
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
OBJECTIVE
Total return on its assets from growth of capital and income.
INVESTMENTS
Diversified portfolio of equity securities of established non-U.S.
issuers.
SMITH BARNEY HIGH INCOME DIVISION
SMITH BARNEY HIGH INCOME PORTFOLIO
OBJECTIVE
High current income.
INVESTMENTS
High-yielding corporate debt obligations and preferred stock. In
addition, the Portfolio may invest up to 20% of its assets in the securities
of foreign issuers that are denominated in currencies other than U.S. dollars.
SMITH BARNEY MONEY MARKET DIVISION
SMITH BARNEY MONEY MARKET PORTFOLIO
OBJECTIVE
Maximum current income and preservation of capital.
INVESTMENTS
Bank obligations and high quality commercial paper, corporate obligations
and municipal obligations in addition to U.S. government securities and
related repurchase agreements.
The following Division invests in a designated Portfolio of the Smith Barney
Fund.
APPRECIATION DIVISION
APPRECIATION PORTFOLIO
OBJECTIVE
Long-term appreciation of capital.
INVESTMENTS
Primarily in equity and equity-related securities that are believed to
afford attractive opportunities for appreciation.
CHANGES WITHIN ACCOUNT B
We may from time to time make additional Divisions available. These Divisions
will invest in investment portfolios we find suitable for the Contract. We
also have the right to eliminate investment Divisions from Account B, to
combine two or more Divisions, or to substitute a new portfolio for the
portfolio in which a Division invests. A substitution may become necessary if,
in our judgment, a portfolio no longer suits the purposes of the Contract.
This may happen due to a change in laws or regulations, or a change in a
portfolio's investment objectives or restrictions, or because the portfolio is
no longer available for investment, or for some other reason. In addition, we
reserve the right to transfer assets of Account B, which we determine to be
associated with the class of Contracts to which your Contract belongs, to
another account. If necessary, we will get prior approval from the insurance
department of our state of domicile before making such a substitution or
transfer. We will also get any required approval from the SEC and any other
required approvals before making such a substitution or transfer. We will
notify you as soon as practicable of any proposed changes.
When permitted by law, We reserve the right to:
(1) deregister Account B under the 1940 Act;
(2) operate Account B as a management company under the 1940 Act if it is
operating 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;
(4) restrict or eliminate any voting rights as to Account B; and
(5) combine Account B with other accounts.
FACTS ABOUT THE CONTRACT
THE OWNER
You are the Owner. You are also the Annuitant unless another Annuitant is
named in the application or enrollment form. You have the rights and options
described in the Contract. One or more persons may own the Contract. If there
are multiple Owners named, the age of the oldest Owner shall determine the
applicable 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
Beneficiary the death benefit when due. The sole Owner's estate will be the
Beneficiary if no Beneficiary designation is in effect, or if the designated
Beneficiary has predeceased the Owner. In the case of a joint Owner of the
Contract dying prior to the annuity commencement date, we will designate the
surviving Owner(s) as the Beneficiary(ies). This supersedes any previous
Beneficiary designation.
In the case where the Owner is a trust and a beneficial Owner of the trust has
been designated, the beneficial Owner will be treated as the Owner of the
Contract solely for the purpose of determining the death benefit provision. 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
determined 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
(unless 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.
If there is no contingent Annuitant when the Annuitant dies prior to the
Annuity Commencement Date, the Owner will become the Annuitant. The Owner may
designate 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
Annuity Commencement Date and the Owner is not an individual, we will pay the
Beneficiary the death benefit then due. The Beneficiary will be as provided in
the Beneficiary designation then in effect. If no Beneficiary designation is
in effect, or if there is no designated Beneficiary living, the Owner will be
the Beneficiary. If the Annuitant was the sole Owner and there is no
Beneficiary designation, the Annuitant's estate will be the Beneficiary.
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
commencement date. We pay death benefit proceeds to the primary Beneficiary
(unless there are joint Owners, in which case death proceeds are payable to
the surviving Owner(s)). See Proceeds Payable to the Beneficiary.
If the Beneficiary dies before the Annuitant or Owner, the death benefit
proceeds are paid to the contingent Beneficiary, if any. If there is no
surviving Beneficiary, we pay the death benefit proceeds to the Owner'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
assume any death benefit proceeds are to be paid in equal shares to the
surviving beneficiaries.
You have the right to change beneficiaries during the Annuitant's lifetime
unless you have designated an irrevocable Beneficiary. When an irrevocable
Beneficiary has been designated, you and the irrevocable Beneficiary 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
nonqualified 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
connection with an individual retirement account. In the latter case, the
Contract will be issued without an Individual Retirement Annuity endorsement,
and the rights of the participant under the Contract will be affected by the
terms and conditions of the particular individual retirement trust or
custodial account, and by provisions of the Code and the regulations
thereunder. For example, the individual retirement trust or custodial account
will impose minimum distribution rules, which 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, frequency 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 $5,000 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
requirements for certain group or sponsored arrangements. See Group or
Sponsored Arrangements.
QUALIFIED PLANS
For IRA Contracts, the annual premium on behalf of any individual
Contract may not exceed $2,000. Provided your spouse does not make a
contribution to an IRA, you may set up a spousal IRA even if your spouse has
earned some compensation during the year. The maximum deductible amount for a
spousal IRA program is the lesser of $2,250 or 100% of your compensation
reduced by the contribution (if any) made by you for the taxable year to your
own IRA. However, no more than $2,000 can go to either your or your spouse's
IRA in any one year. For example, $1,750 may go to your IRA and $500 to your
spouse's IRA. These maximums are not applicable if the premium is the result
of a rollover from another qualified plan.
