<PAGE>
[LETTERHEAD OF CANADA LIFE INSURANCE COMPANY OF AMERICA APPEARS HERE]
February, 1999
Dear Trillium(R) Policyholder:
Enclosed for your review is the Trillium Annual Report for the period ending
December 31, 1998. We encourage you to review this information and refer to it
as needed throughout the year.
Thank you for selecting Trillium for your financial needs.
Sincerely,
/s/ Ronald E. Beettam
Ronald E. Beettam
Encl.
<PAGE>
[LETTERHEAD OF CANADA LIFE INSURANCE COMPANY OF AMERICA APPEARS HERE]
TRILLIUM(R)
A Variable Annuity
ADDITIONAL PREMIUM PAYMENT FORM
Please complete the following information:
<TABLE>
<S> <C>
OWNER:_______________________ AMOUNT OF PREMIUM PAYMENT:
ANNUITANT:___________________ $____________
POLICY NO.:__________________
OWNER'S SSN/TIN:_____________ IF YOU ARE CHANGING ALLOCATION
PLEASE COMPLETE THE FOLLOWING:
________ THIS PAYMENT ONLY
________ THIS PAYMENT AND ALL FUTURE PYMTS
________ RE-ALLOCATE ALL CURRENT ASSETS
</TABLE>
CASH MGMT (21) ___% INCOME (22) ___% SMALL-CAP VALUE (44) ___%
BOND (23) ___% COM STOCK (24) ___% LARGE-CAP VALUE (45) ___%
CAPITAL (25) ___% INTERNATIONAL (26) ___%
COMM & INFO (27) ___% GBL GROWTH OPP (28) ___%
GBL SMLR CO (29) ___% FRONTIER (41) ___%
HIGH YLD BOND (42) ___% GLOBAL TECH (43) ___%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
FIXED ACCOUNT OPTIONS*
<S> <C> <C> <C> <C>
___% 1 Yr. (002) ___% 3 Yr. (303) ___% 5 Yr. (305) ___% 7 Yr. (307) ___% 10 Yr. (310)
*The Fixed Accounts and/or the Guarantee Periods may not be available in all states.
- ------------------------------------------------------------------------------------------------------
</TABLE>
Total allocation must equal 100%
OWNER'S SIGNATURE _______________________ DATE _______________
JOINT OWNER'S SIGNATURE _______________________ DATE _______________
PLEASE MAKE CHECKS PAYABLE TO CANADA LIFE INSURANCE COMPANY OF AMERICA
INFORMATION FOR QUALIFIED POLICY CONTRIBUTIONS
(THIS SECTION MUST BE COMPLETED)
IS THIS A ROLLOVER? _____YES _____NO
IF YES, WHAT TYPE? _____________________ PLEASE NOTE: CONTRIBUTIONS FOR PRIOR
TAX YEAR CANNOT BE MADE
CONTRIBUTION $___________ FOR __________ AFTER APRIL 15TH OF THE
CURRENT TAX YEAR.
CONTRIBUTION $___________ FOR __________
PLEASE DIRECT ANY QUESTIONS REGARDING YOUR POLICY TO YOUR REGISTERED
REPRESENTATIVE OR TO OUR VARIABLE ANNUITY DEPARTMENT AT (800) 905-1959.
OUR VARIABLE ANNUITY ADMINISTRATORS CAN NOT ADVISE YOU ON THE SUITABILITY OF
YOUR PAYMENT. PLEASE CONTACT YOUR REGISTERED REPRESENTATIVE TO DISCUSS
SUITABILITY ISSUES PRIOR TO SUBMITTING YOUR ADDITIONAL PREMIUM PAYMENT.
Variable Annuities are issued by Canada Life Insurance Company of America and
offered through its subsidiary, Canada Life of America Financial Services, Inc.
(member NASD).
<PAGE>
TRILLIUM
A VARIABLE ANNUITY
VARIABLE ACCOUNT PERFORMANCE
----------------------------
Average Annual Total Returns for Periods Ending December 31, 1998
Assuming Contract Continues
<TABLE>
<CAPTION>
Since Inception
1 Year 3 Year 5 Year 10 Year Inception Date
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Seligman Communications and Information
Portfolio 34.50% 20.08% -- -- 23.53% 10/4/94
- -------------------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Technology Portfolio 34.81 -- -- -- 20.13 5/1/96
- -------------------------------------------------------------------------------------------------------------------------
Seligman Frontier Portfolio (2.90) 10.65 -- -- 15.91 10/4/94
- -------------------------------------------------------------------------------------------------------------------------
Seligman Small-Cap Value Portfolio (new portfolio) (17.83)* 5/1/98
- -------------------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Smaller
Companies Portfolio 5.02 7.64 -- -- 9.77 10/4/94
- -------------------------------------------------------------------------------------------------------------------------
Seligman Capital Portfolio 20.41 17.42 13.54% 14.00% 13.20 6/21/88
- -------------------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Growth
Opportunities Portfolio 19.82 -- -- -- 10.41 5/1/96
- -------------------------------------------------------------------------------------------------------------------------
Seligman Large-Cap Value Portfolio (new portfolio) (1.25)* 5/1/98
- -------------------------------------------------------------------------------------------------------------------------
Seligman Common Stock Portfolio 22.35 19.93 16.37 14.75 14.04 6/21/88
- -------------------------------------------------------------------------------------------------------------------------
Seligman Henderson International Portfolio 14.12 8.61 6.86 -- 8.39 5/3/93
- -------------------------------------------------------------------------------------------------------------------------
Seligman Income Portfolio 6.18 7.67 6.00 8.51 8.08 6/21/88
- -------------------------------------------------------------------------------------------------------------------------
Seligman High-Yield Bond Portfolio (0.46) 8.31 -- -- 8.53 5/1/95
- -------------------------------------------------------------------------------------------------------------------------
Seligman Bond Portfolio 6.62 4.01 4.64 5.53 5.35 6/21/88
- -------------------------------------------------------------------------------------------------------------------------
Seligman Cash Management Portfolio 3.89 3.79 3.44 3.58 3.53 6/21/88
- -------------------------------------------------------------------------------------------------------------------------
*Not annualized.
