As filed with the Securities and Exchange Commission on April
24,
1997
Registration No. 33-83928
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. _____ ( )
POST-EFFECTIVE AMENDMENT NO. 3
(X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 3 (X)
(Check appropriate box or boxes)
RETIREMENT PLAN SERIES ACCOUNT
(Exact name of Registrant)
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(Name of Depositor)
8515 East Orchard Road
Englewood, Colorado 80111
(Address of Depositor's Principal Executive Officers) (Zip Code)
Depositor's Telephone Number, including Area Code:
(800) 537-2033
William T. McCallum
Great-West Life & Annuity Insurance Company
President and Chief Executive Officer
8515 East Orchard Road
Englewood, Colorado 80111
(Name and Address of Agent for Service)
Copy to:
James F. Jorden, Esq.
Jorden Burt Berenson & Johnson, LLP
1025 Thomas Jefferson Street, N.W., Suite 400 East
Washington, D.C. 20007-0805
It is proposed that this filing will become effective (check
appropriate space):
____ Immediately upon filing pursuant to paragraph (b) of Rule
485
X On May 1, 1997, pursuant to paragraph (b) of Rule
485.
____ 60 days after filing pursuant to paragraph (a)(1) of Rule
485.
____ On ____________, pursuant to paragraph (a)(1) of Rule
485.
____ 75 days after filing pursuant to paragraph (a)(2) of Rule
485.
____ On ____________, pursuant to paragraph (a)(2) of Rule
485.
If appropriate, check the following:
____ This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
The Registrant has previously filed a declaration of indefinite
registration of its shares pursuant to Rule 24F-2 under the
Investment Company Act of 1940. The Rule 24F-2 Notice for
Registrant's fiscal year was filed February 28, 1997.
RETIREMENT PLAN SERIES ACCOUNT
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
FORM N-4 ITEM PROSPECTUS CAPTION
1. Cover Page Cover Page
2 Definitions Glossary of Special Terms
3. Synopsis Fee Table; Questions and Answers about the Series
Account Variable Annuity
4. Condensed Financial Information Condensed Financial
Information
5. General Description of
Registrant, Depositor and
Portfolio Companies Great-West Life & Annuity Insurance
Company; Retirement Series Account; Investments of the Series
Account; Voting Rights
6. Deductions Administrative Charges; Risk Charges, Premium
Taxes and Other Deductions; Appendix A; Distribution of the
Contracts
7. General Description of
Variable Annuity Contracts The Contracts; Investments of
the Series Account; Statement of Additional Information
8. Annuity Period Annuity Options
9. Death Benefit The Contracts-Accumulation Period - Death
Benefit; Prior to Retirement Date; Annuity Payments
10. Purchases and Contract Value The Contracts-General; The
Contracts-Accumulation Period; Distribution of the Contracts; Cover
Page; Great-West Life & Annuity Insurance Company
11. Redemptions The Contracts-Accumulation Period - Total and
Partial Surrenders; Return Privilege
12. Taxes Federal Tax Consequences
13. Legal Proceedings Legal Proceedings
14. Table of Contents of
Statement of Additional
Information Statement of Additional Information
STATEMENT OF ADDITIONAL
FORM N-4 ITEM INFORMATION CAPTION
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and
History Not Applicable
18. Services Custodian and Accountants
19. Purchase of Securities
Being Offered Not Applicable
20. Underwriters Underwriter
21. Calculation of
Performance Data Calculation of Performance Data
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
PART A
INFORMATION REQUIRED IN A PROSPECTUS
RETIREMENT PLAN SERIES ACCOUNT
of
Great-West Life & Annuity Insurance Company
INDIVIDUAL FLEXIBLE PREMIUM VARIABLE ANNUITY CONTRACTS
Distributed by
One Orchard Equities, Inc.
8515 East Orchard Road, Englewood, Colorado 80111
(800) 338-4015
The individual flexible premium variable annuity contracts
(the "Contracts") described in this prospectus are designed and
offered to provide for individual retirement account ("IRA")
programs. The Contracts may be purchased with rollover proceeds
from qualified plans under Section 401(k), ("401(k) Plans"), of the
Internal Revenue Code (the "Code"), or any other eligible rollover
sources as described in the Code.
The Contracts are issued by Great-West Life & Annuity
Insurance Company ("GWL&A"). One Orchard Equities, Inc. ("One
Orchard") is the principal underwriter and distributor of the
Contracts. The Contracts provide for a deferred annuity to begin
at a future pre-selected date (the "Annuity Commencement Date").
The Contracts also provide for a death benefit.
Prior to the Annuity Commencement Date, the Contributions
can
accumulate on a variable basis, guaranteed basis, or a combination
of both. To accumulate on a variable basis, Contributions will be
allocated to the RETIREMENT PLAN SERIES ACCOUNT (the "Series
Account"), a segregated investment account of GWL&A. The value of
the Contributions prior to the Annuity Commencement Date and thus
the amount accumulated to provide annuity payments will depend upon
the investment performance of the Series Account. While there is
no minimum initial Contribution requirement, the minimum additional
Contribution amount is $250.
The amount of annuity payments may also be variable based upon
the investment experience of the Series Account, or may be fixed
without regard to such experience, or may be a combination of both.
The Series Account currently has 15 Investment Divisions
available for allocation of Contributions. The Investment
Divisions invest in shares of one of the Portfolios of Maxim Series
Fund, Inc. ("Maxim" or the "Fund"), a series, open-end management
investment company as described beginning on page 2.
THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR
MAXIM SERIES FUND, INC. THIS PROSPECTUS PROVIDES INFORMATION A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING AND SHOULD BE
KEPT FOR FUTURE REFERENCE. ADDITIONAL INFORMATION ABOUT THE
CONTRACTS HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN A STATEMENT OF ADDITIONAL INFORMATION, DATED MAY 1,
1997, WHICH IS INCORPORATED HEREIN BY REFERENCE. THE STATEMENT OF
ADDITIONAL INFORMATION, THE TABLE OF CONTENTS OF WHICH IS SET FORTH
ON THE LAST PAGE OF THIS PROSPECTUS, IS AVAILABLE WITHOUT CHARGE
UPON REQUEST BY WRITING OR TELEPHONING GWL&A AT THE ADDRESS OR
TELEPHONE NUMBER SET FORTH ABOVE. THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this prospectus is May 1, 1997
AVAILABLE PORTFOLIOS
( the Money Market Portfolio, which seeks preservation of
capital, liquidity and the highest possible current income
consistent with the foregoing objectives, through investments in
short-term money market securities. Shares of the Money Market
Portfolio are neither insured nor guaranteed by the U.S.
Government. Further, there is no assurance that the Portfolio will
be able to maintain a stable net asset value of $1.00 per share;
( the Investment Grade Corporate Bond Portfolio, which seeks
the
highest possible current income within the confines of the primary
goal of insuring the protection of capital by investing primarily
in investment grade corporate debt securities and in debt
securities issued by the U.S. Government and its agencies;
( the Stock Index Portfolio, which seeks to provide investment
results, before fees, that correspond to the total return of the
S&P 500 Index and the S&P MidCap Index, weighted according to their
respective pro-rata shares of the market;
( the U.S. Government Mortgage Securities Portfolio, which seeks
the highest level of return consistent with preservation of capital
and substantial credit protection and seeks to achieve this
objective by investing in mortgage-related securities issued or
guaranteed by an agency or instrumentality of the U.S. Government,
other U.S. agency and instrumentality obligations, and in U.S.
Treasury obligations;
( the Total Return Portfolio, which seeks to obtain the highest
possible total return through a combination of income and capital
appreciation, consistent with reasonable risk;
( the Small-Cap Index Portfolio, which seeks to provide
investment results, before fees, that correspond to the total
return of the Russell 2000 Index;
( the Value Index Portfolio, which seeks to provide investment
results, before fees, that correspond to the total return of the
Russell 1000 Value Index;
( the Growth Index Portfolio, which seeks to provide investment
results, before fees, that correspond to the total return of the
Russell 1000 Growth Index;
( the Small-Cap Value Portfolio, which seeks to achieve
long-term capital appreciation by investing primarily in common
stocks, although the Portfolio may also invest in other securities,
including restricted and preferred stocks;
( the Foreign Equity Portfolio, which seeks total return from
long-term growth of capital and dividend income and seeks to
achieve its investment objective by investing its assets primarily
in international equity securities which are predominately common
stocks and may also include any types of equity securities;
( the Small-Cap Aggressive Growth Portfolio, which seeks
long-term capital growth and seeks to achieve its investment
objective by investing its assets in common stocks or their
equivalent, emphasizing securities believed to be undervalued;
( the Corporate Bond Portfolio, which seeks high total
investment return by investing primarily in debt securities
(including convertibles), although up to 20% of its assets, at the
time of acquisition, may be invested in preferred stocks;
( the Short-Term Maturity Bond Portfolio, which seeks
preservation of capital, liquidity and maximum total return through
investment in an actively managed portfolio of debt securities; and
TABLE OF CONTENTS
Page
Fee Table 4
Examples 5
Glossary of Special Terms 7
Questions and Answers about the Series Account Variable Annuity 8
Financial Highlights 10
Performance Related Information 13
Great-West Life & Annuity Insurance Company 15
Retirement Plan Series Account 15
The Contracts 16
Accumulation Period 16
Investments of the Series Account 19
Charges and Deductions 21
Periodic Payment Options 22
Annuity Options 23
Federal Tax Consequences 25
Voting Rights 27
Distribution of the Contracts 28
Return Privileges 28
State Regulation 28
Reports 28
Legal Proceedings 28
Legal Matters 29
Registration Statement 29
Statement of Additional Information 29
FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchases (as a percentage of purchase
payments) None
Deferred Sales Load (as a percentage of amount distributed) None
Distribution Fees (as a percentage of amount distributed) None
Exchange Fee None
Administrative Surrender Fees
$50 administrative surrender fee if the Contract is surrendered in
whole during first 12 months
$25 administrative surrender fee if the Contract is surrendered in
part during first 12 months
Annual Contract Fee Maximum $30 1
SERIES ACCOUNT ANNUAL EXPENSES
Mortality & Expense Risk
The level of the mortality and expense risk charge applicable
to the Contract during the first calendar year will be based upon
the initial account balance of the Contract, in accordance with the
schedule set forth below. The level of the mortality and expense
risk charge applicable in subsequent calendar years will be based
upon the account balance as of December 31 of the previous calendar
year, in accordance with such schedule. The following table sets
forth the level of the mortality and expense risk charges that will
apply to a Contract:
Mortality & Expense Risk Charge
Account Balance
0.75%
$0 - $9,999.99
0.50%
$10,000 - $ 24,999.99
0.25%
$25,000 - $49,999.99
0.00%
$50,000 and greater
Because the mortality and expense risk charge is determined based
on the December 31 account balance of the previous calendar year,
Contract Owners may wish to monitor their account balances closely
to ensure timely contributions are made to the extent possible to
reduce the mortality and expense risk charge that will be
applicable in the ensuing year.
Please note that while GWL&A currently intends to pay any
Premium Tax levied by any governmental entity, and thus makes no
deduction from Contributions, GWL&A reserves the right, in the
future and with prior notice to the Contract Owner, to deduct the
Premium Tax, if any, from the Contract Value upon the Annuity
Commencement Date. (See "Charges and Deductions.")
1 The annual contract fee ("Contract Maintenance Charge") will
not be imposed if the Contract Owner maintains a Contract Value of
at least $5,000, as determined by the Contract Value as of December
31, of the prior year end assessed during the second quarter of the
current calendar year. The Contract Maintenance Charge will only
be imposed on contracts purchased after May 1, 1997.
Maxim Series Fund, Inc. Annual Expenses
(as a percentage of Maxim Series Fund, Inc. average daily net
assets)
Money Market Portfolio
Investment Grade Corporate Bond Portfolio
Stock Index Portfolio
U.S. Govt. Mortgage Securities Portfolio
Small-Cap Index Portfolio
Growth Index Portfolio
Short-Term Maturity Bond Portfolio
Management Fees
0.46%
0.60%
0.60%
0.60%
0.60%
0.60%
0.60%
Other Expenses
None
None
None
None
None
None
None
TOTAL Maxim Series Fund Annual Expenses
0.46%
0.60%
0.60%
0.60%
0.60%
0.60%
0.60%
Value
index Portfolio
Small-Cap Value Portfolio
Total
Return Portfolio
Foreign Equity Portfolio
Small-Cap Aggressive Growth Portfolio
Corporate Bond Portfolio
Management Fees
0.60%
1.00%
0.60%
1.00%
1.00%
0.90%
Other Expenses
None
0.35%
None
0.50%
0.30%
None
TOTAL Maxim Series Fund Annual Expenses
0.60%
1.35%
0.60%
1.50%
1.30%
0.90%
EXAMPLES
If you do not take a distribution in whole from your Contract, or
if you annuitize at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment, assuming
a 5% annual return on assets:
1 Year
3 Year
5 Year
10 Year
Money Market Investment Division
12.63
41.26
74.92
185.62
Investment Grade Corporate
Bond Investment Division
14.08
45.94
83.30
205.68
Stock Index Investment Division
14.08
45.94
83.30
205.68
U.S. Government Mortgage
Securities Investment Division
14.08
45.94
83.30
205.68
Small-Cap Index Investment Division
14.08
45.94
83.30
205.68
Growth Index Investment Division
14.08
45.94
83.30
205.68
Value Index Investment Division
14.08
45.94
83.30
205.68
Total Return Investment Division
14.08
45.94
83.30
205.68
Small-Cap Value Investment Division
21.82
70.67
127.20
308.51
Foreign Equity Investment Division
23.36
75.55
135.79
328.17
Small-Cap Aggressive Growth
Investment Division
21.30
69.04
124.33
301.89
Corporate Bond Investment Division
17.18
55.90
101.06
247.74
Short-Term Maturity Bond
Investment Division
14.08
45.94
83.30
205.68
EXAMPLES (Cont.)
If you take a distribution in whole from your Contract at the end
of the applicable time period, you would pay the following expenses
on a $1,000 investment, assuming a 5% annual return on assets:
1 Year
3 Year
5 Year
10 Year
Money Market Investment Division
62.63
41.26
74.92
185.62
Investment Grade Corporate
Bond Investment Division
64.08
45.94
83.30
205.68
Stock Index Investment Division
64.08
45.94
83.30
205.68
U.S. Government Mortgage
Securities Investment Division
64.08
45.94
83.30
205.68
Small-Cap Index Investment Division
64.08
45.94
83.30
205.68
Growth Index Investment Division
64.08
45.94
83.30
205.68
Value Index Investment Division
64.08
45.94
83.30
205.68
Total Return Investment Division
64.08
45.94
83.30
205.68
Small-Cap Value Investment Division
71.82
70.67
127.20
308.51
Foreign Equity Investment Division
73.36
75.55
135.79
328.17
Small-Cap Aggressive Growth
Investment Division
71.30
69.04
124.33
301.89
Corporate Bond Investment Division
67.18
55.90
101.06
247.74
Short-Term Maturity Bond
Investment Division
64.08
45.94
83.30
205.68
The above Examples should not be considered a representation
of past or future expenses. The tables currently do not include
the addition of the annual contract fee which may be assessed if
the contract value is below $5,000. Actual expenses may be greater
or less than those shown, subject to the guarantees in the
Contracts.
The purpose of the tables shown above is to assist the
Contract Owner in understanding the various costs and expenses that
a Contract Owner will bear directly or indirectly. For more
information pertaining to these costs and expenses see "Charges and
Deductions."
Please note that while GWL&A currently intends to pay any Premium
Tax levied by any governmental entity, and thus makes no deduction
from Contributions, GWL&A reserves the right, in the future and
with prior notice to the Contract Owner, to deduct the Premium Tax,
if any, from the Contract Value upon the Annuity Commencement Date.
(See "Charges and Deductions.")
GLOSSARY OF SPECIAL TERMS
As used in this prospectus, the terms have the indicated meanings:
Accumulation Period: The Period during which the Contract Owner is
covered under this Contract prior to the Contract Owner's Annuity
Commencement Date.
Accumulation Unit: An accounting measure used to determine the
Variable Account Value before the Annuity Commencement Date.
Administrative Offices: The Administrative Offices of GWL&A are
located at 8515 E. Orchard Rd., Englewood, Colorado 80111.
Annuitant: The person upon whose life the annuity payments will be
based.
Annuity Period: The period after the Annuity Commencement Date.
Annuity Commencement Date: The date on which annuity payments
commence under an Annuity Option.
Annuity Unit: An accounting measure used to determine the dollar
value of any variable annuity payment after the first payment.
Contribution(s): The total dollar amount(s) paid to purchase an
annuity for an Annuitant.
Contract: An agreement between GWL&A and the Contract Owner
providing a variable annuity. The agreement consists of the
contract form and the application.