WHERE TO MAKE PAYMENTS
Remit premium payments to our Customer Service Center. The address is
shown on the cover. We will send you a confirmation notice.
MAKING ADDITIONAL PREMIUM PAYMENTS
You may make additional premium payments after the end of the Free Look
Period. We can accept additional premium payments until either the Annuitant
or Owner reaches the Attained Age of 85 under non-qualified plans. For
qualified plans, no contributions may be made to an IRA Contract for the
taxable year in which you attain age 70 1/2 and thereafter (except for
rollover contributions). The minimum additional premium payment we will accept
is $500 for a non-qualified plan and $250 for a qualified plan.
CREDITING PREMIUM PAYMENTS
The Initial Premium will be accepted or rejected within two business days of
receipt by us if accompanied by information sufficient to permit us to
determine 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
business days, the applicant or enrollee will be informed of the reasons for
the delay and the Initial Premium will be returned immediately unless the
applicant or enrollee 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.
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 accompanied by a
simultaneous telephone facsimile or other electronic data transmission
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
accompanied by sufficient electronically transmitted data, we will issue the
Contract, 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 broker-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 according to your
instructions, subject to any restrictions. See Restrictions on Allocation of
Premium Payments. 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
Divisions in proportion to the amount of Accumulation Value in each Division
as of the date we receive and accept the additional premium payment.
(2) For an Initial Premium, we calculate 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 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.
(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 executed
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.
YOUR RIGHT TO REALLOCATE
You may reallocate your Accumulation Value among the Divisions 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 reallocation of your Accumulation Value
equal at least $250 or, if less, your entire Accumulation Value within a
Division. 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 Trusts. We also reserve the right to modify
or terminate your right to reallocate your Accumulation Value at any time in
accordance with applicable law. 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 or refuse any reallocation request if we believe
that: (a) excessive trading by you or a specific reallocation request may have
a detrimental effect on unit values or the share prices of the underlying
Portfolio; or (b) we are informed by the ESS Trust, the Travelers Fund or the
Smith Barney Fund 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
ESS Trust, the Travelers Fund or the Smith Barney Fund.
Where permitted by law, we may accept your authorization of third party
reallocation 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
cancellation. We may restrict the Divisions that will be available to you for
reallocations of premiums during any period in which you authorize such third
party to act on your behalf. We will give you prior notification of any such
restrictions. However, we will not enforce such restrictions 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 behalf 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 Smith Barney Money
Market Division you may elect the dollar cost averaging program and have
a specified dollar amount transferred from such Division on a monthly basis.
The main objective of dollar cost averaging is to attempt to shield your
investment from short-term price fluctuations. Since the same dollar amount is
transferred to other Divisions each month, more units are purchased in a
Division if the value per unit is low and less units are purchased if the
value per unit is high.
Therefore, a lower than average value per unit may be achieved over the long
term. This plan of investing allows investors to take advantage of market
fluctuations but does not assure a profit or protect against a loss in
declining markets.
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 Smith Barney
Money Market Division 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
transfer amount once each Contract Year, or cancel this program by sending
satisfactory 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.
WHAT HAPPENS IF A DIVISION IS NOT AVAILABLE
When a distribution is made from an investment portfolio supporting a Division
of Account B in which reinvestment is not available, we will allocate the
distribution, unless you specify otherwise, to the Specially Designated
Division.
Such a distribution can occur when (a) an investment portfolio matures, or (b)
a distribution from a portfolio or Division cannot be reinvested in the
portfolio or Division due to the unavailability of securities for acquisition.
When an investment portfolio matures, we will notify you in writing 30 days in
advance of that date. To elect an allocation 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
permitted. When a distribution from a portfolio or Division cannot be
reinvested in the portfolio due to the unavailability of securities for
acquisition, we will notify you promptly after the allocation has occurred. If
within 30 days you allocate the Accumulation Value from the Specially
Designated Division to other Divisions of your choice, such allocations 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 in
which you are invested, and is the amount available for investment at any
time. You select the Divisions to which to allocate your Accumulation Value.
We adjust your Accumulation Value on each Valuation Date to reflect the
Divisions' investment performance, any additional premium payments or partial
withdrawals since the previous Valuation Date, and on each Contract processing
date to reflect any deduction of the annual Contract fee. Your Accumulation
Value is applied 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. See Your Right to Cancel or Exchange Your
Contract.
ON EACH VALUATION DATE
At the end of each subsequent Valuation Period, the amount of
Accumulation Value in each Division will be calculated as follows:
(1) We take the Accumulation Value in the Division at the end of the
preceding Valuation Period.
(2) We multiply (1) by the Division's net rate of return for the current
Valuation Period.
(3) We add (1) and (2).
(4) We add to (3) any additional premium payments allocated to the
Division during the current Valuation Period.
(5) We add or subtract allocations to or from that Division during the
current Valuation Period.
(6) We subtract from (5) any partial withdrawals and any associated
charges allocated to that Division during the current Valuation Period.