</TABLE>
Seligman Cash Management Portfolio's current yield, annualized for the seven-day
period ending December 31, 1998, was 3.31%. Trillium Fixed Account's rate for
the one year Guarantee Period was 4.50% as of December 31, 1998. 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 Advisors 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. A portfolio with fewer holdings may be subject to greater volatility
than a portfolio with a greater number of holdings. The securities in which the
Seligman High-Yield Bond Portfolio invests are subject to a greater risk of loss
of principal and interest than higher-rated investment grade bonds. Purchasers
should carefully assess the risks associated with an investment in the
portfolio.
4
<PAGE>
VARIABLE ACCOUNT PERFORMANCE
----------------------------
Average Annual Total Returns for Periods Ending December 31, 1998
Assuming Contract Is Surrendered at End of Period
<TABLE>
<CAPTION>
Since Inception
1 Year 3 Year 5 Year 10 Year Inception Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Seligman Communications and Information
Portfolio 29.10% 19.03% -- -- 23.10% 10/4/94
- -----------------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Technology Portfolio 29.41 -- -- -- 18.88 5/1/96
- -----------------------------------------------------------------------------------------------------------------------
Seligman Frontier Portfolio (8.30) 9.41 -- -- 15.38 10/4/94
- -----------------------------------------------------------------------------------------------------------------------
Seligman Small-Cap Value Portfolio (new portfolio) (23.23)* 5/1/98
- -----------------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Smaller
Companies Portfolio (0.38) 6.33 -- -- 9.13 10/4/94
- -----------------------------------------------------------------------------------------------------------------------
Seligman Capital Portfolio 15.01 16.32 13.21% 14.00% 13.20 6/21/88
- -----------------------------------------------------------------------------------------------------------------------
Seligman Henderson Global Growth
Opportunities Portfolio 14.42 -- -- -- 8.97 5/1/96
- -----------------------------------------------------------------------------------------------------------------------
Seligman Large-Cap Value Portfolio (new portfolio) (6.65)* 5/1/98
- -----------------------------------------------------------------------------------------------------------------------
Seligman Common Stock Portfolio 16.95 18.88 16.07 14.75 14.04 6/21/88
- -----------------------------------------------------------------------------------------------------------------------
Seligman Henderson International Portfolio 8.72 7.32 6.44 -- 8.07 5/3/93
- -----------------------------------------------------------------------------------------------------------------------
Seligman Income Portfolio 0.78 6.36 5.57 8.51 8.08 6/21/88
- -----------------------------------------------------------------------------------------------------------------------
Seligman High-Yield Bond Portfolio (5.86) 7.01 -- -- 7.54 5/1/95
- -----------------------------------------------------------------------------------------------------------------------
Seligman Bond Portfolio 1.22 2.61 4.19 5.53 5.35 6/21/88
- -----------------------------------------------------------------------------------------------------------------------
Seligman Cash Management Portfolio (1.51) 2.38 2.96 3.58 3.53 6/21/88
- -----------------------------------------------------------------------------------------------------------------------
* Not annualized.
Issued by: Canada Life Insurance Company of America, 6201 Powers Ferry Road, N.W., Atlanta, GA 30339
Distributed by: Seligman Advisors, Inc., 100 Park Avenue, New York, NY 10017 . (800) 221-2783
</TABLE>
Seligman Cash Management Portfolio's current yield, annualized for the seven-day
period ending December 31, 1998, was 3.31% Trillium Fixed Account's rate for the
one year Guarantee Period was 4.50% as of December 31, 1998. 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 Advisors 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.
5
<PAGE>
- -------------------------------------------------------------------------------
A N N U A L R E P O R T
- -------------------------------------------------------------------------------
TRILLIUM
A VARIABLE ANNUITY
December 31, 1998
<PAGE>
Total Returns*
For the Year Ended December 31, 1998
Sub-Accounts:
Bond............................................. 6.70%
Capital.......................................... 20.49
Cash Management.................................. 3.96
Common Stock..................................... 22.43
Communications and Information................... 34.59
Frontier......................................... (2.83)
Global Growth Opportunities...................... 19.91
Global Smaller Companies......................... 5.10
Global Technology................................ 34.89
International.................................... 14.20
High-Yield Bond.................................. (0.38)
Income........................................... 6.26
Large-Cap Value.................................. (1.20)**
Small-Cap Value.................................. (17.78)**
- -------------------------
* 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.
