<PAGE> 1
The attached are incorporated by reference herein to the annual reports filed by
and on behalf of the following:
Seligman Portfolios, Inc., filed March 2, 1998
Portfolios which include: Seligman Capital; Seligman Cash Management;
Seligman Common Stock; Seligman Bond; Seligman Income; Seligman
Henderson International; Seligman Communications and Information;
Seligman Frontier; Seligman Henderson Global Smaller Companies;
Seligman High-Yield Bond; Seligman Henderson Global Technology; and
Seligman Henderson Global Growth Opportunities
<PAGE> 2
[CANADA LIFE LETTERHEAD]
February, 1998
Dear Trillium(R) Policyholder:
Enclosed for your review is the Trillium Annual Report for the period ending
December 31, 1997. We encourage you to review this information and refer to it
as needed throughout the year.
Also, we are pleased to provide you with the enclosed two supplements to the
Trillium Variable Annuity prospectus dated May 1, 1997. The first supplement
provides the information on amended tax laws that allow for the use of both
Simple IRAs and Roth IRAs. For more information on the new IRA plans, please
contact your registered representative. The second supplement announces a
manager change for the Seligman Capital portfolio.
For your convenience, the "tear-off" below can be used to make additional
payments to your Trillium policy.
Thank you for selecting Trillium.
Sincerely,
/s/ Janice S. Blanchard
Janice Blanchard, ChFC, CLU
Senior Marketing Coordinator
- -------------------------------------------------------------------------------
Policyowner(s): ____________________________ Policy Number: _______________
If you are changing allocation, please complete the following:
__________ This payment only
__________ This payment and all future payments
__________ Re-allocate all current assets
__________% Cash Mgmt (21) __________% Comm & Info (27)
__________% Income (22) __________% Global Grwth Ops (28)
__________% Bond (23) __________% Global Smlr Cos (29)
__________% Common Stock (24) __________% Frontier (41)
__________% Capital (25) __________% High Yld Bond (42)
__________% International (26) __________% Global Tech (43)
__________% Fixed Account (Specify 1, 3, 5, 7 or 10 Years*)
Total must equal 100%. Please make checks payable to Canada Life Insurance
Company of America.
- -------------------- ---------------------------------
Date Policyowner's Signature
*Years 3, 5, 7 and 10 availability is subject to state approval
6201 Powers Ferry Rd., NW Atlanta, GA 30339
<PAGE> 3
VARIABLE ACCOUNT PERFORMANCE
<TABLE>
<CAPTION>
Average Annual Total Returns for Periods Ending December 31, 1997
Assuming Contract Continues
[TRILLIUM LOGO] Since Inception
A VARIABLE ANNUITY 1 Year 3 Year 5 Year Inception Date
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELIGMAN COMMUNICATIONS AND INFORMATION
PORTFOLIO 20.26% 20.55% -- 20.31% 10/4/94
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO 17.61 -- -- 12.10 5/1/96
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO 14.47 22.30 -- 22.42 10/4/94
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER
COMPANIES PORTFOLIO 1.76 11.06 -- 11.06 10/4/94
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO 19.36 18.90 11.37% 12.45 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH
OPPORTUNITIES PORTFOLIO 10.76 -- -- 5.12 5/1/96
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO 6.61 7.12 -- 7.19 5/3/93
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO 19.37 20.82 13.91 13.17 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO 12.19 10.90 6.85 8.25 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO 13.25 -- -- 12.10 5/1/95
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN BOND PORTFOLIO 7.23 7.35 4.62 5.20 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN CASH MANAGEMENT PORTFOLIO 3.84 3.70 2.81 3.48 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
SELIGMAN CASH MANAGEMENT PORTFOLIO'S current yield, annualized for the
seven-day period ending December 31, 1997, was 3.82%. TRILLIUM FIXED ACCOUNT'S
rate for the one year Guarantee Period was 4.75% as of December 31, 1997.
Rates for each Guarantee Period will be different and are subject to change on
a monthly basis. The 3,5,7, and 10 year Guarantee Periods are currently not
approved in all states. Please call 800-221-2783 for state approval and the
current rates on these Guarantee Periods.
Performance quoted represents past performance, and the investment return and
principal value of an investment will fluctuate so that units, when surrendered,
may be worth more or less than their original cost. Performance of the variable
portfolios reflects the performance of Seligman Portfolios, Inc., the underlying
investment vehicle for the Trillium Variable Account adjusted for the current
fees and charges (excluding CDSC) associated with Trillium. For performance
figures with CDSC, please see reverse side. The variable account commenced
operations on 5/3/93. The fixed account is held in the general account of
Canada Life Insurance Company of America (CLICA) and provides a guarantee, by
CLICA, against loss of principal, and guarantees payment of a specified current
rate of interest. Please contact your financial advisor or call Seligman
Financial Services at 800-221-2783 for a prospectus containing full details
including information on fees and charges. Please read the prospectus carefully
before investing or sending money.