(7) We subtract from (6) the amounts allocated to that Division for:
(a)any Contract fees; and
(b)any 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
Division 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 $14.64, $16.43 and $13.76 for the OTC,
Research and Total Return Divisions, respectively. The index for the rest of
the Divisions was set at $10. The index for a current Valuation Period equals
the index for the preceding Valuation Period multiplied by the experience
factor for the current Valuation Period.
We may express the value of amounts allocated to the Divisions in terms
of units. We determine the number of units for a given amount on a Valuation
Date by dividing the dollar value of that amount by the index of investment
experience for that date. The index of investment experience is equal to the
value of a unit.
HOW WE DETERMINE THE EXPERIENCE FACTOR
For Divisions of Account B the experience factor reflects the investment
experience of the Portfolio in which a Division invests as well as the charges
assessed against the Division for a Valuation Period. The factor is calculated
as follows:
(1) We take the net asset value of the portfolio in which the Division
invests at the end of the current Valuation Period.
(2) We add to (1) the amount of any dividend or capital gains
distribution declared for the investment portfolio and reinvested in such
portfolio during the current Valuation Period. We subtract from that amount a
charge for our taxes, if any.
(3) We divide (2) by the net asset value of the portfolio at the end of
the preceding Valuation Period.
(4) We subtract the applicable daily mortality and expense risk charge
from each Division for each day in the valuation period.
(5) We subtract the daily asset based administrative charge from each
Division for each day in the valuation period.
Calculations for Divisions investing in a Portfolio are made on a per
share basis.
NET RATE OF RETURN FOR A DIVISION
The net rate of return for a Division during a valuation period is the
experience factor for that Valuation Period minus one.
CASH SURRENDER VALUE
Your Contract's Cash Surrender Value fluctuates daily with the investment
results of the Divisions. 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; and
(3) We deduct from (2) any charges incurred but not yet deducted.
SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE
The Contract may be surrendered by the Owner at any time while the
Annuitant is living and before the Annuity Commencement Date.
A surrender will be effective on the date your written request and the
Contract are received 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
payment. 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, will be taken in proportion to the amount of
Accumulation Value in each Division in which you are invested.
There are three options available for selecting partial withdrawals, the
Conventional Partial Withdrawal Option, the Systematic Partial Withdrawal
Option and the IRA Partial Withdrawal Option. All three options are described
below. 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.
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,
quarterly, or annual basis from your Accumulation Value in the Divisions. The
commencement of payments under this option may not be elected to start sooner
than 28 days after the Contract Issue Date. You select 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
subject to the following maximums, but in no event can a payment be less than
$100:
FREQUENCY MAXIMUM PERCENTAGE
Monthly 1.25%
Quarterly 3.75%
Annual 15.00%
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
withdrawal amount would be reduced to $300. If a percentage is selected and
the amount to be systematically withdrawn based on that percentage would be
less than the minimum of $100, we would increase the amount to $100 provided
it does not exceed the maximum percentage. If it is below the maximum
percentage we will send the minimum. If it is above the maximum percentage we
will send the amount and then cancel the option. For example, if you selected
1.0% to be systematically withdrawn on a monthly basis and that amount equaled
$90, and since $100 is less than 1.25% of the Accumulation Value, we would
send $100. If 1.0% equaled $75, and since $100 is more than 1.25% of the
Accumulation Value we would send $75 and then cancel the option. In such a
case, in order to receive systematic partial withdrawals in the future, you
would be required to submit a new notice to our Customer Service Center.
You may change the amount or percentage of your withdrawal once each
Contract Year or cancel this option at any time by sending satisfactory notice
to our Customer Service Center at least seven days prior to the next scheduled
withdrawal date. However, you may not change the amount or percentage of your
withdrawals in any Contract Year during which you have previously taken a
conventional partial withdrawal.
IRA PARTIAL WITHDRAWAL OPTION
If you have an IRA Contract and will attain age 70 1/2 in the current
calendar 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 withdrawals while the Systematic Partial Withdrawal Option is in
effect. If you do not elect the IRA Partial Withdrawal Option, and
distributions are required by Federal tax law, distributions adequate to
satisfy the requirements imposed by Federal tax law may be made. Thus, if the
Systematic Partial Withdrawal 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
withdrawn from your Contract each year based on the information you give us
and various choices you make. For information regarding the calculation and
choices you have to make, see the Statement of Additional Information. The
minimum dollar amount you can withdraw is $100. At the time we determine the
required partial withdrawal amount for a taxable year based on the frequency
you select, if that amount is less than $100, we will pay $100. At any time
where the partial withdrawal amount is greater than the Accumulation Value, we
will cancel the Contract and send you the amount of the Cash Surrender Value.
You may change the payment frequency of your withdrawals once each
Contract Year or cancel this option at any time by sending us satisfactory
notice to our Customer Service Center at least seven days prior to the next
scheduled withdrawal date.
PARTIAL WITHDRAWALS IN GENERAL
CONSULT YOUR TAX ADVISOR REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH
TAKING PARTIAL WITHDRAWALS. A partial withdrawal made before the taxpayer
reaches age 59 1/2 may result in imposition of a tax penalty of 10% of the
taxable portion withdrawn. 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 allocation 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
Divisions 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. 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.
Automatic rebalancing will not take place during the free look period.
To participate in automatic rebalancing you must submit to our Customer
Service Center written notice in a form satisfactory to us. We will begin the
program 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 Annuity Option, a single sum distribution will be made. Any
distributions from non-qualified Contracts must comply with applicable Federal
tax law distribution requirements.