** From commencement of operations, May 1, 1998.
<PAGE>
Seligman Portfolios, Inc. the
underlying investment vehicle for
--------------------------------------
TRILLIUM
A Variable
Annuity
--------------------------------------
February 5, 1999
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, 1998.
In 1998, for the eighth straight year, the US economy expanded, with real
domestic growth of 3.9%. Once again, large-cap US stocks responded to this
favorable environment with strong performance. The market, as measured by the
Standard & Poor's 500 Composite Stock Price Index (S&P 500), rose 28.58% -- the
first time in history that this widely watched index returned more than 20% for
four years in a row.
Although 1998 will certainly be recorded as another stellar year for equities,
the market gave investors a bumpy ride along the way. In fact, such wide market
swings haven't been seen since 1987. A number of factors contributed to this
volatility -- some domestic, many international. The global economic background
in 1998 was one of steadily deteriorating conditions as the financial crisis,
originally limited to a few Asian countries, spread throughout other regions.
The global turmoil continued when Russia defaulted on its debt and devalued its
currency, and investors everywhere feared that Brazil and other Latin American
countries would follow.
In addition to high volatility, last year's market was notable for being
extremely narrow, with the exceptional performances of a few stocks distorting
the total picture. In fact, 197 stocks, representing 39% of the S&P 500,
actually lost market value during the last 12 months. Investment results between
market caps were also more widely dispersed than usual. The disparity was almost
unprecedented. For example, the large-capitalization-dominated S&P 500 rose
28.58%, while the Russell 2000 Index of smaller-capitalization stocks actually
declined 2.55%.
International markets began the year with generally strong performances,
fueled by expectations of lower inflation and falling interest rates. Beginning
in mid-July, however, the combination of the Russian debt default, speculative
attacks against emerging market currencies, and a worse-than-expected economic
impact from Asia on the rest of the world led to sharp market corrections. Then,
in October, markets recovered as interest rates were cut in many parts of the
world and a coordinated program of support for the world's financial system was
implemented.
Fixed-income markets posted strong returns for the year but, as in the equity
markets, some segments performed notably better than others. US Treasury bonds,
in particular, benefitted from a confluence of events that drove prices higher
and yields to 30-year lows. US government-backed bonds, which carry the highest
credit quality, were in great demand as the global financial turmoil produced a
"flight to quality" around the world. Further boosting the US government bond
market was the Federal Reserve Board's lowering of the federal-funds rate, and a
federal budget surplus which caused the overall supply of bonds to decrease.
In 1999, we believe gross domestic product (GDP) should slow to about 2.5
percent. We expect a challenging financial market environment with ongoing
economic uncertainties and continued high volatility. Nonetheless, we see
moderately positive returns for the year in line with our lower growth
projections. In addition, low inflation, falling or stable interest rates,
improving prospects in Asia, and a Federal Reserve leading the fight against
global recession should all provide support for US markets. We expect that the
equity market, which began to show signs of broadening in the fourth quarter of
1998, will continue to broaden in 1999. If this trend continues, small- and mid-
cap stocks should begin to benefit from the favorable equity environment to a
greater extent.
Thank you for your continued support of Trillium. We look forward to
continuing to serve your investment needs in 1999.
Respectfully,
/s/ Ronald E. Beettam /s/ William C. Morris
Ronald E. Beettam William C. Morris President
President Chairman
Canada Life Insurance Company of America J. & W. Seligman & Co. Incorporated
-- 1 --
<PAGE>
Canada Life of America Variable Annuity Account 2
- -------------------------------------------------------------------------
Statement of Net Assets December 31, 1998
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH COMMON COMMUNICATIONS
BOND CAPITAL MANAGEMENT STOCK AND INFORMATION FRONTIER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS:
Investments in Seligman Portfolios, Inc.,
at market value (see Note 3 for
cost values)........................ $ 5,304,699 $18,116,104 $9,046,059 $42,120,381 $98,001,344 $31,812,968
Due to Canada Life Insurance
Company of America (Note 6)......... (31,787) (98,494) (83,149) (255,427) (620,386) (194,791)
----------- ----------- ---------- ----------- ----------- -----------
NET ASSETS............................... $ 5,272,912 $18,017,610 $8,962,910 $41,864,954 $97,380,958 $31,618,177
=========== =========== ========== =========== =========== ===========
NET ASSETS ATTRIBUTABLE TO:
Policyholders' liability reserve......... $ 5,272,912 $18,017,610 $8,962,910 $41,864,954 $97,380,958 $31,618,177
----------- ------------ ---------- ----------- ----------- -----------
NET ASSETS............................... $ 5,272,912 $18,017,610 $8,962,910 $41,864,954 $97,380,958 $31,618,177
=========== =========== ========== =========== =========== ===========
NUMBER OF UNITS OUTSTANDING.............. 302,558 485,399 6,178,761 1,044,087 3,963,361 1,684,443
=========== =========== ========== =========== =========== ===========
NET ASSET VALUE PER UNIT................. $ 17.4278 $ 37.192 $ 1.4506 $ 40.0972 $ 24.5703 $ 18.7707
=========== =========== ========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
GLOBAL GLOBAL
GROWTH SMALLER GLOBAL HIGH-YIELD