Contract Owner: The person, as described in this prospectus, to
whom a Contract is issued.
Contract Value: The sum of the dollar values of all Accumulation
Units credited to the Contract during the Accumulation Period.
Fixed Annuity: An annuity with payments which remain fixed
throughout the payment period and which do not reflect the
investment experience of the Series Account.
Fund: Maxim Series Fund, Inc., a registered, open-end, management
investment company in which the assets of the Series Account are
invested.
Investment Division: The Series Account is divided into investment
divisions, one for each designated Portfolio maintained by the Fund
and made available to the Series Account.
Premium Tax: The amount of tax, if any, charged on premiums, by a
state or other government authority.
Request: Any request, either written, telephone or computerized,
which is in a form satisfactory to GWL&A and received by GWL&A at
its Administrative Office, as required by any provision of the
Contract, and at other times as required by GWL&A.
Series Account: The segregated investment account of Great-West
Life & Annuity Insurance company called Retirement Plan Series
Account existing under Colorado law and registered as a unit
investment trust under the Investment Company Act of 1940, as
amended.
Transfer: The transfer of all or a portion of the Contract Value
between and among the sub-accounts.
Valuation Date: The date on which the net asset value of the Fund
is determined. Valuation will occur on each day that the New York
Stock Exchange is open for trading. Contributions and Requests
received after 4:00 p.m. EST/EDT will be deemed to have been
received on the next business day. On the day after Thanksgiving,
however, transactions submitted other than by automated voice
response unit or computer link will not be processed.
Valuation Period: The period between the ending of two successive
Valuation Dates.
Variable Annuity: An annuity providing for payments, the amount of
which will vary in accordance with the changing values of
securities held in the Series Account.
Variable Account Value: The sum of the values of the Variable
Sub-Accounts credited to the Contract Value.
Variable Sub-Account: A subdivision of the Series Account
containing the value credited to a Contract Owner from an
Investment Division.
QUESTIONS AND ANSWERS ABOUT THE SERIES ACCOUNT VARIABLE ANNUITY
What is the purpose of the Contracts offered in the Prospectus?
The variable annuity Contracts offered in this prospectus
provide an IRA program (the "Program") as defined by the Code.
This Program is primarily designed for individuals seeking to
rollover assets which they accumulated under a 401(k) Plan.
However, the Contracts may also be used by individuals who wish to
rollover assets from other eligible sources, as described in the
Code. The value of the Contract and the amount of the annuity
payments will vary according to the investment results of the Fund.
How are Contributions allocated?
Contributions allocated to the Series Account accumulate on
a
variable basis. The assets of the Series Account are invested at
net asset value (no sales charge) in shares of the Fund. The
investment objectives and policies of those portfolios of the Fund
which are available for allocation of Contributions to the Series
Account are set forth at the beginning of the prospectus and are
described in full in the accompanying prospectus for the Fund.
What are the charges to Contract Owners under the Contract?
There is an administrative surrender fee of $50 for a Contract
surrendered in whole during the first 12 months of the Contract
(excluding the free look period) and an administrative surrender
fee of $25 for a Contract surrendered in part during the first 12
months of the Contract.
There is a contract maintenance charge of $30 per year if
the
Contract Value, as determined on December 31 of the previous year,
is below $5,000. However, there are no sales charges (contingent,
deferred or otherwise) applied to the Contract Value. GWL&A
deducts from the net asset value of the Series Account an amount,
computed daily for mortality and expense risk guarantees as
described below.
The level of the mortality and expense risk charge applicable
to the Contract during the first calendar year will be based upon
the initial account balance of the Contract, in accordance with the
schedule set forth below. The level of the mortality and expense
risk charge applicable in subsequent calendar years will be based
upon the account balance as of December 31 of the previous calendar
year, in accordance with such schedule. The following table sets
forth the level of the mortality and expense risk charges that will
apply to a Contract:
Mortality & Expense Risk Charge
Account Balance
0.75%
$0 - $9,999.99
0.50%
$10,000 - $ 24,999.99
0.25%
$25,000 - $49,999.99
0.00%
$50,000 and greater
Because the mortality and expense risk charge is determined based
on the December 31 account balance of the previous calendar year,
Contract Owners may wish to monitor their account balances closely
to ensure timely contributions are made to the extent possible to
reduce the mortality and expense risk charge that will be
applicable in the ensuing year.
Upon a total or partial distribution, a penalty tax may be
imposed pursuant to Section 72 of the Code. (See "Federal Tax
Consequences.")
GWL&A presently makes no deduction from Contributions for
premium taxes; however, applicable state premium taxes, ranging
from 0 to 3.50%, may be deducted from the Contract Value upon the
Annuity Commencement Date.
In addition to the charges set forth above, the Contract
Owner
will indirectly bear the investment advisory fees and other
expenses of the Fund. (See "Investments of the Series Account -
Investment Adviser.")
Can I surrender the Contract in whole or in part?
A distribution in whole or in part may be taken up to 30
days
prior to the Annuity Commencement Date, subject to restrictions by
the retirement plan under which your Contract is issued. If a
distribution is requested less than 30 days prior to the Annuity
Commencement Date, the Company may delay the Annuity Commencement
Date for a period of up to 30 days. (See "Accumulation Period -
Total and Partial Distribution.") Upon a total or partial
distribution, a penalty tax may be imposed pursuant to Section 72
of the Code. (See "Federal Tax Status.") In addition, an
administrative surrender fee may apply. (See "Charges and
Deductions.")
Can Contributions be Transferred between the Variable and
Guaranteed Sub-Accounts?
Yes. All or a portion of the Contract Value held in any of
the Variable Sub-Accounts may be Transferred at any time prior to
the Annuity Commencement Date by Request. (See "Accumulation Period
- - Transfers Between Sub-Accounts.")
What Annuity Options are available?
The Contracts provide for several annuity options payable on
a variable, fixed, or combination basis. An election of any
annuity option(s) must be made at least 30 days prior to the
Contract Owner's Annuity Commencement Date. If no election is
made, annuity payments will begin automatically on the Annuity
Commencement Date under an option providing for a life annuity with
120 monthly payments certain. (See "Annuity Options.")
What are the voting rights under the Contracts?
Contract Owners will be entitled to instruct GWL&A to vote
shares of the Fund held in the Series Account based upon the value
of their Contract. (See "Voting Rights.")
Is there a short-term cancellation ("Free Look") right?
Yes. Within 10 days (20 days in Idaho and North Dakota) after
the Contract is first received by the Contract Owner, it may be
canceled by the Contract Owner for any reason by delivering or
mailing it along with a Request to cancel, to GWL&A's
Administrative Office. (See "Return Privileges.")
How will the Contracts be distributed?
The Contracts will be distributed through One Orchard
Equities, Inc. ("One Orchard"). (See "Distribution of the
Contracts.")
What is the Fund?
The Contributions may be allocated to the Series Account.
The
assets of the Series Account are invested at net asset value in
shares of the Fund. The Fund is an open-end management investment
company of the series type. A more complete description of the
Fund and its Portfolios can be found in the accompanying Fund
prospectus which should be read together with this prospectus. The
Fund is required to redeem its shares at GWL&A's request. GWL&A
reserves the right to add, delete or substitute Portfolios subject
to approval, as necessary, of the Securities and Exchange
Commission.
Who can invest and what is the minimum Contribution?
Any individual of legal age in the states where the
Contract
may be lawfully sold, who is not older than age 90, may purchase a
Contract. The individual must also be eligible to participate in
the plan for which the Contract is designed. (See "The
Contracts.")</R.
There is no minimum initial Contribution amount required.
However, Contributions must be eligible rollover distributions (as
defined by the Code) from a plan qualified under Code Section
401(k) or any other eligible rollover sources as described in the
Code. The minimum additional Contribution amount is $250.
Contributions may be made at any time during the Accumulation
Period.
FINANCIAL HIGHLIGHTS
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
Investment Division
1996 By Category
1995 By Category
MONEY MARKET
A
O
U
Z
A*(3)
O*(15)
U*(15)
Z*(3)
Value at beginning of period
$ 10.23
$ 10.02
$ 10.05
$ 10.27
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 10.66
$ 10.47
$ 10.54
$ 10.79
$ 10.23
$ 10.02
$ 10.05
$ 10.27
Increase (decrease) in value of Accumulation Units
0.43
0.45
0.49
0.52
0.23
0.02
0.05
0.27
Number of Accumulation Units outstanding at end of period
9,449.98
12,173.70
15,907.37
59,518.32
2,395.98
926.69
1,445.29
44,935.09
INVESTMENT GRADE CORPORATE BOND
A
O
U
Z
A*(8)
O*(5)
U*(11)
Z*(6)
Value at beginning of period
$ 10.48
$ 10.55
$ 10.45
$ 10.58
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 10.72
$ 10.82
$ 10.75
$ 10.91
$ 10.48
$ 10.55
$ 10.45
$ 10.58
Increase (decrease) in value of Accumulation Units
0.24
0.27
0.30
0.33
0.48
0.55
0.45
0.58
Number of Accumulation Units outstanding at end of period
4,019.39
5,887.41
2,497.98
14,123.28
756.56
1,298.14
2,523.64
7,411.72
STOCK INDEX
A
O
U
Z
A*(1)
O*(5)
U*(4)
Z*(8)
Value at beginning of period
$ 11.59
$ 11.55
$ 11.57
$ 11.58
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 14.01
$ 14.00
$ 14.06
$ 14.11
$ 11.59
$ 11.55
$ 11.57
$ 11.58
Increase (decrease) in value of Accumulation Units
2.42
2.45
2.49
2.53
1.59
1.55
1.57
1.58
Number of Accumulation Units outstanding at end of period
30,565.13
48,278.77
50,780.90
119,929.73
4,042.63
11,673.47
18,708.73
55,122.00
U.S. GOVERNMENT MORTGAGE SECURITIES
A
O
U
Z
A*(8)
O*(5)
U*(4)
Z*(6)
Value at beginning of period
$ 10.45
$ 10.52
$ 10.54
$ 10.55
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 10.82
$ 10.92
$ 10.96
$ 11.00
$ 10.45
$ 10.52
$ 10.54
$ 10.55
Increase (decrease) in value of Accumulation Units
0.37
0.40
0.42
0.45
0.45
0.52
0.54
0.55
Number of Accumulation Units outstanding at end of period
5,272.40
8,847.40
7,526.42
18,157.75
731.02
5,864.01
1,624.61
7,344.94
SMALL-CAP INDEX
A
O
U
Z
A*(1)
O*(5)
U*(9)
Z*(8)
Value at beginning of period
$ 11.60
$ 11.62
$ 11.63
$ 11.65
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 13.28
$ 13.33
$ 13.38
$ 13.43
$ 11.60
$ 11.62
$ 11.63
$ 11.65
Increase (decrease) in value of Accumulation Units
1.68
1.71
1.75
1.78
1.60
1.62
1.63
1.65
Number of Accumulation Units outstanding at end of period
13,245.31
17,113.51
20,809.07
28,991.22
2,240.54
5,959.11
3,318.14
14,397.06
GROWTH INDEX
A
O
U
Z
A*(8)
O*(5)
U*(9)
Z*(6)
Value at beginning of period
$ 11.69
$ 11.71
$ 11.72
$ 11.74
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 14.17
$ 14.22
$ 14.28
$ 14.34
$ 11.69
$ 11.71
$ 11.72
$ 11.74
Increase (decrease) in value of Accumulation Units
2.48
2.51
2.56
2.60
1.69
1.71
1.72
1.74
Number of Accumulation Units outstanding at end of period
23,490.03
33,100.60
38,890.98
64,886.39
3,339.10
10,056.69
9,367.33
19,673.41
Investment Division
1996 By Category
1995 By Category
VALUE INDEX
A
O
U
Z
A*(8)
O*(5)
U*(4)
Z*(10)
Value at beginning of period
$ 11.55
$ 11.56
$ 11.58
$ 11.60
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 13.82
$ 13.88
$ 13.93
$ 13.99
$ 11.55
$ 11.56
$ 11.58
$ 11.60
Increase (decrease) in value of Accumulation Units
2.27
2.32
2.35
2.39
1.55
1.56
1.58
1.60
Number of Accumulation Units outstanding at end of period
16,778.01
32,274.09
32,323.22
46,735.19
1,666.79
7,395.18
12,134.89
18,036.45
SMALL-CAP VALUE
A
O
U
Z
A*(8)
O*(5)
U*(4)
Z*(7)
Value at beginning of period
$ 11.02
$ 11.04
$ 11.05
$ 11.07
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 12.90
$ 12.95
$ 13.00
$ 13.06
$ 11.02
$ 11.04
$ 11.05
$ 11.07
Increase (decrease) in value of Accumulation Units
1.88
1.91
1.95
1.99
1.02
1.04
1.05
1.07
Number of Accumulation Units outstanding at end of period
5,037.63
7,695.51
12,528.51
8,094.84
773.21
1,371.51
5,416.35
2,801.92
TOTAL RETURN
A
O
U
Z
A*(8)
O*(5)
U*(11)
Z*(7)
Value at beginning of period
$ 10.89
$ 10.90
$ 10.92
$ 10.93
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 12.08
$ 12.12
$ 12.17
$ 12.22
$ 10.89
$ 10.90
$ 10.92
$ 10.93
Increase (decrease) in value of Accumulation Units
1.19
1.22
1.25
1.29
0.89
0.90
0.92
0.93
Number of Accumulation Units outstanding at end of period
10,571.44
15,356.64
12,390.53
26,271.06
1,177.80
5,184.26
2,940.80
4,666.32
FOREIGN EQUITY
A
O
U
Z
A*(2)
O*(5)
U*(12)
Z*(13)
Value at beginning of period
$ 10.30
$ 10.27
$ 10.26
$ 10.28
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 11.00
$ 10.99
$ 11.01
$ 11.06
$ 10.30
$ 10.27
$ 10.26
$ 10.28
Increase (decrease) in value of Accumulation Units
0.70
0.72
0.75
0.78
0.30
0.27
0.26
0.28
Number of Accumulation Units outstanding at end of period
9,442.18
12,679.40
10,789.35
9,174.83
2,788.66
1,670.77
2,190.94
1,192.47
SMALL-CAP AGGRESSIVE GROWTH
A
O
U
Z
A*(8)
O*(7)
U*(14)
Z*(7)
Value at beginning of period
$ 11.93
$ 11.95
$ 11.96
$ 11.98
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 15.40
$ 15.46
$ 15.52
$ 15.59
$ 11.93
$ 11.95
$ 11.96
$ 11.98
Increase (decrease) in value of Accumulation Units
3.47
3.51
3.56
3.61
1.93
1.95
1.96
1.98
Number of Accumulation Units outstanding at end of period
19,250.73
30,001.51
23,175.18
24,716.11
1,064.47
5,718.10
1,398.81
4,726.93
CORPORATE BOND
A
O
U
Z
A*(8)
O*(5)
U*(11)
Z*(6)
Value at beginning of period
$ 10.95
$ 11.03
$ 10.91
$ 11.06
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Value at end of period
$ 11.99
$ 12.11
$ 12.01
$ 12.21
$ 10.95
$ 11.03
$ 10.91
$ 11.06
Increase (decrease) in value of Accumulation Units
1.04
1.08
1.10
1.15
0.95
1.03
0.91
1.06
Number of Accumulation Units outstanding at end of period
5,084.50
10,767.39
7,111.83
17,630.19
821.90
2,425.21
1,650.00
22,880.14
Investment Division
1996 By Category
SHORT-TERM
MATURITY BOND
A(16)
O(16)
U(16)
Z(16)
Value at beginning of period
$ 10.06
$ 10.07
$ 10.08
$ 10.09
Value at end of period
$ 10.34
$ 10.41
$ 10.45
$ 10.33
Increase (decrease) in value of Accumulation Units
0.28
0.34
0.37
0.24
Number of Accumulation Units outstanding at end of period
244.56
1,038.99
1,603.91
219.54
Current Accumulation Unit Values can be obtained by calling GWL&A
toll free at 1-800-338-4015.
_______________
Mortality & Expense Charge Account Balance
* A = .75% $0 - $9,999.99
O = .50% $10,000 - $24,999.99
U = .25% $25,000 - $49,999.99
Z = .00% $50,000 and greater
(1) The inception date for the Small-Cap Index A and Stock Index A
Investment Divisions was June 20, 1995.
(2) The inception date for the Foreign Equity A Investment Division
was June 23, 1995.
(3) The inception date for the Money Market A and Money Market Z
Investment Divisions was July 5, 1995.
(4) The inception date for the Stock Index U, Small-Cap Value U,
Value Index U, and U.S. Government Mortgage Securities U Investment
Divisions was July 12, 1995.
(5) The inception date for the Foreign Equity O, Small-Cap Index O,
Growth Index O, Stock Index O, Small-Cap Value O, Total Return O,
Value Index O, U.S. Government Mortgage Securities O, Investment
Grade Corporate Bond O and Corporate Bond O Investment Divisions
was July 24, 1995.