There are specific risks associated with global technology investing such as
currency fluctuations, foreign taxation, differences in financial reporting
practices, and changes in political conditions. A portfolio that concentrates
its investments in one sector of the economy may be subject to greater share
price fluctuations than a more diversified portfolio. There are specific risks
associated with global investing such as currency fluctuations, foreign
taxation, differences in financial reporting practices, and changes in
political conditions. The securities in which the Seligman High-Yield Bond
Portfolio invests are subject to a greater risk of loss of principal and
interest then higher-rated investment grade bonds. Purchasers should carefully
assess the risks associated with an investment in the portfolio.
<PAGE> 4
<TABLE>
<CAPTION>
VARIABLE ACCOUNT PERFORMANCE
Average Annual Total Returns for Periods Ending December 31, 1997
Assuming Contract Is Surrendered at End of Period
Since Inception
1 Year 3 Year 5 Year Inception Date
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SELIGMAN COMMUNICATIONS AND INFORMATION
PORTFOLIO 14.86% 19.51% -- 19.39% 10/4/94
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL TECHNOLOGY PORTFOLIO 12.21 -- -- 9.12 5/1/96
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN FRONTIER PORTFOLIO 9.07 21.29 -- 21.54 10/4/94
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL SMALLER
COMPANIES PORTFOLIO (3.64) 9.83 -- 10.16 10/4/94
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN CAPITAL PORTFOLIO 13.96 17.82 11.02% 12.45 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HENDERSON GLOBAL GROWTH
OPPORTUNITIES PORTFOLIO 5.36 -- -- 1.97 5/1/96
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HENDERSON INTERNATIONAL PORTFOLIO 1.21 5.79 -- 6.59 5/3/93
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN COMMON STOCK PORTFOLIO 13.97 19.78 13.59 13.17 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN INCOME PORTFOLIO 6.79 9.67 6.43 8.25 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN HIGH-YIELD BOND PORTFOLIO 7.85 -- -- 10.70 5/1/95
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN BOND PORTFOLIO 1.83 6.03 4.16 5.20 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
SELIGMAN CASH MANAGEMENT PORTFOLIO (1.56) 2.28 2.32 3.48 6/21/88
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Issued by: Canada Life Insurance Company of America, 6201 Powers Ferry Road,
N.W., Atlanta, GA 30339
Distributed by: Seligman Financial Services, Inc., 100 Park Avenue, New York,
NY 10007 - (800) 221-2783
SELIGMAN CASH MANAGEMENT PORTFOLIO'S current yield, annualized for the
seven-day period ending December 31, 1997, was 3.82% TRILLIUM FIXED ACCOUNT'S
rate for the one year Guarantee Period was 4.75% as of December 31, 1997.
Rates for each Guarantee Period will be different and are subject to change on
a monthly basis. The 3,5,7, and 10 year Guarantee Periods are currently not
approved in all states. Please call 800-221-2783 for state approval and the
current rates on these Guarantee Periods.
Performance quoted represents past performance, and the investment return and
principal value of an investment will fluctuate so that units, when surrendered,
may be worth more or less than their original cost. Performance of the variable
portfolios reflects the performance of Seligman Portfolios, Inc., the underlying
investment vehicle for the Trillium Variable Account and is adjusted for
Trillium's current fees and charges including the maximum CDSC of 6%.
Trillium's CDSC for current premiums (premiums paid during the current and
previous six policy years) starts at 6% and decreases in steps, depending on the
number of policy years since the premium was paid, as follows: less than two
years, 6% at least two, but less than four, 5% at least four, but less than
five, 4% at least five, but less than six, 3% at least six, but less than seven,
2% at least seven, no charge. The variable account commenced operations on
5/3/93. The fixed account is held in the general account of Canada Life
Insurance Company of America (CLICA) and provides a guarantee, by CLICA, against
loss of principal, and guarantees payment of a specified current rate of
interest. Please contact your financial advisor or call Seligman Financial
Services at 800-221-2783 for a prospectus containing full details including
information on fees and charges. Please read the prospectus carefully before
investing or sending money.
