<PAGE>
Registration No. 33-70948
811-8120
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM
N-8B-2
Post-Effective Amendment No. 6
INHEIRITAGE ACCOUNT OF
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(Exact Name of Registrant)
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
440 Lincoln Street
Worcester MA 01653
(Address of Principal Executive Office)
Abigail M. Armstrong, Esq.
440 Lincoln Street
Worcester MA 01653
(Name and Address of Agent for Service of Process)
It is proposed that this filing will become effective:
_X_ Immediately upon filing pursuant to paragraph (b)
___ on(date) pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a) (1)
___ on (date) pursuant to paragraph (a) (1)
___ on (date) pursuant to paragraph (a) (2) of Rule 485
___ this post-effective amendment designates a new
effective date
___ for a previously filed post-effective amendment.
FLEXIBLE PREMIUM VARIABLE LIFE
Pursuant to Reg. Section 270.24f-2 of the Investment Company Act of 1940,
Registrant hereby declares that an indefinite amount of its securities is being
registered under the Securities Act of 1933. The Rule 24f-2 Notice for the
issuer's fiscal year ended December 31, 1997 will be filed on or before
February 27, 1998.
<PAGE>
RECONCILIATION AND TIE BETWEEN ITEMS
IN FORM N-8B-2 AND THE PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
1 . . . . . . . . Cover Page
2 . . . . . . . . Cover Page
3 . . . . . . . . Not Applicable
4 . . . . . . . . Distribution
5 . . . . . . . . The Company, The Inheiritage Account
6 . . . . . . . . The Inheiritage Account
7 . . . . . . . . Not Applicable
8 . . . . . . . . Not Applicable
9 . . . . . . . . Legal Proceedings
10. . . . . . . . Prospectus A: Summary; Description of the Company, the
Inheiritage Account, Allmerica Investment Trust, Variable
Insurance Products Fund, Variable Insurance Products Fund
II, T. Rowe Price International Series, Inc., and Delaware
Group Premium Fund, Inc.; The Policy; Policy Termination
and Reinstatement; Other Policy Provisions
Prospectus B: Summary; Description of the Company, The
Inheiritage Account, Allmerica Investment Trust, Variable
Insurance Products Fund, and T. Rowe Price International
Series, Inc.; The Policy; Policy Termination and
Reinstatement; Other Policy Provisions; Supplement dated
February 10, 1998 to Prospectus Dated May 1, 1997
11. . . . . . . . Prospectus A: Summary; Description of the Company, the
Inheiritage Account, Allmerica Investment Trust, Variable
Insurance Products Fund, Variable Insurance Products Fund
II, T. Rowe Price International Series, Inc., And Delaware
Group Premium Fund, Inc.; Investment Objectives and
Policies
Prospectus B: Summary; Allmerica Investment Trust;Variable
Insurance Products Fund; and T. Rowe Price International
Series, Inc.; Investment Objectives and Policies;
Supplement dated February 10, 1998 to Prospectus Dated
May 1, 1997
12. . . . . . . . Prospectus A: Summary; Allmerica Investment Trust,
Variable Insurance Products Fund, Variable Insurance
Products Fund II, T. Rowe Price International Series,
Inc., and Delaware Group Premium Fund, Inc.
Prospectus B: Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; and T. Rowe Price
International Series, Supplement Dated February 10,
1998 to Prospectus Dated May 1, 1998
13. . . . . . . . Prospectus A: Summary; Allmerica Investment Trust, Variable
Insurance Products Fund, Variable Insurance Products Fund
II, T. Rowe Price International Series, Inc., and Delaware
Group Premium Fund, Inc. Investment Advisory Services to
Allmerica Investment Trust, Investment Advisory Services to
Variable Insurance Products Fund and Variable Insurance
Products Fund II, Investment Advisory Services to T. Rowe
Price International Series, Inc.; Investment Advisory
Services to Delaware Group Premium Fund, Inc.; Charges
and Deductions
Prospectus B: Summary; Allmerica Investment Trust;
Variable Insurance Products Fund; T. Rowe Price
International Series, Inc.; Investment Advisory Services to
the Trust; Investment Advisory Services to Variable
Insurance Products Fund; Investment Advisory Services to
T. Rowe Price International Series, Inc.; Charges and
Deductions; Supplement dated February 10, 1998 to Prospectus
Dated May 1, 1997
<PAGE>
14. . . . . . . . Summary; Application for a Policy
15. . . . . . . . Summary; Application for a Policy; Premium Payments;
Allocation of Net Premiums
16. . . . . . . . Prospectus A: The Inheiritage Account: Allmerica Investment
Trust, Variable Insurance Products Fund and Variable
Insurance Products Fund II, T. Rowe Price International
Series, Inc., and Delaware Group Premium Fund, Inc.;
International Series, Inc.; Premium Payments; Allocation of
Net Premiums
Prospectus B: The Inheiritage Account; Allmerica Investment
Trust; Variable Insurance Products Fund; and T. Rowe Price
International Series, Inc.; Premium Payments; Allocation of
Net Premiums; Supplement dated February 10, 1998 to
Prospectus Dated May 1, 1997
17. . . . . . . . Summary; Surrender; Partial Withdrawal; Charges and
Deductions; Policy Termination and Reinstatement
18. . . . . . . . Prospectus A: The Inheiritage Account: Allmerica Investment
Trust, Variable Insurance Products Fund and Variable
Insurance Products Fund II, T. Rowe Price International
Series, Inc., and Delaware Group Premium Fund, Inc.;
International Series, Inc.; Premium Payments
Prospectus B: The Inheiritage Account; Allmerica Investment
Trust; Variable Insurance Products Fund; and T. Rowe Price
International Series, Inc.; Premium Payments; Supplement
dated February 10, 1998 to Prospectus Dated May 1, 1997
19. . . . . . . . Reports; Voting Rights
20 . . . . . . . Not Applicable
21. . . . . . . . Summary; Policy Loans; Other Policy Provisions
22. . . . . . . . Other Policy Provisions
23. . . . . . . . Not Required
24 . . . . . . . Other Policy Provisions
25. . . . . . . . The Company
26 . . . . . . . Not Applicable
27. . . . . . . . The Company
28. . . . . . . . Directors and Principal Officers of the Company
29. . . . . . . . The Company
30. . . . . . . . Not Applicable
31. . . . . . . . Not Applicable
32. . . . . . . . Not Applicable
33. . . . . . . . Not Applicable
34. . . . . . . . Not Applicable
35. . . . . . . . Distribution
36 . . . . . . . Not Applicable
37. . . . . . . . Not Applicable
38. . . . . . . . Summary; Distribution
39. . . . . . . . Summary; Distribution
40. . . . . . . . Not Applicable
41. . . . . . . . The Company, Distribution
42. . . . . . . . Not Applicable
43. . . . . . . . Not Applicable
44. . . . . . . . Premium Payments; Policy Value and Cash Surrender Value
45. . . . . . . . Not Applicable
46. . . . . . . . Policy Value and Cash Surrender Value; Federal Tax
Considerations
47. . . . . . . . The Company
48. . . . . . . . Not Applicable
49. . . . . . . . Not Applicable
50. . . . . . . . The Inheiritage Account
<PAGE>
51. . . . . . . . Cover Page; Summary; Charges and Deductions; The Policy;
Policy Termination and Reinstatement; Other Policy
Provisions
52. . . . . . . . Addition, Deletion or Substitution of Investments
53. . . . . . . . Federal Tax Considerations
54. . . . . . . . Not Applicable
55. . . . . . . . Not Applicable
56. . . . . . . . Not Applicable
57. . . . . . . . Not Applicable
58. . . . . . . . Not Applicable
59. . . . . . . . Not Applicable
<PAGE>
This Post-Effective Amendment No. 6 under the Securities Act of 1933 is being
filed for the purposes of adding a supplement to Prospectus B of the
Inheiritage Account of Allmerica Financial Life Insurance and Annuity Company
dated May 1, 1997 and to generally update corporate information for the
Company and the Registrant. All other pertinent information regarding this
Registration Statement, including the Prospectus was previously filed in
Registrant's Post-Effective Amendment No. 5 on April 30, 1997 and is
incorporated by reference herein.
<PAGE>
INHEIRITAGE ACCOUNT (PROSPECTUS B)
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
SUPPLEMENT DATED FEBRUARY 10, 1998 TO PROSPECTUS DATED MAY 1, 1997
* * *
Effective February 10, 1998, three additional Sub-Accounts will be available
under the Contract. The Sub-Accounts will invest exclusively in shares of the
Select Emerging Markets Fund, the Select Value Opportunity Fund and the Select
Strategic Growth Fund of the Allmerica Investment Trust. As such, the following
information supplements the corresponding sections of the Prospectus. Please
consult the Prospectus for the full text of each supplemented section.
The listing of funds on page 1 and page 21 of the prospectus is amended by
adding the following:
<TABLE>
<CAPTION>
Fund Investment Adviser
---- ------------------
<S> <C>
Select Emerging Markets Fund Schroder Capital Management International
Inc.
Select Value Opportunity Fund Cramer Rosenthal McGlynn, LLC
Select Strategic Growth Fund Cambiar Investors, Inc.
</TABLE>
The number "eleven" is changed to "fourteen" in the third sentence under "THE
INHEIRITAGE ACCOUNT" on page 19 of the Prospectus. "Seven" is changed to
"ten" in the second sentence of the second paragraph under "ALLMERICA
INVESTMENT TRUST" on page 20, and the three new funds are added to the
listing of available funds.
* * *
The second paragraph under "INVESTMENT ADVISORY SERVICES TO THE TRUST" is
amended to read in its entirety as follows:
Allmerica Investment Management Company, Inc. ("Manager"), an
affiliate of the Company is the investment manager of the Trust.
The Manager has entered into agreements with investment advisors
("Sub-Advisers") selected by the Manager and Trustees in
consultation with RogersCasey. The Sub-Advisers (other than
Allmerica Asset Management, Inc.) are not affiliated with the
Company or the Trust. In addition, Rogers, Casey Sponsor
Services, Inc. a wholly owned subsidiary of RogersCasey, provides
asset allocation recommendations that may be utilized at no cost
by registered representatives who are assisting clients in
developing diversified portfolios.
1
<PAGE>
* * *
The Fund Expenses table on page 11 of the Prospectus is deleted and the
following inserted in its place:
FUND EXPENSES: The following table shows the expenses (unaudited) of the
Underlying Funds as a percentage of average net assets for the year ended
December 31, 1997.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Other Fund
Management Expenses (After Any Total Fund
Fund Fee Applicable Reimbursements) Expenses
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Select Emerging Markets [email protected]% 0.65%(1) 2.00%
Select International Equity Fund........................................0.92%* 0.20%(1) 1.12%(3)
T. Rowe Price International Stock Portfolio.............................1.05% 0.00% 1.05%
Select Aggressive Growth Fund...........................................0.89%* 0.09%(1) 0.98%(3)
Select Capital Appreciation Fund........................................0.95%* 0.15%(1) 1.10%
Select Value Opportunity Fund...........................................0.90%** 0.14%(1) 1.04%(3)
Select Growth Fund......................................................0.85% 0.08%(1) 0.93%(3)
Select Strategic Growth [email protected]% 0.13%(1) 0.98%
Fidelity VIP Growth Portfolio...........................................0.60% 0.09% 0.69%(2)
Select Growth and Income Fund...........................................0.70%* 0.07%(1) 0.77%(3)
Fidelity VIP Equity-Income Portfolio....................................0.50% 0.08% 0.58%(2)
Fidelity VIP High Income Portfolio......................................0.59% 0.12% 0.71%
Select Income Fund......................................................0.58%* 0.13%(1) 0.71%
Money Market Fund.......................................................0.27% 0.08%(1) 0.35%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
@ These Portfolios commenced operations in February 1998. Expenses shown are
annualized and are based on estimated amounts for the current fiscal year.
Actual expenses may be greater or less than shown.