(6) The inception date for the Growth Index Z, Investment Grade
Corporate Bond Z, U.S. Government Mortgage Securities Z, and
Corporate Bond Z Investment Divisions was July 26, 1995.
(7) The inception date for the Small-Cap Aggressive Growth Z,
Small-Cap Value Z, Total Return Z, and Small-Cap Aggressive Growth
O Investment Divisions was August 3, 1995.
(8) The inception date for the Small-Cap Index Z, Stock Index Z,
Growth Index A, Small-Cap Aggressive Growth A, Small-Cap Value A,
Total Return A, Value Index A, U.S. Government Mortgage Securities
A, Investment Grade Corporate Bond A, and Corporate Bond A
Investment Divisions was August 9, 1995.
(9) The inception date for the Small-Cap Index U, and the Growth
Index U Investment Divisions was September 8, 1995.
(10)The inception date for the Value Index Z Investment Division
was September 13, 1995.
(11)The inception date for the Total Return U, Investment Grade
Corporate Bond U, and Corporate Bond U Investment Divisions was
September 19, 1995.
(12)The inception date for the Foreign Equity U Investment Division
was October 3, 1995.
(13)The inception date for the Foreign Equity Z Investment Division
was October 4, 1995.
(14)The inception date for the Small-Cap Aggressive Growth
Investment Division was November 17, 1995.
(15)The inception date for the Money Market O, and the Money Market
U Investment Divisions was November 30, 1995.
(16)The inception date for the Short-Term Maturity Bond Investment
Division was March 13, 1996. The unit values began July 31, 1995
at $10.00
PERFORMANCE RELATED INFORMATION
From time to time, the Series Account may advertise certain
performance related information concerning its Investment
Divisions. Performance information about an Investment Division is
based on the Investment Division's historical performance only and
is not intended to indicate future performance. Below are tables
of performance related information. For the "Inception Date" of a
particular Investment Division see the "Total Return" tables below.
Investment Division
Yield
Effective Yield
Money Market a*
4.18%
4.27%
Money Market o*
4.43%
4.53%
Money Market u*
4.67%
4.78%
Money Market z*
4.92%
5.05%
Yield and effective Yield for the Money Market Investment Division
is for the 7-day period ended December 31, 1996. Yield
calculations take into account recurring charges against the Series
Account and the Money Market Portfolio. All yield and effective
yield information is annualized.
Average Annual Total Return
Investment Divisions a*
Date of Inception
1 Year ended 12/31/96
Since Inception
Foreign Equity
June 23, 1995
6.80%
5.82%
Small-Cap Index
June 20, 1995
14.45%
17.15%
Growth Index
August 9, 1995
21.19%
22.52%
Small-Cap Aggressive Growth
August 9, 1995
29.12%
27.61%
Stock Index
June 20, 1995
20.90%
22.69%
Small-Cap Value
August 9, 1995
17.07%
17.18%
Total Return
August 9, 1995
10.92%
11.96%
Value Index
August 9, 1995
19.74%
22.99%
U.S. Government Mortgage Securities
August 9, 1995
3.51%
6.37%
Investment Grade Corporate Bond
August 9, 1995
2.36%
5.75%
Corporate Bond
August 9, 1995
9.52%
13.78%
Short-Term Maturity Bond
April 1, 1996
N/A
3.80%
Investment Divisions o*
Date of Inception
1 Year ended 12/31/96
Since Inception
Foreign Equity
July 24, 1995
7.07%
4.49%
Small-Cap Index
July 24, 1995
14.73%
15.92%
Growth Index
July 24, 1995
21.49%
22.90%
Small-Cap Aggressive Growth
August 3, 1995
29.44%
28.78%
Stock Index
July 24, 1995
21.20%
22.80%
Small-Cap Value
July 24, 1995
17.36%
18.28%
Total Return
July 24, 1995
11.19%
12.46%
Value Index
July 24, 1995
20.04%
23.23%
U.S. Government Mortgage Securities
July 24, 1995
3.77%
6.55%
Investment Grade Corporate Bond
July 24, 1995
2.62%
5.94%
Corporate Bond
July 24, 1995
9.80%
13.92%
Short-Term Maturity Bond
March 13, 1996
N/A
4.15%
Investment Divisions u*
Date of Inception
1 Year ended 12/31/96
Since Inception
Foreign Equity
October 3, 1995
7.34%
8.09%
Small-Cap Index
September 8, 1995
15.02%
11.81%
Growth Index
September 8, 1995
21.80%
22.21%
Small-Cap Aggressive Growth
November 17, 1995
29.77%
32.90%
Stock Index
July 12, 1995
21.50%
21.88%
Small-Cap Value
July 12, 1995
17.65%
16.88%
Total Return
September 19, 1995
11.47%
11.01%
Value Index
July 12, 1995
20.34%
22.41%
U.S. Government Mortgage Securities
July 12, 1995
4.03%
5.67%
Investment Grade Corporate Bond
September 19, 1995
2.88%
5.01%
Corporate Bond
September 19, 1995
10.07%
12.57%
Short Term Maturity Bond
March 13, 1996
N/A
4.34%
Investment Divisions z*
Date of Inception
1 Year ended 12/31/96
Since Inception
Foreign Equity
October 13, 1995
7.61%
7.99%
Small-Cap Index
August 9, 1995
15.30%
15.25%
Growth Index
July 26, 1995
22.10%
22.51%
Small-Cap Aggressive Growth
August 3, 1995
30.09%
29.42%
Stock Index
August 9, 1995
21.81%
23.52%
Small-Cap Value
August 3, 1995
17.94%
18.84%
Total Return
August 3, 1995
11.75%
12.79%
Value Index
September 13, 1995
20.64%
21.94%
U.S. Government Mortgage Securities
July 26, 1995
4.29%
7.27%
Investment Grade Corporate Bond
July 26, 1995
3.14%
6.64%
Corporate Bond
July 26, 1995
10.35%
14.51%
Short Term Maturity Bond
August 16, 1996
N/A
2.53%
___________
Mortality & Expense Risk Charge Account Balance
a* = 0.75% $0 -
$9,999.99
o* = 0.50% $10,000 -
$24,999.99
u* = 0.25% $25,000 -
$49,999.99
z* = 0.00% $50,000 and
greater
The Series Account may include total return in advertisements or
other sales material regarding the Investment Grade Corporate Bond
Investment Division, Stock Index Investment Division, U.S.
Government Mortgage Securities Investment Division, Small-Cap Index
Investment Division, Growth Index Investment Division, Value Index
Investment Division, Total Return Investment Division, Small-Cap
Value Investment Division, Foreign Equity Investment Division,
Small-Cap Aggressive Growth Investment Division, Corporate Bond
Investment Division and Short-Term Maturity Bond Investment
Division. When the Series Account advertises the total return of
one of these Investment Divisions, it will be calculated for one
year, five years, and ten years or some other relevant period if
the Investment Division has not been in existence for at least ten
years. Total return is measured by comparing the value of an
investment in the Investment Division at the beginning of the
relevant period to the value of the investment at the end of the
period (assuming immediate reinvestment of any dividends or capital
gains distributions). In calculating the total return, it is
assumed that the entire value of the Investment Division will be
distributed on the last day of the period.
For the Money Market Investment Division, "yield" refers to
the income generated by an investment in the Money Market
Investment Division over a stated seven-day period. This income is
then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week
over a 52-week period and is shown as a percentage of the
investment. The "effective yield" of the Money Market Investment
Division is calculated similarly but, when annualized, the income
earned by an investment in the Money Market Investment Division is
assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this
assumed reinvestment.
The yield and effective yield calculations for the Money
Market Investment Division includes all recurring charges under the
Contract, and is lower than yield and effective yield for the Fund,
which does not have comparable charges. Total return for the
Investment Divisions include all charges under the Contract, and
likewise, is lower than total return at the Fund level, which has
no comparable charges.
For more complete information on the method used to
calculate
yield, effective yields, and total return of the respective
Investment Divisions, see the "Statement of Additional
Information."
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
GWL&A is a stock life insurance company originally organized
under the laws of the state of Kansas as the National Interment
Association. Its name was changed to Ranger National Life
Insurance Company in 1963 and to Insuramerica Corporation prior to
changing to its current name in February of 1982. In September of
1990, GWL&A redomesticated and is now organized under the laws of
the state of Colorado.
GWL&A is authorized to engage in the sale of life insurance,
accident and health insurance and annuities. It is qualified to do
business in Puerto Rico, the District of Columbia and 49 states in
the United States.
GWL&A is a wholly-owned subsidiary of The Great-West Life
Assurance Company. The Great-West Life Assurance Company is a
subsidiary of Great-West Lifeco Inc., a holding company.
Great-West Lifeco Inc. is in turn a subsidiary of Power Financial
Corporation of Canada, a financial services company. Power
Corporation of Canada, a holding and management company, has voting
control of Power Financial Corporation of Canada. Mr. Paul
Desmarais, through a group of private holding companies, which he
controls, has voting control of Power Corporation of Canada.
GWL&A has primary responsibility for the administration of the
Contracts and the Series Account. Its Administrative Offices are
located at 8515 E. Orchard Road, Englewood, Colorado 80111.
RETIREMENT PLAN SERIES ACCOUNT
The Retirement Plan Series Account was established by GWL&A
under Colorado law on January 25, 1994. The Retirement Plan Series
Account has been registered with the Securities and Exchange
Commission as a unit investment trust pursuant to the provisions of
the Investment Company Act of 1940, as amended, and meets the
definition of a "separate account" under the federal securities
laws. Such registration does not involve supervision of the
management of the Series Account or GWL&A by the Securities and
Exchange Commission.
The Series Account currently has 15 Investment Divisions
available for allocation of Contributions. If, in the future,
GWL&A determines that marketing needs and investment conditions
warrant, it may establish additional Investment Divisions which
will be made available to existing Contract Owners to the extent
and on a basis to be determined by GWL&A. Each Investment Division
invests in shares of the Fund allocable to one of the Portfolios,
each having a specific investment objective.
GWL&A does not guarantee the investment performance of the
Series Account. The portion of the Contract Value attributable to
the Series Account and the amount of variable annuity payments
depend on the investment performance of the Fund. Thus, the
Contract Owner bears the full investment risk for all Contributions
allocated to the Series Account.
The Series Account is administered and accounted for as part
of the general business of GWL&A; but the income, capital gains, or
capital losses of each Variable Sub-Account are credited to or
charged against the assets held in that Variable Sub-Account in
accordance with the terms of the Contracts, without regard to other
income, capital gains or capital losses of any other Variable
Sub-Account or arising out of any other business GWL&A may conduct.
Under Colorado law, the assets of the Series Account are not
chargeable with liabilities arising out of any other business GWL&A
may conduct. Nevertheless, all obligations arising under the
Contracts are generally corporate obligations of GWL&A.
THE CONTRACTS
Purchase of Contracts
Persons wishing to purchase a Contract must complete an
application form to be forwarded to the GWL&A Administrative
Offices for its acceptance. While there is no minimum initial
contribution, the initial contribution must be an eligible rollover
distribution (as defined by the Code) from a plan qualified under
Code Section 401(k) or any other eligible rollover sources as
described in the Code. The initial Contribution will be allocated
after receipt at GWL&A's Administrative Offices within two business
days, if the application form is complete. If an incomplete
application form is completed within five business days of GWL&A's
receipt, the initial Contribution will be allocated within two
business days of the application's completion. If an incomplete
application cannot be completed within five business days after
receipt by GWL&A, the initial contribution will be returned at once
unless the prospective purchaser specifically consents to GWL&A
retaining the purchase payment until the application is made
complete. Upon acceptance, a Contract will be prepared, executed
by duly authorized officers of GWL&A and forwarded to the Contract
Owner. Subsequent Contributions will be allocated upon receipt by
GWL&A at its Administrative Offices on the day received.
Amendment of Contracts
GWL&A reserves the right to amend the Contract without the
consent of any person to meet the requirements of the Investment
Company Act of 1940 or other applicable federal or state laws or
regulations, or to modify the annuity rates for future
Contributions. GWL&A will notify the Contract Owners of any such
changes.
Ownership
The Contract Owner has all rights under the Contract. Under
law, the assets of the Series Account are held for the exclusive
benefit of the Contract Owners and their designated beneficiaries
and are not chargeable with liabilities arising out of any other
business that GWL&A may conduct.
ACCUMULATION PERIOD
Allocation of Contributions
Initial Contributions will be allocated after receipt at
GWL&A's Administrative Offices within two business days if the
application form is complete. If an incomplete application form is
completed within five business days of GWL&A's receipt, the initial
Contribution will be allocated within two calendar days of the
application's completion. If an incomplete application cannot be
completed within five business days after receipt by GWL&A, the
initial contribution will be returned at once unless the
prospective purchaser specifically consents to GWL&A retaining the
purchase payment until the application is made complete. The
initial contribution will be allocated to the Money Market
Investment Division during the "free look" period (See "Return
Privileges.") Upon expiration of the "free look" period amounts
contributed previously will be allocated according to the Contract
Owner's instructions on the application form. Subsequent
contributions will be applied pursuant to the allocation
instructions in the completed application and will be allocated
upon receipt by GWL&A at its Administrative Offices on the day
received. Contributions by a Contract Owner are allocated to the
Series Account to accumulate on a variable basis. Allocation
instructions may be changed at any time by filing the appropriate
change form or through any other means deemed acceptable by GWL&A.
Changes will be effective the later of (1) the date specified in
the Request or (2) the date the Request is received and recorded by
GWL&A at its Administrative Offices. GWL&A will allocate the
Contributions based upon the instructions in the application form.
A change of allocation instructions will be effective for
Contributions which are received after GWL&A's receipt and
recording of the change.
Upon allocation to the appropriate Variable Sub-Account, the
Contributions are converted into Accumulation Units. The number of
Accumulation Units credited with respect to the initial
Contribution is determined by dividing the amount allocated to each
Variable Sub-Account by the value of an Accumulation Unit for that
Variable Sub-Account on the day following GWL&A's receipt of the
initial Contribution and GWL&A's acceptance of such Contribution.
The number of Accumulation Units with respect to any additional
Contribution is determined by dividing the amount allocated to the
appropriate Variable Sub-Account by the value of an Accumulation
Unit for that Sub-Account on the day the Contribution is accepted.
Contributions received after 4:00 p.m., EST/EDT, shall be deemed to
have been received on the next Valuation Date. The number of
Accumulation Units so determined shall not be changed by any
subsequent change in the value of an Accumulation Unit, but the
dollar value of an Accumulation Unit will vary in amount depending
upon the investment experience of the Fund.
Valuation of Accumulation Units
Accumulation Units for each Variable Sub-Account are valued
separately, but the method used for valuing Accumulation Units in
each Variable Sub-Account is the same. Initially, the value of
each Accumulation Unit was set at $10.00. Thereafter, the value of
an Accumulation Unit in any Variable Sub-Account on any Valuation
Date equals the value of an Accumulation Unit in the Sub-Account as
of the immediately preceding Valuation Date multiplied by the most
current "Net Investment Factor" of that Variable Sub-Account.
Accumulation Unit values are valued once each day that the Fund
shares are valued.
The Net Investment Factor for each Variable Sub-Account is
determined by dividing (a) by (b), and subtracting (c) from the
result where:
(a) is the net result of:
(i) the net asset value per share of the Fund shares held in
the Variable Sub-Account determined as of the end of the current
Valuation Period, plus
(ii) the per share amount of any dividend (or, if applicable,
capital gain distributions) made by the Fund on shares held in the
Variable Sub-Account if the "ex-dividend" date occurs during the
current Valuation Period, minus or plus
(iii) a per unit charge or credit for any taxes incurred by or
provided for in the Variable Sub-Account, which is determined by
GWL&A to have resulted from the investment operations of the
Variable Sub-Account; and
(b) is the net result of:
(i) the net asset value per share of the Fund shares held in
the Variable Sub-Account determined as of the end of the
immediately preceding Valuation Period, minus or plus
(ii) the per unit charge or credit for any taxes incurred by
or provided for in the Variable Sub-Account for the immediately
preceding Valuation Period; and
(c) is an amount representing the Mortality and Expense Risk
Charge
deducted from each Variable Sub-Account on a daily basis. (See
"Charges and Deductions.")
The Net Investment Factor may be greater than, less than, or
equal to one. Therefore, the Accumulation Unit Value may increase,
decrease or remain unchanged.
The net asset value per share referred to in paragraphs (a)(i)
and (b)(i) above, reflect the investment performance of the Fund as
well as the payment of underlying mutual fund expenses. (See
"Investments of the Series Account.")
