<PAGE>
[LOGO] [LETTERHEAD OF CANADA LIFE INSURANCE COMPANY OF NEW YORK]
February 28, 2000
Dear Varifund(R) Policyholder:
Enclosed is the Varifund Annual Report for the period ending December 31, 1999.
We encourage you to review this information and to refer to it as needed
throughout the year.
Please call your Registered Representative or Canada Life if you have any
questions.
Thank you for selecting Varifund for your financial needs.
Sincerely,
/s/ Ronald E. Beettam
Ronald E. Beettam
Encl.
<PAGE>
The attached are incorporated by reference herein to the semi-annual reports
filed by and on behalf of the following:
The Alger American Fund, filed February 28, 2000
Portfolios which include: Alger American Small Capitalization; Alger
American Growth; Alger American MidCap Growth; and Alger American Leveraged
AllCap
Berger Institutional Products Trust, filed February 28, 2000
Portfolios which include: Berger/BIAM IPT-International Fund; Small Company
Growth
Canada Life of America Series Fund, Inc., filed March 8, 2000
Portfolios which include: Money Market; Managed; Bond; Value
Equity, International Equity; and Capital.
Dreyfus Variable Investment Fund, filed February 23, 2000
Portfolios which include: Dreyfus Growth and Income; Dreyfus Capital
Appreciation
The Dreyfus Socially Responsible Growth Fund, Inc., filed February 23, 2000
Portfolios which include: Dreyfus Socially Responsible
Fidelity Investments Variable Insurance Products Fund, filed February 23, 2000
Portfolios which include: Fidelity VIP Growth
Fidelity Investments Variable Insurance Products Fund, filed February 23, 2000
Portfolios which include: Fidelity VIP High Income
Fidelity Investments Variable Insurance Products Fund, filed February 23, 2000
Portfolios which include: Fidelity VIP Overseas
Fidelity Investments Variable Insurance Products Fund II, filed February 23,
2000
Portfolios which include: Fidelity VIP II Asset Manager
Fidelity Investments Variable Insurance Products Fund II, filed February 23,
2000
Portfolios which include: Fidelity VIP II Index 500; Fidelity VIP II
Contrafund
Seligman Portfolios, Inc., filed March 1, 2000
Portfolios which include: Communications and Information; and Frontier
The Montgomery Funds III, filed February 28, 2000
Portfolios which include: Montgomery Variable Series Emerging Markets Fund;
and Montgomery Variable Series Growth Fund
<PAGE>
V A R I F U N D (R) A N N U I T Y
- ------------------------------------- VF -----------------------------------
VARIABLE SUB-ACCOUNT PERFORMANCE Average Annual Total Returns For
Periods Ending December 31, 1999
Single Premium Variable Annuity Assuming Contract Continues
<TABLE>
<CAPTION>
Since Fund
One Three Five Ten Fund Inception
Portfolio Type Portfolio YTD Year Year Year Year Inception Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Portfolios Alger American Growth 31.79 % 31.79 % 33.58 % 29.06 % 21.14 % 21.29 % 01/08/89
Alger American Leveraged Allcap 75.47 % 75.47 % 47.66 % N/A N/A 44.36 % 01/25/95
Alger American MidCap Growth 29.92 % 29.92 % 23.66 % 24.33 % N/A 22.93 % 05/03/93
Alger American Small Capitalization 41.32 % 41.32 % 20.88 % 20.88 % 16.53 % 19.13 % 09/20/88
Berger Small Company Growth 88.67 % 88.67 % 31.37 % N/A N/A 24.43 % 05/01/96
CLASF Capital 58.46 % 58.46 % 30.81 % 26.83 % N/A 20.35 % 04/23/93
CLASF Value Equity 18.21 % 18.21 % 14.43 % 13.98 % 10.48 % 10.46 % 12/04/89