DEATH BENEFIT OPTIONS
Subject to our rules, there are two death benefit options that may be
elected by you at issue under the Contract: the Standard Death Benefit Option
and the Annual Ratchet Enhanced Death Benefit Option.
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 the 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
arrangements. See Other Contract Provisions, Group or Sponsored Arrangements.
STANDARD DEATH BENEFIT OPTION
You will automatically receive the Standard Death Benefit Option unless
you elect the enhanced death benefit. 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 Surrender
Value.
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 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
Beneficiary. We will calculate the death benefit as of the date we receive due
proof of death. The Beneficiary should contact our Customer Service Center for
instructions.
REPORTS TO OWNERS
We will send you a report once each 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
quarter. 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 jurisdiction in which the Contract is delivered.
We will also send you copies of any shareholder reports of the portfolios or
securities in which Account B invests, as well as any other reports, notices
or documents required by law to be furnished to 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
information needed to process the payment.
However, we may delay payment of amounts derived from the Divisions if it is
not practical for us to value or dispose of shares of Account B because:
(1) The NYSE is closed for trading;
(2) The SEC determines that a state of emergency exists;
(3) An order or pronouncement of the SEC permits a delay for the
protection of Owners; or,
(4) The check used to pay the premium has not cleared through the banking
system. This may take up to 15 days.
During such times, as to amounts allocated to the Divisions, we may delay:
(1) Determination and payment of any Cash Surrender Value;
(2) Determination and payment of any death benefit if death occurs before
the Annuity Commencement Date;
(3) Allocation changes of the Accumulation Value; or,
(4) Application under an Annuity Option of the Accumulation Value.
CHARGES AND FEES
CHARGE DEDUCTION DIVISION
You may specify at issue if you wish to have all charges against the
Accumulation Value deducted from the Smith Barney Money Market Division. We
call this the Charge Deduction Division Option, and within this context refer
to the Smith Barney Money Market 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 notice 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 you select, subject to certain restrictions. 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. The charges we deduct are:
SURRENDER CHARGE
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 we
receive and accept such premium payment. The percentage of premium payments
deducted 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
payment as follows:
COMPLETE YEARS ELAPSED SURRENDER
SINCE PREMIUM PAYMENT CHARGE
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 1%
7+ 0%
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
received 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, 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 considered a partial surrender of the Contract and we will impose a
surrender charge and any associated premium tax. Such charges will be deducted
from the Accumulation Value in proportion to the Accumulation Value in each
Division from which the excess partial withdrawal was taken. In instances
where the excess partial withdrawal equals the entire Accumulation Value in
each such Division, charges will be deducted proportionately from all other
Divisions in which you are invested.
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 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
Contract 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 withdrawal
of a part of the Initial Premium payment of $10,000 and would be subject to a
5% surrender charge of $87.50 ($1,750 x .05). This example does not take into
account the 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
Commencement Date. In those states we may initially defer collection of the
amount of the charge for premium taxes from your Accumulation Value and deduct
it against Accumulation Value on surrender of the Contract, excess partial
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 Contract 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
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. This
amount represents the maximum we will charge. The charge would be deducted
from the Divisions from which each such reallocation is made in proportion to
the amount being transferred from each such Division unless you have chosen to
use the Charge Deduction Division. The excess allocation charge is set at a
level that is not designed to produce profit for Golden American or any
affiliate. Any 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 determining 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
benefit option that is in effect. If the Standard Death Benefit Option is
in effect, 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
allocated to the mortality risk and .35% is allocated to the expense risk. If
the Annual Ratchet Death Benefit Option is in effect, the charge is equivalent,
on an annual basis, to 1.25% of the assets in each Division. The charge is
deducted on each Valuation Date at the rate of .003446% for each day in the
Valuation Period. For the Annual Ratchet approximately .90% is allocated
to the mortality risk.
This charge will compensate us for mortality and expense risks we assume
under the Contract. We will realize a gain from this charge to the extent it
is not needed to provide for benefits and expenses under the Contract. We will
use any gain for any lawful purpose including any shortfalls on paying
distribution expenses.
The mortality risk assumed is the risk that Annuitants as a group will
live for a longer time than our actuarial tables predict. As a result, we
would be paying more in annuity income than we planned. Golden American also
assumes a risk under the Contract for paying a guaranteed death benefit.
The expense risk assumed is the risk that it will cost us more to issue
and administer the Contract than we expect.
ASSET BASED ADMINISTRATIVE CHARGE
We will deduct a daily charge from the assets in each Division, 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 Portfolio of the ESS Trust,
the Travelers Fund and the Smith Barney Fund. 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
Option by making a written request to us at least 30 days prior to the Annuity
Commencement Date of the Contract. The amount of the payments will be
determined by applying your Accumulation Value on the Annuity Commencement
Date in accordance with The Annuity 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
Commencement 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
distribution requirements of applicable Federal tax law.
The minimum monthly annuity income payment that we will make is $20. We
may require that a single sum payment be made if the Accumulation Value is
less than $2,000 or if the calculated monthly annuity income payment is less
than $20.
For each option we will issue a separate written agreement putting the
option into effect. Before we pay any annuity benefits, we require the return
of the Contract. If your Contract has been lost, we will require that you
complete and return the applicable Contract form. Various factors will affect
the level of annuity benefits including the Annuity Option chosen, the
applicable payment rate used and the investment results of the Divisions in
which the Accumulation Value has been invested.