* Effective September 1, 1997, the management fee rates for these funds were
revised. The management fees ratios shown in the table above have been adjusted
to assume that the revised rates took effect on January 1, 1997.
** The Select Value Opportunity Fund was formerly known as the "Small-Mid Cap
Value Fund." Effective April 1, 1997, the management fee rate of the former
Small-Mid Cap Value Fund was revised. In addition, effective April 1, 1997
and until further notice, the management fee for this fund has been
voluntarily limited to an annual rate of 0.90% of average daily net assets.
The management fee ratio shown above for the Select Value Opportunity Fund
has been adjusted to assume that the revised rate and the voluntary
limitation took effect on January 1, 1997. Had the voluntary limitation of
0.90% not been effective on January 1, 1997 and had the management fee rate
revision discussed above been effective on January 1, 1997, the management
fee ratio and the total fund expense ratio would have been 0.95% and 1.09%,
respectively.
(1) Until further notice, Allmerica Investment Management Company, Inc.
("Manager"), under the Management Agreement with Allmerica Investment Trust, has
declared a voluntary expense limitation of 1.50% of average net assets for
Select International Equity Fund, 1.35% for Select Aggressive Growth Fund and
Select Capital Appreciation Fund, 1.25% for Select Value Opportunity Fund, 1.20%
for Select Strategic Growth and Select Growth Fund, 1.10% for Select Growth and
Income Fund, 1.00% for Select Income Fund and 0.60% for Money Market Fund. In
addition, the Manager has agreed to waive voluntarily its management fee to the
extent that expenses of the Select
2
<PAGE>
Emerging Markets Fund exceed 2.00% of the Fund's average daily assets, except
that such waiver shall not exceed the net amount of management fees earned by
the Manager from the fund after subtracting fees paid by the Manager to
Schroder Capital Management International Inc. for sub-advisory fees. The
total operating expenses of the funds of the Trust were less than their
respective expense limitations throughout 1997. The declaration of a
voluntary expense limitation in any year does not bind Allmerica Investments
to declare future expense limitations with respect to these funds.
(2) A portion of the brokerage commissions the Portfolio paid was used to reduce
Fund expenses. Including these reductions, total operating expenses would have
been 0.57% for the Fidelity VIP Equity-Income Portfolio and 0.67% for the
Fidelity VIP Growth Portfolio.
(3) These Funds have entered into agreements with brokers whereby the brokers
rebate a portion of commissions. Had these amounts been treated as reductions of
expenses, the total operating expenses would have been 1.10% for Select
International Equity Fund, 0.91% for Select Growth Fund, 0.74% for Select Growth
and Income Fund, 0.93% for Select Aggressive Growth, and 0.98% for Select Value
Opportunity Fund.
* * *
The following summaries of investment objectives and policies are added as
the first, sixth and eighth summaries respectively under "INVESTMENT
OBJECTIVES AND POLICIES":
SELECT EMERGING MARKETS FUND -- seeks long-term growth of
capital by investing in the world's emerging markets.
SELECT VALUE OPPORTUNITY FUND -- seeks long-term growth of
capital by investing primarily in a diversified portfolio of
common stocks of small and mid-size companies, whose securities
at the time of purchase are considered by the Sub-Adviser to be
undervalued.
3
<PAGE>
SELECT STRATEGIC GROWTH FUND -- seeks long-term growth of capital
by investing primarily in common stocks of established companies.
The following information is added to the next-to-last paragraph under
"INVESTMENT ADVISORY SERVICES TO THE TRUST"
The Manager's fee, computed daily at an annual rate based on the
average daily net asset value of the Fund, will be 1.35% for
Select Emerging Markets Fund and 0.85% for Select Strategic
Growth Fund. For the Select Value Opportunity Fund, the fee will
be 1.00% for net asset value up to $100,000,000; 0.85% on the
next $150,000,000; 0.80% on the next $250,000,000; 0.75% on the
next $250,000,000 and 0.70% on the remainder.
* * *
Footnote 14, SUBSEQUENT EVENT (UNAUDITED) under "Notes to Financial
Statements" on page F-17 is deleted and replaced in its entirely with the
following:
On April 14, 1997, the Company entered into an agreement in
principle to transfer the Company's individual disability
income business under a 100% coinsurance agreement to Metropolitan
Life Insurance Company. The coinsurance agreement became effective
October 1, 1997. The transaction has resulted in the recognition
of a $53.9 million pre-tax loss in the first quarter of 1997.
In late July 1997, a lawsuit was instituted in Louisana against
Allmerica Financial Corporation and certain of its subsidiaries,
including the Company, by individual plaintiffs alleging fraud,
unfair or deceptive acts, breach of contracts, misrepresentations
and related claims in the sale of life insurance policies.
In October 1997, plaintiffs voluntarily dismissed the Lousisana suit
and refiled the action in Federal District Court in Worcester,
Massachusetts. The plaintiffs seek to be certified as a class.
The case is in the early stages of discovery and the Company
is evaluating the claims. Although the Company believes it has
meritorious defenses to plaintiff's claims, there can be no assurance
that the claim will be resolved on a basis which is satisfactory
to the Company.
Following are unaudited financial statements for the Inheritage Separate
Account and the company for the nine-month period ended September 30, 1997.
Supplement Dated February 10, 1998
4
<PAGE>
premium $10,000
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
INHERITAGE POLICY
Insured #1: Unisex Nonsmoker Issue Age 55
Insured #1: Unisex Nonsmoker Issue Age 55
Specified Face Amount = $1,000,000
Sum Insured Option 1
BASED ON CURRENT MONTHLY INSURANCE PROTECTION
CHARGES WITHOUT RIDERS
<TABLE>
<CAPTION>
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest ----------------------- ----------------------- ------------------------
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
----- -------- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 9,235 1,000,000 0 9,804 1,000,000 0 10,373 1,000,000
2 21,525 5,466 18,182 1,000,000 7,178 19,893 1,000,000 8,959 21,674 1,000,000
3 33,101 7,836 26,836 1,000,000 11,269 30,269 1,000,000 14,982 33,982 1,000,000
4 45,256 16,953 35,193 1,000,000 22,691 40,931 1,000,000 29,150 47,390 1,000,000
5 58,019 26,151 43,251 1,000,000 34,782 51,882 1,000,000 44,896 61,996 1,000,000
6 71,420 35,047 51,007 1,000,000 47,167 63,127 1,000,000 61,954 77,914 1,000,000
7 85,491 43,636 58,456 1,000,000 59,847 74,667 1,000,000 80,447 95,267 1,000,000
8 100,266 51,911 65,591 1,000,000 72,821 86,501 1,000,000 100,507 114,187 1,000,000
9 115,779 59,860 72,400 1,000,000 86,084 98,624 1,000,000 122,277 134,817 1,000,000
10 132,068 67,474 78,874 1,000,000 99,635 111,035 1,000,000 145,920 157,320 1,000,000
11 149,171 75,772 84,892 1,000,000 114,502 123,622 1,000,000 172,649 181,769 1,000,000
12 167,130 83,567 90,407 1,000,000 129,501 136,341 1,000,000 201,481 208,321 1,000,000
13 185,986 90,811 95,371 1,000,000 144,589 149,149 1,000,000 232,598 237,158 1,000,000
14 205,786 97,453 99,733 1,000,000 159,720 162,000 1,000,000 266,205 268,485 1,000,000
15 226,575 103,434 103,434 1,000,000 174,837 174,837 1,000,000 302,532 302,532 1,000,000
16 248,404 106,697 106,697 1,000,000 188,068 188,068 1,000,000 340,349 340,349 1,000,000
17 271,324 109,102 109,102 1,000,000 201,156 201,156 1,000,000 381,578 381,578 1,000,000
18 295,390 110,601 110,601 1,000,000 214,059 214,059 1,000,000 426,623 426,623 1,000,000
19 320,660 110,977 110,977 1,000,000 226,587 226,587 1,000,000 475,842 475,842 1,000,000
20 347,193 110,042 110,042 1,000,000 238,573 238,573 1,000,000 529,704 529,704 1,000,000
Age 60 58,019 26,151 43,251 1,000,000 34,782 51,882 1,000,000 44,896 61,996 1,000,000
Age 65 132,068 67,474 78,874 1,000,000 99,635 111,035 1,000,000 145,920 157,320 1,000,000
Age 70 226,575 103,434 103,434 1,000,000 174,837 174,837 1,000,000 302,532 302,532 1,000,000
Age 75 347,193 110,042 110,042 1,000,000 238,573 238,573 1,000,000 529,704 529,704 1,000,000
</TABLE>
A-1
<PAGE>
premium $10,000
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
INHERITAGE POLICY
Insured #1: Unisex Nonsmoker Issue Age 55
Insured #1: Unisex Nonsmoker Issue Age 55
Specified Face Amount = $1,000,000
Sum Insured Option 1
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION
CHARGES WITHOUT RIDERS
<TABLE>
<CAPTION>
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest ----------------------- ----------------------- ------------------------
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
----- -------- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 9,195 1,000,000 0 9,764 1,000,000 0 10,333 1,000,000
2 21,525 5,338 18,053 1,000,000 7,044 19,760 1,000,000 8,819 21,535 1,000,000
3 33,101 7,558 26,558 1,000,000 10,970 29,970 1,000,000 14,662 33,662 1,000,000
4 45,256 16,453 34,693 1,000,000 22,137 40,377 1,000,000 28,537 46,777 1,000,000
5 58,019 25,336 42,436 1,000,000 33,856 50,956 1,000,000 43,845 60,945 1,000,000
6 71,420 33,798 49,758 1,000,000 45,716 61,676 1,000,000 60,267 76,227 1,000,000
7 85,491 41,798 56,618 1,000,000 57,672 72,492 1,000,000 77,866 92,686 1,000,000
8 100,266 49,286 62,966 1,000,000 69,668 83,348 1,000,000 96,698 110,378 1,000,000
9 115,779 56,189 68,729 1,000,000 81,623 94,163 1,000,000 116,807 129,347 1,000,000
10 132,068 62,418 73,818 1,000,000 93,439 104,839 1,000,000 138,229 149,629 1,000,000
11 149,171 69,022 78,142 1,000,000 106,152 115,272 1,000,000 162,152 171,272 1,000,000
12 167,130 74,751 81,591 1,000,000 118,497 125,337 1,000,000 187,476 194,316 1,000,000
13 185,986 79,497 84,057 1,000,000 130,349 134,909 1,000,000 214,262 218,822 1,000,000
14 205,786 83,139 85,419 1,000,000 141,564 143,844 1,000,000 242,580 244,860 1,000,000
15 226,575 85,527 85,527 1,000,000 151,972 151,972 1,000,000 272,502 272,502 1,000,000
16 248,404 84,397 84,397 1,000,000 159,453 159,453 1,000,000 302,499 302,499 1,000,000
17 271,324 81,421 81,421 1,000,000 165,535 165,535 1,000,000 334,266 334,266 1,000,000
18 295,390 76,400 76,400 1,000,000 169,981 169,981 1,000,000 367,982 367,982 1,000,000
19 320,660 68,747 68,747 1,000,000 172,190 172,190 1,000,000 403,618 403,618 1,000,000
20 347,193 57,870 57,870 1,000,000 171,537 171,537 1,000,000 441,248 441,248 1,000,000
Age 60 58,019 25,336 42,436 1,000,000 33,856 50,956 1,000,000 43,845 60,945 1,000,000
Age 65 132,068 62,418 73,818 1,000,000 93,439 104,839 1,000,000 138,229 149,629 1,000,000
Age 70 226,575 85,527 85,527 1,000,000 151,972 151,972 1,000,000 272,502 272,502 1,000,000
Age 75 347,193 57,870 57,870 1,000,000 171,537 171,537 1,000,000 441,248 441,248 1,000,000
</TABLE>
A-2
<PAGE>
premium = $10,000
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
INHERITAGE POLICY
Insured #1: Unisex Nonsmoker Issue Age 55
Insured #1: Unisex Nonsmoker Issue Age 55
Specified Face Amount = $1,000,000
Sum Insured Option 2
BASED ON CURRENT MONTHLY INSURANCE PROTECTION
CHARGES WITHOUT RIDERS
<TABLE>
<CAPTION>
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest ----------------------- ----------------------- ------------------------
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
----- -------- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 9,234 1,009,234 0 9,804 1,009,804 0 10,373 1,010,373
2 21,525 5,463 18,179 1,018,179 7,175 19,890 1,019,890 8,955 21,670 1,021,670