Dreyfus Capital Appreciation 9.82 % 9.82 % 21.15 % 23.71 % N/A 18.26 % 03/31/93
Dreyfus Growth & Income 15.17 % 15.17 % 13.26 % 22.13 % N/A 18.53 % 05/02/94
Dreyfus Socially Responsible 28.17 % 28.17 % 27.42 % 26.82 % N/A 22.31 % 10/07/93
Fidelity VIP II Contrafund 22.43 % 22.43 % 24.20 % N/A N/A 25.86 % 01/03/95
Fidelity VIP Growth 35.43 % 35.43 % 31.34 % 27.86 % 18.21 % 17.06 % 10/09/86
Montgomery Growth 19.02 % 19.02 % 15.22 % N/A N/A 18.51 % 02/09/96
Fidelity VIP II Index 500 18.74 % 18.74 % 25.23 % 26.32 % N/A 19.33 % 08/27/92
Fidelity VIP III Growth Opportunities 2.73 % 2.73 % 17.29 % N/A N/A 19.73 % 01/03/95
Seligman Frontier 14.88 % 14.88 % 8.54 % 15.47 % N/A 15.86 % 10/11/94
----------------------------------------------------------------------------------------------------------
International Berger-IPT International 29.33 % 29.33 % N/A N/A N/A 14.53 % 05/01/97
CLASF International Equity 42.75 % 42.75 % 17.91 % N/A N/A 16.17 % 04/24/95
Fidelity VIP Overseas 40.54 % 40.54 % 19.74 % 15.64 % 9.80 % 9.29 % 01/26/87
Montgomery Emerging Markets 62.41 % 62.41 % (0.71)% N/A N/A 0.79 % 02/02/96
---------------------------------------------------------------------------------------------------------
Speciality Portfolio Seligman Communications & Information 83.11 % 83.11 % 43.70 % 34.14 % N/A 33.32 % 10/11/94
----------------------------------------------------------------------------------------------------------
Balanced CLASF Managed 7.80 % 7.80 % 8.98 % 10.14 % 8.29 % 8.24 % 12/04/89
Fidelity VIP II Asset Manager 9.46 % 9.46 % 13.84 % 13.94 % N/A 11.16 % 09/06/89
----------------------------------------------------------------------------------------------------------
Fixed Income Portfolios CLASF Bond (5.25)% (5.25)% 2.71 % 5.16 % 5.25 % 5.18 % 12/04/89
Fidelity VIP High Income 6.56 % 6.56 % 5.21 % 9.24 % 10.61 % 9.29 % 09/19/85
----------------------------------------------------------------------------------------------------------
Money Market CLASF Money Market 2.86 % 2.86 % 3.18 % 3.22 % 2.95 % 2.97 % 12/04/89
</TABLE>
CLASF Money Market Portfolio current yield (annualized yield for a seven day
period ended December 31, 1999) is 5.01% VariFund Fixed Account 1 year rate was
4.75% as of January 1, 2000. The Money Market Fund is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Fund seeks to preserve the value of your investment at $10.00 per
share, it is possible to lose money by investing in the Fund. The performance
data quoted is after the deduction of all fees and charges, except for possible
surrender charges. For performance figures after the deduction of all fees and
charges, including the maximum possible surrender charge, please see the reverse
side. Performance data represents past performance and is not a guarantee of
future results. Investment returns and principal value may flucuate so that an
investor's shares, when redeemed, may be more or less than his or her original
cost. Performance figures for portfolios with inception dates prior to December
4, 1999 reflect performance if VariFund existed at the inception of those
portfolios. Contact your registered representative or call Canada Life Insurance
Company of New York, Ardsley, NY at (914)693-2300 for a Prospectus containing
full details including information on fees and charges. Please read the
prospectus carefully before investing or sending money.
(Not valid without accompanying "standardized" performance returns.)