Some annuity options may provide only for fixed payments. Fixed Annuity
Payments are regular payments, the amount of which is fixed and guaranteed by
us. The amount of the payments will depend only on the form and duration of
payments chosen, the age of the Annuitant or Beneficiary (and sex, where
appropriate), the total Accumulation Value applied to purchase the fixed
option, and the applicable payment rate.
Our approval is needed for any option where:
(1) The person named to receive payment is other than the Owner or
Beneficiary;
(2) The person named is not a natural person, such as a corporation; or
(3) Any income payment would be less than the minimum annuity income
payment allowed.
ANNUITY COMMENCEMENT DATE SELECTION
You select the Annuity Commencement Date. 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. If the Annuity Commencement Date occurs when the
Annuitant is at an advanced age, such as over age 85, it is possible that the
Contract will not be considered an annuity for Federal tax purposes. See
Federal Tax Considerations. For a Contract purchased in connection with a
qualified plan, distribution must commence not later than April 1st of the
calendar year following the calendar year in which you attain age 70 1/2.
Consult your tax advisor.
FREQUENCY SELECTION
You choose the frequency of the Annuity Payments. They may be monthly,
quarterly, semi-annually or annually. If we do not receive written notice from
you, the payments will be made monthly. There may be certain restrictions on
minimum payments that we will allow.
THE 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
Accumulation 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 available upon request. Illustrations are available upon request. If the
Cash Surrender Value or Accumulation Value is applied under this option, a 10%
penalty tax may apply to the taxable portion of each income payment until the
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
certain may be available on request. A refund certain may be chosen instead.
Under this arrangement, income is guaranteed until payments equal the amount
applied. If the person named lives beyond the guaranteed period, payments
continue until his or her death. We guarantee that each payment will be at
least the amount set forth in the Contract corresponding to the person's age
on his or her last birthday before the option's effective date. Amounts for
ages not shown in the Contract are available upon request.
OPTION 3. JOINT LIFE INCOME
This option is available if there are two persons named to receive
payments. At least one of the persons named must be either the Owner or
Beneficiary of the Contract. Monthly payments are guaranteed and are made as
long as at least one of the named persons is living. There is no minimum
number of payments. Monthly payment amounts are available upon request.
OPTION 4. ANNUITY PLAN
An amount can be used to buy any single premium annuity we offer on the
option's effective date.
PAYMENT WHEN NAMED PERSON DIES
When the person named to receive payment dies, we will pay any amounts
still due as provided by the option agreement. The amounts still due are
determined as follows:
(1) For option 1, or any remaining guaranteed payments under option 2,
payments will be continued. Under options 1 and 2, the discounted values of
the remaining guaranteed payments may be paid in a single sum. This means we
deduct the amount of the interest each remaining guaranteed payment would have
earned had it not been paid out early. The discount interest rate is 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 Federal
tax consequences. See Federal Tax Considerations.
You must give us satisfactory written notice at our Customer Service
Center in order to make or release an assignment. We are not responsible for
the validity of any assignment.
NON-PARTICIPATING
The Contract does not participate in the divisible surplus of Golden
American.
AUTHORITY TO MAKE AGREEMENTS
All agreements made by us must be signed by our president or a vice
president and by our secretary or an assistant secretary. No other person,
including an insurance agent or broker, can change any of the Contract's
terms, make any agreements binding on us or extend the time for premium
payments.
CONTRACT CHANGES - APPLICABLE TAX LAW
We reserve the right to make changes in the Contract to the extent we
deem it necessary to continue to qualify the Contract as an annuity. Any such
changes will apply uniformly to all Contracts that are affected. You will be
given advance written notice of such changes.
YOUR RIGHT TO CANCEL OR EXCHANGE YOUR CONTRACT
CANCELLING YOUR CONTRACT
You may cancel your Contract within your Free Look Period, which is ten
days after you receive your Contract. For purposes of administering our
allocation and administrative rules, we deem this period to expire 15 days
after the Contract is mailed to you. Some states may require a longer Free
Look Period. If you decide to cancel, you may mail or deliver the Contract to
our Customer Service Center. We will refund the Accumulation Value plus any
charges we deducted, and the Contract will be voided as of the date we receive
the Contract and your request. See Facts About the Contract, Measurement of
Investment Experience, Index of Experience and Unit Value.
EXCHANGING YOUR CONTRACT
For information regarding exchanges under Section 1035 of the Internal
Revenue 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,
administration, 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
requirements for size and number of years in existence. Group or sponsored
arrangements that have been set up solely to buy Contracts or that have been
in existence less than six months will not qualify for reduced charges.
We will make these and any similar reductions according to our rules in effect
when an application or enrollment form for a Contract is approved. We may
change these rules from time to time. Any variation in the 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.
Commissions will be paid to broker-dealers who sell the Contract.
Broker-dealers will be paid commissions, up to an amount currently equal to
7.75% of premium payments, for promotional or distribution expenses associated
with the marketing of the Contract. Golden American may, by agreement with the
broker-dealer, pay commissions as a combination of a certain percentage amount
at the time of sale and a trail commission (which when combined could exceed
7.75% of premiums). In addition, under certain circumstances, Golden American
may pay certain sellers production bonuses which will take into account, among
other things, the total premium payments which have been made under the
Contract associated with the broker-dealer. Additional payments or allowances
may be made for other services not directly related to the sale of the
Contract.