OPPORTUNITIES COMPANIES TECHNOLOGY INTERNATIONAL BOND INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS:
Investment in Seligman Portfolios, Inc.,
at market value (see Note 3 for
cost values)......................... $7,928,657 $19,631,895 $5,303,774 $9,437,165 $31,040,970 $9,042,491
Due to Canada Life Insurance
Company of America (Note 6).......... (41,683) (125,413) (32,739) (69,676) (175,769) (56,377)
---------- ----------- ---------- ----------- ----------- ----------
NET ASSETS................................ $7,886,974 $19,506,482 $5,271,035 $9,367,489 $30,865,201 $8,986,114
========== =========== ========== =========== =========== ==========
NET ASSETS ATTRIBUTABLE TO:
Policyholders' liability reserve.......... $7,886,974 $19,506,482 $5,271,035 $9,367,489 $30,865,201 $8,986,114
========== =========== ========== =========== =========== ==========
NET ASSETS................................ $7,886,974 $19,506,482 $5,271,035 $9,367,489 $30,865,201 $8,986,114
========== =========== ========== =========== =========== ==========
NUMBER OF UNITS OUTSTANDING............... 604,445 1,310,083 322,591 591,251 2,279,540 394,266
========== =========== ========== =========== =========== ==========
NET ASSET VALUE PER UNIT.................. $ 13.0483 $ 14.8895 $ 16.3397 $ 15.8435 $ 13.5401 $ 22.7920
========== =========== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP
VALUE VALUE SUB-ACCOUNTS
SUB-ACCOUNT SUB-ACCOUNT COMBINED
----------- ----------- --------
<S> <C> <C> <C>
NET ASSETS:
Investment in Seligman Portfolios, Inc.,
at market value (see Note 3 for
cost values)......................... $ 3,594,158 $ 2,216,575 $ 292,597,240
Due to Canada Life Insurance
Company of America (Note 6).......... (15,732) (7,378) (1,808,801)
----------- ----------- -------------
NET ASSETS................................ $ 3,578,426 $ 2,209,197 $ 290,788,439
=========== =========== =============
NET ASSETS ATTRIBUTABLE TO:
Policyholders' liability reserve.......... $ 3,578,426 $ 2,209,197 $ 290,788,439
----------- ----------- -------------
NET ASSETS................................ $ 3,578,426 $ 2,209,197 $ 290,788,439
=========== =========== =============
NUMBER OF UNITS OUTSTANDING............... 362,174 268,697 19,791,656
=========== =========== =============
NET ASSET VALUE PER UNIT.................. $ 9.8804 $ 8.2219
=========== ===========
</TABLE>
- -----------------------------
See accompanying notes.
--2 and 3--
<PAGE>
Canada Life of America Variable Annuity Account 2
- -------------------------------------------------------------------------------
Statement of Operations For the Year Ended December 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CASH COMMON COMMUNICATIONS
BOND CAPITAL MANAGEMENT STOCK AND INFORMATION FRONTIER
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Dividend and capital
gain distributions..................... $328,609 $1,017,743 $461,985 $3,199,922 $3,856,403 $ --
Less mortality and expense risk
charges (Note 6)....................... 67,355 255,069 122,773 520,906 1,131,906 477,598
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS)............. 261,254 792,674 339,212 2,679,016 2,724,807 (477,598)
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments.. 75,857 640,187 -- 737,506 (9,244) (30,358)
Net unrealized appreciation
(depreciation) of investments.......... (24,918) 1,474,942 -- 4,133,708 22,974,473 (588,267)
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS......................... 50,939 2,115,129 -- 4,871,214 22,965,229 (618,625)
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS....... $312,193 $2,907,803 $339,212 $7,550,230 $25,690,036 $(1,096,223)
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
GLOBAL GLOBAL
GROWTH SMALLER GLOBAL HIGH-YIELD
OPPORTUNITIES COMPANIES TECHNOLOGY INTERNATIONAL BOND INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Dividend and capital
gain distributions..................... $ 46,683 $ 289,542 $ 228,760 $ 185,677 $ 2,625,999 $ 482,672
Less mortality and expense risk
charges (Note 6)....................... 91,916 286,855 59,926 133,412 384,444 124,492
----------- ----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS)............. (45,233) 2,687 168,834 52,265 2,241,555 358,180
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments.. 170,051 237,916 119,124 302,886 242,702 48,543
Net unrealized appreciation
(depreciation) of investments.......... 921,826 664,912 960,333 852,183 (2,787,854) 120,665
----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS......................... 1,091,877 902,828 1,079,457 1,155,069 (2,545,152) 169,208
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS....... $ 1,046,644 $ 905,515 $ 1,248,291 $1,207,334 $ (303,597) $ 527,388
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
LARGE-CAP SMALL-CAP
VALUE VALUE SUB-ACCOUNTS
SUB-ACCOUNT SUB-ACCOUNT COMBINED
----------- ----------- -----------
<S> <C> <C> <C>
NET INVESTMENT INCOME:
Dividend and capital
gain distributions........................ $ 107,743 $242,054 $13,073,792
----------- ---------- -----------
Less mortality and expense risk
charges (Note 6).......................... 14,518 9,588 3,650,448
----------- ---------- -----------
NET INVESTMENT INCOME (LOSS)................ 93,225 232,466 9,423,344
----------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments..... (39,349) (82,801) 2,413,020
Net unrealized appreciation
(depreciation) of investments............. 109,072 (34,480) 28,776,595
----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS............................ 69,723 (117,281) 31,189,615
----------- ---------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS.......... $ 162,948 $115,185 $40,612,959
=========== ========== ===========
</TABLE>
- ------------------------------------------------------------------------------
* For the period May 1, 1998 (commencement of operations) to December 31, 1998.