Transfers Between Sub-Accounts
All or a portion of the Contract Value held in any of the
Sub-Accounts may be transferred at any time prior to the Annuity
Commencement Date by Request to GWL&A's Administrative Offices. In
order for telephone transfers to be accommodated, a Telephone
Transfer Form must be on file with GWL&A. This form can be
obtained at the time the Contract is signed, or at any time
thereafter from the Administrative Offices of GWL&A. The Transfer
request shall be made by the Contract Owner. A transfer will take
effect on the later of the date designated in the request, or the
date that the Transfer request is received by GWL&A at its
Administrative Offices. Transfer requests received after 4:00
p.m., EST/EDT, shall be deemed to have been received on the next
following Valuation Date. If a Transfer request is received by
GWL&A within 30 days of the Annuity Commencement Date, GWL&A may
delay the Annuity Commencement Date by not more than 30 days.
Additional Transfer conditions apply to Transfers to or from the
Guaranteed Sub-Accounts, as more fully described in the Contract.
For Transfer Requests GWL&A will use reasonable procedures
such as requiring certain identifying information from the caller,
tape recording the telephone instructions, and providing written
confirmation of the transaction, in order to confirm that
instructions communicated by telephone are genuine. Any telephone
instructions reasonably believed by GWL&A to be genuine will be the
responsibility of the Contract Owner, including losses arising from
any errors in the communication of instructions. As a result, the
Contract Owner will bear the risk of loss. If GWL&A does not
employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, GWL&A may be liable for any
losses due to unauthorized or fraudulent instructions.
Total and Partial Distribution
The right to a total or partial distribution is subject to any
limitations or restrictions contained in the Contract. A Request
must be received by GWL&A's Administrative Offices at least 30 days
prior to the Annuity Commencement Date. A request for partial
distribution must also specify the Variable and/or Guaranteed
Sub-Account(s) from which the partial distribution is to be made.
If a request for a total or partial distribution is received less
than 30 days prior to Annuity Commencement Date, GWL&A, at its
option, may delay the Annuity Commencement Date for a period of up
to 30 days. The amount available for a distribution in whole or in
part is the current value of the Contract Value at the end of the
Valuation Period for the "effective date" of the request. The
"effective date" is the later of the date selected in the request
or the date which the Request is received by GWL&A's Administrative
Offices. Requests received after 4:00 p.m., EST/EDT, shall be
deemed to have been received on the next following Valuation Date.
The partial or total distribution will be made within seven days
after GWL&A receives the Request. The payment may be postponed as
permitted by the Investment Company Act of 1940. The amount
payable upon a total distribution may be applied to an Annuity
Option (see "Annuity Options,") instead of a lump-sum payment.
There are additional conditions that apply to a partial or total
distribution of the Contract Value from a Guaranteed Sub-Account,
as more fully described in the Contract.
There may be certain charges imposed upon a partial or
total
distribution prior the Annuity Commencement Date and there may be
certain tax consequences.(See "Charges and Deductions" and "Federal
Tax Consequences.")
Cessation of Contributions
If, in the judgment of GWL&A, further Contributions or
Transfers to certain or all of the Variable and Guaranteed
Sub-Accounts should become inappropriate, GWL&A may, upon 30 days
written notice to the Contract Owner, direct that no future
Contributions or Transfers to such Sub-Account(s) be made.
In the event that such written notice is given for any or all
of the Sub-Accounts, Contributions and Transfers made to such
Sub-Account(s) prior to the effective date of the notice (that date
being called the "Date of Cessation") may be maintained in such
Sub-Account(s). Allocation instructions must be changed to delete
the affected Sub-Account(s). If no change of allocation
instructions is received, GWL&A may return all affected
Contributions or allocate such Contributions as designated in the
written notice provided to the Contract Owner.
In the event that a Date of Cessation is declared for all
Sub-Accounts, no new Contributions will be accepted by GWL&A.
Death Benefit
In the event of the death of the Contract Owner prior to
his/her Annuity Commencement Date, a death benefit will be paid
upon receipt of proof of the death of the Contract Owner. The
death benefit is the Contract Value. The death benefit will be
paid to the beneficiary designated by the Contract Owner.
If the Contract Owner dies before distribution of his or her
interest begins, distribution of the Contract Owner's entire
interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Contract Owner's death
except to the extent that an election is made to receive
distributions in accordance with (A) or (B) below:
(A) If the Contract Owner's interest is payable to a designated
beneficiary, then the entire interest of the Contract Owner may be
distributed over the life or over a period certain not greater than
the life expectancy of the designated beneficiary commencing or
before December 31 of the calendar year immediately following the
calendar year in which the Contract Owner died.
(B) If the sole designated beneficiary is the Contract Owner's
surviving spouse, the date distributions are required to begin in
accordance with (A) above shall not be earlier than the later of
(1) December 31 of the calendar year immediately following the
calendar year in which the Contract Owner died or (2) December 31
of the calendar year in which the Contract Owner would have
attained age 701/2 .
If the designated beneficiary is the Contract Owner's
surviving spouse, the spouse may treat the Contract as his or her
own IRA. This election will be deemed to have been made if such
surviving spouse makes a regular IRA contribution to the Contract,
makes a rollover to or from such Contract, or fails to elect any of
the above provisions.
Life expectancy is computed by use of the expected return
multiples in Tables V and VI of section 1.72-9 of the Income Tax
Regulations (the "Regulations.") For purposes of distributions
beginning after the Contract Owner's death, unless otherwise
elected by the surviving spouse by the time distributions are
required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable by the surviving
spouse and shall apply to all subsequent years. In the case of any
other designated beneficiary, life expectancies shall be calculated
using the attained age of such beneficiary during the calendar year
in which distributions are required to begin pursuant to this
section, and payments for any subsequent calendar year shall be
calculated based on such life expectancy reduced by one for each
calendar year which has elapsed since the calendar year life
expectancy was first calculated.
Distributions under this section are considered to have begun
if distributions are made on account of the Contract Owner reaching
his or her required beginning date or if prior to the required
beginning date distributions irrevocably commence to the Contract
Owner over a period permitted and in an annuity form acceptable
under section 1.401(a)(9) of the Regulations.
The Contract Owner may designate or change a beneficiary by
filing a Request with GWL&A at its Administrative Offices. Each
change of beneficiary revokes any previous designation. Unless
otherwise provided in the beneficiary designation, one of the
following procedures will take place on the death of a beneficiary:
(1) if there is more than one primary surviving beneficiary, the
Contract Value will be shared equally among them; (2) if any
primary beneficiary dies before the Contract Owner, that
beneficiary's interest will pass to any other named surviving
primary beneficiary or Beneficiaries, to be shared equally; (3) if
there is no surviving primary beneficiary, the Contract Value shall
pass to any surviving contingent beneficiary, and if more than one
contingent beneficiary, shall be shared equally among them; (4) if
no beneficiary survives the Contract Owner, the Contract Value
shall pass to the Contract Owner's estate; or (5) if the
designation of the beneficiary was not adequately made, the
Contract Value shall pass to the Contract Owner's estate.
INVESTMENTS OF THE SERIES ACCOUNT
The Series Account invests in shares of the Fund, an
open-end
management investment company registered with the Securities and
Exchange Commission. Such registration does not involve
supervision of the management of the Fund by the Securities and
Exchange Commission. Shares of the Fund are also sold to the
FutureFunds Series Account and Maxim Series Account, which are
separate accounts established by GWL&A to receive and invest
premiums paid under variable annuity contracts issued by GWL&A.
Shares of the Fund are also sold to TNE Series (k) Account of
Metropolitan Life Insurance Company to fund benefits under variable
annuity contracts. Shares of the Fund are also sold to the
Pinnacle Series Account of GWL&A to fund variable life insurance
policies. Shares of the Fund are currently and may be sold to
other separate accounts of GWL&A, its affiliates and other
insurance companies. It is conceivable that, in the future, it may
be disadvantageous for variable life insurance separate accounts
and variable annuity separate accounts to invest in the Fund
simultaneously. Although any such disadvantages are not currently
foreseen, whether to variable life insurance policyowners or the
variable annuity contract owners, the Board of Directors of the
Fund intends to monitor events in order to identify any material
conflicts between such policyowners and contract owners and to
determine what action, if any, should be taken in response thereto.
Such action could include the sale of the Fund shares by one or
more of GWL&A's separate accounts which could have adverse
consequences. Material conflicts could result from, for example,
(1) changes in state insurance laws, (2) changes in Federal income
tax laws, (3) changes in the investment management of any portfolio
of the Fund, or (4) differences in voting instructions between
those given by policyowners and those given by contract owners.
The investment objectives of each Portfolio of the Fund
available under the Contract are described beginning on page 2 of
this prospectus. A more complete description of the Fund and the
available Portfolios and their investment objectives can be found
in the accompanying Fund prospectus which should be read together
with this prospectus before investing. THERE IS NO ASSURANCE
THAT THE PORTFOLIOS WILL ACHIEVE THEIR RESPECTIVE STATED
OBJECTIVES. The Fund has additional portfolios which are not
generally available for allocation of Contributions to the Series
Account.
Investment Adviser
The investment adviser (the "Investment Adviser") for the
Fund
is GW Capital Management Inc., 8515 East Orchard Road, Englewood,
Colorado 80111. The Investment Adviser is registered with the
Securities and Exchange Commission as an investment adviser. The
Investment Adviser provides portfolio management and investment
advice to the Fund and administers its other affairs subject to the
supervision of the Fund's Board of Directors.
Sub-Advisers
Ariel Capital Management Inc. ("Ariel") 307 N. Michigan
Avenue, Chicago, Illinois 60601, is a privately held minority-owned
money manager registered with the Securities and Exchange
Commission as an investment adviser. Subject to review and
supervision by the Investment Adviser and the Board of Directors of
the Fund, Ariel is responsible for the actual management of the
Small-Cap Value Portfolio and for making decisions to buy, sell or
hold any particular security.
Loomis, Sayles & Company, Inc. ("Loomis Sayles") located at
One Financial Center, Boston, Massachusetts 02111, is the
investment advisor of the Small-Cap Aggressive Growth, Foreign
Equity and Corporate Bond Portfolios, respectively. Loomis Sayles
is registered with the Securities and Exchange Commission as an
investment adviser. Subject to review and supervision by the
Investment Adviser and the Board of Directors of the Fund, Loomis
Sayles is responsible for the actual management of the Small-Cap
Aggressive Growth, Foreign Equity and Corporate Bond Portfolios and
for making decisions to buy, sell or hold any particular
security.
Reinvestment and Redemption
All dividend distributions of Maxim will be automatically
reinvested in shares of Maxim at their net asset value on the date
of distribution; all capital gains distributions of Maxim, if any,
will likewise by reinvested at the net asset value on the record
date. GWL&A will redeem Maxim shares at their net asset values to
the extent necessary to make annuity or other payments under the
Contract.
Substitution of Investments
GWL&A reserves the right, subject to compliance with the law
as currently applicable or subsequently changed, to make additions
to, deletions from or substitutions for the investments held by the
Series Account. In the future, GWL&A may establish additional
Investment Divisions within the Series Account. These Investment
Divisions will be established if, and when, in the sole discretion
of GWL&A marketing needs and investment conditions warrant, and
will be made available under existing Contracts to the extent and
on a basis to be determined by GWL&A.
If shares of any of the Portfolios of Maxim should no longer
be available for investment, or if in the judgment of GWL&A's
management further investment in any of the Portfolios' shares
should become inappropriate in view of the objectives of the
Contracts, then GWL&A may substitute shares of another mutual fund
for shares already purchased, or to be purchased in the future
under the Contracts. No substitution of securities held by the
Series Account may take place without prior approval of the
Securities and Exchange Commission, and prior notice to the
Contract Owners.
CHARGES AND DEDUCTIONS
Contract Maintenance Charge
GWL&A has primary responsibility for the administration of all
Contracts and the Series Account. For Contract purchased after May
1, 1997, GWL&A will impose an annual contract maintenance charge in
the amount of $30 if the Contract Value is not at least $5,000 on
December 31 of the prior year. This charge will be assessed during
the second quarter of the current year. If an Annuity Account is
established after the assessment date, the charge will be deducted
on the first day of the next quarter and will be pro-rated for the
remaining portion of the year. No refund of this charge will be
made.
No Sales Charge
GWL&A will impose no sales charge.
Administrative Surrender Fee
A $50 charge will be imposed for any Contract surrendered in
whole during the first 12 months after issue, excluding the "free
look" period and a $25 charge will be imposed for any Contract
surrendered in part during the first 12 months after issue. This
charge reflects the actual expenses associated with the surrenders
GWL&A expects to incur and may not be increased.
Deductions for Premium Taxes
The applicable Premium Tax rates that states and other
governmental entities impose currently range from 0% to 3.5% and
are subject to change by the respective state legislature, by
administrative interpretations or by judicial act. Such Premium
Taxes will depend, among other things, on the state of residence of
a Contract Owner and the insurance tax laws and status of GWL&A in
these states when the Premium Taxes are incurred.
GWL&A presently makes no deduction from Contributions for
Premium Taxes; however, it reserves the right to make such
deductions from the Contract Value upon the annuity date.
Deductions for Assumption of Mortality and Expense Risks
GWL&A deducts from the daily net accumulation unit value of
the Series Account an amount, computed daily, which is equal to an
annual rate as described below.
The level of the mortality and expense risk charge applicable
to the Contract during the first calendar year will be based upon
the initial account balance of the Contract, in accordance with the
schedule set forth below. The level of the mortality and expense
risk charge applicable in subsequent calendar years will be based
upon the account balance as of December 31 of the previous calendar
year, in accordance with such schedule. The following table sets
forth the level of the mortality and expense risk charges that will
apply to a Contract:
M & E Charge
Account Balance
0.75%
From $0 - 9,999.99
0.50%
From $10,000 - $24,999.99
0.25%
From $25,000 - $49,999.99
0.00%
From $50,000 and greater
Because the mortality and expense risk charge is determined
based
on the December 31 account balance of the previous calendar year,
Contract Owners may wish to monitor their account balances closely
to ensure timely contributions are made to the extent possible to
reduce the mortality and expense risk charge that will be
applicable in the ensuing year. Each level of this charge is
guaranteed and will not be increased.
GWL&A's assumption of mortality risk guarantees that the
annuity payments made to the beneficiary or other payee will not be
affected by the mortality experience (life span) of persons
receiving such payment or of the general population. GWL&A assumes
this "mortality risk" by virtue of the fact that annuity rates in
effect at the time that any Contributions are made cannot be
changed.
GWL&A also assumes the risk that the actual administrative
expenses in connection with the Contracts will exceed the
anticipated administrative expenses. The administrative services
which GWL&A provides include: processing of applications for
issuance of the Contracts and establishing individual Contract
Owner records; purchase and redemption of the underlying mutual
fund shares as required; maintenance of records; administration of
annuity payments; accounting and valuation services; and regulatory
and reporting services.
If the deduction for mortality and expense risks is
insufficient to cover actual costs and assumed risks, the loss will
fall on GWL&A. Conversely, if the deduction proves more than
sufficient, any excess will be added to the GWL&A surplus.
There are also fees and expenses associated with the
underlying mutual fund (See "Fee Table.")
PERIODIC PAYMENT OPTIONS
GWL&A offers two distribution options that are not considered
Annuity options: The Estate Maximizer Option ("EMO") and the
Flexible Payment Option ("FPO"). These options are available for
any Contract Owners but with respect to the EMO, Contract Owners
must be at least age 701/2.
Since EMO and FPO are not Annuity options, the Contract
remains in the Accumulation Period and retains all rights and
flexibility described in this prospectus. The value of the
Accumulation Units canceled will be withdrawn in the same order
that the contributions were applied to the Contract and on a pro
rata basis; i.e., proportioned across the Investment Divisions to
which a Contract Owner has allocated his/her Contributions.
Distributions from a periodic payment option prior to age
591/2 may be subject to an early withdrawal penalty imposed by the
Code. Distributions after age 591/2 will be subject to no
penalties as long as payments are substantially level and are paid
over a period of not less than five (5) years.
All payments made to an Contract Owner upon the Contract
Owner's attainment of age 701/2 from any periodic payment option
must comply with the Code's minimum distribution regulations.
GWL&A reserves the right to discontinue the availability of
these distribution options and to change the terms for future
elections.
Once elected, the applicable option(s) may be revoked by
the
Contract Owner at any time, by submitting a Request to the
Company's Administrative Office. Any revocation will apply only to
the amounts not yet paid. Once EMO or FPO is revoked, it may not
be elected again.
If any periodic payment will be less than $100, GWL&A may make
the payments in the most frequent interval which produces a payment
of at least $100.
FPO is different from EMO in the following ways: (1) FPO
payments are made for a fixed dollar amount or a fixed time period
whereas EMO payments vary in dollar amount and can continue
indefinitely during the Contract Owner's lifetime, and (2)
generally, FPO payments will be higher than expected EMO payments.
Contract Owners should carefully assess their future income needs
when considering the election of these distribution options.