REGULATORY INFORMATION
VOTING RIGHTS
ACCOUNT B
We will vote the shares of a Trust owned by Account B according to your
instructions. However, if the Investment Company Act of 1940 or any related
regulations should change, or if interpretations of it or related regulations
should change, and we decide that we are permitted to vote the shares of 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
instructions by mail at least 10 days before the meeting.
If we do not get your instructions in time, we will vote the shares in
the same proportion as the instructions received from all Contracts in that
Division. We will also vote shares we hold in Account B which are not
attributable to Owners in the same proportion.
STATE REGULATION
We are regulated and supervised by the Insurance Department of the State
of Delaware, which periodically examines our financial condition and
operations. We are also subject to the insurance laws and regulations of all
jurisdictions where we do business. The Contract offered by this prospectus
has been approved by the Insurance Department of the State of Delaware and by
the Insurance Department of New Hampshire and any other states in which it may
be offered. We are required to submit annual statements of our operations,
including financial statements, to the Insurance Departments of the various
jurisdictions in which we do business to determine solvency and compliance
with state insurance laws and regulations.
LEGAL PROCEEDINGS
Golden American, as an insurance company, is ordinarily involved in
litigation. We do not believe that any current litigation is material and we
do not expect to incur significant losses from such actions.
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 intended as tax advice. The federal income tax treatment of the Contract
is unclear in certain circumstances, and a qualified tax adviser should always
be consulted with regard to the application of the tax law to individual
circumstances. This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), Treasury Department regulations, and interpretations
existing 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 GUARANTEE REGARDING ANY TAX TREATMENT -- FEDERAL, STATE OR LOCAL --
OF ANY CONTRACT 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 attributable to Contract obligations are automatically
applied to increase reserves, Golden American does not anticipate that it will
incur any federal income tax liability in Account B attributable to Contract
obligations, and therefore Golden American does not intend to make provision
for any such taxes. If Golden American is taxed on investment income or
capital gains of Account B, then Golden American may impose a charge against
Account B, as appropriate, 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
increase 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
distribution. However, this rule allowing deferral applies only if (1) the
investments of Account B are "adequately diversified" in accordance with
Treasury Department regulations, (2) Golden American, rather than the owner,
is considered the owner of the assets of Account B for federal income tax
purposes, and (3) the owner is an individual. In addition to the foregoing, if
the Contract's annuity commencement date occurs at a time when the annuitant
is at an advanced age, such as over age 85, it is possible that the owner will
be taxable currently on the annual increase in the Accumulation Value.
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
diversified." If a Division of Account B failed to comply with these
diversification 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-diversification. 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 announced, in connection
with the issuance of regulations concerning investment diversification, that
those regulations "do not provide guidance concerning the circumstances in
which investor control of the investments of a segregated asset account may
cause the investor, rather than the insurance company, to be treated as the
owner of the assets in the account." This announcement also stated that
guidance would be issued by way of regulations or rulings on the "extent to
which policyholders may direct their investments to particular sub-accounts
(of a segregated asset account) without being treated as owners of the
underlying assets." As of the date of this prospectus, no such guidance has
been issued.
The ownership rights under the Contract are similar to, but different in
certain respects from, those described by the IRS in rulings in which it was
determined that contract owners were not owners of the assets of a segregated
asset account. For example, the owner of this Contract has the choice of more
investment options to which to allocate purchase payments and the Accumulation
Value, and may be able to transfer among investment options more frequently,
than in such rulings. These differences could result 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 standards 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 basis only. Thus, if the IRS or the Treasury Department were to
issue regulations or a ruling which treated an owner of this Contract as the
owner of Account B, that treatment might apply on a prospective basis.
However, if the 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 purposes.
The income on such contracts (as defined in the tax law) is taxed as ordinary
income that is received or accrued by the owner of the contract during the
taxable year. There are several exceptions to this general rule for
non-natural owners. First, contracts will generally be treated as held by a
natural person if the nominal owner is a trust or other entity which holds the
contract as an agent for a natural person. However, this special exception
will not apply in the case of any employer who is the nominal owner of a
contract under a non-qualified deferred compensation arrangement for its
employees.
In addition, exceptions to the general rule for non-natural owners will
apply with respect to (1) contracts acquired by an estate of a decedent by
reason of the death of the decedent, (2) certain contracts issued in
connection with qualified retirement plans, (3) contracts purchased by
employers 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
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 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 under the Contract to that time (to the extent such payments
were neither deductible 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 regarding the tax treatment of systematic partial
withdrawals, and it is possible that additional amounts may be includible in
income.
The Contract provides a death benefit that in certain circumstances may
exceed the greater of the premium payments and the Accumulation Value. As
described elsewhere in this prospectus, Golden American imposes certain
charges with respect to 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
owner's need for extended medical care or because of the owner's terminal
illness. 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
multiplying (1) the fixed annuity payment by (2) the ratio of the "investment
in the contract" (defined above), adjusted for any period certain or refund
feature, allocated to the fixed annuity option to the total expected amount of
fixed annuity payments for the period of the Contract (determined under
Treasury 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
annuity 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
income 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
manner as a surrender, as described above, or (2) if distributed under an
annuity option, they are taxed in the same manner as annuity payments, as
described 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
includible 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
certain 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
purposes 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 reflect the
increase in the transferor's income.