<PAGE> 5
- ------------------------------------------------------------------------------
A N N U A L R E P O R T
- ------------------------------------------------------------------------------
TRILLIUM
A VARIABLE ANNUITY
December 31, 1997
<PAGE> 6
Total Returns*
For the Year Ended December 31, 1997
<TABLE>
<S> <C>
Sub-Accounts:
Bond........................................................ 7.31%
Capital..................................................... 19.44
Cash Management............................................. 3.92
Common Stock................................................ 19.45
Communications and Information.............................. 20.35
Frontier.................................................... 14.54
Global Growth Opportunities................................. 10.84
Global Smaller Companies.................................... 1.84
Global Technology........................................... 17.69
International............................................... 6.69
High-Yield Bond............................................. 13.32
Income...................................................... 12.27
</TABLE>
- ------------------
*Total returns of the Sub-Accounts are based on the performance of the Seligman
Portfolios, Inc., the underlying investment vehicle for the Canada Life of
America Variable Annuity Account 2 (Variable Annuity Account 2), less current
fees and charges. The returns exclude any contingent deferred sales charge
("CDSC") applicable to the Variable Annuity Account 2.
<PAGE> 7
Seligman Portfolios, Inc.
the underlying investment vehicle for
TRILLIUM
A Variable
Annuity
February 6, 1998
Dear Contract Owner:
J. & W. Seligman & Co. Incorporated, as Manager of Seligman Portfolios,
Inc. ("the Fund"), the underlying investment vehicle for your Trillium Variable
Annuity, and Canada Life Insurance Company of America, as issuer of The Canada
Life of America Variable Annuity Account 2 (the "Variable Account"), are pleased
to provide the enclosed audited financial statements and accompanying
information for the year ended December 31, 1997.
Nineteen ninety-seven was the seventh year of economic expansion in the
US, with real domestic growth of 3.8%. Consumer price inflation slowed to under
2%, interest rates moved steadily lower, productivity rose, and unemployment
levels reached 27-year lows. Meanwhile, the federal budget deficit virtually
disappeared and corporate profits posted a third consecutive year of strong
gains.
The domestic equity markets, as measured by the Dow Jones Industrial
Average (DJIA), brought returns in excess of 20% for a third consecutive year --
a feat unmatched in the DJIA's 101-year history. However, the majority of the
market advances occurred in the first seven months of the year, as the Asian
financial crisis increased uncertainty in the last quarter. Despite a brief
rally in May, and strong results when the equity markets broadened in the third
quarter, the valuations and performance of small-capitalization stocks continued
to trail those of large-capitalization stocks.
Although there were occasional setbacks due to fears of inflation and the
possibility of Federal Reserve Board interventions, 1997 was also a successful
year for the fixed-income markets. Once the effect of the March adjustment in
the federal funds rate subsided, yields progressively trended downward and
prices improved. The yield on the benchmark 30-year US Treasury bond ended the
year at 5.92%, significantly lower than the 6.64% yield on December 31, 1996.
Additionally, the yield on the benchmark three-month US Treasury bill reached
5.34% by year end, somewhat higher than the 5.17% yield on December 31, 1996.
Going forward, the outlook for US corporate profits in 1998 is more
uncertain due to expectations of modest economic growth and the unforeseeable
effects of the Asian crisis. There is also a risk of temporary price deflation
linked to the Asian crisis, as those economies seek to export their way out of
trouble. Barring problems caused by the tightness of the labor market, we expect
a continuation of the current low-inflation and low-interest- rate environment,
but no deflation.
Internationally, the year has been dominated by the continuing and
worsening economic and financial crisis in Asia. By year end, the crisis, which
started in Thailand, had spread throughout Asia to much larger economies such as
South Korea. The Japanese economy was also very weak, and stock markets
throughout Asia fell very sharply. Thus far, Europe has taken an optimistic view
of these events, and with the background of falling inflation and interest
rates, stock markets there have performed very well. Looking forward, the
problems in Asia are unlikely to be resolved quickly. Therefore, we will
continue to favor the European area as a whole and invest in some selected
emerging markets.
We thank you for your continued interest in Trillium, and look forward to
serving your investment needs in the many years to come.