1. Estate Maximizer Option ("EMO")
GWL&A will calculate and distribute an annual amount using
the
method contained in the Code's minimum distribution regulations.
The Contract Owner specifies the initial distribution date.
Subsequent distributions will be made on the 15th of any month or
such other date GWL&A may designate or allow. The annual
distribution is determined by dividing the Contract Value by a life
expectancy factor from tables designated by the Internal Revenue
Service ("IRS"). The factor will be based on either the Contract
Owner's life expectancy or the joint life expectancy of the
Contract Owner and the Contract Owner's spouse and will be
redetermined for each calendar year's distribution. The Contract
Value to be used in this calculation is the Contract Value on the
December 31st prior to the year in which the EMO payment is being
made. This calculation will be changed, if necessary, to conform
to changes in the Code or applicable regulations.
2. Flexible Payment Option ("FPO")
FPO payments are available on a monthly, quarterly, semiannual
or annual basis. The Contract Owner specifies the initial
distribution date. Subsequent distributions will be made on the
15th of any month or such other date the Company may designate or
allow.
One of two methods of distribution may be elected for payments
from Variable Sub-Accounts:
(a) Specified Payment - payments of a designated dollar
amount. The dollar amount chosen must be greater than or equal to
the minimum distribution amount allowed by the Code and applicable
regulations. The Contract Value on December 31st prior to the year
for which the payment is being made will be used in this
calculation. Payments will cease on the earlier of the date the
amount elected to be paid under the option selected has been
reduced to zero or the Contract Value is zero.
(b) Specified Period - payments for a designated time period.
The annual distribution amount must be greater than or equal to the
minimum distribution amount required by the Code and applicable
regulations. Each annual distribution is determined by dividing
the Contract Value by the number of years remaining in the elected
period. The Contract Value on December 31st prior to the year for
which the payment is being made will be used in this calculation.
For payments made more often than annually, the annual payment
result (calculated above) is divided by the number of payments due
each year. The specified period must be at least three (3) years,
but not greater than the Annuitant's life expectancy factor.
Payments will cease on the earlier of the date the amount elected
to be paid under the option selected has been reduced to zero or
the Contract Value is zero.
For purposes of determination of amount to distributed under each
of the referenced distribution methods, life expectancy will be
recalculated annually based on Code section 401(a)(9) or applicable
regulations.
ANNUITY OPTIONS
An Annuity Commencement Date and the form of annuity payments
("Annuity Options") may be elected at any time during the
Accumulation Period. The elections are made by the Contract Owner.
The Annuity Commencement Date elected generally must, to avoid the
imposition of an excise tax, not be later than April 1 of the
calendar year following the calendar year in which the Contract
Owner attains age 701/2 without regard to the actual retirement
date or termination of employment date. It is the responsibility
of the Contract Owner to file the necessary Request with GWL&A.
The Annuity Commencement Date may be postponed or accelerated,
or the election of any of the Annuity Options changed, upon Request
received by GWL&A at its Administrative Offices up to 30 days prior
to the existing Annuity Commencement Date. If any Annuity
Commencement Date elected would be less than 30 days from the date
that the Request is received, GWL&A may delay the date elected by
not more than 30 days.
The Contract provides for the Annuity Options described below,
as well as such other Annuity Options as GWL&A may choose to make
available in the future. Except as otherwise noted, the Annuity
Options are payable on a variable, fixed or combination basis.
More than one Annuity Option may be elected. If no Annuity Option
is elected, the Contract automatically provides for a variable life
annuity (with respect to the variable portion of the Contract)
and/or a fixed life annuity (with respect to the fixed portion of
the Contract) with 120 monthly payments guaranteed.
The level of annuity payments under the following options is
based upon the option selected and, depending on the option chosen,
such factors as the age at which payments begin and the frequency
and duration of payments.
Option No. 1: Life Annuity
This option provides an annuity payable monthly during the
lifetime of the annuitant. It would be possible under this option
for the Annuitant to receive no annuity payment if he/she died
prior to the date of the first annuity payment, one annuity payment
if the Annuitant died before the second annuity payment, etc.
Option No. 2: Life Annuity with Payments Guaranteed for Designated
Periods
This option provides an annuity payable monthly for the
guaranteed period elected or the lifetime of the annuitant,
whichever is longer, with the guarantee that if, at the death of
the annuitant, payments have been made for less than the designated
period, the beneficiary will receive payments for the remainder of
the period. The designated period may be 5, 10, 15, or 20 years.
The period generally referred to as "Installment Refund" is
available only on a fixed dollar payment basis.
Option No. 3: Joint and One-Half Survivor (available only as fixed
dollar payments)
This option provides an annuity payable during the joint
lifetime of the annuitant and a designated second person, and
thereafter during the remaining lifetime of the survivor. After
the death of the annuitant, and while only the designated second
person is alive, the amount payable will be one-half of the amount
paid while both were living. It would be possible under this
option for the annuitant and the beneficiary to receive no annuity
payment if both persons died prior to the date of the first annuity
payment, one annuity payment if both persons died before the second
annuity payment, etc.
Option No. 4: Income of Specified Amount (available only as fixed
dollar payments)
Under this option, the amount of the periodic benefit is
selected, which amount will be paid to the payee in equal annual,
semiannual, quarterly, or monthly installments as elected, provided
that the annuity payment period is not less than 36 months nor more
than 240 months.
Option No. 5: Income for Specified Period (available only as fixed
dollar payments)
Under this option, the duration of the periodic benefit is
selected (which may not be less than 36 months nor more than 240
months), and a resulting annuity payment amount will be paid to the
payee in equal annual, semiannual, quarterly, or monthly
installments, as elected.
Option No. 6: Installment Refund Period (available only as fixed
dollar payments)
Under this payment option, monthly payments for the life of
the annuitant will be made or until the sum of the payments made
equals the amount applied, whichever is greater.
Variable Annuity Payments
Variable annuity payments will be determined on the basis of:
(i) the Variable Account Value prior to the Annuity Commencement
Date; (ii) the annuity tables contained in the Contract which
reflect the age of the Contract Owner; (iii) the type of annuity
option(s) selected; and (iv) the investment performance of the
underlying mutual fund. The Contract Owner receives the value of
a fixed number of Annuity Units each month.
At the Annuity Commencement Date, the number of Annuity Units
for each Variable Sub-Account on which variable annuity payments
are based is established. The number of Annuity Units to be
credited is determined by dividing the amount of the first monthly
payment by the value of an Annuity Unit as of the fifth Valuation
Period prior to the Annuity Commencement Date in each Variable
Sub-Account selected. Although the number of Annuity Units is
fixed by this process, the value of such units will vary with the
value of the underlying mutual fund.
The dollar amount of the first monthly variable annuity
payment is determined by applying the total value of the
Accumulation Units credited to the Contract valued as of the fifth
Valuation Period prior to the Annuity Commencement Date to the
annuity tables contained in the Contract. Amounts shown in the
tables are based on the 1983 Table (a) for Individual Annuity
Valuation with an assumed investment return at the rate of 2.5% per
annum. The first annuity payment is determined by multiplying the
benefit per $1,000 of value shown in the Contract tables by the
number of thousands of dollars of value accumulated under the
Variable Account Value. These annuity tables vary according to the
form of annuity selected and according to the age of the Contract
Owner at his/her Annuity Commencement Date.
The 2.5% interest rate stated above is the measuring point
for
subsequent annuity payments. If the actual Net Investment Factor
(annualized) exceeds 2.5%, the payment will increase at a rate
equal to the amount of such excess. Conversely, if the actual rate
is less than 2.5%, annuity payments will decrease. If the assumed
rate of interest were to be increased, annuity payments would start
at a higher level but would increase more slowly or decrease more
rapidly.
The amount of the second and subsequent payments is determined
by multiplying the credited fixed number of Annuity Units by the
appropriate Annuity Unit value for the fifth Valuation Period
preceding the date that payment is due. The Annuity Unit value at
the end of any Valuation Period is determined by multiplying the
Annuity Unit value for the immediately preceding Valuation Period
by the product of:
(a) the Net Investment Factor of the Variable Sub-Account for
the Valuation Period for which the Annuity Unit is being
determined, and
(b) a factor of .999932 to neutralize the assumed investment
return of 2.5% per year used in the annuity table.
The value of each Variable Sub-Account's Annuity Unit is
set
initially at $10.00.
The value of the Annuity Units is determined as of a Valuation
Period five (5) days' prior to the payment in order to permit
calculation of amount of annuity payments and mailing of checks in
advance of their due date.
Fixed Annuity Payments
The guaranteed level of fixed annuity payments will be
determined on the basis of: (i) the Guaranteed Account Value prior
to the Annuity Commencement Date; (ii) the annuity tables contained
in the Contract which reflects the age of the Contract Owner; and
(iii) the type of annuity option(s) elected. The payment amount
may be greater, however, if GWL&A is using a more favorable table
as of a Contract Owner's Annuity Commencement Date.
Combination Variable and Fixed Annuity Payments
If an election is made to receive annuity payments on a
combination variable and fixed basis, the Variable Account Value
will be applied to the variable annuity option elected and the
Guaranteed Account Value to the fixed annuity option.
Proof of Age and Survival
GWL&A may require proof of age and survival of any payee upon
whose age or survival payments depend.
Frequency and Amount of Annuity Payments
Variable annuity payments will be paid as monthly
installments; fixed annuity payments will be paid annually,
semiannually, quarterly or monthly, as requested. However, if any
payment to be made under any annuity option will be less than $100
GWL&A may make the payments in the most frequent interval which
produces a payment of at least $100. If the net amount available
to apply under any Annuity Option is less than $2,000, GWL&A may
pay it in one lump sum. The maximum amount that may be applied
under an Annuity Option without the prior written consent of GWL&A
is $1,000,000.00.
FEDERAL TAX CONSEQUENCES
Introduction
The ultimate effect of Federal income taxes on the Contract
Value, on annuity payments and on the economic benefit to the
Contract Owner, beneficiary or other payee depends on GWL&A's tax
status, and upon the tax and employment status of the individual
concerned. The discussion which follows is general in nature and
is not intended as tax advice. No representation is made regarding
the likelihood of the continuation of present federal income tax
law or of the current interpretations of the Internal Revenue
Service. No discussion of state or other tax laws is provided.
FOR FURTHER INFORMATION, CONSULT A QUALIFIED TAX ADVISER.
Taxation of GWL&A
GWL&A is taxed on its insurance business in the United States
as a life insurance company in accordance with Part I of Subchapter
L of the Code. The Series Account is taxed as a part of GWL&A; not
as a "regulated investment company" under Part I of Subchapter M of
the Code. GWL&A is taxed as a life insurance company as described
below. Investment income and realized capital gains on the assets
of the Series Account are reinvested and are taken into account in
determining the Contract Value. Under existing federal income tax
law, such amounts do not result in any tax to GWL&A which will be
chargeable to the Contract Owner or the Series Account. GWL&A
reserves the right to make a deduction from the Contract Owner's
account balance for taxes, if any, imposed with respect to such
items in the future.
Individual Retirement Annuities (IRAs)
In general, set forth below are some comments concerning the
federal income taxation of individual retirement annuities (IRAs)
under Sections 72 and 408 of the Code. It should be understood
that the following discussion is not exhaustive, and that special
rules may apply to certain situations not discussed here. The
Contract Owner and beneficiaries are responsible for determining
that Contributions, distributions and other transactions with
respect to the Contract comply with applicable laws.
To qualify as an IRA under Section 408 of the Code, the
Annuitant must at all times be the owner of the Contract. The
entire interest of the Contract Owner is nonforfeitable and
nontransferable. Contributions may not exceed the limitations
allowable under the Code. The Contract Owner may not borrow from
the Contract or pledge the annuity or any portion of it as security
for a loan. If the Contract Owner borrows money under the
Contract, including a policy loan, or pledges any portion of the
Contract as security for a loan, the Contract ceases to qualify as
an IRA as of the first day of the year, and the fair market value
of the Contract is includable in the Contract Owner's gross income
for the year.
Generally a Contract Owner who is a natural person is not
taxed on increases (if any) in the value of the Contract until
distribution occurs. Code Section 408(d)(1) provides that
distributions from IRAs, including total or partial withdrawals and
annuity payments, are generally taxed for federal income tax
purposes under Code Section 72. Under these rules, a portion of
the distribution may be excludable from income if any nondeductible
contributions were made. However, since the initial contribution
to this IRA was entirely from pre-tax contributions to a qualified
plan, the entire amount distributed generally will be taxable to
the Contract Owner as ordinary income in the year distributed.
There is no special averaging treatment for lump sum distributions.
Rollovers
Generally, a Contract Owner of an IRA may receive a
distribution of any amount from the IRA and within 60 days roll
that amount, or any part of it, over into any other IRA. Amounts
properly rolled over will not be included in gross income until a
distribution is taken from the new IRA. Only one rollover from a
particular IRA to any other IRA may be made in any one-year period.
Certain other restrictions apply.
A Contract Owner may receive a distribution from an IRA and
within 60 days roll it over into a qualified plan only if all the
funds in the IRA are attributable to a previous rollover
distribution from a qualified plan. Section 408(d)(3)(A)(ii). If
the Contract Owner ever mixes a rollover contribution from a
qualified plan with other contributions or funds from other
sources, the right to roll it back into a qualified plan is
forfeited.
Required Beginning Date/Minimum Distribution Requirements
The Contract Owner's entire interest in the contract typically
must be distributed, or begin to be distributed, by April 1
following the calendar year in which the Contract Owner reaches age
701/2. Required distributions must be made over a period not
exceeding the life expectancy of the Contract Owner or the joint
lives of the Contract Owner and his/her designated beneficiary. If
the amount distributed does not meet the minimum distribution and
incidental death benefit requirements, of Section 401(a)(9) and the
regulations thereunder, a 50% penalty tax on the amount which was
required to be, but was not, distributed may be imposed upon the
Contract Owner under Section 4974.
Penalty Taxes
Distributions made before the Contract Owner attains age 591/2
are premature distributions and ordinarily are subject to an
additional tax equal to 10% of the amount of the distributions
which is includable in gross income in the tax year. However,
under Code Section 72(t) the penalty tax will not apply to
distributions: (i) made to a beneficiary or the Contract Owner's
estate on or after the death of the Contract Owner; (ii)
attributable to the Contract Owner's being disabled within the
meaning of code Section 72(m)(7); or (iii) made as a part of a
series of substantially equal periodic payments (at least annually)
for the life or life expectancy of the Contract Owner or the joint
lives or life expectancies of the Contract Owner and his/her
designated beneficiary.
If the penalty tax does not apply to a distribution as a
result of the application of item (iii) above, and the series of
payments are subsequently modified (other than by reason of death
or disability), (a) before the close of the period which is 5 years
from the date of the first payment and after the employee attains
age 591/2 , or (b) before the employee attains age 591/2 , the tax
for the first year when the modification occurs will be increased
by an amount (determined by Treasury Department regulations) equal
to the tax that would have been imposed but for item (iii) above,
plus interest for the deferral period.
Distributions on Death of Contract Owner
Distributions made to a beneficiary upon the Contract Owner's
death must be made pursuant to the rules contained in Section
401(a)(9) of the Code. Generally, if the Contract Owner dies while
receiving annuity payments or other required minimum distribution,
but before the entire interest in the annuity has been distributed,
the remainder of his interest must generally be distributed to the
beneficiary at least as rapidly as under the method in effect as of
the Contract Owner's date of death.
If the Contract Owner dies before payments have begun, his
entire interest must generally be distributed in full on or before
December 31 of the calendar year that contains the fifth
anniversary of the date of the Contract Owner's death, unless the
Contract Owner has named an individual beneficiary. If an
individual other than the surviving spouse has been designated as
beneficiary, payments may be made over the life of that individual
or over a period not extending beyond the life expectancy of the
beneficiary so long as payments begin on or before December 31 of
the year following the year of death. If the beneficiary is the
Contract Owner's spouse, distributions are not required to begin
until the date the Contract Owner would have attained age 70 1/2 .
If the spouse dies before distributions begin, the rules discussed
above will apply as if the spouse were the Contract Owner.
A surviving spouse, who is the Contract Owner's beneficiary,
may elect to treat the entire annuity as his or her own IRA
regardless of whether distributions had begun to the deceased
Contract Owner or have begun to the surviving spouse. As the new
Contract Owner, the surviving spouse may make contributions to the
IRA and make rollovers from it. Such an election is deemed made if
any amounts required to be distributed on the Contract Owner's
death under these rules have not been distributed or any additional
amounts are contributed to the annuity.
Federal Income Tax Withholding on Distributions
Taxable distributions from an IRA are subject to income tax
withholding; if the distribution is in the form of an annuity or
similar periodic payments, amounts are withheld as though each
distribution were a payment of wages; in the case of any other kind
of distribution, a flat 10% is withheld, unless the recipient
elects not to have the tax withheld.