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
transaction. 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 retirement 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
taxable amount of any payment from the contract unless the payment is: (a)
received on or after the owner reaches age 59 1/2; (b) attributable to the
owner'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
series of substantially equal periodic payments (not less frequently than
annually) 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
defined 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
annuity 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
exception). In addition, if withdrawals are of interest amounts only,
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
combining some or all of the annuity contracts owned by an individual not
issued in connection with qualified retirement plans. For example, if a person
purchases 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
annuity commencement date) is includible in income. In addition, if a person
purchases a Contract offered by this prospectus and also purchases at
approximately the same time an immediate annuity, the IRS may treat the two
contracts as one contract. The effects of such aggregation are not clear,
however, 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
American 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
qualified retirement plans which receive favorable treatment under the Code.
Numerous 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
conditions of the plan itself. For example, for both surrenders and annuity
payments under certain contracts issued in connection with qualified
retirement plans, there may be no "investment in the contract" and the total
amount received may be taxable. Also, special rules apply to the time at which
distributions 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
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 qualified 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 payments. 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
retirement accounts and IRAs owned by an individual are treated as one
contract, 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
contract that is issued as an IRA (or that is purchased by an individual
retirement 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 premium
payments were made to an IRA (within the limits allowed by the tax laws), a
portion of each distribution from the Contract typically is includible in
income when it is distributed. In such a case, any amount distributed as an
annuity payment or in a lump sum upon death or 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 distributed that were
excluded from income). Also, in such a case, any amount distributed 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
requirements (discussed below), amounts may be "rolled over" from certain
qualified retirement plans to an IRA (or from one IRA or individual retirement
account to an IRA) without incurring current income tax if certain conditions
are met. Only certain types of distributions to eligible 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
excludable 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 payments 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, distributions 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
connection with various types of qualified retirement plans other than IRAs.
Golden American does not currently offer all of the types of qualified
retirement 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 contributions.
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
employees, using the employees' IRAs for such purposes, if certain criteria
are met. Under these plans the employer may, within specified limits, make
deductible contributions on behalf of the employees to IRAs. Employers in
tending to use the contract in connection with such plans should seek
competent advice.
Corporate and Self-Employed ("H.R. 10" or "Keogh") Pension and
Profit-Sharing Plans. Sections 401(a) and 403(a) of the Code permit corporate
employers to establish various types of tax-favored retirement plans for
employees. The Self-Employed Individuals' Tax Retirement Act of 1962, as
amended, commonly referred to as "H.R. 10" or "Keogh," permits self-employed
individuals 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 provides 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 provided under
pension and profit sharing plans. In addition, the provision of such benefits
may result in currently taxable income to participants. Employers 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 educational organizations
specified in section 170(b)(l)(A)(ii), to have their employers purchase
annuity contracts for them and, subject to certain limitations, to exclude the
amount of premium payments from gross income for federal income tax purposes.
Purchasers of the contracts for use as a "Section 403(b) Annuity Contract"
should seek competent advice as to eligibility, 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 payments 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
beginning after December 31, 1988, (ii) earnings on those contributions, and
(iii) earnings after 1988 on amounts attributable to salary reduction
contributions (and earnings on those contributions) held as of the last year
beginning before January 1, 1989. These amounts can be paid only if the
employee 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 employees 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 recipient, subject only to the
claims of the employer's general creditors. Generally, 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
limits, employers contributions and premature distributions. In addition,
because 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%
contributions for each employee or may elect a matching contribution from 1 to
3% varying each year, subject to certain restrictions. All employer
contributions are immediately fully vested to the employee when made.
Employee Contributions. Employee contributions of up to $6,000 of
compensation may be made by eligible employees. All employee contributions
must be made by a salary reduction arrangement with their employer. Employee
contributions may be for any percent of compensation.
Distributions. Distributions from a Simple retirement account by an
employee 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 and employee first participated in any qualified salary reduction
arrangement 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
mandatory 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 employee'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 apply to that portion of the eligible rollover distribution which,
instead of receiving, the taxpayer elects to have directly transferred to
certain eligible 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 administrator 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%.
Regardless 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
payment. As discussed above, the withholding rate applicable to eligible
rollover distributions is 20%.
<R/>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS PAGE
INTRODUCTION1
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
Financial Statements of Golden American
Life Insurance Company
Appendix -- Description of Bond Ratings A-1
(This page has been intentionally left blank.)
PLEASE TEAR OFF, COMPLETE AND RETURN THE FORM BELOW TO ORDER A FREE STATEMENT
OF ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER THE PROSPECTUS.
ADDRESS THE FORM TO OUR CUSTOMER SERVICE CENTER, THE ADDRESS IS SHOWN ON THE
COVER.
PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR
SEPARATE ACCOUNT B
PLEASE PRINT OR TYPE
_____________________________________
NAME
_____________________________________
SOCIAL SECURITY NUMBER
_____________________________________
STREET ADDRESS
_____________________________________
CITY, STATE, ZIP
(IN GRANITE PRIMELITE (2/97)
PART B
STATEMENT OF ADDITIONAL INFORMATION
GRANITE PRIMELITE
DEFERRED VARIABLE
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 14, 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
Financial Statements of Golden American Life Insurance Company . .
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 changed the name
of BT Variable, Inc. 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 to perform management, administrative and clerical services
and the use of certain of its facilities. EIC Variable charged Golden
American for such expenses and all other general and administrative costs,
first on the basis of direct charges when identifiable, and second
allocated based on the estimated amount of time spent by EIC Variable's
employees on behalf of Golden American. For the year 1993 and the period
from September 30, 1992 to December 31, 1992, EIC Variable allocated to
Golden American $1,503,000 and $450,000, respectively. The agreement was
terminated on January 1, 1994.