Respectfully,
/s/ Allen Loney /s/ William C. Morris
D. Allen Loney William C. Morris
President Chairman
Canada Life Insurance Company of America J. & W. Seligman & Co. Incorporated
-- 1 --
<PAGE> 8
CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2
- ------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH COMMON COMMUNICATIONS
BOND CAPITAL MANAGEMENT STOCK AND INFORMATION
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSETS:
Investment in Seligman Portfolios, Inc., at market
value (see Note 3 for cost values)................. $4,982,006 $14,983,560 $7,291,206 $32,411,950 $73,680,233
Due (to) from Canada Life Insurance Company of
America (Note 6)................................... (24,292) 31,721 (34,328) 163,690 497,281
Receivable (payable) for investments sold (purchased) (3,775) (29,371) 126,689 (67,447) (177,566)
---------- ----------- ---------- ----------- -----------
NET ASSETS........................................... $4,953,939 $14,985,910 $7,383,567 $32,508,193 $73,999,948
========== =========== ========== =========== ===========
NET ASSETS ATTRIBUTABLE TO:
Policyholders' liability reserve..................... $4,953,939 $14,985,910 $7,383,567 $32,508,193 $73,999,948
---------- ----------- ---------- ----------- -----------
NET ASSETS........................................... $4,953,939 $14,985,910 $7,383,567 $32,508,193 $73,999,948
========== =========== ========== =========== ===========
NUMBER OF UNITS OUTSTANDING.......................... 303,296 486,445 5,291,742 992,580 4,053,481
========== =========== ========== =========== ===========
NET ASSET VALUE PER UNIT............................. $16.3337 $30.8070 $1.3953 $32.7512 $18.2559
========== =========== ========== =========== ===========
</TABLE>
- ------------------
See accompanying notes.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
CASH COMMON COMMUNICATIONS
BOND CAPITAL MANAGEMENT STOCK AND INFORMATION
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Dividend and capital gain distributions............. $248,056 $ 988,744 $427,461 $4,978,458 $18,996,507
Less mortality and expense risk charges (Note 6).... 53,705 189,814 122,936 412,662 1,019,729
-------- ---------- -------- ---------- -----------
NET INVESTMENT INCOME............................... 194,351 798,930 304,525 4,565,796 17,976,778
-------- ---------- -------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain from investments.................. 8,066 458,289 -- 488,619 2,491,942
Net unrealized appreciation (depreciation)
from investments................................. 66,018 899,608 -- (535,131) (8,926,535)
-------- ---------- -------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (Loss)
FROM INVESTMENTS.................................. 74,084 1,357,897 -- (46,512) (6,434,593)
-------- ---------- -------- ---------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................................... $268,435 $2,156,827 $304,525 $4,519,284 $11,542,185
======== ========== ======== ========== ===========
</TABLE>
- -------------------
See accompanying notes.
-- 2 --
<PAGE> 9
CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2
- ------------------------------------------------------------------------------
December 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GLOBAL
GROWTH SMALLER GLOBAL HIGH-YIELD
FRONTIER OPPORTUNITIES COMPANIES TECHNOLOGY INTERNATIONAL BOND INCOME SUB-ACCOUNTS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT COMBINED
----------- ------------- ----------- ----------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$34,585,073 $4,574,218 $19,510,887 $3,241,991 $8,727,870 $22,477,341 $8,281,764 $234,748,099
359,489 170,042 4,969 51,382 77,550 300,714 6,982 1,605,200
(56,437) 15,098 35,449 127 37 (62,232) (8,217) (227,645)
----------- ---------- ----------- ---------- ---------- ----------- ---------- ------------
$34,888,125 $4,759,358 $19,551,305 $3,293,500 $8,805,457 $22,715,823 $8,280,529 $236,125,654
=========== ========== =========== ========== ========== =========== ========== ============
$34,888,125 $4,759,358 $19,551,305 $3,293,500 $8,805,457 $22,715,823 $8,280,529 $236,125,654
----------- ---------- ----------- ---------- ---------- ----------- ---------- ------------
$34,888,125 $4,759,358 $19,551,305 $3,293,500 $8,805,457 $22,715,823 $8,280,529 $236,125,654
=========== ========== =========== ========== ========== =========== ========== ============
1,806,075 437,357 1,380,030 271,907 634,692 1,671,215 386,042 17,714,862
=========== ========== =========== ========== ========== =========== ========== ============
$ 19.3171 $ 10.8821 $ 14.1673 $ 12.1126 $ 13.8736 $ 13.5924 $ 21.4498
=========== ========== =========== ========== ========== =========== ==========
</TABLE>
- ------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GLOBAL