See accompanying notes.
-- 2 and 3 --
<PAGE>
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 Year Ended Year Ended
December 31, December 31, December 31,
---------------------- ----------------------- -------------------------
1998 1997 1998 1997 1998 1997
---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)........... $ 261,254 $ 194,351 $ 792,674 $ 798,930 $ 339,212 $ 304,525
Net realized gain (loss)
on investments....................... 75,857 8,066 640,187 458,289 -- --
Net unrealized appreciation/
depreciation of investments.......... (24,918) 66,018 1,474,942 899,608 -- --
---------- ---------- ----------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ 312,193 268,435 2,907,803 2,156,827 339,212 304,525
---------- ---------- ----------- ----------- ---------- ----------
CAPITAL TRANSACTIONS:
Net increase (decrease) from
unit transactions (Note 5)........... 6,780 2,029,015 123,897 3,428,077 1,240,131 (1,162,636)
---------- ---------- ----------- ----------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS ARISING FROM
CAPITAL TRANSACTIONS................. 6,780 2,029,015 123,897 3,428,077 1,240,131 (1,162,636)
---------- ---------- ----------- ----------- ---------- ----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS........................ 318,973 2,297,450 3,031,700 5,584,904 1,579,343 (858,111)
Net Assets, Beginning of Period........ 4,953,939 2,656,489 14,985,910 9,401,006 7,383,567 8,241,678
---------- ---------- ----------- ----------- ---------- ----------
NET ASSETS, END OF PERIOD.............. $5,272,912 $4,953,939 $18,017,610 $14,985,910 $8,962,910 $7,383,567
========== ========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Communications and
Common Stock Information
Sub-Account Sub-Account
------------------------ ------------------------
Year Ended Year Ended
December 31, December 31,
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)........... $ 2,679,016 $ 4,565,796 $ 2,724,807 $17,976,778
Net realized gain (loss)
on investments....................... 737,506 488,619 (9,244) 2,491,942
Net unrealized appreciation/
depreciation of investments.......... 4,133,708 (535,131) 22,974,473 (8,926,535)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ 7,550,230 4,519,284 25,690,036 11,542,185
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Net increase (decrease) from
unit transactions (Note 5)........... 1,806,531 7,593,933 (2,309,026) 8,108,126
----------- ----------- ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS ARISING FROM
CAPITAL TRANSASCTIONS................ 1,806,531 7,593,933 (2,309,026) 8,108,126
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS........................ 9,356,761 12,113,217 23,381,010 19,650,311
Net Assets, Beginning of Period........ 32,508,193 20,394,976 73,999,948 54,349,637
----------- ----------- ----------- -----------
NET ASSETS, END OF PERIOD.............. $41,864,954 $32,508,193 $97,380,958 $73,999,948
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Global Growth
Frontier Opportunities
Sub-Account Sub-Account
------------------------ -------------------------
Year Ended Year Ended
December 31, December 31,
------------------------ -------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)........... $ (477,598) $ 2,671,617 $ (45,233) $ 2,289
Net realized gain (loss)
on investments....................... (30,358) 878,611 170,051 77,328
Net unrealized appreciation/
depreciation of investments.......... (588,267) 500,110 921,826 153,700
----------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............ (1,096,223) 4,050,338 1,046,644 233,317
----------- ----------- ---------- ----------
CAPITAL TRANSACTIONS:
Net increase (decrease) from
unit transactions (Note 5)........... (2,173,725) 4,928,379 2,080,972 3,233,258
NET INCREASE (DECREASE)
IN NET ASSETS ARISING FROM
CAPITAL TRANSASCTIONS................ (2,173,725) 4,928,379 2,080,972 3,233,258
----------- ----------- ---------- ----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS........................ (3,269,948) 8,978,717 3,127,616 3,466,575
Net Assets, Beginning of Period........ 34,888,125 25,909,408 4,759,358 1,292,783
----------- ----------- ---------- ----------
NET ASSETS, END OF PERIOD.............. $31,618,177 $34,888,125 $7,886,974 $4,759,358
=========== =========== ========== ==========
</TABLE>
--4 and 5--
<PAGE>
<TABLE>
<CAPTION>
Global Smaller Global
Companies Technology International
Sub-Account Sub-Account Sub-Account
----------------------- ---------------------- -------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
----------------------- ---------------------- -------------------
1998 1997 1998 1997 1998 1997
--------- --------- ---------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................... $ 2,687 $ 180,288 $ 168,834 $ 412,115 $ 52,265 $ 179,009