3 33,101 7,826 26,826 1,026,826 11,257 30,257 1,030,257 14,970 33,970 1,033,970
4 45,256 16,930 35,170 1,035,170 22,664 40,904 1,040,904 29,118 47,358 1,047,358
5 58,019 26,106 43,206 1,043,206 34,727 51,827 1,051,827 44,829 61,929 1,061,929
6 71,420 34,969 50,929 1,050,929 47,069 63,029 1,063,029 61,830 77,790 1,077,790
7 85,491 43,512 58,332 1,058,332 59,683 74,503 1,074,503 80,232 95,052 1,095,052
8 100,266 51,724 65,404 1,065,404 72,564 86,244 1,086,244 100,157 113,837 1,113,837
9 115,779 59,590 72,130 1,072,130 85,699 98,239 1,098,239 121,731 134,271 1,134,271
10 132,068 67,097 78,497 1,078,497 99,077 110,477 1,110,477 145,096 156,496 1,156,496
11 149,171 75,251 84,371 1,084,371 113,702 122,822 1,122,822 171,420 180,540 1,180,540
12 167,130 82,854 89,694 1,089,694 128,366 135,206 1,135,206 199,667 206,507 1,206,507
13 185,986 89,851 94,411 1,094,411 143,002 147,562 1,147,562 229,959 234,519 1,234,519
14 205,786 96,181 98,461 1,098,461 157,534 159,814 1,159,814 262,420 264,700 1,264,700
15 226,575 101,773 101,773 1,101,773 171,869 171,869 1,171,869 297,173 297,173 1,297,173
16 248,404 104,557 104,557 1,104,557 184,087 184,087 1,184,087 332,842 332,842 1,332,842
17 271,324 106,375 106,375 1,106,375 195,868 195,868 1,195,868 371,160 371,160 1,371,160
18 295,390 107,172 107,172 1,107,172 207,119 207,119 1,207,119 412,315 412,315 1,412,315
19 320,660 106,710 106,710 1,106,710 217,551 217,551 1,217,551 456,323 456,323 1,456,323
20 347,193 104,784 104,784 1,104,784 226,895 226,895 1,226,895 503,228 503,228 1,503,228
Age 60 58,019 26,106 43,206 1,043,206 34,727 51,827 1,051,827 44,829 61,929 1,061,929
Age 65 132,068 67,097 78,497 1,078,497 99,077 110,477 1,110,477 145,096 156,496 1,156,496
Age 70 226,575 101,773 101,773 1,101,773 171,869 171,869 1,171,869 297,173 297,173 1,297,173
Age 75 347,193 104,784 104,784 1,104,784 226,895 226,895 1,226,895 503,228 503,228 1,503,228
</TABLE>
A-3
<PAGE>
premium = $10,000
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
INHERITAGE POLICY
Insured #1: Unisex Nonsmoker Issue Age 55
Insured #1: Unisex Nonsmoker Issue Age 55
Specified Face Amount = $1,000,000
Sum Insured Option 2
BASED ON GUARANTEED MONTHLY INSURANCE PROTECTION
CHARGES WITHOUT RIDERS
<TABLE>
<CAPTION>
Premiums Hypothetical 0% Hypothetical 6% Hypothetical 12%
Paid Plus Gross Investment Return Gross Investment Return Gross Investment Return
Interest ----------------------- ----------------------- ------------------------
Policy At 5% Surrender Policy Death Surrender Policy Death Surrender Policy Death
Year Per Year Value Value Benefit Value Value Benefit Value Value Benefit
----- -------- ----- ----- ------- ----- ----- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 10,500 0 9,195 1,009,195 0 9,764 1,009,764 0 10,333 1,010,333
2 21,525 5,334 18,050 1,018,050 7,041 19,756 1,019,756 8,815 21,531 1,021,531
3 33,101 7,547 26,547 1,026,547 10,957 29,957 1,029,957 14,647 33,647 1,033,647
4 45,256 16,426 34,666 1,034,666 22,104 40,344 1,040,344 28,499 46,739 1,046,739
5 58,019 25,280 42,380 1,042,380 33,787 50,887 1,050,887 43,761 60,861 1,060,861
6 71,420 33,696 49,656 1,049,656 45,587 61,547 1,061,547 60,104 76,064 1,076,064
7 85,491 41,628 56,448 1,056,448 57,448 72,268 1,072,268 77,572 92,392 1,092,392
8 100,266 49,017 62,697 1,062,697 69,300 82,980 1,082,980 96,196 109,876 1,109,876
9 115,779 55,780 68,320 1,068,320 81,042 93,582 1,093,582 115,983 128,523 1,128,523
10 132,068 61,818 73,218 1,073,218 92,552 103,952 1,103,952 136,921 148,321 1,148,321
11 149,171 68,164 77,284 1,077,284 104,835 113,955 1,113,955 160,130 169,250 1,169,250
12 167,130 73,556 80,396 1,080,396 116,589 123,429 1,123,429 184,422 191,262 1,191,262
13 185,986 77,874 82,434 1,082,434 127,646 132,206 1,132,206 209,748 214,308 1,214,308
14 205,786 80,983 83,263 1,083,263 137,817 140,097 1,140,097 236,036 238,316 1,238,316
15 226,575 82,725 82,725 1,082,725 146,875 146,875 1,146,875 263,177 263,177 1,263,177
16 248,404 80,816 80,816 1,080,816 152,616 152,616 1,152,616 289,368 289,368 1,289,368
17 271,324 76,918 76,918 1,076,918 156,474 156,474 1,156,474 315,955 315,955 1,315,955
18 295,390 70,849 70,849 1,070,849 158,147 158,147 1,158,147 342,737 342,737 1,342,737
19 320,660 62,031 62,031 1,062,031 156,905 156,905 1,156,905 369,065 369,065 1,369,065
20 347,193 49,927 49,927 1,049,927 152,018 152,018 1,152,018 394,258 394,258 1,394,258
Age 60 58,019 25,280 42,380 1,042,380 33,787 50,887 1,050,887 43,761 60,861 1,060,861
Age 65 132,068 61,818 73,218 1,073,218 92,552 103,952 1,103,952 136,921 148,321 1,148,321
Age 70 226,575 82,725 82,725 1,082,725 146,875 146,875 1,146,875 263,177 263,177 1,263,177
Age 75 347,193 49,927 49,927 1,049,927 152,018 152,018 1,152,018 394,258 394,258 1,394,258
</TABLE>
A-4
<PAGE>
INHEIRITAGE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE 1 -- ORGANIZATION
The Inheiritage Account (Inheiritage) is a separate investment account
of Allmerica Financial Life Insurance and Annuity Company (the Company),
established on April 21, 1994 for the purpose of separating from the general
assets of the Company those assets used to fund the variable portion of
certain flexible premium variable life policies issued by the Company. The
Company is a wholly-owned subsidiary of First Allmerica Financial Life
Insurance Company (First Allmerica). First Allmerica is a wholly-owned
subsidiary of Allmerica Financial Corporation (AFC). Under applicable
insurance law, the assets and liabilities of Inheiritage are clearly
identified and distinguished from the other assets and liabilities of the
Company. Inheiritage cannot be charged with liabilities arising out of any
other business of the Company.
Inheiritage is registered as a unit investment trust under the
Investment Company Act of 1940, as amended (the 1940 Act). Inheiritage
currently offers nineteen Sub-Accounts (See Note 3). Each Sub-Account invests
exclusively in a corresponding investment portfolio of the Allmerica
Investment Trust (the Trust) managed by Allmerica Investment Management
Company, Inc., a wholly-owned subsidiary of First Allmerica or of the
Variable Insurance Products Fund (Fidelity VIP), or the Variable Insurance
Products Fund II (Fidelity VIP II) managed by Fidelity Management & Research
Company (FMR), or of T. Rowe Price International Series, Inc. (T. Rowe Price)
managed by Rowe Price-Fleming International, Inc. or of the Delaware Group
Premium Fund, Inc. (DGPF) managed by Delaware International Advisers, Ltd.
The Trust, Fidelity VIP, Fidelity VIP II, T. Rowe Price, and DGPF (the Funds)
are open-end, diversified management investment companies registered under
the 1940 Act.
Effective April 1, 1997, the Sub-Account formerly known as Small Cap
Value of the Trust changed its name to Small-Mid Cap Value. At the Meeting
of Shareholders of the Small Cap Value Fund, held on March 18, 1997,
shareholders approved the revisions in the investment objective, name and
policies of the Fund to change from investing primarily in small cap value
stocks to investing primarily in small and mid-cap value stocks.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS -- Security transactions are recorded on the trade date.
Investments held by the Sub-Accounts are stated at the net asset value per
share of the respective investment portfolio of the Trust, Fidelity VIP,
Fidelity VIP II, T. Rowe Price, or DGPF. Net realized gains and losses on
securities sold are determined using the average cost method. Dividends and
capital gain distributions are recorded on the ex-dividend date and are
reinvested in additional shares of the respective investment portfolio of the
Trust, Fidelity VIP, Fidelity VIP II, T. Rowe Price, or DGPF at net asset
value.
FEDERAL INCOME TAXES -- The Company is taxed as a "life insurance
company" under Subchapter L of the Internal Revenue Code and files a
consolidated federal income tax return with First Allmerica. The Company
anticipates no tax liability resulting from the operations of Inheiritage.
Therefore, no provision for income taxes has been charged against
Inheiritage.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Investment
Growth Grade Income Money Market Equity Index Government Bond
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
1 2 3 4 5
----------- ------------ ----------- ------------ --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust . . . . $2,505,936 $ 838,100 $1,531,153 $1,455,904 $ 183,945
Investments in shares of Fidelity Variable
Insurance Products Funds . . . . . . . . . . . . . . . . . - - - - -
Investment in shares of T. Rowe Price International
Series, Inc. . . . . . . . . . . . . . . . . . . . . . . - - - - -
Investment in shares of Delaware Group Premium
Fund, Inc. . . . . . . . . . . . . . . . . . . . . . . . . - - - -
---------- --------- ---------- ---------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . 2,505,936 838,100 1,531,153 $1,455,904 183,945
LIABILITIES: - - - - -
---------- --------- ---------- ---------- ---------
Net assets . . . . . . . . . . . . . . . . . . . . . . . $2,505,936 $ 838,100 $1,531,153 $1,455,904 $ 183,945
---------- --------- ---------- ---------- ---------
---------- --------- ---------- ---------- ---------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . $2,505,936 $ 837,870 $1,531,153 $1,455,904 $ 183,945
Value of investment by Allmerica Financial Life Insurance
and Annuity Company (Sponsor) . . . . . . . . . . . . . - 230 - - -
---------- --------- ---------- ---------- ----------
$2,505,936 $ 838,100 $1,531,153 $1,455,904 $ 183,945
---------- --------- ---------- ---------- ----------
---------- --------- ---------- ---------- ----------
Units outstanding, September 30, 1997 . . . . . . . . 1,233,361 667,465 1,336,289 714,471 154,410
Net asset value per unit, September 30, 1997 . . . . . $ 2.031795 $1.255646 $ 1.145825 $ 2.037738 $1.191279
<CAPTION>
Select Select Small
Aggressive Select Growth and Mid-Cap Select
Growth Growth Income Value Income
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
6 7 8 9 10
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in shares of Allmerica Investment Trust . . . . $3,630,679 $1,519,159 $1,684,997 $1,765,165 $ 65,894
Investments in shares of Fidelity Variable
Insurance Products Funds . . . . . . . . . . . . . . . . . - - - - -
Investment in shares of T. Rowe Price International
Series, Inc. . . . . . . . . . . . . . . . . . . . . . . - - - - -
Investment in shares of Delaware Group Premium
Fund, Inc. . . . . . . . . . . . . . . . . . . . . . . . . - - - - -
---------- ---------- ---------- ---------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . 3,630,679 1,519,159 1,684,997 1,765,165 65,894
LIABILITIES: - - - - -
---------- ---------- ---------- ---------- ---------
Net assets . . . . . . . . . . . . . . . . . . . . . . . $3,630,679 $1,519,159 $1,684,997 $1,765,165 $ 65,894
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
Net asset distribution by category:
Variable life policies . . . . . . . . . . . . . . . . . $3,630,679 $1,519,159 $1,684,997 $1,765,165 $ 65,894
Value of investment by Allmerica Financial Life Insurance
and Annuity Company (Sponsor) . . . . . . . . . . . . . - - - - -
---------- ---------- ---------- ---------- ---------
$3,630,679 $1,519,159 $1,684,997 $1,765,165 $ 65,894
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
Units outstanding, September 30, 1997 . . . . . . . . 1,873,654 785,282 892,234 1,007,071 62,304
Net asset value per unit, September 30, 1997 . . . . . $ 1.937753 $ 1.934539 $ 1.888514 $ 1.752772 $1.057632
</TABLE>
* Formerly Small Cap Value Fund. See Note 1.