GROWTH SMALLER GLOBAL HIGH-YIELD
FRONTIER OPPORTUNITIES COMPANIES TECHNOLOGY INTERNATIONAL BOND INCOME SUB-ACCOUNTS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT COMBINED
----------- ------------- ----------- ----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 3,135,271 $ 50,905 $477,129 $ 446,558 $310,052 $1,745,758 $815,008 $32,619,907
463,654 48,616 296,841 34,443 131,043 253,491 124,822 3,151,756
----------- -------- -------- --------- -------- ---------- -------- -----------
2,671,617 2,289 180,288 412,115 179,009 1,492,267 690,186 29,468,151
----------- -------- -------- --------- -------- ---------- -------- -----------
878,611 77,328 265,007 190,061 251,193 390,673 77,550 5,577,339
500,110 153,700 (90,117) (324,750) 73,912 176,658 165,357 (7,841,170)
----------- -------- -------- --------- -------- ---------- -------- -----------
1,378,721 231,028 174,890 (134,689) 325,105 567,331 242,907 (2,263,831)
----------- -------- -------- --------- -------- ---------- -------- -----------
$ 4,050,338 $233,317 $355,178 $ 277,426 $504,114 $2,059,598 $933,093 $27,204,320
=========== ======== ======== ========= ======== ========== ======== ===========
</TABLE>
-- 3 --
<PAGE> 10
CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2
- ------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND CAPITAL CASH MANAGEMENT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------------ ------------------------ ------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------ ------------------------ ------------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)......... $ 194,351 $ 107,014 $ 798,930 $ 475,901 $ 304,525 $ 330,116
Net realized gain (loss)
on investments..................... 8,066 (2,688) 458,289 148,246 -- --
Net unrealized appreciation
(depreciation) on investments...... 66,018 (116,469) 899,608 52,121 -- --
---------- ---------- ----------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS......................... 268,435 (12,143) 2,156,827 676,268 304,525 330,116
---------- ---------- ----------- ---------- ---------- ----------
CAPITAL TRANSACTIONS:
Net increase (decrease) from unit
transactions (Note 5).............. 2,029,015 833,395 3,428,077 4,653,886 (1,162,636) 1,753,858
---------- ---------- ----------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS ARISING FROM CAPITAL
TRANSACTIONS....................... 2,029,015 833,395 3,428,077 4,653,886 (1,162,636) 1,753,858
---------- ---------- ----------- ---------- ---------- ----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS...................... 2,297,450 821,252 5,584,904 5,330,154 (858,111) 2,083,974
Net Assets, Beginning of Period ..... 2,656,489 1,835,237 9,401,006 4,070,852 8,241,678 6,157,704
---------- ---------- ----------- ---------- ---------- ----------
NET ASSETS, END OF PERIOD ........... $4,953,939 $2,656,489 $14,985,910 $9,401,006 $7,383,567 $8,241,678
========== ========== =========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
GLOBAL GROWTH GLOBAL GLOBAL
OPPORTUNITIES SMALLER COMPANIES TECHNOLOGY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------------ ------------------------ ------------------------
YEAR ENDED
YEAR 5/1/96* DECEMBER 31, YEAR 5/1/96*
ENDED TO ------------------------- ENDED TO
12/31/97 12/31/96 1997 1996 12/31/97 12/31/96
---------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)......... $ 2,289 $ (3,423) $ 180,288 $ 991,325 $ 412,115 $ 692
Net realized gain (loss) on
investments ...................... 77,328 1,198 265,007 177,060 190,061 3,894
Net unrealized appreciation
(depreciation) on investments...... 153,700 10,126 (90,117) (45,488) (324,750) 54,493
---------- ---------- ----------- ----------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.......... 233,317 7,901 355,178 1,122,897 277,426 59,079
---------- ---------- ----------- ----------- ---------- ----------
CAPITAL TRANSACTIONS:
Net increase (decrease)from unit
transactions (Note 5).............. 3,233,258 1,284,882 2,874,836 10,327,648 1,899,573 1,057,422
---------- ---------- ----------- ----------- ---------- ----------
NET INCREASE (DECREASE)IN NET
ASSETS ARISING FROM CAPITAL
TRANSACTIONS....................... 3,233,258 1,284,882 2,874,836 10,327,648 1,899,573 1,057,422
---------- ---------- ----------- ----------- ---------- ----------
TOTAL INCREASE IN NET ASSETS......... 3,466,575 1,292,783 3,230,014 11,450,545 2,176,999 1,116,501
Net Assets, Beginning of Period ..... 1,292,783 -- 16,321,291 4,870,746 1,116,501 --
---------- ---------- ----------- ----------- ---------- ----------
NET ASSETS, END OF PERIOD............ $4,759,358 $1,292,783 $19,551,305 $16,321,291 $3,293,500 $1,116,501
========== ========== =========== =========== ========== ==========
</TABLE>
- ----------------
* Commencement of operations.
See accompanying notes.