Net realized gain (loss) on investments.................... 237,916 265,007 119,124 190,061 302,886 251,193
Net unrealized appreciation/depreciation of investments.... 664,912 (90,117) 960,333 (324,750) 852,183 73,912
----------- ----------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................ 905,515 355,178 1,248,291 277,426 1,207,334 504,114
----------- ----------- ---------- ---------- ---------- ----------
CAPITAL TRANSACTIONS:
Net increase (decrease) from unit transactions (Note 5).... (950,338) 2,874,836 729,244 1,899,573 (645,302) 1,173,767
----------- ----------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS ARISING FROM CAPITAL
TRANSACTIONS.......................................... (950,338) 2,874,836 729,244 1,899,573 (645,302) 1,173,767
----------- ----------- ---------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS............................... (44,823) 3,230,014 1,977,535 2,176,999 562,032 1,677,881
Net Assets, Beginning of Period............................ 19,551,305 16,321,291 3,293,500 1,116,501 8,805,457 7,127,576
----------- ----------- ---------- ---------- ---------- ----------
NET ASSETS, END OF PERIOD.................................. $19,506,482 $19,551,305 $5,271,035 $3,293,500 $9,367,489 $8,805,457
=========== =========== ========== ========== ========== ==========
</TABLE>
- ---------------------
* Commencement of operations.
See accompanying notes.
<TABLE>
<CAPTION>
High-Yield Bond Income
Sub-Account Sub-Account
------------------------ ------------------------
Year Ended Year Ended
December 31, December 31,
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................... $ 2,241,555 $ 1,492,267 $ 358,180 $ 690,186
Net realized gain (loss) on investments.................... 242,702 390,673 48,543 77,550
Net unrealized appreciation/depreciation of investments.... (2,787,854) 176,658 120,665 165,357
----------- ----------- ---------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................ (303,597) 2,059,598 527,388 933,093
----------- ----------- ---------- ------------
CAPITAL TRANSACTIONS:
Net increase (decrease) from unit transactions (Note 5).... 8,452,975 9,388,102 178,197 (747,332)
----------- ----------- ---------- ------------
NET INCREASE (DECREASE) IN NET ASSETS ARISING FROM CAPITAL
TRANSACTIONS.......................................... 8,452,975 9,388,102 178,197 (747,332)
----------- ----------- ---------- ------------
TOTAL INCREASE IN NET ASSETS............................... 8,149,378 11,447,700 705,585 185,761
Net Assets, Beginning of Period............................ 22,715,823 11,268,123 8,280,529 8,094,768
----------- ----------- ---------- ------------
NET ASSETS, END OF PERIOD.................................. $30,865,201 $22,715,823 $8,986,114 $ 8,280,529
=========== =========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
Large-Cap Small-Cap
Value Value Sub-Accounts
Sub-Account Sub-Account Combined
------------------------ --------------------------
Year Ended Year Ended
December 31, December 31,
------------------------ --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................... $ 93,225 $ 232,466 $ 9,423,344 $ 29,468,151
Net realized gain (loss) on investments.................... (39,349) (82,801) 2,413,020 5,577,339
Net unrealized appreciation/depreciation of investments.... 109,072 (34,480) 28,776,595 (7,841,170)
----------- ----------- ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................ 162,948 115,185 40,612,959 27,204,320
----------- ----------- ------------ -------------
CAPITAL TRANSACTIONS:
Net increase (decrease) from unit transactions (Note 5).... 3,415,478 2,094,012 14,049,826 42,747,098
----------- ----------- ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS ARISING FROM CAPITAL
TRANSACTIONS.......................................... 3,415,478 2,094,012 14,049,826 42,747,098
----------- ----------- ------------ -------------
TOTAL INCREASE IN NET ASSETS............................... 3,578,426 2,209,197 54,662,785 69,951,418
Net Assets, Beginning of Period............................ -- -- 236,125,654 166,174,236
----------- ----------- ------------ -------------
NET ASSETS, END OF PERIOD.................................. $ 3,578,426 $ 2,209,197 $209,788,439 $236,125,654
=========== =========== ============ =============
</TABLE>
-- 4 and 5 --
<PAGE>
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 fourteen 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
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 and Capital Gain Distributions
Dividends and capital gain distributions 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. Except for the Cash
Management Portfolio, whose dividends are declared daily and paid monthly,
dividends and capital gain distributions are declared and paid annually.