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
appearing or incorporated by reference in the Statement of Additional
Information and Registration Statement have been audited by Ernst & Young LLP,
independent 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.
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 administrative costs, first on the basis of direct charges when
identifiable, and the remainder allocated based on the estimated amount of
time spent by Golden American's employees on behalf of DSI. In the opinion
of management, this method of cost allocation is reasonable. For the years
ended December 31, 1994 and 1993, expenses allocated to DSI were $1,983,000
and $2,013,000, respectively. In 1995, the service agreement between DSI and
Golden American was amended to provide for a management fee from DSI to Golden
American for managerial and supervisory services provided by Golden American.
This fee, calculated as a percentage of average assets in the variable
separate accounts, was $986,650 for 1995.
PERFORMANCE INFORMATION
Performance information for the divisions of Account B, including the yield
and effective yield of the Smith Barney Money Market 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%.
SEC STANDARD MONEY MARKET DIVISION YIELDS
Current yield for the Smith Barney Money Market 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
There is no current yield and effective yield provided because the Smith Barney
Money Market Division commenced operations as of the date of the Prospectus.
SEC STANDARD 30-DAY YIELD FOR NON-MONEY MARKET DIVISIONS
Quotations of yield for the remaining divisions will be based on all investment
income per Unit (accumulation value divided by the index of investment
experience) earned during a particular 30-day period, less expenses accrued
during the period ("net investment income"), and will be computed by dividing
net investment income by the 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 Portfolio 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 Portfolio in which the Division invests and from
dividends declared and paid by the Portfolio, which are automatically
reinvested in shares of the Portfolio.
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.
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.
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
Portfolio 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 Annual Ratchet Enhanced Death Benefit
Option. The mortality and expense risk charge associated with the Standard
Death Benefit is 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 . . . . . . . . . . . . . . . . . . 0.00003425
6. Less asset based administrative charge. . . . . . . . . . . . . . . . . . . 0.00000411
7. Net investment return (4) minus (5) minus (6) . . . . . . . . . . . . . . . 0.00996164
8. Net investment factor (1.000000) plus (7) . . . . . . . . . . . . . . . . . 1.00996164
9. IIE, end of period (1) multiplied by (8). . . . . . . . . . . . . . . . . . $ 10.09961644
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.09961644
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
A Registration statement has 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 statement, 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 Division of Account 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 audited financial statements of Golden American Life Insurance
Company are included in Part B hereof:
The audited financial statements of Golden American Life Insurance Company
listed below are prepared in accordance with generally accepted accounting
principles ("GAAP") and appear in the Annual Report of the Golden American
Life Insurance Company which was filed with the SEC and are included in
this Statement of Additional Information.
Report of Independent Auditors
Financial Statements -- GAAP
Balance Sheets as of December 31, 1995 and 1994
Statements of Operations for the Years ended December 31, 1995,
1994 and 1993
Statements of Changes in Stockholder's Equity for the Years ended
December 31, 1995, 1994 and 1993
Statements of Cash Flows for the Years ended December 31, 1995,
1994 and 1993
Notes to Audited Financial Statements
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
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
- -------------------------------------------------------------------------------
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
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
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
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
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
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
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
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
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
- --------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
[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
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
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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 the Statement 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 (11)
(7) Not applicable
(8) (i) Form of Fund Participation Agreement between Golden American and
and Travelers Series Fund Inc. (to be filed by amendment)
(ii) Form of Fund Participation Agreement between Golden American
and Smith Barney Series Fund. (to be filed by amendment)
(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).
(11) 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 February 7, 1997 (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:
<TABLE>
<CAPTION
<S> <C> <C>
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 President, 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
</TABLE>
(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 the 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 14th day of February, 1997.
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/ Myles R. Tashman
------------------------
Myles R. Tashman
Executive Vice President and
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
14, 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/ Myles R. Tashman Attorney-in-Fact
-----------------------
Myles R. Tashman
_______________________
*Executed by Myles R. Tashman on behalf of those indicated pursuant
to Power of Attorney.
EXHIBIT INDEX
ITEM EXHIBIT PAGE #
10(a) Consent of Sutherland, Asbill & Brennan . . . . . .
10(b) Written Consent of Ernst & Young LLP. . . . . . . .
10(c) Consent of Myles R. Tashman, Esq. . . . . . . . . .
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 13, 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. 6 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
Exhibit 10(b) Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the captions "Independent
Auditors", "Experts" and "Financial Statements" and to use of our reports
dated February 12, 1996 (except Note 10, as to which the date is August 13,
1996), with respect to Golden American Life Insurance Company, and
February 12, 1996 with respect to Separate Account B, and February 9, 1996
(except Note 6, as to which the date is August 27, 1996) with respect to
The Managed Global Account of Separate Account D in Post-Effective
Amendment No. 6 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
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 14, 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
Statement of Additional Information. In giving this consent I do not thereby
admit that I come within the category of persons whose consent is required
under section 7 of the Securities Act of 1933 or the Rules and Regulations of
the Securities and Exchange Commission thereunder.
Sincerely,
/s/ Myles R. Tashman
- ----------------------
Myles R. Tashman
Executive Vice President and Secretary