-- 4 --
<PAGE> 11
CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK COMMUNICATIONS AND FRONTIER
SUB-ACCOUNT INFORMATION SUB-ACCOUNT SUB-ACCOUNT
---------------------------- ---------------------------- ----------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
---------------------------- ---------------------------- ----------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 4,565,796 $ 2,678,713 $17,976,778 $ (667,768) $ 2,671,617 $ 2,509,079
488,619 195,563 2,491,942 (1,090,347) 878,611 341,465
(535,131) (425,986) (8,926,535) 5,505,927 500,110 405,499
----------- ----------- ----------- ----------- ----------- -----------
4,519,284 2,448,290 11,542,185 3,747,812 4,050,338 3,256,043
----------- ----------- ----------- ----------- ----------- -----------
7,593,933 8,521,175 8,108,126 14,971,955 4,928,379 11,790,123
----------- ----------- ----------- ----------- ----------- -----------
7,593,933 8,521,175 8,108,126 14,971,955 4,928,379 11,790,123
----------- ----------- ----------- ----------- ----------- -----------
12,113,217 10,969,465 19,650,311 18,719,767 8,978,717 15,046,166
20,394,976 9,425,511 54,349,637 35,629,870 25,909,408 10,863,242
----------- ----------- ----------- ----------- ----------- -----------
$32,508,193 $20,394,976 $73,999,948 $54,349,637 $34,888,125 $25,909,408
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL HIGH-YIELD BOND INCOME SUB-ACCOUNTS
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT COMBINED
------------------------- --------------------------- --------------------------- ------------------------------
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------- --------------------------- --------------------------- ------------------------------
1997 1996 1997 1996 1997 1996 1997 1996
---------- ---------- ----------- ----------- ---------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 179,009 $ 106,747 $ 1,492,267 $ 644,240 $ 690,186 $ 423,903 $ 29,468,151 $ 7,596,539
251,193 107,485 390,673 143,025 77,550 (17,889) 5,577,339 7,012
73,912 112,177 176,658 45,075 165,357 (105,663) (7,841,170) 5,491,812
---------- ---------- ----------- ----------- ---------- ------------ ------------- ------------
504,114 326,409 2,059,598 832,340 933,093 300,351 27,204,320 13,095,363
---------- ---------- ----------- ----------- ---------- ------------ ------------- ------------
1,173,767 2,728,950 9,388,102 7,503,654 (747,332) 3,023,461 42,747,098 68,450,409
---------- ---------- ----------- ----------- ---------- ------------ ------------- ------------
1,173,767 2,728,950 9,388,102 7,503,654 (747,332) 3,023,461 42,747,098 68,450,409
---------- ---------- ----------- ----------- ---------- ------------ ------------- ------------
1,677,881 3,055,359 11,447,700 8,335,994 185,761 3,323,812 69,951,418 81,545,772
7,127,576 4,072,217 11,268,123 2,932,129 8,094,768 4,770,956 166,174,236 84,628,464
---------- ---------- ----------- ----------- ---------- ------------ ------------- ------------
$8,805,457 $7,127,576 $22,715,823 $11,268,123 $8,280,529 $8,094,768 $236,125,654 $166,174,236
========== ========== =========== =========== ========== ========== ============ ============
</TABLE>
-- 5 --
<PAGE> 12
Canada Life of America Variable Annuity Account 2
- ------------------------------------------------------------------------------
Notes to Financial Statements
- ------------------------------------------------------------------------------
1. Organization
Canada Life of America Variable Annuity Account 2 ("Variable Annuity Account 2")
was established on February 26, 1993, as a separate investment account of Canada
Life Insurance Company of America ("CLICA") to receive and invest premium
payments under variable annuity policies issued by CLICA. Variable Annuity
Account 2 is registered as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of Variable Annuity Account 2 are invested
in the shares of Seligman Portfolios, Inc. (the "Fund"), a diversified,
open-end, management investment company. Variable Annuity Account 2 has twelve
sub-accounts, each of which invests only in the shares of the corresponding
portfolio of the Fund.
The assets of Variable Annuity Account 2 are the property of CLICA. The portion
of Variable Annuity Account 2 assets applicable to the policies will not be
charged with liabilities arising out of any other business CLICA may conduct.
2. Significant Accounting Policies
Investments
Investments in shares of the Fund are valued at the reported net asset values
of the respective portfolios. Realized gains and losses are computed on the
basis of average cost. The difference between cost and current market value of
investments owned is recorded as an unrealized gain or loss on investments.
Dividends
Dividends are recorded on the ex-dividend date and reflect the dividends
declared by the Fund from their accumulated net investment income and net
realized investment gains. Dividends in the Cash Management Portfolio are
declared daily and paid monthly. Dividends in the Bond, Capital, Common Stock,
Communications and Information, Frontier, Global Growth Opportunities, Global
Smaller Companies, Global Technology, International, High-Yield Bond, and Income
Portfolios are declared and paid annually. Dividends paid to the Variable
Annuity Account 2 are reinvested in additional shares of the respective
portfolio of the Fund at the net asset value per share.
Federal Income Taxes
Variable Annuity Account 2 is not taxed separately because the operations of
Variable Annuity Account 2 will be included in the federal income tax return of
CLICA, which is taxed as a "life insurance company" under the provisions of the
Internal Revenue Code.