Dividends and capital gain distributions 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, 1998, is as follows:
<TABLE>
<CAPTION>
Number of Shares Market Price Market Value Cost
---------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Bond 511,050 $10.38 $5,304,699 $ 5,346,867
Capital 870,548 20.81 18,116,104 15,645,186
Cash Management 9,046,059 1.00 9,046,059 9,046,059
Common Stock 2,260,890 18.63 42,120,381 39,204,810
Communications and Information 5,717,698 17.14 98,001,344 82,060,753
Frontier 2,045,850 15.55 31,812,968 31,071,977
Global Growth Opportunities 594,798 13.33 7,928,657 6,843,005
Global Smaller Companies 1,441,402 13.62 19,631,895 18,968,538
Global Technology 382,944 13.85 5,303,774 4,613,698
International 613,999 15.37 9,437,165 8,187,394
High-Yield Bond 2,855,655 10.87 31,040,970 33,567,265
Income 821,298 11.01 9,042,491 9,049,250
Large-Cap Value 372,066 9.66 3,594,158 3,485,086
Small-Cap Value 303,225 7.31 2,216,575 2,251,055
------------ ------------
$292,597,240 $269,340,943
============ ============
</TABLE>
4. Security Purchases and Sales The aggregate cost of purchases and the
proceeds from sales of investments are presented below:
<TABLE>
<CAPTION>
Aggregate Cost of Purchases Proceeds from Sales
---------------------------- -------------------
<S> <C> <C>
Bond $ 2,894,321 $ 2,622,567
Capital 13,272,251 12,254,836
Cash Management 30,487,925 28,733,072
Common Stock 17,671,343 12,834,126
Communications and Information 24,700,513 23,344,631
Frontier 12,796,277 14,949,757
Global Growth Opportunities 4,265,606 2,003,044
Global Smaller Companies 4,045,388 4,827,208
Global Technology 4,705,868 3,723,542
International 2,101,903 2,547,677
High-Yield Bond 21,196,350 10,087,569
Income 2,688,848 2,097,329
Large-Cap Value 4,631,642 1,107,207
Small-Cap Value 3,252,108 918,252
------------ ------------
$148,710,343 $122,050,817
============ ============
</TABLE>
-- 6 --
<PAGE>
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 Large-Cap Value
and Small-Cap Value Sub-Accounts commenced operations on May 1, 1998.
<TABLE>
<CAPTION>
Year Ended December 31, 1998 Year Ended December 31, 1997
------------------------------ ------------------------------
Units Amount Units Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Bond Sub-Account
Accumulation Units:
Contract purchases and net transfers in 290,989 $ 4,955,129 261,683 $ 4,117,039
Terminated contracts and net transfers out (291,727) (4,948,349) (132,913) (2,088,024)
----------- ------------ ----------- ------------
(738) 6,780 128,770 2,029,015
----------- ------------ ----------- ------------
Capital Sub-Account
Accumulation Units:
Contract purchases and net transfers in 476,675 15,080,911 304,990 8,703,658
Terminated contracts and net transfers out (477,721) (14,957,014) (183,032) (5,275,581)
----------- ------------ ----------- ------------
(1,046) 123,897 121,958 3,428,077
----------- ------------ ----------- ------------
Cash Management Sub-Account
Accumulation Units:
Contract purchases and net transfers in 28,701,853 40,888,881 28,517,454 39,834,422
Terminated contracts and net transfers out (27,814,834) (39,648,750) (29,363,850) (40,997,058)
----------- ------------ ----------- ------------
887,019 1,240,131 (846,396) (1,162,636)
----------- ------------ ----------- ------------
Common Stock Sub-Account
Accumulation Units:
Contract purchases and net transfers in 584,818 21,245,552 511,179 15,875,524
Terminated contracts and net transfers out (533,311) (19,439,021) (262,447) (8,281,591)
----------- ------------ ----------- ------------
51,507 1,806,531 248,732 7,593,933
----------- ------------ ----------- ------------
Communications and Information Sub-Account
Accumulation Units:
Contract purchases and net transfers in 1,336,799 26,057,001 1,120,831 31,154,764
Terminated contracts and net transfers out (1,426,919) (28,366,027) (650,150) (23,046,638)
----------- ------------ ----------- ------------
(90,120) (2,309,026) 470,681 8,108,126
----------- ------------ ----------- ------------
Frontier Sub-Account
Accumulation Units:
Contract purchases and net transfers in 920,590 17,444,970 1,123,395 17,074,867
Terminated contracts and net transfers out (1,042,222) (19,618,695) (853,657) (12,146,488)
----------- ------------ ----------- ------------
(121,632) (2,173,725) 269,738 4,928,379
----------- ------------ ----------- ------------
Global Growth Opportunities Sub-Account
Accumulation Units:
Contract purchases and net transfers in 601,646 7,353,393 482,602 5,012,445
Terminated contracts and net transfers out (434,558) (5,272,421) (176,920) (1,779,187)
----------- ------------ ----------- ------------
167,088 2,080,972 305,682 3,233,258
----------- ------------ ----------- ------------
Global Smaller Companies Sub-Account
Accumulation Units:
Contract purchases and net transfers in 479,301 7,291,622 992,939 8,591,113
Terminated contracts and net transfers out (549,248) (8,241,960) (786,157) (5,716,277)
----------- ------------ ----------- ------------
(69,947) (950,338) 206,782 2,874,836
----------- ------------ ----------- ------------