VOTING RIGHTS
GWL&A will vote the shares held by the Investment Divisions of
the Series Account at regular and special meetings of shareholders
of Maxim. The Investment Company Act of 1940 (the "1940 Act") and
the regulations thereunder, as presently interpreted, require that
the shares of the applicable underlying mutual fund be voted in
accordance with instructions received from persons having voting
interests in the Variable Sub-Accounts and, accordingly, GWL&A will
do so. However, if the 1940 Act or any regulation thereunder
should be amended, or if the present interpretation thereof should
change, and as a result GWL&A determined that it is permitted to
vote the shares at its own discretion, it may elect to do so.
Prior to the Annuity Commencement Date, the Contract Owner has
the voting interest in the Variable Sub-Account. After annuity
payments begin under a variable annuity option, the payee will have
the voting interest.
The number of votes which a person has the right to cast will
be determined by applying his/her percentage interest in a Variable
Sub-Account to the total number of votes attributable to the
Sub-Account. In determining the number of votes, fractional shares
will be recognized. During the annuity payment period, the number
of votes attributable to a Contract will decrease as the assets
held to fund the annuity payments decrease.
Voting rights held in respect of a Variable Sub-Account of
this Series Account as to which no timely instructions are received
and shares that are not otherwise attributable to persons having
voting interests in the Variable Sub-Accounts of this Series
Account, will be voted by GWL&A in proportion to the voting
instructions which are received with respect to all Contracts
participating in that Sub-Account of this Series Account. Voting
instructions to abstain on any item to be voted upon will be
applied on a pro rata basis to reduce the votes eligible to be
cast.
Each person having a voting interest will receive proxy
materials, reports and other materials relating to the applicable
underlying mutual fund.
DISTRIBUTION OF THE CONTRACTS
One Orchard, 8515 East Orchard Road, Englewood, Colorado
80111
is the principal underwriter and the distributor of the Contracts.
One Orchard is registered with the Securities and Exchange
Commission under the Securities and Exchange Act of 1934 as a
broker-dealer and is a member of the National Association of
Securities Dealers, Inc. ("NASD"). Applications for the Contracts
will be solicited by duly-licensed insurance agents of GWL&A who
are registered with One Orchard.
No commissions will be paid to any person for the sale of
Contracts.
RETURN PRIVILEGES
Within 10 days (20 days in Idaho and North Dakota) after the
Contract is first received, it may be canceled for any reason by
delivering or mailing it together with a written request to cancel
to GWL&A's Administrative Offices. Upon cancellation, GWL&A will
pay the Contract Owner the initial purchase payment. No
administrative termination fee will be deducted.
STATE REGULATION
As a life insurance company organized and operated under
Colorado law, GWL&A is subject to provisions governing such
companies and to regulation by the Colorado Commissioner of
Insurance.
GWL&A's books and accounts are subject to review and
examination by the Colorado Division of Insurance at all times and
a full examination of its operations is conducted by the National
Association of Insurance Commissioners ("NAIC") at least once every
three years.
REPORTS
As presently required by the 1940 Act and regulations
promulgated thereunder, all Contract Owners will be furnished,
semi-annually, reports containing such information as may be
required under the 1940 Act or by any other applicable law or
regulation. In addition, all Contract Owners will be furnished not
less frequently than annually a statement of the Contract Value
established in his/her name.
LEGAL PROCEEDINGS
The Series Account is not engaged in any litigation. GWL&A is
not involved in any litigation which would have material adverse
effect on the ability of GWL&A to perform its contract with the
Series Account.
LEGAL MATTERS
The organization of GWL&A, its authority to issue variable
annuity contracts and the validity of the Contracts have been
passed upon by R.B. Lurie, Vice-President, Counsel and Associate
Secretary of GWL&A. Certain legal matters relating to the federal
securities laws have been passed upon for GWL&A by Jorden Burt
Berenson & Johnson, LLP.
REGISTRATION STATEMENT
A Registration Statement has been filed with the Securities
and Exchange Commission, under the Securities Act of 1933 as
amended, with respect to the Contracts offered hereby. This
Prospectus does not contain all the information set forth in the
Registration Statement and amendments thereto and exhibits filed as
a part thereof, to all of which reference is hereby made.
Statements contained in this Prospectus as to the content of
Contracts and other legal instruments are summaries. For a
complete statement of the terms thereof reference is made to such
instruments as filed.
STATEMENT OF ADDITIONAL INFORMATION
The Statement of Additional Information contains more
specific
information and financial statements relating to the Series Account
and GWL&A. The Table of Contents of the Statement of Additional
Information is set forth below:
1. Custodian and Independent Auditors
2. Underwriter
3. Calculation of Performance Data
4. Financial Statements
Inquiries and requests for a Statement of Additional
Information should be directed to GWL&A in writing at 8515 E.
Orchard Road, Englewood, Colorado 80111, or by telephoning GWL&A at
(800) 338-4015.
1 The annual contract fee ("Contract Maintenance Charge") will not
be imposed if the Contract Owner maintains a Contract Value of at
least $5,000, as determined by the Contract Value as of December
31, of the prior year and assessed during the second quarter of
the current calendar year. The Contract Maintenance Charge will
only be imposed on contracts purchased after May 1, 1997.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
MAXIM SERIES ACCOUNT
Individual Flexible Premium Variable Annuity Contracts
issued by
Great-West Life & Annuity Insurance Company
8515 E. Orchard Road
Englewood, Colorado 80111
Telephone: (800) 468-8661 (Outside Colorado)
(800) 547-4957 (Colorado)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a
Prospectus
and should be read in conjunction with the Prospectus, dated May 1,
1997, which is available without charge by contacting Great-West
Life & Annuity Insurance Company ("GWL&A") at the above address or
at the above telephone number.
May 1, 1997
TABLE OF CONTENTS
Page
CUSTODIAN AND INDEPENDENT AUDITOR B-3
UNDERWRITER B-3
CALCULATION OF PERFORMANCE DATA B-3
FINANCIAL STATEMENTS B-5
CUSTODIAN AND INDEPENDENT AUDITORS
A. Custodian
The assets of Maxim Series Account (the "Series Account")
are held by GWL&A. The assets of the Series Account are kept
physically segregated and held separate and apart from the general
account of GWL&A. GWL&A maintains records of all purchases and
redemptions of shares of the Fund. Additional protection for the
assets of the Series Account is afforded by blanket fidelity bonds
issued to The Great-West Life Assurance Company ("Great-West") in
the amount of $30 million (Canadian), which covers all officers and
employees of GWL&A.
B. Independent Auditors
The accounting firm of Deloitte & Touche LLP performs
certain accounting and auditing services for GWL&A and the Series
Account. The principal business address of Deloitte & Touche LLP
is 555 Seventeenth Street, Suite 3600, Denver, Colorado 80202-3942.
The statements of assets and liabilities of Maxim
Series
Account as of December 31, 1996, the related statement of
operations for the year then ended, the statements of changes in
net asset for each of the two years then ended and the consolidated
balance sheets for Great-West Life & Annuity Insurance Company at
December 31, 1996, 1995 and the related consolidated statements of
income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1996, included in this
Statement of Additional Information have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their reports
appearing herein and are included in reliance upon the reports of
such firm given upon their authority as experts in accounting and
auditing.
UNDERWRITER
The offering of the Contracts is made on a continuous basis
by
BenefitsCorp Equities, Inc. ("BCE"), a wholly owned subsidiary of
GWL&A. Previously, the Contracts were offered through Great-West
an affiliate of GWL&A. No payments were made to Great-West for the
years 1992 through 1996 and no payments were made to BCE in
1996.
CALCULATION OF PERFORMANCE DATA
A. Yield and Effective Yield Quotations for the Money Market
Investment Division
The yield quotation for the Money Market Investment
Division
set forth in the Prospectus is for the seven-day period ended
December 31, 1996 and is computed by determining the net change,
exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one Accumulation Unit in
the Money Market Investment Division at the beginning of the
period, subtracting a hypothetical charge reflecting deductions
from Participant accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the
base period return, and then multiplying the base period return by
(365/7) with the resulting yield figure carried to the nearest
hundredth of one percent.
The effective yield quotation for the Money Market
Investment
Division set forth in the Prospectus is for the seven-day period
ended December 31, 1996 and is carried to the nearest hundredth of
one percent, computed by determining the net change, exclusive of
capital changes, in the value of a hypothetical pre-existing
account having a balance of one Accumulation Unit in the Money
Market Investment Division at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from
Participant accounts, and dividing the difference by the value of
the account at the beginning of the base period to obtain the base
period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result, according to the following
formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN +1 365/7]-1.
For purposes of the yield and effective yield computations,
the hypothetical charge reflects all deductions that are charged to
all Participant accounts in proportion to the length of the base
period, and for any fees that vary with the size of the account,
the account size is assumed to be the Money Market Investment
Division's mean account size. The specific percentage applicable to
a particular withdrawal would depend on a number of factors
including the length of time the Contract Owner has participated
under the Contracts. (See "Administrative Charges, Risk Charges
and Premium Taxes" in the prospectus.) No deductions or sales
loads are assessed upon annuitization under the Contracts.
Realized gains and losses from the sale of securities and
unrealized appreciation and depreciation of the Money Market
Investment Division and the Fund are excluded from the calculation
of yield.
B. Total Return and Yield Quotations for All Investment Divisions
(Other than Money Market)
The total return quotations for all Investment Divisions,
other than the Money Market, set forth in the Prospectus are
average annual total return quotations for the one-year period
ended December 31, 1996. The quotations are computed by finding
the average annual compounded rates of return over the relevant
periods that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the particular period at
the end of the particular period
For purposes of the total return quotations for these Investment
Divisions, the calculations take into effect all fees that are
charged to the Contract Value , and for any fees that vary with the
size of the account, the account size is assumed to be the
respective Investment Divisions' mean account size. The
calculations also assume a complete redemption as of the end of the
particular period.
FINANCIAL STATEMENTS
The financial statements of GWL&A as contained herein should
be considered only as bearing upon GWL&A's ability to meet its
obligations under the Contracts, and they should not be considered
as bearing on the investment performance of the Series Account.
The interest of Contract Owners under the Contracts are affected
solely by the investment results of the Series Account.
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT OF
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
Financial Statements for the Years
Ended December 31, 1996 and 1995
and Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Contract Owners of
Retirement Plan Series Account of
Great-West Life & Annuity Insurance Company:
We have audited the accompanying statement of assets and
liabilities of Retirement Plan Series Account of Great-West Life &
Annuity Insurance Company as of December 31, 1996, the related
statements of operations for the year then ended and the statements
of changes in net assets for each of the two years in the period
then ended, including each of the investment divisions. These
financial statements are the responsibility of the Series Account's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of the Retirement Plan
Series Account of Great-West Life & Annuity Insurance Company at
December 31, 1996, the results of its operations for the year then
ended and the changes in its net assets for each of the two years
in the period then ended, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 7, 1997
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
ASSETS
Investments in affiliated underlying funds:
Shares
Cost
Value
Maxim Series Fund, Inc. - Corporate Bond
412,894
$475,262
$479,692
Maxim Series Fund, Inc. - Foreign Equity
438,024
446,342
463,408
Maxim Series Fund, Inc. - Growth Index
1,546,764
2,224,627
2,297,317
Maxim Series Fund, Inc. - Investment Grade Corporate Bond
222,335
284,415
284,007
Maxim Series Fund, Inc. - Money Market
1,038,148
1,038,851
1,038,851
Maxim Series Fund, Inc. - Short-Term Maturity Bond
32,114
32,355
32,322
Maxim Series Fund, Inc. - Small-Cap Aggressive Growth
1,065,023
1,415,464
1,493,990
Maxim Series Fund, Inc. - Small-Cap Index
859,615
1,051,140
1,063,321
Maxim Series Fund, Inc. - Small-Cap Value
345,737
378,419
431,486
Maxim Series Fund, Inc. - Stock Index
1,475,333
3,073,932
3,489,127
Maxim Series Fund, Inc. - Total Return
584,098
778,765
783,375
Maxim Series Fund, Inc. - U.S. Government Mortgage Securities
377,093
435,818
434,380
Maxim Series Fund, Inc. - Value Index
1,213,421
1,607,370
1,764,039
Total investments
$13,242,760
$14,055,315
Other assets and liabilities:
Premium due and accrued
106,582
Due to Great-West Life & Annuity Insurance Company
(3,245)
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL (Note 5)
$14,158,652
See notes to financial statements.
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
Bond Fund III Investment Division
International Fund II Investment Division
Aggressive Growth Fund IV Investment Division
Bond Fund II Investment Division
Short-Term Fund II Investment Division
Bond Fund V Investment Division (E)
Aggressive Growth Fund V Investment Division
INVESTMENT INCOME
$36,938
$1,195
$217,265
$13,692
$41,160
$1,062
$102,474
EXPENSES - mortality and
expense risks by category:
A
264
469
1,306
189
435
10
845
O
265
380
1,526
182
470
30
986
U
125
162
918
70
307
21
381
Z
NET INVESTMENT INCOME
36,284
184
213,515
13,251
39,948
1,001
100,262
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments
532
529
13,792
134
(8)
995
Net change in unrealized appreciation
(depreciation) on investments
1,107
15,421
59,519
(1,914)
(33)
81,392
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
1,639
15,950
73,311
(1,780)
0
(41)
82,387
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
$37,923
$16,134
$286,826
$11,471
$39,948
$960
$182,649
(E) The investment division commenced operations on March 13, 1996.
See notes to financial statements.
[Continued]
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
Aggressive Growth Fund III Investment Division
Growth Fund IV Investment Division
Growth Fund II Investment Division
Growth & Income Fund I Investment Division
Bond Fund I Investment Division
Growth & Income Fund III Investment Division
Total Retirement Plan
INVESTMENT INCOME
$84,719
$2,372
$53,184
$54,879
$21,563
$71,140
$701,643
EXPENSES - mortality and
expense risks by category:
A
655
220
1,636
532
243
813
7,617
O
741
279
1,825
651
393
1,081
8,809
U
373
230
1,191
242
159
742
4,921
Z
NET INVESTMENT INCOME
82,950
1,643
48,532
53,454
20,768
68,504
680,296
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments
536
166
7,453
502
(387)
3,962
28,206
Net change in unrealized appreciation
(depreciation) on investments
10,260
52,815
383,100
5,154
(3,253)
144,470
748,038
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
10,796
52,981
390,553
5,656
(3,640)
148,432
776,244
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS
$93,746
$54,624
$439,085
$59,110
$17,128
$216,936
$1,456,540
See notes to financial statements.
[Concluded]
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
Bond Fund III Investment Division (C)
1996
1995
International Fund II Investment Division
1996
1995
Aggressive Growth Fund IV Investment Division (C)
1996
1995
FROM OPERATIONS:
Net investment income (loss)
$36,284
$9,914
$184
$(27)
$213,515
$4,728
Net realized gain (loss) on investments
532
4
529
(33)
13,792
543
Net change in unrealized appreciation
(depreciation) in investments
1,107
3,321
15,421
1,645
59,519
13,171
Increase in net assets
derived from operations
37,923
13,239
16,134
1,585
286,826
18,442
FROM UNIT TRANSACTIONS: (by category)
Purchase payments:
A
50,877
8,659
87,026
31,067
356,156
38,071
O
103,463
26,054
128,370
16,858
337,592
115,047
U
80,174
17,491
102,657
22,036
400,584
106,432
Z
99,286
242,784
74,578
11,933
528,402
249,766
Redemptions:
A
(1,024)
(12,782)
(2,857)
(95,553)
(865)
O
(5,690)
(10,276)
(26,031)
U
(9,197)
(322)
(29,231)
Z
(61,862)
(1,077)
(67,744)
Net transfers from (to) other annuity contracts:
A
(2,237)
(2,760)
135
O
15,689
U
(9,688)
(10,568)
1,949
Z
(96,878)
10,572
111,110
(29,350)
Increase in net assets
derived from unit transactions
147,224
293,589
366,817
79,037
1,533,058
479,101
INCREASE IN NET ASSETS
185,147
306,828
382,951
80,622
1,819,884
497,543
NET ASSETS
Beginning of period
306,828
80,622
497,543
End of period
$491,975
$306,828
$463,573
$80,622
$2,317,427
$497,543
(C) The investment division commenced operations on July 24, 1995.
See notes to financial statements.