3. Investments
The investment by Variable Annuity Account 2 in the individual portfolios of
the Fund at December 31, 1997, is as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES MARKET PRICE MARKET VALUE COST
---------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Bond 486,524 $10.24 $ 4,982,006 $ 4,999,256
Capital 827,821 18.10 14,983,560 13,987,584
Cash Management 7,291,206 1.00 7,291,206 7,291,206
Common Stock 1,990,906 16.28 32,411,950 33,630,087
Communications and Information 5,628,742 13.09 73,680,233 80,714,115
Frontier 2,191,703 15.78 34,585,073 33,255,815
Global Growth Opportunities 414,707 11.03 4,574,218 4,410,392
Global Smaller Companies 1,503,150 12.98 19,510,887 19,512,442
Global Technology 306,137 10.59 3,241,991 3,512,248
International 644,599 13.54 8,727,870 8,330,282
High-Yield Bond 1,893,626 11.87 22,477,341 22,215,782
Income 766,830 10.80 8,281,764 8,409,188
------------ ------------
$234,748,099 $240,268,397
============ ============
</TABLE>
4. Security Purchases and Sales
The aggregate cost of purchases and the proceeds from sales of investments for
the year ended December 31, 1997, are presented below:
<TABLE>
<CAPTION>
AGGREGATE COST OF PURCHASES PROCEEDS FROM SALES
---------------------------- ------------------
<S> <C> <C>
Bond $ 3,238,306 $ 995,030
Capital 9,169,566 4,922,299
Cash Management 27,253,771 27,965,801
Common Stock 18,212,555 6,102,269
Communications and Information 45,843,027 19,958,374
Frontier 16,902,517 9,529,348
Global Growth Opportunities 4,505,053 1,295,885
Global Smaller Companies 7,787,221 4,676,548
Global Technology 4,325,695 2,066,203
International 3,725,088 2,405,695
High-Yield Bond 19,905,913 9,035,339
Income 2,815,049 2,841,618
------------ -----------
$163,683,761 $91,794,409
============ ===========
</TABLE>
-- 6 --
<PAGE> 13
CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2
5. SUMMARY OF CHANGES FROM UNIT TRANSACTIONS
The following table represents a summary of changes from unit transactions
attributable to contract holders for the periods indicated. The Global Growth
Opportunities and Global Technology Sub-Accounts commenced operations on May 1,
1996.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
-------------------------------- --------------------------------
UNITS AMOUNT UNITS AMOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BOND SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 261,683 $ 4,117,039 132,349 $ 1,978,551
Terminated contracts and net transfers out (132,913) (2,088,024) (76,585) (1,145,156)
----------- ----------- ----------- -----------
128,770 2,029,015 55,764 833,395
----------- ----------- ----------- -----------
CAPITAL SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 304,990 8,703,658 248,098 6,192,212
Terminated contracts and net transfers out (183,032) (5,275,581) (61,479) (1,538,326)
----------- ----------- ----------- -----------
121,958 3,428,077 186,619 4,653,886
----------- ----------- ----------- -----------
CASH MANAGEMENT SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 28,517,454 39,834,422 16,031,782 22,304,326
Terminated contracts and net transfers out (29,363,850) (40,997,058) (14,650,097) (20,550,468)
----------- ----------- ----------- -----------
(846,396) (1,162,636) 1,381,685 1,753,858
----------- ----------- ----------- -----------
COMMON STOCK SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 511,179 15,875,524 420,292 10,665,942
Terminated contracts and net transfers out (262,447) (8,281,591) (82,681) (2,144,767)
----------- ----------- ----------- -----------
248,732 7,593,933 337,611 8,521,175
----------- ----------- ----------- -----------
COMMUNICATIONS AND INFORMATION
SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 1,120,831 31,154,764 2,136,400 29,690,542
Terminated contracts and net transfers out (650,150) (23,046,638) (1,068,840) (14,718,587)
----------- ----------- ----------- -----------
470,681 8,108,126 1,067,560 14,971,955
----------- ----------- ----------- -----------
FRONTIER SUB-ACCOUNT
ACCUMULATION UNITS:
Contract purchases and net transfers in 1,123,395 17,074,867 813,870 14,406,146
Terminated contracts and net transfers out (853,657) (12,146,488) (63,193) (2,616,023)
----------- ----------- ----------- -----------
269,738 4,928,379 750,677 11,790,123
----------- ----------- ----------- -----------
GLOBAL GROWTH OPPORTUNITIES SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 482,602 5,012,445 163,620 1,572,553
Terminated contracts and net transfers out (176,920) (1,779,187) (31,945) (287,671)
----------- ----------- ----------- -----------
305,682 3,233,258 131,675 1,284,882
----------- ----------- ----------- -----------
GLOBAL SMALLER COMPANIES SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 992,939 8,591,113 890,029 11,994,060
Terminated contracts and net transfers out (786,157) (5,716,277) (125,651) (1,666,412)
----------- ----------- ----------- -----------
206,782 2,874,836 764,378 10,327,648
----------- ----------- ----------- -----------
GLOBAL TECHNOLOGY SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 332,006 3,909,248 127,107 1,242,668