Global Technology Sub-Account
Accumulation Units:
Contract purchases and net transfers in 406,018 5,711,409 332,006 3,909,248
Terminated contracts and net transfers out (355,334) (4,982,165) (168,582) (2,009,675)
----------- ------------ ----------- ------------
50,684 729,244 163,424 1,899,573
----------- ------------ ----------- ------------
International Sub-Account
Accumulation Units:
Contract purchases and net transfers in 234,066 3,590,169 107,800 4,319,259
Terminated contracts and net transfers out (277,507) (4,235,471) (21,223) (3,145,492)
----------- ------------ ----------- ------------
(43,441) (645,302) 86,577 1,173,767
----------- ------------ ----------- ------------
</TABLE>
-- 7 --
<PAGE>
Canada Life of America Variable Annuity Account 2
- -------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31, 1998 Year Ended December 31, 1997
---------------------------- ----------------------------
Units Amount Units Amount
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
High-Yield Bond Sub-Account
Accumulation Units:
Contract purchases and net transfers in 1,589,267 $ 22,003,390 1,917,673 $ 19,330,600
Terminated contracts and net transfers out (980,942) (13,550,415) (1,185,914) (9,942,498)
---------- ----------- ---------- ------------
608,325 8,452,975 731,759 9,388,102
---------- ----------- ---------- ------------
Income Sub-Account
Accumulation Units:
Contract purchases and net transfers in 145,220 3,209,039 156,332 3,156,221
Terminated contracts and net transfers out (136,996) (3,030,842) (193,980) (3,903,553)
---------- ----------- ---------- ------------
8,224 178,197 (37,648) (747,332)
---------- ----------- ---------- ------------
Large-Cap Value Sub-Account*
Accumulation Units:
Contract purchases and net transfers in 470,789 4,426,163
Terminated contracts and net transfers out (108,615) (1,010,685)
---------- -----------
362,174 3,415,478
---------- -----------
Small-Cap Value Sub-Account*
Accumulation Units:
Contract purchases and net transfers in 362,710 2,860,882
Terminated contracts and net transfers out (94,013) (766,870)
---------- -----------
268,697 2,094,012
---------- -----------
Net increase from unit transactions $14,049,826 $ 42,747,098
=========== ============
</TABLE>
- ------------------
* From commencement of operations.
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 Sub-Account at each valuation period. In
addition, at each valuation period an effective annual rate of 0.15% of the net
asset value of each Sub-Account is deducted as daily administration fees.
7. Net Assets
Net assets at December 31, 1998, consisted of the following:
<TABLE>
<CAPTION>
Net
Accumulated Net Unrealized
Investment Realized Appreciation
Accumulated Income Gain (Loss) (Depreciation) Combined
Unit M and E and Capital on of Net
Transactions charges Gains Investments Investments Assets
------------- ------------ ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Bond $ 4,528,380 $ (177,272) $ 880,097 $ 83,875 $ (42,168) $ 5,272,912
Capital 11,864,813 (580,586) 3,028,248 1,234,217 2,470,918 18,017,610
Cash Management 7,993,657 (469,898) 1,439,151 -- -- 8,962,910
Common Stock 26,307,355 (1,233,386) 12,436,996 1,438,418 2,915,571 41,864,954
Communications and Information 57,740,484 (3,044,955) 25,168,079 1,576,759 15,940,591 97,380,958
Frontier 24,609,834 (1,249,792) 6,306,959 1,210,185 740,991 31,618,177
Global Growth Opportunities 6,599,112 (145,248) 98,881 248,577 1,085,652 7,886,974
Global Smaller Companies 16,822,365 (745,336) 2,062,353 703,743 663,357 19,506,482
Global Technology 3,686,239 (102,220) 683,861 313,079 690,076 5,271,035
International 7,061,086 (377,944) 761,172 673,404 1,249,771 9,367,489
High-Yield Bond 28,178,096 (767,160) 5,195,530 785,030 (2,526,295) 30,865,201
Income 6,831,250 (417,663) 2,477,943 101,343 (6,759) 8,986,114
Large-Cap Value 3,415,478 (14,518) 107,743 (39,349) 109,072 3,578,426
Small-Cap Value 2,094,012 (9,588) 242,054 (82,801) (34,480) 2,209,197
------------- ------------ ------------ ------------ --------------- ------------
$ 207,732,161 $ (9,335,566) $ 60,889,067 $ 8,246,480 $ 23,256,297 $290,788,439
============= ============= ============ ============ =============== ============
</TABLE>
8. Unit Values
Unit Values as reported are calculated by dividing total net assets by total
units for each Sub-Account.
-- 8 --
<PAGE>
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, Income, Large-Cap Value and Small-Cap Value Sub-
Accounts) as of December 31, 1998, 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, 1998, 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, 1998, 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.
Ernst & Young LLP
Atlanta, Georgia
February 5, 1999
-- 9 --
<PAGE>
The attached are incorporated by reference herein to the annual reports filed by
and on behalf of the following:
Seligman Portfolios, Inc., filed March 4, 1999
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; Seligman Henderson Global Growth
Opportunities; Seligman Large-Cap, Value; and Seligman Small-Cap Value