[Continued]
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
Bond Fund II Investment Division (C)
1996
1995
Short-Term II Investment Division (A)
1996
1995
Bond Fund V Investment Division (E)
1996
FROM OPERATIONS:
Net investment income (loss)
$13,251
$1,907
$39,948
$10,961
$1,001
Net realized gain (loss) on investments
134
28
(8)
Net change in unrealized appreciation
(depreciation) in investments
(1,914)
1,506
(33)
Increase in net assets
derived from operations
11,471
3,441
39,948
10,961
960
FROM UNIT TRANSACTIONS: (by category)
Purchase payments:
A
37,298
7,720
99,328
24,206
2,455
O
53,768
13,484
153,218
9,252
15,941
U
35,822
25,929
200,154
14,436
16,276
Z
103,669
76,149
237,273
442,787
2,211
Redemptions:
A
(801)
(25,435)
O
(5,477)
(21,462)
(5,467)
U
(15,096)
(322)
(96,163)
Z
(115,280)
(21,273)
Net transfers from (to) other annuity contracts:
A
(2,533)
(51)
O
(17,741)
U
(20,932)
43,314
Z
(35,819)
31,313
29,434
Increase in net assets
derived from unit transactions
149,899
122,960
488,468
498,842
31,416
INCREASE IN NET ASSETS
161,370
126,401
528,416
509,803
32,376
NET ASSETS
Beginning of period
126,401
509,803
End of period
$287,771
$126,401
$1,038,219
$509,803
$32,376
(A) The Investment Division commenced operations on July 5, 1995.
(C) The Investment Division commenced operations on July 24, 1995.
(E) The Investment Division commenced operations on March 13, 1996.
See notes to financial statements.
[Continued]
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
Aggressive Growth Fund V Investment Division (D)
1996
1995
Aggressive Growth Fund III Investment Division
1996
1995
Growth Fund IV Investment Division (B)
1996
1995
FROM OPERATIONS:
Net investment income (loss)
$100,262
$12,454
$82,950
$6,835
$1,643
$5,864
Net realized gain (loss) on investments
995
766
536
685
166
Net change in unrealized appreciation
(depreciation) in investments
81,392
(2,865)
10,260
1,921
52,815
252
Increase in net assets
derived from operations
182,649
10,355
93,746
9,441
54,624
6,116
FROM UNIT TRANSACTIONS: (by category)
Purchase payments:
A
262,233
13,813
154,945
31,319
52,930
8,133
O
383,608
66,146
181,447
67,527
71,708
14,145
U
272,988
16,272
252,684
38,383
86,945
57,348
Z
245,674
73,099
178,104
183,954
62,559
28,804
Redemptions:
A
(13,962)
(1,699)
(14,191)
(6,016)
(3,953)
O
(13,077)
(1,673)
(26,595)
(830)
(5,072)
U
(9,990)
(20,168)
(471)
(3,632)
Z
(9,085)
(21,950)
(10,130)
(21,776)
(3,004)
Net transfers from (to) other annuity contracts:
A
2,320
O
(22,733)
(11,339)
5,642
U
39,622
(8,248)
Z
30,645
Increase in net assets
derived from unit transactions
1,168,243
144,008
676,509
292,090
264,123
108,430
INCREASE IN NET ASSETS
1,350,892
154,363
770,255
301,531
318,747
114,546
NET ASSETS
Beginning of period
154,363
301,531
114,546
End of period
$1,505,255
$154,363
$1,071,786
$301,531
$433,293
$114,546
(B) The investment division commenced operations on July 12, 1995.
(D) The investment division commenced operations on August 3, 1995.
See notes to financial statements.
[Continued]
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
Growth Fund II Investment Division
1996
1995
Growth & Income Fund I Investment Division (C)
1996
1995
Bond Fund I Investment Division (B)
FROM OPERATIONS:
Net investment income (loss)
$48,532
$12,203
$53,454
$4,489
$20,768
$3,445
Net realized gain (loss) on investments
7,453
284
502
2
(387)
4
Net change in unrealized appreciation
(depreciation) in investments
383,100
32,095
5,154
(544)
(3,253)
1,815
Increase in net assets
derived from operations
439,085
44,582
59,110
3,947
17,128
5,264
FROM UNIT TRANSACTIONS: (by category)
Purchase payments:
A
357,620
45,210
121,497
12,486
55,025
7,565
O
494,735
130,516
115,481
55,013
64,109
63,033
U
455,854
207,611
137,409
31,635
102,340
16,799
Z
900,190
632,102
243,139
49,715
119,305
74,595
Redemptions:
A
(17,480)
(14,452)
(7,470)
O
(21,037)
(909)
(30,444)
(3,000)
U
(12,100)
(640)
(6,867)
(316)
(18,028)
(321)
Z
(87,684)
(22,725)
(7,955)
(4,855)
Net transfers from (to) other annuity contracts:
A
129
O
(2,328)
252
(2,517)
U
(41,760)
(22,729)
(22,634)
Z
8,300
10,435
Increase in net assets
derived from unit transactions
2,034,439
992,074
575,301
148,533
254,831
158,671
INCREASE IN NET ASSETS
2,473,524
1,036,656
634,411
152,480
271,959
163,935
NET ASSETS
Beginning of period
1,036,656
152,480
163,935
End of period
$3,510,180
$1,036,656
$786,891
$152,480
$435,894
$163,935
(B) The investment division commenced operations on July 12, 1995.
(C) The investment division commenced operations on July 24, 1995.
See notes to financial statements.
[Continued]
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
Growth & Income Fund III Investment Division (B)
1996
1995
Total Retirement Plan
1996
1995
FROM OPERATIONS:
Net investment income (loss)
$68,504
$9,714
$680,296
$82,487
Net realized gain (loss) on investments
3,962
335
28,206
2,618
Net change in unrealized appreciation
(depreciation) in investments
144,470
12,199
748,038
64,516
Increase in net assets
derived from operations
216,936
22,248
1,456,540
149,621
FROM UNIT TRANSACTIONS: (by category)
Purchase payments:
A
192,893
21,043
1,830,283
249,292
O
325,707
82,281
2,429,147
659,356
U
326,828
132,683
2,470,715
687,055
Z
342,275
222,207
3,136,665
2,287,895
Redemptions:
A
(8,550)
(2,537)
(215,653)
(13,974)
O
(12,590)
(184,127)
(5,503)
U
(29,696)
(639)
(250,168)
(3,031)
Z
(16,802)
(22,890)
(384,401)
(111,691)
Net transfers from (to) other annuity contracts:
A
4,997
O
5,476
(29,599)
U
(45,082)
(96,756)
Z
27,224
96,902
84
Increase in net assets
derived from unit transactions
1,112,680
432,148
8,803,008
3,749,483
INCREASE IN NET ASSETS
1,329,616
454,396
10,259,548
3,899,104
NET ASSETS
Beginning of period
454,396
3,899,104
End of period
$1,784,012
$454,396
$14,158,652
$3,899,104
(B) The investment division commenced operations on July 12, 1995.
See notes to financial statements.
[Concluded]
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1. HISTORY OF THE SERIES ACCOUNT
The Retirement Plan Series Account of Great-West Life & Annuity
Insurance Company (the Series Account) is a separate account of
Great-West Life & Annuity Insurance Company (the Company)
established under Colorado law. The Series Account commenced
operations on June 1, 1995. The Series Account is registered with
the Securities and Exchange Commission as a unit investment trust
under the provisions of the Investment Company Act of 1940, as
amended.
The Series Account has various investment divisions (the Funds)
which invest in shares of open-end management investment companies
as follows:
Retirement Plan Series Investment Division
Underlying Fund Investment
Aggressive Growth Fund III
Maxim Series Fund, Inc. - Small-Cap Index
Aggressive Growth Fund IV
Maxim Series Fund, Inc. - Growth Index
Aggressive Growth Fund V
Maxim Series Fund, Inc. - Small-Cap Aggressive Growth
Bond Fund I
Maxim Series Fund, Inc. - U.S. Government Mortgage Securities
Bond Fund II
Maxim Series Fund, Inc. - Investment Grade Corporate Bond
Bond Fund III
Maxim Series Fund, Inc. - Corporate Bond
Bond Fund V
Maxim Series Fund, Inc. - Short-Term Maturity Bond
Growth Fund II
Maxim Series Fund, Inc. - Stock Index
Growth Fund IV
Maxim Series Fund, Inc. - Small-Cap Value
Growth & Income Fund I
Maxim Series Fund, Inc. - Total Return
Growth & Income Fund III
Maxim Series Fund, Inc. - Value Index
International Fund II
Maxim Series Fund, Inc. - Foreign Equity
Short Term Fund II
Maxim Series Fund, Inc. - Money Market
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of
the Series Account which are in accordance with the accounting
principles generally accepted in the investment company industry:
Security Transactions - Security transactions are recorded on the
trade date. Cost of investments sold is determined on the basis of
identified cost.
Dividend income is accrued as of the ex-dividend date and expenses
are accrued on a daily basis.
Security Valuation - The investments in shares of the underlying
funds are valued at the closing net asset value per share as
determined by the appropriate fund/portfolio at the end of each
day.
The cost of investments represents shares of the underlying funds
which were purchased by the Series Account. Purchases are made at
the net asset value from net purchase payments or through
reinvestment of all distributions from the underlying fund.
Federal Income Taxes - The Series Account income is automatically
applied to increase contract reserves. Under the existing federal
income tax law, this income is not taxed to the extent that it is
applied to increase reserves under a contract. The Company
reserves the right to charge the Series Account for federal income
taxes attributable to the Series Account if such taxes are imposed
in the future.
3. CHARGES UNDER THE CONTRACT
Charges Incurred for Total or Partial Surrenders - The
administrative surrender fee is $50 if the contract is surrendered
in whole during the first 12 months and $25 if the contract is
surrendered in part during the first 12 months.
Deductions for Premium Taxes - The Company presently intends to pay
any premium tax levied by any governmental entity as a result of
the existence of the participant accounts or the Series Account.
Deductions for Variable Asset Charge - The Company deducts an
amount, computed daily, from the net asset value of the Series
Account investments, equal to an annual rate of .75% (category A),
.50% (category O), .25% (category U), and .00% (category Z),
depending on the size of the contract. This charge is designed to
compensate the Company for its assumption of certain mortality,
death benefit and expense risks.
If the above proves insufficient to cover actual costs and assumed
risks, the loss will be borne by the Company; conversely, if the
amount deducted proves more than sufficient, the excess will be a
profit to the Company.
4. RELATED PARTY SERVICES
The Company's parent, The Great-West Life Assurance Company, served
as investment advisor to Maxim Series Fund, Inc. through October
31, 1996. Effective November 1, 1996 a wholly-owned subsidiary of
the Company, GW Capital Management, Inc., serves as investment
advisor. Fees are assessed against the average daily net asset
value of the Funds to compensate GW Capital Management, Inc. for
investment advisory services.
5. COMPONENTS OF NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF
CAPITAL
The following is a summary of the net assets applicable to
outstanding units of capital, depending on the variable asset
charge, at December 31, 1996 for each investment division:
Net Assets Applicable to Outstanding Units of Capital:
Units
Unit Price
Total Variable Annuity Contract Liabilities
Bond Fund III
Category A
5,084.504
11.991878
60,973
Category O
10,767.391
12.110117
130,394
Category U
7,111.831
12.010848
85,419
Category Z
17,630.188
12.205696
215,189
International Fund II
Category A
9,442.184
11.003489
103,897
Category O
12,679.396
10.992290
139,376
Category U
10,789.345
11.014751
118,842
Category Z
9,174.827
11.058353
101,458
Aggressive Growth Fund IV
Category A
23,490.027
14.166031
332,760
Category O
35,100.601
14.222070
499,203
Category U
38,890.979
14.278606
555,309
Category Z
64,886.391
14.335079
930,155
(Continued)
5. COMPONENTS OF NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF
CAPITAL (Continued)
Units
Unit Price
Total Variable Annuity Contracts Liabilities
Bond Fund II
Category A
4,019.391
10.722887
43,099
Category O
5,887.407
10.822869
63,719
Category U
2,497.983
10.754096
26,864
Category Z
14,123.278
10.910280
154,089
Short-Term Fund II
Category A
9,449.984
10.664782
100,782
Category O
12,173.696
10.472306
127,487
Category U
15,907.373
10.536308
167,605
Category Z
59,518.324
10.792402
642,345
Bond Fund V
Category A
244.557
10.337986
2,528
Category O
1,038.880
10.413253
10,818
Category U
1,603.912
10.449937
16,761
Category Z
219.539
10.326411
2,269
Aggressive Growth Fund V
Category A
19,250.731
15.401517
296,490
Category O
30,001.513
15.463441
463,927
Category U
23,175.182
15.518156
359,636
Category Z
24,716.113
15.585045
385,202
Aggressive Growth Fund III:
Category A
13,245.305
13.280728
175,907
Category O
17,113.508
13.326399
228,061
Category U
20,809.066
13.379096
278,406
Category Z
28,991.217
13.432017
389,412
Growth Fund IV
Category A
5,037.628
12.900574
64,988
Category O
7,695.514
12.954096
99,688
Category U
12,528.514
13.004809
162,931
Category Z
8,094.836
13.055990
105,686
Growth Fund II:
Category A
30,565.131
14.012525
428,295
Category O
48,278.765
13.999456
675,876
Category U
50,780.904
14.055103
713,731
Category Z
119,929.733
14.110567
1,692,278
Growth & Income Fund I
Category A
10,571.444
12.075652
127,657
Category O
15,356.637
12.123296
186,173
Category U
12,390.526
12.171499
150,811
Category Z
26,371.059
12.219863
322,250
Bond Fund I
Category A
5,272.403
10.817490
57,034
Category O
8,847.397
10.915741
96,576
Category U
7,526.420
10.959709
82,487
Category Z
18,157.745
11.003379
199,797
Growth & Income Fund III
Category A
16,778.011
13.824915
231,955
Category O
32,274.094
13.878439
447,914
Category U
32,323.216
13.933724
450,383
Category Z
46,735.194
13.988702
653,760
TOTAL
$14,158,652
(Concluded)
6. SELECTED DATA
The following is a summary of selected data for a unit of
capital of the Series Account at the beginning and end of the year
and the number of units outstanding at December 31, 1996 and 1995:
Bond Fund III A (C)
Bond Fund III O (C)
Bond Fund III U (C)
Bond Fund III Z (C)
International Fund II A
International Fund II O
International Fund II U
International Fund II Z
1996
Beginning Unit Value
$ 10.95
$ 11.03
$ 10.91
$ 11.06
$ 10.30
$ 10.27
$ 10.26
$ 10.28
Ending Unit Value
$ 11.99
$ 12.11
$ 12.01
$ 12.21
$ 11.00
$ 10.99
$ 11.01
$ 11.06
Number of Units Outstanding
5,084.50
10,767.39
7,111.83
17,630.19
9,442.18
12,679.40
10,789.35
9,174.83
1995
Beginning Unit Value
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Ending Unit Value
$ 10.95
$ 11.03
$ 10.91
$ 11.06
$ 10.30
$ 10.27
$ 10.26
$ 10.28
Number of Units Outstanding
821.90
2,425.21
1,650.00
22,880.14
2,788.66
1,670.77
2,190.94
1,192.47
(C) The investment division commenced operations on July 24, 1995,
at a unit value of $10.00.
[Continued]
6. SELECTED DATA (continued)
Aggressive Growth Fund IV A (C)
Aggressive Growth Fund IV O (C)
Aggressive Growth Fund IV U (C)
Aggressive Growth Fund IV Z (C)
Bond Fund II A (C)
Bond Fund II O (C)
Bond Fund II U (C)
Bond Fund II Z (C)
1996
Beginning Unit Value
$ 11.69
$ 11.71
$ 11.72
$ 11.74
$ 10.48
$ 10.55
$ 10.45
$ 10.58
Ending Unit Value
$ 14.17
$ 14.22
$ 14.28
$ 14.34
$ 10.72
$ 10.82
$ 10.75
$ 10.91
Number of Units Outstanding
23,490.03
33,100.60
38,890.98
64,886.39
4,019.39
5,887.41
2,497.98
14,123.28
1995
Beginning Unit Value
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Ending Unit Value
$ 11.69
$ 11.71
$ 11.72
$ 11.74
$ 10.48
$ 10.55
$ 10.45
$ 10.58
Number of Units Outstanding
3,339.10
10,056.69
9,367.33
19,673.41
756.56
1,298.14
2,523.64
7,411.72
(C) The investment division commenced operations on July 24, 1995,
at a unit value of $10.00.
[Continued]
6. SELECTED DATA (continued)
Short-Term Fund II A (A)
Short-Term Fund II O (A)
Short-Term Fund II U (A)
Short-Term Fund II Z (A)
Bond Fund V A (E)
Bond Fund V O (E)
Bond Fund V U (E)
Bond Fund V Z (E)
1996
Beginning Unit Value
$ 10.23
$ 10.02
$ 10.05
$ 10.27
$ 10.06
$ 10.07
$ 10.08
$ 10.09
Ending Unit Value
$ 10.66
$ 10.47
$ 10.54
$ 10.79
$ 10.34
$ 10.41
$ 10.45
$ 10.33
Number of Units Outstanding
9,449.98
12,173.70
15,907.37
59,518.32
244.56
1,038.88
1,603.91
219.54
1995
Beginning Unit Value
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Ending Unit Value
$ 10.23
$ 10.02
$ 10.05
$ 10.27
$ 10.06
$ 10.07
$ 10.08
$ 10.09
Number of Units Outstanding
2,395.98
926.69
1,445.29
44,935.09
0.00
0.00
0.00
0.00
(A) The investment division commenced operations July 5, 1995, at
a unit value of $10.00.