The accompanying notes are an integral part of these financial statements.
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
September 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Select Select
International Capital VIPF
Equity Appreciation High Income
Sub-Account Sub-Account Sub-Account
11 12 102
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of
Allmerica Investment Trust ................... $ 2,703,956 $ 1,637,156 -
Investments in shares of Fidelity
Variable Insurance Products Funds ............ - - $ 1,481,967
Investment in shares of T. Rowe
Price International Series, Inc. ............ - - -
Investment in shares of Delaware
Group Premium Fund, Inc. .................... - - -
Total assets ............................ 2,703,956 1,637,156 1,481,967
LIABILITIES: - - -
------------- ------------- -------------
Net assets ............................... $ 2,703,956 $ 1,637,156 $ 1,481,967
------------- ------------- -------------
------------- ------------- -------------
Net asset distribution by category:
Variable life policies ................... $ 2,703,956 $ 1,637,156 $ 1,481,967
Value of investment by Allmerica Financial
Life Insurance
and Annuity Company (Sponsor) .......... - - -
------------- ------------- -------------
$ 2,703,956 $ 1,637,156 $ 1,481,967
------------- ------------- -------------
------------- ------------- -------------
Units outstanding, September 30, 1997 .. 1,822,748 990,934 963,692
Net asset value per unit,
September 30, 1997 .................... $1.483450 $1.652135 $1.537802
VIPF VIPF VIPF
Equity-Income Growth Overseas
Sub-Account Sub-Account Sub-Account
103 104 105
------------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investments in shares of
Allmerica Investment Trust .................. - - -
Investments in shares of Fidelity
Variable Insurance Products Funds ............ $ 4,345,455 $ 3,623,373 $ 703,716
Investment in shares of T. Rowe
Price International Series, Inc. ........... - - -
Investment in shares of Delaware
Group Premium Fund, Inc. ...................... - - -
------------- ----------- -----------
Total assets .......................... 4,345,455 3,623,373 703,716
LIABILITIES: - - -
------------- ----------- ------------
Net assets ............................. $ 4,345,455 $ 3,623,373 $ 703,716
------------- ----------- ------------
------------- ------------ ------------
Net asset distribution by category:
Variable life policies .................. $ 4,345,455 $ 3,623,373 $ 703,716
Value of investment by Allmerica Financial
Life Insurance and
Annuity Company (Sponsor) ............... - - -
------------- ----------- ------------
$ 4,345,455 $ 3,623,373 $ 703,716
------------- ----------- ------------
------------- ----------- ------------
Units outstanding, September 30, 1997 ... 2,194,824 1,823,741 510,731
Net asset value per unit,
September 30, 1997 ...................... $1.979864 $1.986780 $1.377860
VIPF II T. Rowe Price DGPF
Asset Manager Internaional Stock International Equity
Sub-Account Sub-Account Sub-Account
106 150 207
------------- ------------------ -------------------
ASSETS:
Investments in shares of
Allmerica Investment Trust ................... - - -
Investments in shares of Fidelity
Variable Insurance Products Funds ............ $ 693,223 - -
Investment in shares of T. Rowe
Price International Series, Inc. ............ - $ 795,237 -
Investment in shares of Delaware
Group Premium Fund, Inc. .................... - - $ 806,497
------------- ------------- -------------
Total assets ............................ 693,223 795,237 806,497
LIABILITIES: - - -
------------- ------------- ------------
Net assets ............................... $ 693,223 $ 795,237 $ 806,497
------------- ------------- ------------
------------- ------------- ------------
Net asset distribution by category:
Variable life policies ................... $693,223 $795,237 $806,497
Value of investment by Allmerica Financial
Life Insurance
and Annuity Company (Sponsor) .......... - - -
------------- ------------- -------------
$693,223 $795,237 $806,497
------------- ------------- -------------
------------- ------------- -------------
Units outstanding, September 30, 1997 457,484 599,637 541,656
Net asset value per unit,
September 30, 1997 .................... $1.1515293 $1.326198 $1.488949
</TABLE>
The accompanying notes are an integral part of these financial statements.
PAGE 2
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Growth
Sub-Account 1
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 73,957 136,012 48,237
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 12,426 8,082 2,845
Administrative expenses . . . . . . . . . . . . . . . . . . . 3,504 2,279 790
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 15,930 10,361 3,635
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 58,027 125,651 44,602
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 15,421 6,206 871
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 15,421 6,206 871
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 351,623 24,343 35,675
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 367,044 30,549 36,546
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 425,071 156,200 81,148
----------- ----------- -----------
----------- ----------- -----------
Investment Grade Income
Sub-Account 2
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 36,110 29,860 14,621
----------- -----------
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 4,735 3,961 1,689
Administrative expenses . . . . . . . . . . . . . . . . . . . 1,335 1,117 469
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 6,070 5,078 2,158
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 30,040 24,782 12,463
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales
of investments . . . . . . . . . . . . . . . . . . . . . . . 528 118 170
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 528 118 170
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 10,540 (11,188) 13,405
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 11,068 (11,070) 13,575
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 41,108 13,712 26,038
----------- ----------- -----------
----------- ----------- -----------
Money Market
Sub-Account 3
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 54,749 32,250 32,514
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 9,186 5,620 5,092
Administrative expenses . . . . . . . . . . . . . . . . . . . 2,591 1,585 1,415
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 11,777 7,205 6,507
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 42,972 25,045 26,007
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 0 0 0
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 0 0 0
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 0 0 0
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 42,972 25,045 26,007
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 1
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
Equity Index
Sub-Account 4
------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended --------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,049 $ 16,321 $ 6,792
------------------- ------------ -----------
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . . . . . . . . . 7,300 3,711 801
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,060 1,047 223
------------------- ------------ -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,360 4,758 1,024
------------------- ------------ -----------
Net investment income (loss) . . . . . . . . . . . . . . . . . . . . . . . . 4,689 11,563 5,768
------------------- ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of investments . . . . . . . . . . . . . . 36,062 13,582 650
------------------- ------------ -----------
Net realized gain (loss) from gain distributions and sales of investments. . 36,062 13,582 650
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . 222,664 53,897 17,486
------------------- ------------ -----------
Net realized and unrealized gain (loss) on investments . . . . . . . . . . 258,726 67,479 18,136
------------------- ------------ -----------
Net increase (decrease) in net assets from operations . . . . . . . . . . . 263,415 79,042 23,904
------------------- ------------ -----------
------------------- ------------ -----------
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<CAPTION>
Government Bond
Sub-Account 5
------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended --------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,339 $ 9,371 $ 4,876
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . . . . . . . . . 1,313 1,395 779
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 394 216
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,683 1,789 995
------------------- ------------ -----------
Net investment income (loss) . . . . . . . . . . . . . . . . . . . . . . . . 6,656 7,582 3,881
------------------- ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of investments . . . . . . . . . . . . . . 461 416 2,220
------------------- ------------ -----------
Net realized gain (loss) from gain distributions and sales of investments. . 461 416 2,220
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . 922 (2,658) 3,911
------------------- ------------ -----------
Net realized and unrealized gain (loss) on investments . . . . . . . . . . 1,383 (2,242) 6,131
------------------- ------------ -----------
Net increase (decrease) in net assets from operations . . . . . . . . . . . 8,039 5,340 10,012
------------------- ------------ -----------
------------------- ------------ -----------
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<CAPTION>
Government Bond
Sub-Account 5
------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended --------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,081 $ 110,059 $ 0
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . . . . . . . . . 16,239 10,984 4,636
Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,580 3,098 1,288
------------------- ------------ -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,819 14,082 5,924
------------------- ------------ -----------
Net investment income (loss) . . . . . . . . . . . . . . . . . . . . . . . . 16,262 95,977 (5,924)
------------------- ------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of investments . . . . . . . . . . . . . . 11,166 14,437 2,278
------------------- ------------ -----------
Net realized gain (loss) from gain distributions and sales of investments. . 11,166 14,437 2,278
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . 779,310 65,265 135,550
------------------- ------------ -----------
Net realized and unrealized gain (loss) on investments . . . . . . . . . . 790,476 79,702 137,828
------------------- ------------ -----------
Net increase (decrease) in net assets from operations . . . . . . . . . . . 806,738 175,679 131,904
------------------- ------------ -----------
------------------- ------------ -----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
PAGE 2
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
Select Growth
Sub-Account 7
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 7,603 70,775 25
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 6,607 2,634 1,047
Administrative expenses . . . . . . . . . . . . . . . . . . . 1,863 743 291
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 8,470 3,377 1,338
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . (867) 67,398 (1,313)
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 2,739 8,490 1,936
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 2,739 8,490 1,936
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 257,011 (25,800) 18,467
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 259,750 (17,310) 20,403
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 258,883 50,088 19,090
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
Select Growth and Income
Sub-Account 8
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 30,827 81,334 24,678
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 8,915 6,466 2,675
Administrative expenses . . . . . . . . . . . . . . . . . . . 2,514 1,824 743
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 11,429 8,290 3,418
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 19,398 73,044 21,260
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales
of investments . . . . . . . . . . . . . . . . . . . . . . . 5,956 5,532 1,275
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 5,956 5,532 1,275
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 219,326 50,803 53,136
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 225,282 56,335 54,411
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 244,680 129,379 75,671
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
Small Mid-Cap Value
Sub-Account 9
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 6,623 44,323 16,135
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 8,570 5,802 2,801
Administrative expenses . . . . . . . . . . . . . . . . . . . 2,417 1,636 778
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 10,987 7,438 3,579
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . (4,364) 36,885 12,556
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 33,526 10,246 1,180
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 33,526 10,246 1,180
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 238,354 107,671 34,744
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 271,880 117,917 35,924
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 267,516 154,802 48,480
----------- ----------- -----------
----------- ----------- -----------
* Formerly Small Cap Value Fund. See Note 1.