Terminated contracts and net transfers out (168,582) (2,009,675) (18,624) (185,246)
----------- ----------- ----------- -----------
163,424 1,899,573 108,483 1,057,422
----------- ----------- ----------- -----------
INTERNATIONAL SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 107,800 4,319,259 327,752 4,120,757
Terminated contracts and net transfers out (21,223) (3,145,492) (109,617) (1,391,807)
----------- ----------- ----------- -----------
86,577 1,173,767 218,135 2,728,950
----------- ----------- ----------- -----------
</TABLE>
-- 7 --
<PAGE> 14
CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER 31, 1996
------------------------------- ------------------------------
UNITS AMOUNT UNITS AMOUNT
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
HIGH-YIELD BOND SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 1,917,673 $19,330,600 848,850 $ 9,721,724
Terminated contracts and net transfers out (1,185,914) (9,942,498) (185,110) (2,218,070)
---------- ----------- --------- -----------
731,759 9,388,102 663,740 7,503,654
---------- ----------- --------- -----------
INCOME SUB-ACCOUNT
Accumulation Units:
Contract purchases and net transfers in 156,332 3,156,221 224,340 4,172,168
Terminated contracts and net transfers out (193,980) (3,903,553) (62,752) (1,148,707)
---------- ----------- --------- -----------
(37,648) (747,332) 161,588 3,023,461
---------- ----------- --------- -----------
Net increase from unit transactions $42,747,098 $68,450,409
=========== ===========
</TABLE>
6. MORTALITY AND EXPENSE RISK (M AND E) CHARGES
CLICA assumes mortality and expense risks related to the operations of Variable
Annuity Account 2 and deducts a charge equal to an effective annual rate of
1.25% of the net asset value of each of the Funds at each valuation period. In
addition, at each valuation period from January 1, 1997, through September 30,
1997, an effective annual rate of 0.35% of the net asset value of each
Sub-Account was deducted as daily administration fees. Effective October 1,
1997, the daily administration fee was lowered to 0.15% of the net asset value
of each Sub-Account.
7. NET ASSETS
Net assets at December 31, 1997, consisted of the following:
<TABLE>
<CAPTION>
ACCUMULATED NET
INVESTMENT NET UNREALIZED
ACCUMULATED INCOME REALIZED APPRECIATION
UNIT M AND E AND CAPITAL GAIN ON (DEPRECIATION) COMBINED
SUB-ACCOUNT TRANSACTIONS CHARGES GAINS INVESTMENTS ON INVESTMENTS NET ASSETS
- ----------- ------------ ------------ ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Bond $ 4,521,600 $ (109,917) $ 551,488 $ 8,018 $ (17,250) $ 4,953,939
Capital 11,740,916 (355,517) 2,010,505 594,030 995,976 14,985,910
Cash Management 6,753,526 (347,125) 977,166 -- -- 7,383,567
Common Stock 24,500,824 (712,480) 9,237,074 700,912 (1,218,137) 32,508,193
Communications and Information 60,049,510 (1,913,359) 21,311,676 1,586,003 (7,033,882) 73,999,948
Frontier 26,783,559 (772,194) 6,306,959 1,240,543 1,329,258 34,888,125
Global Growth Opportunities 4,518,140 (53,332) 52,198 78,526 163,826 4,759,358
Global Smaller Companies 17,772,703 (458,481) 1,772,811 465,827 (1,555) 19,551,305
Global Technology 2,956,995 (42,294) 455,101 193,955 (270,257) 3,293,500
International 7,706,388 (244,532) 575,495 370,518 397,588 8,805,457
High-Yield Bond 19,725,121 (382,716) 2,569,531 542,328 261,559 22,715,823
Income 6,653,053 (293,171) 1,995,271 52,800 (127,424) 8,280,529
------------ ----------- ----------- ---------- ----------- ------------
$193,682,335 $(5,685,118) $47,815,275 $5,833,460 $(5,520,298) $236,125,654
============ =========== =========== ========== =========== ============
</TABLE>
8. Unit Values
Unit values as reported are calculated by dividing total net assets by total
units for each Sub-Account.
-- 8 --
<PAGE> 15
CANADA LIFE OF AMERICA VARIABLE ANNUITY ACCOUNT 2
- ------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------
Board of Directors of Canada Life Insurance Company of America
and Contract Owners of Canada Life of America Variable Annuity Account 2
We have audited the accompanying statement of net assets of Canada Life of
America Variable Annuity Account 2 (comprising, respectively, the Bond, Capital,
Cash Management, Common Stock, Communications and Information, Frontier, Global
Growth Opportunities, Global Smaller Companies, Global Technology,
International, High-Yield Bond, and Income Sub-Accounts) as of December 31,
1997, and the related statements of operations and changes in net assets for the
periods indicated therein. 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
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, 1997, 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
Sub-Accounts constituting the Canada Life of America Variable Annuity Account 2
at December 31, 1997, and the results of their operations and the changes in
their net assets for each of the periods indicated therein in conformity with
generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Atlanta, Georgia
February 6, 1998
-- 9 --