Date of first use December 31, 1999
<PAGE>
V A R I F U N D (R) A N N U I T Y
- ----------------------------------------------------------------------------
VARIABLE SUB-ACCOUNT PERFORMANCE Average Annual Total Returns For
Periods Ending December 31, 1999
Assuming Contract is Surrendered
At End Of Period
Single Premium Variable Annuity
<TABLE>
<CAPTION>
Since Sub-Account
One Three Five Ten Sub-Acct Inception
Portfolio Type Portfolio YTD Year Year Year Year Inception Date
- ---------------------------------------------------------------------------------------------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Portfolios Alger American Growth 26.39 % 26.39 % 32.73 % N/A N/A 27.52 % 05/01/96
Alger American Leveraged Allcap 70.07 % 70.07 % 46.97 % N/A N/A 36.00 % 05/01/96
Alger American MidCap Growth 24.52 % 24.52 % 22.67 % N/A N/A 17.71 % 05/01/96
Alger American Small Capitalization 35.92 % 35.92 % 19.84 % N/A N/A 13.39 % 05/01/96
Berger Small Company Growth 83.27 % 83.27 % N/A N/A N/A 60.60 % 05/01/98
CLASF Capital 53.06 % 53.06 % 29.92 % 26.62 % N/A 20.32 % 05/01/93
CLASF Value Equity 12.81 % 12.81 % 13.27 % 13.66 % 10.48 % 10.46 % 12/04/89
Dreyfus Capital Appreciation 4.42 % 4.42 % N/A N/A N/A 9.30 % 05/01/98
Dreyfus Growth & Income 9.77 % 9.77 % 12.08 % N/A N/A 11.85 % 05/01/96
Dreyfus Socially Responsible 22.77 % 22.77 % 26.49 % N/A N/A 24.76 % 05/01/96
Fidelity VIP II Contrafund 17.03 % 17.03 % N/A N/A N/A 18.88 % 05/01/98
Fidelity VIP Growth 30.03 % 30.03 % 30.46 % 27.66 % N/A 24.36 % 05/01/94
Montgomery Growth 13.62 % 13.62 % N/A N/A N/A 14.70 % 05/01/97
Fidelity VIP II Index 500 13.34 % 13.34 % 24.27 % N/A N/A 23.79 % 05/01/96
Fidelity VIP III Growth Opportunities (2.67)% (2.67)% N/A N/A N/A 6.09 % 05/01/98
Seligman Frontier 9.48 % 9.48 % 7.25 % N/A N/A 13.60 % 05/01/95
------------------------------------------------------------------------------------- ---------- ---------
International Berger-IPT International 23.93 % 23.93 % N/A N/A N/A 13.17 % 05/01/97
CLASF International Equity 37.35 % 37.35 % 18.66 % N/A N/A 15.78 % 05/01/95
Fidelity VIP Overseas 35.14 35.14 % 18.68 % 15.33 % N/A 12.47 % 05/01/94
Montgomery Emerging Markets 57.01 % 57.01 % (2.25)% N/A N/A (1.19)% 05/01/96
------------------------------------------------------------------------------------- ---------- --------
Speciality Portfolio Seligman Communications & Information 77.71 % 77.71 % 42.97 % N/A N/A 32.16 % 05/01/95
------------------------------------------------------------------------------------- ---------- ---------
Balanced CLASF Managed 2.40 % 2.40 % 7.70 % 9.77 % 8.29 % 8.24 % 12/04/89
Fidelity VIP II Asset Manager 4.06 % 4.06 % 12.67 % 13.62 % N/A 11.27 % 05/01/94
------------------------------------------------------------------------------------- ---------- ---------
Fixed Income Portfolios CLASF Bond (10.65)% (10.65)% 1.27 % 4.72 % 5.25 % 5.18 % 12/04/89
Fidelity VIP High Income 1.16 % 1.16 % 3.84 % 8.86 % N/A 7.52 % 05/01/94
------------------------------------------------------------------------------------- ---------- ---------
Money Market CLASF Money Market 2.54 % (2.54)% 1.75 % 2.74 % 2.95 % 2.97 % 12/04/89
</TABLE>
The above figures are SEC required "standardized" performance returns which
include the deduction of all fees and charges, including the maximum possible
sales charge. These figures may not be applicable to your contract, since you
may not have to pay these early withdrawal charges. Please see the prospectus
for more details. CLASF refers to Canada Life of America Series Fund, Inc.
Fidelity VIP and Fidelity VIP II refer to Fidelity Investments Variable
Insurance Products Funds and Fidelity Variable Insurance Products Fund II.
Annuities including the Money Market sub-account are not deposits of,
obligations of, or guaranteed by any depository institution. They are not
insured by FDIC or any federal agency, and as such are subject to investment
risk including possible loss of principal invested. Although the Money Market
Fund seeks to preserve the value of your investment at $10.00 per share, it is
still possible to lose money by investing in the fund. The FIXED account
positions of a variable annuity (NOT the separate accounts) are received by
the issuing insurance company.
Variable Annuity Contract issued By: Canada Life Insurance Company of New York,
410 Saw Mill River Road, Ardsley, NY 10502, and distributed by its affiliate
Canada Life of America Financial Services, Inc. 6201 Pomera Ferry Road, N.W.
Atlanta GA 30339
Date of first use December 31, 1999