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 3
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
Select Income
Sub-Account 10
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,404
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 127
Administrative expenses . . . . . . . . . . . . . . . . . . . 36
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 163 -- --
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 1,241 -- --
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 31 -- --
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 105
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 136 -- --
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . $ 1,377 -- --
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
Select International Equity
Sub-Account 11
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,991 $ 24,530 $ 4,810
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 13,100 6,466 1,757
Administrative expenses . . . . . . . . . . . . . . . . . . . 3,695 1,824 488
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 16,795 8,290 2,245
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 1,196 16,240 2,565
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 14,863 6,398 1,625
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 14,863 6,398 1,625
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 152,133 128,190 29,470
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 166,996 134,588 31,095
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . $ 168,192 $ 150,828 $ 33,660
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
Select Capital Appeciation
Sub-Account 12
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 1,660 $ 2,887
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 8,074 4,971 370
Administrative expenses . . . . . . . . . . . . . . . . . . . 2,278 1,402 103
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 10,352 6,373 473
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . (10,352) (4,713) 2,414
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 4,056 1,850 219
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 4,056 1,850 219
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 186,381 6,909 12,788
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 190,437 8,759 13,007
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . $ 180,085 $ 4,046 $ 15,421
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 4
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
VIPF High Income
Sub-Account 102
-------------------------------------------------
For the Nine For the Year
Months Ended December 31,
9/30/97 (Unaudited) 1996 1995
------------------ ----------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . $ 76,895 $29,150 $ 4,862
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . 7,862 4,702 1,284
Administrative expenses . . . . . . . . . . . . . . . 2,217 1,326 357
-------- ------- -------
Total expenses . . . . . . . . . . . . . . . . . . . 10,079 6,028 1,641
-------- ------- -------
Net investment income (loss) . . . . . . . . . . . . 66,816 23,122 3,221
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of investments . . 11,661 1,765 1,048
-------- ------- -------
Net realized gain (loss) from gain distributions and
sales of investments . . . . . . . . . . . . . . . 11,661 1,765 1,048
Net unrealized gain (loss) . . . . . . . . . . . . . 103,588 35,447 16,928
-------- ------- -------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . 115,249 37,212 17,976
-------- ------- -------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . $182,065 $60,334 $21,197
-------- ------- -------
-------- ------- -------
VIPF Equity-Income
Sub-Account 103
-------------------------------------------------
For the Nine For the Year
Months Ended December 31,
9/30/97 (Unaudited) 1996 1995
------------------ ----------------------------
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . $288,684 $ 65,464 $ 37,820
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . 22,731 18,682 6,818
Administrative expenses . . . . . . . . . . . . . . . 6,412 5,269 1,894
-------- -------- --------
Total expenses . . . . . . . . . . . . . . . . . . 29,143 23,951 8,712
-------- -------- --------
Net investment income (loss) . . . . . . . . . . . . 259,541 41,513 29,108
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of investments . . 21,160 20,770 5,061
-------- -------- --------
Net realized gain (loss) from gain distributions and
sales of investments . . . . . . . . . . . . . . . 21,160 20,770 5,061
Net unrealized gain (loss) . . . . . . . . . . . . . 484,145 197,470 178,135
-------- -------- --------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . 505,305 218,240 183,196
-------- -------- --------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . $764,846 $259,753 $212,304
-------- -------- --------
-------- -------- --------
VIPF Growth
Sub-Account 104
-------------------------------------------------
For the Nine For the Year
Months Ended December 31,
9/30/97 (Unaudited) 1996 1995
------------------ ----------------------------
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . $ 90,099 $ 84,694 $ 1,827
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . 19,326 16,095 6,109
Administrative expenses . . . . . . . . . . . . . . . 5,451 4,540 1,697
-------- -------- --------
Total expenses . . . . . . . . . . . . . . . . . . . 24,777 20,635 7,806
-------- -------- --------
Net investment income (loss) . . . . . . . . . . . . 65,322 64,059 (5,979)
-------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of investments . . 28,598 9,689 4,162
-------- -------- --------
Net realized gain (loss) from gain distributions and
sales of investments . . . . . . . . . . . . . . . 28,598 9,689 4,162
Net unrealized gain (loss) . . . . . . . . . . . . . 544,681 129,705 157,014
-------- -------- --------
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . 573,279 139,394 161,176
-------- -------- --------
Net increase (decrease) in net assets from
operations . . . . . . . . . . . . . . . . . . . . . $638,601 $203,453 $155,197
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
VIPF Overseas
Sub-Account 105
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . $ 49,974 $ 14,705 $ 2,604
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 4,094 5,779 4,128
Administrative expenses . . . . . . . . . . . . . . . . . . . 1,154 1,630 1,146
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 5,248 7,409 5,274
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 44,726 7,296 (2,670)
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 7,332 26,178 1,200
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 7,332 26,178 1,200
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . 52,520 36,231 43,023
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 59,852 62,409 44,223
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . $ 104,578 $ 69,705 $ 41,553
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
VIPF II Asset Manager
Sub-Account 106
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . $ 69,904 $ 35,481 $ 7,071
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 4,114 5,090 3,680
Administrative expenses . . . . . . . . . . . . . . . . . . . 1,161 1,435 1,022
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 5,275 6,525 4,702
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 64,629 28,956 2,369
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 7,006 19,047 2,905
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 7,006 19,047 2,905
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 26,621 23,161 56,562
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 33,627 42,208 59,467
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . $ 98,256 $ 71,164 $ 61,836
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
T. Rowe Price International Stock
Sub-Account 150
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0 $ 5,000 $ 0
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 3,728 1,506 114
Administrative expenses . . . . . . . . . . . . . . . . . . . 1,052 425 32
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 4,780 1,931 146
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . (4,780) 3,069 (146)
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 4,721 786 25
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 4,721 786 25
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . 52,137 17,465 1,602
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 56,858 18,251 1,627
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . $ 52,078 $ 21,320 $ 1,481
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 6
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
DGPF International Equity
Sub-Account 207
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,296 $ 6,505 $ 1,760
EXPENSES:
Mortality and expense risk fee . . . . . . . . . . . . . . . . 3,556 1,812 904
Administrative expenses . . . . . . . . . . . . . . . . . . . 1,003 511 252
----------- ----------- -----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 4,559 2,323 1,156
----------- ----------- -----------
Net investment income (loss) . . . . . . . . . . . . . . . . 7,737 4,182 604
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from sales of
investments . . . . . . . . . . . . . . . . . . . . . . . . . 2,784 3,693 414
----------- ----------- -----------
Net realized gain (loss) from gain distributions
and sales of investments . . . . . . . . . . . . . . . . . 2,784 3,693 414
Net unrealized gain (loss) . . . . . . . . . . . . . . . . . . 58,118 28,077 11,496
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments . . 60,902 31,770 11,910
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . $ 68,639 $ 35,952 $ 12,514
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 7
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Growth
Sub-Account 1
--------------------------------------------------
Nine Year Ended December 31,
Months Ended ----------------------
9/30/97 (Unaudited) 1996 1995
------------------ ------ ------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 58,027 $ 125,651 $ 44,602
Net realized gain (loss) on investments . . . . . . . . . . . . 15,421 6,206 871
Net unrealized gain (loss) on investments . . . . . . . . . . . 351,623 24,343 35,675
--------- --------- -------
Net increase (decrease) in net assets from operations . . . . . 425,071 156,200 81,148
--------- --------- -------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 358,095 347,739 133,682
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (17,410) (11,851) (725)
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . (23,058)
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . . 411,038 306,635 197,720
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . -
--------- --------- -------
Net increase (decrease) in net assets from capital transactions . 728,665 642,523 330,677
--------- --------- -------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 1,153,736 798,723 411,825
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . 1,352,200 553,477 141,652
--------- --------- -------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,505,936 $1,352,200 $553,477
--------- --------- -------
--------- --------- -------
Investment Grade Income
Sub-Account 2
--------------------------------------------------
Nine Year Ended December 31,
Months Ended ----------------------
9/30/97 (Unaudited) 1996 1995
------------------ ------ ------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 30,040 $ 24,782 $ 12,463
Net realized gain (loss) on investments . . . . . . . . . . . . 528 118 170
Net unrealized gain (loss) on investments . . . . . . . . . . . 10,540 (11,188) 13,405
--------- --------- -------
Net increase (decrease) in net assets from operations . . . . . 41,108 13,712 26,038
--------- --------- -------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 174,573 172,317 129,213
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (5,462) - (186)
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (12,730) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . . 49,437 73,887 101,623
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . . -
--------- --------- -------
Net increase (decrease) in net assets from capital transactions . 205,818 246,204 230,650
--------- --------- -------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 246,926 259,916 256,688
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 591,174 331,258 74,570
--------- --------- -------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 838,100 $ 591,174 $331,258
--------- --------- -------
--------- --------- -------
Money Market
Sub-Account 3
--------------------------------------------------
Nine Year Ended December 31,
Months Ended ----------------------
9/30/97 (Unaudited) 1996 1995
------------------ ------ ------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 42,972 $ 25,045 $ 26,007
Net realized gain (loss) on investments . . . . . . . . . . . . - - -
Net unrealized gain (loss) on investments . . . . . . . . . . . - - -
--------- --------- -------
Net increase (decrease) in net assets from operations . . . . . 42,972 25,045 26,007
--------- --------- -------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 1,286,961 1,964,968 744,319
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (44,480) (894) -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (46,560) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . (793,584) (1,311,350) (859,523)
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . - - -
--------- --------- -------
Net increase (decrease) in net assets from capital transactions . 402,337 652,724 (115,204)
--------- --------- -------
Net increase (decrease) in net assets . . . . . . . . . . . . . . 445,309 677,769 (89,197)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 1,085,844 408,075 497,272
--------- --------- -------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . $1,531,153 $1,085,844 $408,075
--------- --------- -------
--------- --------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 1
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
Equity Index
Sub-Account 4
--------------------------------------------------
Nine Year Ended December 31,
Months Ended ----------------------
9/30/97 (Unaudited) 1996 1995
------------------ ------ ------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . $ 4,689 $ 11,563 $ 5,768
Net realized gain (loss) on investments . . . . . . . . . . . 36,062 13,582 650
Net unrealized gain (loss) on investments . . . . . . . . . . 222,664 53,897 17,486
--------- --------- -------
Net increase (decrease) in net assets from operations . . . . 263,415 79,042 23,904
--------- --------- -------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . 320,867 130,549 62,224
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . (2,556) - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . (9,421) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . . 292,720 177,134 91,621
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . - - -
-------- --------- -------
Net increase (decrease) in net assets from capital transactions . 601,610 307,683 153,845
-------- --------- -------
Net increase (decrease) in net assets . . . . . . . . . . . . . 865,025 386,725 177,749
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 590,879 204,154 26,405
-------- --------- --------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . $1,455,904 $ 590,879 $204,154
---------- --------- --------
---------- --------- --------
Government Bond
Sub-Account 5
--------------------------------------------------
Nine Year Ended December 31,
Months Ended ----------------------
9/30/97 (Unaudited) 1996 1995
------------------ ------ ------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 6,656 $ 7,582 $ 3,881
Net realized gain (loss) on investments . . . . . . . . . . . . 461 416 2,220
Net unrealized gain (loss) on investments . . . . . . . . . . . 922 (2,658) 3,911
---------- --------- --------
Net increase (decrease) in net assets from operations . . . . . 8,039 5,340 10,012
---------- --------- --------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 126,647 82,419 54,632
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (63) - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (7,647) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . (114,321) 7,432 (98,107)
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . - - -
---------- --------- --------
Net increase (decrease) in net assets from capital transactions . 4,616 89,851 (43,475)
---------- --------- --------
Net increase (decrease) in net assets . . . . . . . . . . . . . 12,655 95,191 (33,463)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 171,290 76,099 109,562
---------- --------- --------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 183,945 $171,290 $76,099
---------- --------- --------
---------- --------- --------
Select Aggressive Growth
Sub-Account 6
--------------------------------------------------
Nine Year Ended December 31,
Months Ended ----------------------
9/30/97 (Unaudited) 1996 1995
------------------ ------ ------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 16,262 $ 95,977 $ (5,924)
Net realized gain (loss) on investments . . . . . . . . . . . . 11,166 14,437 2,278
Net unrealized gain (loss) on investments . . . . . . . . . . . 779,310 65,265 135,550
---------- --------- --------
Net increase (decrease) in net assets from operations . . . . . 806,738 175,679 131,904
---------- --------- --------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 594,434 375,474 214,367
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (7,747) (15,451) (127)
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (23,126) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . . 629,093 294,620 223,558
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . . - - -
---------- --------- --------
Net increase (decrease) in net assets from capital transactions . 1,192,654 654,643 437,798
---------- --------- --------
Net increase (decrease) in net assets . . . . . . . . . . . . . 1,999,392 830,322 569,702
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 1,631,287 800,965 231,263
---------- --------- --------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . $3,630,679 $1,631,287 $800,965
---------- --------- --------
---------- --------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
Select Growth
Sub-Account 7
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . $ (867) $ 67,398 $ (1,313)
Net realized gain (loss) on investments . . . . . . . . . 2,739 8,490 1,936
Net unrealized gain (loss) on investments . . . . . . . . . 257,011 (25,800) 18,467
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 258,883 50,088 19,090
----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . 310,662 122,752 56,664
Terminations . . . . . . . . . . . . . . . . . . . . . . . (922) (1,127) --
Insurance charges . . . . . . . . . . . . . . . . . . . . . (11,584) -- --
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . 470,840 149,609 54,862
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . -- -- --
----------- ----------- -----------
Net increase (decrease) in net assets from capital
transactions . . . . . . . . . . . . . . . . . . . . . . . 768,996 271,234 111,526
----------- ----------- -----------
Net increase (decrease) in net assets . . . . . . . . . . . 1,027,879 321,322 130,616
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 491,280 169,958 39,342
----------- ----------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $1,519,159 $ 491,280 $ 169,958
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
Select Growth and Income
Sub-Account 8
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . $ 19,398 $ 73,044 $ 21,260
Net realized gain (loss) on investments . . . . . . . . . . 5,956 5,532 1,275
Net unrealized gain (loss) on investments . . . . . . . . . 219,326 50,803 53,136
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 244,680 129,379 75,671
----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . 222,772 216,938 106,450
Terminations . . . . . . . . . . . . . . . . . . . . . . . (2,655) (110) (539)
Insurance charges . . . . . . . . . . . . . . . . . . . . . (15,195) -- --
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . 213,975 161,338 202,145
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . -- -- --
----------- ----------- -----------
Net increase (decrease) in net assets from capital
transactions . . . . . . . . . . . . . . . . . . . . . . . 418,897 378,166 308,056
----------- ----------- -----------
Net increase (decrease) in net assets . . . . . . . . . . . 663,577 507,545 383,727
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 1,021,420 513,875 130,148
----------- ----------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $1,684,997 $1,021,420 $ 513,875
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
Small Mid-Cap Value
Sub-Account 9
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . $ (4,364) $ 36,885 $ 12,556
Net realized gain (loss) on investments . . . . . . . . . . 33,526 10,246 1,180
Net unrealized gain (loss) on investments . . . . . . . . . 238,354 107,671 34,744
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 267,516 154,802 48,480
----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . 280,201 150,169 121,457
Terminations . . . . . . . . . . . . . . . . . . . . . . . (3,972) (1,360) --
Insurance charges . . . . . . . . . . . . . . . . . . . . . (7,132) -- --
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . 350,137 91,341 144,338
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . -- -- --
----------- ----------- -----------
Net increase (decrease) in net assets from capital
transactions . . . . . . . . . . . . . . . . . . . . . . . 619,234 240,150 265,795
----------- ----------- -----------
Net increase (decrease) in net assets . . . . . . . . . . . 886,750 394,952 314,275
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 878,415 483,463 169,188
----------- ----------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $1,765,165 $ 878,415 $ 483,463
----------- ----------- -----------
----------- ----------- -----------
(a) As of December 31, 1995 and 1996, there were no transactions for Sub-Account 10.
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 3
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
Select Income
Sub-Account 10
-------------------------------------------------------------
Nine
Months Ended Year Ended December 31,
----------------------------
9/30/97 (Unaudited) 1996(a) 1995(a)
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 1,241 - -
Net realized gain (loss) on investments . . . . . . . . . . . . 31 - -
Net unrealized gain (loss) on investments . . . . . . . . . . . 105 - -
------------------- ------------- ------------
Net increase (decrease) in net assets from operations. . . . . 1,377 - -
------------------- ------------- ------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 11,119 - -
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (293) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . 53,691 - -
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . - - -
------------------- ------------- ------------
Net increase (decrease) in net assets from capital transactions. 64,517 - -
------------------- ------------- ------------
Net increase (decrease) in net assets . . . . . . . . . . . . . 65,894 - -
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . - - -
------------------- ------------- ------------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,894 - -
------------------- ------------- ------------
------------------- ------------- ------------
Select International Equity
Sub-Account 11
-------------------------------------------------------------
Nine
Months Ended Year Ended December 31,
----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 1,196 $ 16,240 $ 2,565
Net realized gain (loss) on investments . . . . . . . . . . . . 14,863 6,398 1,625
Net unrealized gain (loss) on investments . . . . . . . . . . . 152,133 128,190 29,470
------------------- ------------- ------------
Net increase (decrease) in net assets from operations . . . . . 168,192 150,828 33,660
------------------- ------------- ------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 569,764 330,608 86,660
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (2,815) (10,864) -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (17,543) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . 804,555 346,431 163,641
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . - (132) -
------------------- ------------- ------------
Net increase (decrease) in net assets from capital transactions. 1,353,961 666,043 250,30
------------------- ------------- ------------
Net increase (decrease) in net assets . . . . . . . . . . . . . 1,522,153 816,871 283,961
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . 1,181,803 364,932 80,971
------------------- ------------- ------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,703,956 $ 1,181,803 $ 364,932
------------------- ------------- ------------
------------------- ------------- ------------
Select Capital Appreciation
Sub-Account 12
-------------------------------------------------------------
Nine
Months Ended Year Ended December 31,
----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ (10,352) $ (4,713) $ 2,414
Net realized gain (loss) on investments . . . . . . . . . . . . 4,056 1,850 219
Net unrealized gain (loss) on investments . . . . . . . . . . . 186,381 6,909 12,788
------------------- ------------- ------------
Net increase (decrease) in net assets from operations . . . . . 180,085 4,046 15,421
------------------- ------------- ------------
FROM CAPITAL TRANSACTIONS :
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 368,246 315,826 40,487
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (6,284) (789) -
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (7,383) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . 133,526 497,943 96,126
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . - (294) 200
------------------- ------------- ------------
Net increase (decrease) in net assets from capital transactions. 488,105 812,686 136,813
------------------- ------------- ------------
Net increase (decrease) in net assets . . . . . . . . . . . . . 668,190 816,732 152,234
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . 968,966 152,234 -
------------------- ------------- ------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,637,156 $ 968,966 $ 152,234
------------------- ------------- ------------
------------------- ------------- ------------
(a) As of Decomber 31, 1995 and 1996, there were no transactoins for Sub-Account 10.
The accompanying notes are an integral part of these financial statements
</TABLE>
PAGE 4
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
VIPF High Income
Sub-Account 102
---------------------------------------------------------
Nine
Months Ended Year Ended December 31,
9/30/97 (Unaudited) 1996 1995
---------------------- ------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 66,816 $ 23,122 $ 3,221
Net realized gain (loss) on investments . . . . . . . . . . . . 11,661 1,765 1,048
Net unrealized gain (loss) on investments . . . . . . . . . . . 103,588 35,447 16,928
---------- -------- --------
Net increase (decrease) in net assets from operations . . . . 182,065 60,334 21,197
---------- -------- --------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 355,937 227,688 111,201
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (6,415) (3,177) (94)
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (13,152) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . . . 128,193 260,158 96,059
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . . - - -
---------- -------- --------
Net increase (decrease) in net assets from capital transactions. 464,563 484,669 207,166
---------- -------- --------
Net increase (decrease) in net assets . . . . . . . . . . . . 646,628 545,003 228,363
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 835,339 290,336 61,973
---------- -------- --------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $1,481,967 $835,339 $290,336
---------- -------- --------
---------- -------- --------
VIPF Equity-Income
Sub-Account 103
---------------------------------------------------------
Nine
Months Ended Year Ended December 31,
9/30/97 (Unaudited) 1996 1995
---------------------- ------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 259,541 $ 41,513 $ 29,108
Net realized gain (loss) on investments . . . . . . . . . . . . 21,160 20,770 5,061
Net unrealized gain (loss) on investments . . . . . . . . . . . 484,145 197,470 178,135
---------- -------- ----------
Net increase (decrease) in net assets from operations . . . . 764,846 259,753 212,304
---------- -------- ----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 741,850 718,282 382,477
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (32,817) (19,458) (227)
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (44,087) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . . 206,806 444,910 380,024
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . . - - -
---------- ---------- ----------
Net increase (decrease) in net assets from capital transactions. 871,752 1,143,734 762,274
---------- ---------- ----------
Net increase (decrease) in net assets . . . . . . . . . . . . 1,636,598 1,403,487 974,578
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 2,708,857 1,305,370 330,792
---------- ---------- ----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $4,345,455 $2,708,857 $1,305,370
---------- ---------- ----------
---------- ---------- ----------
VIPF Growth
Sub-Account 104
---------------------------------------------------------
Nine
Months Ended Year Ended December 31,
9/30/97 (Unaudited) 1996 1995
---------------------- ------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . . $ 65,322 $ 64,059 $ (5,979)
Net realized gain (loss) on investments . . . . . . . . . . . . 28,598 9,689 4,162
Net unrealized gain (loss) on investments . . . . . . . . . . . 544,681 129,705 157,014
---------- -------- ---------
Net increase (decrease) in net assets from operations . . . . 638,601 203,453 155,197
---------- -------- ---------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 555,645 617,121 330,994
Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . (27,601) (14,686) (711)
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . (33,532) - -
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . . . 123,409 476,794 305,484
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . . . - - -
---------- ---------- ---------
Net increase (decrease) in net assets from capital transactions. 617,921 1,079,229 635,767
---------- ---------- ---------
Net increase (decrease) in net assets . . . . . . . . . . . . 1,256,522 1,282,682 790,964
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 2,366,851 1,084,169 293,205
---------- ---------- ----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $3,623,373 $2,366,851 $1,084,169
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
VIPF Overseas
Sub-Account 105
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . $ 44,726 $ 7,296 $ (2,670)
Net realized gain (loss) on investments . . . . . . . . . 7,332 26,178 1,200
Net unrealized gain (loss) on investments . . . . . . . . . 52,520 36,231 43,023
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 104,578 69,705 41,553
----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . 92,564 142,056 152,554
Terminations . . . . . . . . . . . . . . . . . . . . . . . (3,549) (3,164) (129)
Insurance charges . . . . . . . . . . . . . . . . . . . . . (6,714) -- --
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . (38,228) (228,656) 72,800
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . -- -- --
----------- ----------- -----------
Net increase (decrease) in net assets from capital
transactions . . . . . . . . . . . . . . . . . . . . . . . 44,073 (89,764) 225,225
----------- ----------- -----------
Net increase (decrease) in net assets . . . . . . . . . . . 148,651 (20,059) 266,778
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 555,065 575,124 308,346
----------- ----------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 703,716 $ 555,065 $ 575,124
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
VIPF II Asset Manager
Sub-Account 106
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . $ 64,629 $ 28,956 $ 2,369
Net realized gain (loss) on investments . . . . . . . . . . 7,006 19,047 2,905
Net unrealized gain (loss) on investments . . . . . . . . . 26,621 23,161 56,562
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 98,256 71,164 61,836
----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . 71,941 117,653 161,011
Terminations . . . . . . . . . . . . . . . . . . . . . . . (35,984) -- --
Insurance charges . . . . . . . . . . . . . . . . . . . . . (13,594) -- --
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . 36,500 (180,625) (13,418)
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . -- (129) --
----------- ----------- -----------
Net increase (decrease) in net assets from capital
transactions . . . . . . . . . . . . . . . . . . . . . . . 58,863 (63,101) 147,593
----------- ----------- -----------
Net increase (decrease) in net assets . . . . . . . . . . . 157,119 8,063 209,429
----------- ----------- -----------
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 536,104 528,041 318,612
----------- ----------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 693,223 $ 536,104 $ 528,041
----------- ----------- -----------
----------- ----------- -----------
<CAPTION>
T. Rowe Price International Stock
Sub-Account 150
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS :
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . $ (4,780) 3,069 (146)
Net realized gain (loss) on investments . . . . . . . . . . 4,721 786 25
Net unrealized gain (loss) on investments . . . . . . . . . 52,137 17,465 1,602
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 52,078 21,320 1,481
----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . 220,548 83,905 13,744
Terminations . . . . . . . . . . . . . . . . . . . . . . . (3,009) (405) --
Insurance charges . . . . . . . . . . . . . . . . . . . . . (3,887) -- --
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . 179,189 192,511 37,762
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . -- -- --
----------- ----------- -----------
Net increase (decrease) in net assets from capital
transactions . . . . . . . . . . . . . . . . . . . . . . . 392,841 276,011 51,506
----------- ----------- -----------
Net increase (decrease) in net assets . . . . . . . . . . . 444,919 297,331 52,987
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 350,318 52,987 --
----------- ----------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 795,237 350,318 52,987
----------- ----------- -----------
----------- ----------- -----------
(a) As of December 31, 1995 and 1996, there were no transactions for Sub-Account 10.
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 6
<PAGE>
INHEIRITAGE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
DGPF International Equity
Sub-Account 207
-------------------------------------------------------
For the Year Ended
For the Nine December 31,
Months Ended -----------------------------
9/30/97 (Unaudited) 1996 1995
------------------- ------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . $ 7,737 $ 4,182 $ 604
Net realized gain (loss) on investments . . . . . . . . . 2,784 3,693 414
Net unrealized gain (loss) on investments . . . . . . . . . 58,118 28,077 11,496
----------- ----------- -----------
Net increase (decrease) in net assets from operations . . . 68,639 35,952 12,514
----------- ----------- -----------
FROM CAPITAL TRANSACTIONS:
Net premiums . . . . . . . . . . . . . . . . . . . . . . . 182,949 81,837 40,691
Terminations . . . . . . . . . . . . . . . . . . . . . . . -- (193) (481)
Insurance charges . . . . . . . . . . . . . . . . . . . . . (4,340) -- --
Other transfers from (to) the General Account of Allmerica
Financial Life Insurance and Annuity Company (Sponsor) . . 244,714 43,641 40,455
Net increase (decrease) in investment by Allmerica Financial
Life Insurance and Annuity Company (Sponsor) . . . . . . . -- -- --
----------- ----------- -----------
Net increase (decrease) in net assets from capital
transactions . . . . . . . . . . . . . . . . . . . . . . . 423,323 125,285 80,665
----------- ----------- -----------
Net increase (decrease) in net assets . . . . . . . . . . . 491,962 161,237 93,179
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . 314,535 153,298 60,119
----------- ----------- -----------
End of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 806,497 $ 314,535 $ 153,298
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
Page 7
<PAGE>
FINANCIAL STATEMENTS
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
STATEMENTS OF INCOME
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
(In millions) 1997 1996
- -------------------------------------------------------------------------------
REVENUES
Premiums. . . . . . . . . . . . . . . . . . . . . . $ 23.3 $ 25.2
Universal life and investment product policy fees . 156.4 129.5
Net investment income . . . . . . . . . . . . . . . 125.8 129.3
Net realized investment losses. . . . . . . . . . . (2.9) (5.7)
Other income. . . . . . . . . . . . . . . . . . . . 0.6 0.3
-------- --------
Total revenues. . . . . . . . . . . . . . . . . . 303.2 278.6
-------- --------
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment
expenses . . . . . . . . . . . . . . . . . . . . . 147.2 143.5
Policy acquisition expenses . . . . . . . . . . . . 38.0 36.7
Loss from cession of disability income business . . 53.9 -
Other operating expenses. . . . . . . . . . . . . . 71.6 63.6
-------- --------
Total benefits, losses and expenses. . . . . . . 310.7 243.8
-------- --------
(Loss) income before federal income taxes. . . . . . . (7.5) 34.8
-------- --------
FEDERAL INCOME TAX EXPENSE (BENEFIT)
Current.. . . . . . . . . . . . . . . . . . . . . . 5.9 18.3
Deferred. . . . . . . . . . . . . . . . . . . . . . (8.1) (8.6)
-------- --------
Total federal income tax (benefit) expense . . . . . . (2.2) 9.7
-------- --------
Net (loss) income. . . . . . . . . . . . . . . . . . . $ (5.3) $ 25.1
-------- --------
-------- --------
The accompanying notes are an integral part of these financial statements.
<PAGE>
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
(In millions) 1997 1996
- -------------------------------------------------------------------------------
COMMON STOCK
Balance at beginning and end of period . . . . . . . $ 2.5 $ 2.5
-------- --------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning and end of period . . . . . . . 346.3 324.3
-------- --------
RETAINED EARNINGS
Balance at beginning of period . . . . . . . . . . . 176.4 144.7
Net (loss) income. . . . . . . . . . . . . . . . . . ( 5.3) 25.1
-------- --------
Balance at end of period . . . . . . . . . . . . . . 171.1 169.8
-------- --------
NET UNREALIZED APPRECIATION ON INVESTMENTS
Balance at beginning of period . . . . . . . . . . . 20.5 23.8
Net appreciation (depreciation) on available-for-sale
securities. . . . . . . . . . . . . . . . . . 21.7 ( 20.4)
(Provision) benefit for deferred federal income taxes (7.6) 7.2
-------- --------
Balance at end of period . . . . . . . . . . . . . . 34.6 10.6
-------- --------
Total shareholders' equity. . . . . . . . . . . $ 554.5 $ 507.2
-------- --------
-------- --------
The accompanying notes are an integral part of these financial statements.
<PAGE>
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
(In millions) 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities-at fair value (amortized cost of $1,425.0 and $1,660.2) $ 1,486.6 $ 1,698.0
Equity securities-at fair value (cost of $33.4 and $33.0) . . . . . . . 51.9 41.5
Mortgage loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213.7 221.6
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8 26.1
Policy loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138.1 131.7
Other long-term investments . . . . . . . . . . . . . . . . . . . . . . 0.1 7.9
---------- ----------
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . 1,905.22 2,126.8
---------- ----------
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 18.3 18.8
Accrued investment income . . . . . . . . . . . . . . . . . . . . . . . 34.8 37.7
Deferred policy acquisition costs . . . . . . . . . . . . . . . . . . . 676.0 632.7
Reinsurance receivable on paid and unpaid losses,
benefits and unearned premiums. . . . . . . . . . . . . . . . . . 75.0 72.5
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210.1 8.2
Separate account assets . . . . . . . . . . . . . . . . . . . . . . . . 7,040.6 4,524.0
---------- ----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,960.0 $ 7,420.7
---------- ----------
---------- ----------
LIABILITIES
Policy liabilities and accruals:
Future policy benefits. . . . . . . . . . . . . . . . . . . . . . . . . $ 2,136.8 $ 2,163.0
Outstanding claims, losses and loss adjustment expenses . . . . . . . . 16.5 15.4
Unearned premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 2.7
Contractholder deposit funds and other policy liabilities . . . . . . . 36.4 32.8
---------- ----------
Total policy liabilities and accruals. . . . . . . . . . . . . . . 2,192.3 2,213.9
---------- ----------
Expenses and taxes payable. . . . . . . . . . . . . . . . . . . . . . . 117.9 77.3
Deferred federal income taxes . . . . . . . . . . . . . . . . . . . . . 54.7 60.2
Separate account liabilities. . . . . . . . . . . . . . . . . . . . . . 7,040.6 4,523.6
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 9,405.5 6,873.0
---------- ----------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock, $1,000 par value, 10,000 shares authorized, 2,518 shares
issued and outstanding. . . . . . . . . . . . . . . . . . . . . . . . . 2.5 2.5
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 346.3 346.3
Unrealized appreciation on investments, net. . . . . . . . . . . . . . . 34.6 20.5
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 171.1 176.4
---------- ----------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . 554.5 545.7
---------- ----------
Total liabilities and shareholders' equity. . . . . . . . . . . . . $ 9,960.0 $ 7,420.7
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
(In millions) 1997 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income. . . . . . . . . . . . . . . . . . . . . . . $ (5.3) $ 25.1
Adjustments to reconcile net (loss) income to net cash from
operating activities:
Net realized losses. . . . . . . . . . . . . . . . . . . . . . . . 2.9 5.7
Net amortization and depreciation. . . . . . . . . . . . . . . . . 0.2 2.9
Deferred federal income taxes. . . . . . . . . . . . . . . . (8.1) (8.6)
Change in deferred acquisition costs . . . . . . . . . . . . . . . (58.7) (36.8)
Change in accrued investment income. . . . . . . . . . . . . . . . 2.9 (2.0)
Change in policy liabilities and accruals, net . . . . . . . . . . (20.8) (38.4)
Change in reinsurance receivable . . . . . . . . . . . . . . . . . (2.6) (3.7)
Change in expenses and taxes payable . . . . . . . . . . . . . . . 29.6 46.5
Separate account activity, net . . . . . . . . . . . . . . . . . . 0.4 10.8
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 (4.0)
-------- -------
Net cash used in operating activities . . . . . . . . . . . . . (59.1) (2.5)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposals and maturities of available-for-sale fixed
maturities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 602.2 643.1
Proceeds from disposals of equity securities . . . . . . . . . . . . 2.1 1.2
Proceeds from disposals of other investments . . . . . . . . . . . . 19.4 10.7
Proceeds from mortgages matured or collected . . . . . . . . . . . . 40.5 16.4
Purchase of available-for-sale fixed maturities. . . . . . . . . . . (562.6) (698.7)
Purchase of equity securities. . . . . . . . . . . . . . . . . . . . (1.9) (12.8)
Purchase of other investments. . . . . . . . . . . . . . . . . . . . (41.1) (21.9)
-------- -------
Net cash provided by (used in) investing activities . . . . . . 58.6 (62.0)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in short term debt. . . . . . . . . . . . . . . . . . . . . . -- 63.2
-------- -------
Net cash provided by financing activities. . . . . . . . . . . . . -- 63.2
-------- -------
Net change in cash and cash equivalents . . . . . . . . . . . . . . . (0.5) (1.3)
Cash and cash equivalents, beginning of period. . . . . . . . . . . . 18.8 17.3
-------- -------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . . $ 18.3 $ 16.0
-------- -------
-------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
(AN INDIRECT WHOLLY OWNED SUBSIDIARY OF ALLMERICA FINANCIAL CORPORATION)
NOTES TO INTERIM FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Allmerica Financial Life Insurance and Annuity Company ("Allmerica Financial"
or the "Company") is a wholly owned subsidiary of SMA Financial Corp., which
is wholly owned by First Allmerica Financial Life Insurance Company ("First
Allmerica"), a stock life insurance company. First Allmerica is a wholly
owned subsidiary of Allmerica Financial Corporation ("AFC"). The
stockholder's equity of the Company is being maintained at a minimum level of
5% of general account assets by First Allmerica in accordance with a policy
established by vote of First Allmerica's Board of Directors.
The accompanying unaudited financial statements of Allmerica Financial have
been prepared in accordance with generally accepted accounting principles for
stock life insurance companies for interim financial information. The
Company began preparing financial statements in accordance with generally
accepted accounting principles for the nine months ended September 31, 1996.
Adjustments to conform with generally accepted accounting principles are not
available on a quarterly basis prior to September 30, 1996. Accordingly,
quarterly comparative amounts for the quarters ended September 30, 1996 and
1997 are not presented.
The accompanying interim financial statements reflect, in the opinion of the
Company's management, all adjustments, consisting of only normal and
recurring adjustments, necessary for a fair presentation of the financial
position and results of operations. The results of operations for the nine
months ended September 30, 1997 are not necessarily indicative of the results
to be expected for the full year. These financial statements should be read
in conjunction with the Company's 1996 annual audited financial statements.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (FAS No. 130). FAS No. 130 established
standards for the reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. All items
that are required to be recognized under accounting standards as components
of comprehensive income are to be reported in a financial statement that is
displayed with the same prominence as other financial statements. This
statement stipulates that comprehensive income reflect the change in equity
of an enterprise during a period from transactions and other events and
circumstances from non-owner sources. Comprehensive income will thus
represent the sum of net income and other comprehensive income, although FAS
No. 130 does not require the use of the terms comprehensive income or other
comprehensive income. The accumulated balance of other comprehensive income
shall be displayed separately from retained earnings and additional paid-in
capital in the statement of financial position. This statement is effective
for fiscal years beginning after December 15, 1997. The Company anticipates
that the adoption of FAS No. 130 will result primarily in reporting
unrealized gains and losses on investments in debt and equity securities in
comprehensive income.
2. Significant Transactions
On April 14, 1997, the Company entered into an agreement in principle to
transfer the Company's individual disability income business under a 100%
coinsurance agreement to Metropolitan Life Insurance Company. The
coinsurance agreement became effective October 1, 1997. The transaction has
resulted in the recognition of a $53.9 million pre-tax loss in the first
quarter of 1997.
3. Federal Income Taxes
Federal income tax expense for the nine months ended September 30, 1997 and
1996, have been computed using estimated effective tax rates. These rates
are revised, if necessary, at the end of each successive interim period to
reflect the current estimates of the annual effective tax rates.
4. Commitments and Contingencies
In late July 1997, a lawsuit was instituted in Louisiana against AFC and
certain of its subsidiaries, by individual plaintiffs alleging fraud, unfair
or deceptive acts, breach of contract, misrepresentation and related claims
in the sale of life insurance policies. In October 1997, plaintiffs
voluntarily dismissed the Louisiana suit and refiled the action in Federal
District Court in Worcester, Massachusetts. The plaintiffs seek to be
certified as a class. The case is in the early stages of discovery and the
Company is evaluating the claims. Although the Company believes it has
meritorious defenses to plaintiffs' claims, there can be no assurance that
the claims will be resolved on a basis which is satisfactory to the Company.
<PAGE>
PART II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Article VIII of Registrant's Bylaws provides: Each Director and each Officer
of the Corporation, whether or not in office, (and his executors or
administrators), shall be indemnified or reimbursed by the Corporation
against all expenses actually and necessarily incurred by him in the defense
or reasonable settlement of any action, suit, or proceeding in which he is
made a party by reason of his being or having been a Director or Officer of
the Corporation, including any sums paid in settlement or to discharge
judgment, except in relation to matters as to which he shall be finally
adjudged in such action, suit, or proceeding to be liable for negligence or
misconduct in the performance of his duties as such Director or Officer; and
the foregoing right of indemnification or reimbursement shall not affect any
other rights to which he may be entitled under the Articles of Incorporation,
any statute, bylaw, agreement, vote of stockholders, or otherwise.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
REPRESENTATIONS PURSUANT TO SECTION 26(e) OF THE INVESTMENT COMPANY ACT OF 1940
The Company hereby represents that the aggregate fees and charges under the
Policy are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the Company.
<PAGE>
CONTENTS OF THE REGISTRATION STATEMENT
This registration statement comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N8B-2 in Prospectus A.
Cross-reference to items required by Form N8B-2 in Prospectus B.
Prospectus A consists of ____ pages
Prospectus B consists of _____pages
The undertaking to file reports.
The undertaking pursuant to Rule 484 under the Securities Act of 1933.
Representations Pursuant to Section 26(e) of the Investment Company Act of 1940
The signatures.
Written consents of the following persons:
1. Price Waterhouse
2. Opinion of Counsel
3. Actuarial Consent
The following exhibits:
1. Exhibit 1 (Exhibits required by paragraph A of the instructions to
Form N-8B-2)
(1) Certified copy of Resolutions of the Board of Directors of the
Company of September 15, 1993 establishing the Inheiritage
Account was previously filed on October 25, 1993 and is herein
incorporated by reference.
(2) Not Applicable.
(3) (a) Form of Sales and Administrative Services Agreement between
the Company and Allmerica Investments, Inc. was
previously filed on October 25, 1993 and is herein
incorporated by reference.
(b) Registered Representative Agreement and Resident Sponsor
Agreement of Allmerica Investment, Inc. (formerly "SMA
Equities, Inc.") were previously filed by the Company
on June 3, 1987, Registration No. 33-14672 and are
incorporated herein by reference.
(4) Not Applicable.
(5) Forms of Policy and initial Policy riders were previously filed
on October 25, 1993 and are herein incorporated by reference.
The Preferred Loan Endorsement was previously filed on
May 1, 1997 in Post-Effective Amendment No. 5 and is
incorporated by reference herein.
(6) Organizational documents of the Company were previously filed in
Post-Effective Amendment No.2, and are herein incorporated by
reference.
(7) Not Applicable.
(8) (a) Form of Participation Agreement with Allmerica Investment
Trust was previously filed by the Company on June 3,
1987, in Registration Statement No. 33-14672, and is
incorporated herein by reference.
<PAGE>
(b) Form of Participation Agreement with Variable Insurance
Products Fund and Variable Insurance Products Fund II
was previously filed by the Company on June 3, 1987, in
Registration Statement No. 33-14672, and is
incorporated herein by reference.
(c) Form of Participation Agreement with Delaware Group Premium
Fund, Inc. was previously filed by the Company on
December 27, 1991 in Registration Statement No. 33-44830,
and is incorporated herein by reference.
(d) Form of Participation Agreement with T. Rowe Price
International Series, Inc. was previously filed on May
1, 1995 and is incorporated herein by reference.
(9) Not Applicable.
(10) Form of Application was previously filed on October 25, 1993 and
is herein incorporated by reference.
2. Form of Policy and Policy riders are as set forth Exhibit 1 above.
3. Opinion of Counsel is filed herewith.
4. Not Applicable.
5. Not Applicable.
6. Actuarial Opinion and Consent is filed herewith.
7. Procedures Memorandum pursuant to Rule 6e-3(T)(b)(12)(iii) under the
1940 Act which includes conversion procedures pursuant to Rule 6e-3(T)
(b)(13)(v)(B) was previously filed on October 25, 1993 and is
herein incorporated by reference.
8. Consent of Independent Accountants is filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Worcester, and Commonwealth of Massachusetts,
on the 2nd day of February, 1998.
INHEIRITAGE ACCOUNT
OF ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY COMPANY
By: /S/ ABIGAIL M. ARMSTRONG
--------------------------------
Abigail M. Armstrong, Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
and on the dates indicated.
Signatures Title Date
- ----------- ----- ----
/s/ John F. O'Brien Director and Chairman of February 2, 1998
- -------------------- the Board
John F. O'Brien
/s/ Bruce C. Anderson Director
- --------------------
Bruce C. Anderson
/s/ Robert E. Bruce Director
- --------------------
Robert E. Bruce
/s/ John P. Kavanaugh Director, Vice President and
- --------------------- Chief Investment Officer
John P. Kavanaugh
/s/ John F. Kelly Director, Vice President and
- -------------------- General Counsel
John F. Kelly
/s/ J. Barry May Director
- --------------------
J. Barry May
/s/ James R. McAuliffe Director
- --------------------
James R. McAuliffe
/s/ Edward J. Parry III Director, Vice President and
- ----------------------- Chief Financial Officer
Edward J. Parry III
/s/ Richard M. Reilly Director, President and
- --------------------- Chief Executive Officer
Richard M. Reilly
/s/ Eric A. Simonsen Director and Vice President
- --------------------
Eric A. Simonsen
/s/ Phillip E. Soule Director
- --------------------
Phillip E. Soule
<PAGE>
FORM S-6 EXHIBIT TABLE
Exhibit 3 Opinion and Consent of Counsel
Exhibit 6 Actuarial Opinion and Consent
Exhibit 8 Consent of Independent Accountants
<PAGE>
February 2, 1998
Allmerica Financial Life Insurance and Annuity Company
440 Lincoln Street
Worcester MA 01653
RE: INHEIRITAGE ACCOUNT OF ALLMERICA FINANCIAL LIFE INSURANCE AND ANNUITY
COMPANY
FILE NO.'S: 33-70948 AND 811-8120
Gentlemen:
In my capacity as Counsel of Allmerica Financial Life Insurance and Annuity
Company (the "Company"), I have participated in the preparation of this
Post-Effective Amendment to the Registration Statement for the Inheiritage
Account on Form S-6 under the Securities Act of 1933 with respect to the
Company's individual flexible premium second-to-die variable life insurance
policies.
I am of the following opinion:
1. The Inheiritage Account is a separate account of the Company validly
existing pursuant to the Delaware Insurance Code and the
regulations issued thereunder.
2. The assets held in the Inheiritage Account equal to the reserves and
other Policy liabilities of the Policies which are supported by the
Inheiritage Account are not chargeable with liabilities arising
out of any other business the Company may conduct.
3. The individual flexible premium variable life insurance policies, when
issued in accordance with the Prospectuses contained in the Registration
Statement and upon compliance with applicable local law, will be legal and
binding obligations of the Company in accordance with their terms and when
sold will be legally issued, fully paid and non-assessable.
In arriving at the foregoing opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary or
appropriate.
I hereby consent to the filing of this opinion as an exhibit to this
Post-Effective Amendment to the Registration Statement of the Inheiritage
Account on Form S-6 filed under the Securities Act of 1933.
Very truly yours,
/s/ Sheila B. St. Hilaire
Sheila B. St. Hilaire
Assistant Vice President and Counsel
<PAGE>
February 2, 1998
Allmerica Financial Life Insurance and Annuity Company
440 Lincoln Street
Worcester MA 01653
RE: INHEIRITAGE ACCOUNT OF ALLMERICA FINANCIAL LIFE INSURANCE AND 7ANNUITY
COMPANY
FILE NO.'S: 33-70948 AND 811-8120
Gentlemen:
This opinion is furnished in connection with the filing by Allmerica
Financial Life Insurance and Annuity Company of a Post-Effective Amendment
to the Registration Statement on Form S-6 of its second-to-die flexible
premium variable life insurance policies ("Policies") allocated to the
Inheiritage Account under the Securities Act of 1933. The prospectuses
included in this Post-Effective Amendment to the Registration Statement
describe the Policies. I am familiar with and have provided actuarial advice
concerning the preparation of the Post-Effective Amendment to the
Registration Statement, including exhibits.
In my professional opinion, the illustration of death benefits and cash
values included in Appendix C of the prospectuses, based on the assumptions
stated in the illustrations, are consistent with the provisions of the
Policy. The rate structure of the Policies has not been designed so as to
make the relationship between premiums and benefits, as shown in the
illustrations, appear more favorable to a prospective purchaser of a Policy
for Insureds age 55 than to prospective purchasers of Policies for Insureds
at other ages or underwriting classes.
I am also of the opinion that the aggregate fees and charges under the
Policy are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the Company.
I hereby consent to the use of this opinion as an exhibit to this
Post-Effective Amendment to the Registration Statement.
Sincerely,
/s/ William H. Mawdsley
William H. Mawdsley, FSA, MAAA
Vice President and Actuary
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 6 to the Registration Statement on Form S-6 of
our report dated February 3, 1997, relating to the financial statements of
Allmerica Financial Life Insurance and Annuity Company, our report dated
February 5, 1996 relating to the statutory basis financial statements of
Allmerica Financial Life Insurance and Annuity Company and our report dated
March 26, 1997 relating to the financial statements of the Inheiritage
Account of Allmerica Financial Life Insurance and Annuity Company, all of
which appear in such Prospectus. We also consent to the reference to us
under the heading "Independent Accountants" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
February 9, 1998