(E) The investment division commenced operations March 13, 1996.
The unit values began July 31, 1995 at $10.00.
[Continued]
6. SELECTED DATA (continued)
Aggressive Growth Fund V A (D)
Aggressive Growth Fund V O (D)
Aggressive Growth Fund V U (D)
Aggressive Growth Fund V Z (D)
Aggressive Growth Fund III A
Aggressive Growth Fund III O
Aggressive Growth Fund III U
Aggressive Growth Fund III Z
1996
Beginning Unit Value
$ 11.93
$ 11.95
$ 11.96
$ 11.98
$ 11.60
$ 11.62
$ 11.63
$ 11.65
Ending Unit Value
$ 15.40
$ 15.46
$ 15.52
$ 15.59
$ 13.28
$ 13.33
$ 13.38
$ 13.43
Number of Units Outstanding
19,250.73
30,001.51
23,175.18
24,716.11
13,245.31
17,113.51
20,809.07
28,991.22
1995
Beginning Unit Value
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Ending Unit Value
$ 11.93
$ 11.95
$ 11.96
$ 11.98
$ 11.60
$ 11.62
$ 11.63
$ 11.65
Number of Units Outstanding
1,064.47
5,718.10
1,398.81
4,726.93
2,240.54
5,959.11
3,318.14
14,397.06
(D) The investment division commenced operations on August 3, 1995,
at a unit value of $10.00.
[Continued]
6. SELECTED DATA (continued)
Growth Fund IV A (B)
Growth Fund IV O (B)
Growth Fund IV U (B)
Growth Fund IV Z (B)
Growth Fund II A
Growth Fund II O
Growth Fund II U
Growth Fund II Z
1996
Beginning Unit Value
$ 11.02
$ 11.04
$ 11.05
$ 11.07
$ 11.59
$ 11.55
$ 11.57
$ 11.58
Ending Unit Value
$ 12.90
$ 12.95
$ 13.00
$ 13.06
$ 14.01
$ 14.00
$ 14.06
$ 14.11
Number of Units Outstanding
5,037.63
7,695.51
12,528.51
8,094.84
30,565.13
48,278.77
50,780.90
119,929.73
1995
Beginning Unit Value
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Ending Unit Value
$ 11.02
$ 11.04
$ 11.05
$ 11.07
$ 11.59
$ 11.55
$ 11.57
$ 11.58
Number of Units Outstanding
773.21
1,371.51
5,416.35
2,801.92
4,042.63
11,673.47
18,708.73
55,122.00
(B) The investment division commenced operations on July 12, 1995,
at a unit value of $10.00.
[Continued]
6. SELECTED DATA (continued)
Growth & Income Fund I A (C)
Growth & Income Fund I O (C)
Growth & Income Fund I U (C)
Growth & Income Fund I Z (C)
Bond Fund I A (B)
Bond Fund I O (B)
Bond Fund I U (B)
Bond Fund I Z (B)
1996
(B)
Beginning Unit Value
$ 10.89
$ 10.90
$ 10.92
$ 10.93
$ 10.45
$ 10.52
$ 10.54
$ 10.55
Ending Unit Value
$ 12.08
$ 12.12
$ 12.17
$ 12.22
$ 10.82
$ 10.92
$ 10.96
$ 11.00
Number of Units Outstanding
10,571.44
15,356.64
12,390.53
26,371.06
5,272.40
8,847.40
7,526.42
18,157.75
1995
Beginning Unit Value
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Ending Unit Value
$ 10.89
$ 10.90
$ 10.92
$ 10.93
$ 10.45
$ 10.52
$ 10.54
$ 10.55
Number of Units Outstanding
1,177.80
5,184.26
2,940.80
4,666.32
731.02
5,864.01
1,624.61
7,344.94
(B) The investment division commenced operations on July 12, 1995,
at a unit value of $10.00.
(C) The investment division commenced operations on July 24, 1995,
at a unit value of $10.00.
[Continued]
6. SELECTED DATA (continued)
Growth & Income Fund III A (B)
Growth & Income Fund III O (B)
Growth & Income Fund III U (B)
Growth & Income Fund III Z (B)
1996
Beginning Unit Value
$ 11.55
$ 11.56
$ 11.58
$ 11.60
Ending Unit Value
$ 13.82
$ 13.88
$ 13.93
$ 13.99
Number of Units Outstanding
16,778.01
32,274.09
32,323.22
46,735,19
1995
Beginning Unit Value
$ 10.00
$ 10.00
$ 10.00
$ 10.00
Ending Unit Value
$ 11.55
$ 11.56
$ 11.58
$ 11.60
Number of Units Outstanding
1,666.79
7,395.18
12,134.89
18,036.45
(B) The investment division commenced operations on July 12, 1995,
at a unit value of $10.00.
[Concluded]
7. CHANGE IN SHARES
The following is a summary of the net change in total investment
shares held in each of the respective underlying funds:
For the Year Ended December 31,
1996
1995
Maxim Series Fund, Inc.
- - Corporate Bond
146,580
266,314
Maxim Series Fund, Inc.
- - Foreign Equity
362,084
75,940
Maxim Series Fund, Inc.
- - Growth Index
1,180,597
366,167
Maxim Series Fund, Inc.
- - Investment Grade Corporate Bond
155,770
66,565
Maxim Series Fund, Inc.
- - Money Market
563,394
474,754
Maxim Series Fund, Inc.
- - Short-Term Maturity Bond
32,114
Maxim Series Fund, Inc.
- - Small-Cap Aggressive Growth
932,503
132,520
Maxim Series Fund, Inc.
- - Small-Cap Index
614,566
245,049
Maxim Series Fund, Inc.
- - Small-Cap Value
238,373
107,364
Maxim Series Fund, Inc.
- - Stock Index
975,408
499,925
Maxim Series Fund, Inc.
- - Total Return
490,755
93,343
Maxim Series Fund, Inc.
- - U.S. Government Mortgage Securities
244,885
132,208
Maxim Series Fund, Inc.
- - Value Index
855,254
358,167
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
(A wholly-owned subsidiary of
The Great-West Life Assurance Company)
Consolidated Financial Statements for the
Years Ended December 31, 1996, 1995, and 1994
and Independent Auditors' Report
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder
of Great-West Life & Annuity Insurance Company:
We have audited the accompanying consolidated balance sheets of
Great-West Life & Annuity Insurance Company (a wholly-owned
subsidiary of The Great-West Life Assurance Company) and
subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, stockholder's equity, and cash
flows for each of the three years in the period ended December 31,
1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Great-West Life & Annuity Insurance Company and subsidiaries as of
December 31, 1996 and 1995, and the results of their operations and
their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
January 25, 1997
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(Dollars in Thousands)
ASSETS
1996
1995
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost (fair value $2,041,064 and
$2,158,043)
$ 1,992,681
$ 2,054,204
Available-for-sale, at fair value (amortized cost $6,151,519
and $6,087,969)
6,206,478
6,263,187
Common stock
19,715
9,440
Mortgage loans on real estate, net
1,487,575
1,713,195
Real estate, net
67,967
60,454
Policy loans
2,523,477
2,237,745
Short-term investments, available-for-sale (cost approximates
fair value)
419,008
134,835
Total Investments
12,716,901
12,473,060
Cash
125,182
90,939
Reinsurance receivable
196,958
333,924
Deferred policy acquisition costs
282,780
278,526
Investment income due and accrued
198,441
211,922
Other assets
57,244
40,038
Premiums in course of collection
74,693
85,990
Deferred income taxes
214,404
168,941
Separate account assets
5,484,631
3,998,878
TOTAL ASSETS
$19,351,234
$17,682,218
See notes to consolidated financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDER'S EQUITY
1996
1995
POLICY BENEFIT LIABILITIES:
Policy reserves
$11,022,595
$10,845,935
Policy and contract claims
372,327
359,791
Policyholders' funds
153,867
154,872
Experience refunds
87,399
83,562
Provision for policyholders' dividends
51,279
47,760
GENERAL LIABILITIES:
Due to Parent Corporation
151,431
149,974
Repurchase agreements
286,736
375,299
Commercial paper
84,682
84,854
Other liabilities
488,818
451,555
Undistributed earnings on
participating business
133,255
136,617
Separate account liabilities
5,484,631
3,998,878
Total Liabilities
18,317,020
16,689,097
STOCKHOLDER'S EQUITY:
Preferred stock, $1 par value,
50,000,000 shares authorized:
Series A, cumulative, 1500 shares authorized,
liquidation value of $100,000 per share,
600 shares issued and outstanding
60,000
60,000
Series B, cumulative, 1500 shares authorized,
liquidation value of $100,000 per share,
200 shares issued and outstanding
20,000
20,000
Series C, cumulative, 1500 shares authorized,
none outstanding
Series D, cumulative, 1500 shares authorized,
none outstanding
Series E, non-cumulative, 2,000,000
shares authorized, liquidation value of $20.90
per share, issued, and outstanding
41,800
41,800
Common stock, $1 par value; 50,000,000 shares authorized;
7,032,000 shares issued and outstanding
7,032
7,032
Additional paid-in capital
664,265
657,265
Net unrealized gains on securities available-for-sale, net
14,951
58,763
Retained earnings
226,166
148,261
Total Stockholder's Equity
1,034,214
993,121
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY
$19,351,234
$17,682,218
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands)
1996
1995
1994
REVENUES:
Annuity contract charges and premiums
$91,881
$79,816
$61,122
Life, accident, and health premiums earned (net of
premiums ceded totaling $(104,250), $60,880
and $48,115)
1,107,367
987,611
938,947
Net investment income
836,642
835,046
767,646
Net realized gains (losses) on investments
(21,078)
7,465
(71,939)
2,014,812
1,909,938
1,695,776
BENEFITS AND EXPENSES:
Life and other policy benefits (net of reinsurance
recoveries totaling $52,675, $43,574,
and $18,937)
515,750
557,469
548,950
Increase in reserves
229,198
98,797
64,834
Interest paid or credited to contractholders
561,786
562,263
529,118
Provision for policyholders' share of earnings (losses)
on participating business
(7)
2,027
(725)
Dividends to policyholders
49,237
48,150
42,094
1,355,964
1,268,706
1,184,271
Commissions
106,561
122,926
120,058
Operating expenses
336,719
314,810
261,311
Premium taxes
25,021
26,884
27,402
1,824,265
1,733,326
1,593,042
INCOME BEFORE INCOME TAXES
190,547
176,612
102,734
PROVISION FOR INCOME TAXES:
Current
77,134
88,366
65,070
Deferred
(21,162)
(39,434)
(36,614)
55,972
48,932
28,456
NET INCOME
$134,575
$127,680
$74,278
See notes to consolidated financial statements.
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands)
Preferred Stock
Shares
Amount
Common Stock
Shares
Amount
Additional Paid-In Capital
Net Unrealized Gains (Losses)
Retained Earnings (Deficit)
Total
BALANCE, JANUARY 1, 1994
2,000,800
$121,800
7,032,000
$7,032
$656,793
$0
$35,721
$821,346
Adjustment to beginning balance for change in
accounting method for investment
securities
6,515
6,515
Change in net unrealized gains (losses)
(84,942)
(84,942)
Capital contributions
472
472
Dividends
(40,438)
(40,438)
Net income
74,278
74,278
BALANCE, DECEMBER 31, 1994
2,000,800
121,800
7,032,000
7,032
657,265
(78,427)
69,561
777,231
Change in net realized gains (losses)
137,190
137,190
Dividends
(48,980)
(48,980)
Net income
127,680
27,680
BALANCE, DECEMBER 31, 1995
2,000,800
121,800
7,032,000
7,032
657,265
58,763
148,261
993,121
Change in net unrealized gains (losses)
(43,812)
(43,812)
Capital contributions
7,000
7,000
Dividends
(56,670)
(56,670)
Net income
134,575
134,575
BALANCE, DECEMBER 31, 1996
2,000,800
$121,800
7,032,000
$7,032
$664,265
$14,951
$226,166
$1,034,214
See notes to consolidated financial statements.
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands)
1996
1995
1994
OPERATING ACTIVITIES:
Net income
$134,575
$127,680
$74,278
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain (loss) allocated to participating policyholders
(7)
2,027
(725)
Amortization of investments
15,518
26,725
36,978
Realized losses (gains) on disposal of investments
and write-downs of mortgage loans and real estate
21,078
(7,465)
71,939
Amortization
49,454
49,464
29,197
Deferred income taxes
(20,258)
(39,763)
(38,631)
Changes in assets and liabilities:
Policy benefit liabilities
358,393
346,975
93,998
Reinsurance receivable
136,966
(38,776)
(25,868)
Accrued interest and other receivables
24,778
(17,617)
(26,032)
Other, net
(8,076)
8,834
96,950
Net cash provided by operating activities
712,421
458,084
312,084
INVESTING ACTIVITIES:
Proceeds from sales, maturities, and
redemptions of investments:
Fixed maturities
Held-to-maturity
Sales
18,821
16,014
Maturities and redemptions
516,838
655,993
1,034,324
Available-for-sale
Sales
3,569,608
4,211,649
1,753,445
Maturities and redemptions
803,369
253,747
141,299
Mortgage loans
235,907
260,960
291,102
Real estate
2,607
4,401
29,868
Common stock
1,888
178
Purchases of investments:
Fixed maturities
Held-to-maturity
(453,787)
(490,228)
(673,567)
Available-for-sale
(4,753,154)
(4,932,566)
(2,606,028)
Mortgage loans
(23,237)
(683)
(9)
Real estate
(15,588)
(5,302)
(9,253)
Common stock
(12,113)
(4,218)
(2,063)
Net cash used in investing activities
(127,662)
(27,426)
(24,690)
(Continued)
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in Thousands)
1996
1995
1994
FINANCING ACTIVITIES:
Contract withdrawals, net of deposits
$(413,568)
$(217,190)
$(238,166)
Due to Parent Corporation
1,457
(9,143)
(13,078)
Dividends paid
(56,670)
(48,980)
(40,438)
Net commercial paper (repayments) borrowings
(172)
(4,832)
89,686
Net repurchase agreements repayments
(88,563)
(191,195)
(39,244)
Capital contributions
7,000
Net cash used in financing activities
(550,516)
(471,340)
(241,240)
NET INCREASE (DECREASE) IN CASH
34,243
(40,682)
46,154
CASH, BEGINNING OF YEAR
90,939
131,621
85,467
CASH, END OF YEAR
$125,182
$90,939
$131,621
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Income taxes
$103,700
$83,841
$68,892
Interest
15,414
17,016
12,229
See notes to consolidated financial statements.
(Concluded)
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Amounts in Thousands, except Share Amounts)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization - Great-West Life & Annuity Insurance Company
(the Company) is a wholly-owned subsidiary of The Great-West Life
Assurance Company (the Parent Corporation). The Company is an
insurance company domiciled in the State of Colorado. The Company
offers a wide range of life insurance, health insurance, and
retirement and investment products to individuals, businesses, and
other private and public organizations throughout the United
States.
Basis of Presentation - The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates. The consolidated financial statements
include the accounts of the Company and its subsidiaries. All
material intercompany transactions and balances have been
eliminated in consolidation.
Certain reclassifications have been made to the 1995 and 1994
financial statements to conform with the basis of presentation used
in 1996.
Investments - Investments are reported as follows:
1. Management determines the classification of fixed maturities
at the time of purchase. Fixed maturities are classified as
held-to-maturity when the Company has the positive intent and
ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost unless fair value is less
than cost and the decline is deemed to be other than temporary, in
which case they are written down to fair value and a new cost basis
is established.
Fixed maturities not classified as held-to-maturity are
classified as available-for-sale. Available-for-sale securities
are carried at fair value, with the net unrealized gains and losses
reported as a separate component of stockholder's equity. The net
unrealized gains and losses in derivative financial instruments
used to hedge available-for-sale securities are included in the
separate component of stockholder's equity.
The amortized cost of fixed maturities classified as
held-to-maturity or available-for-sale is adjusted for amortization
of premiums and accretion of discounts using the effective interest
method over the estimated life of the related bonds. Such
amortization is included in net investment income. Realized gains
and losses, and declines in value judged to be other-than-temporary
are included in net realized gains (losses) on investments.
2. Mortgage loans on real estate are carried at their unpaid
balances adjusted for any unamortized premiums or discounts and any
valuation reserves. Interest income is accrued on the unpaid
principal balance. Discounts and premiums are amortized to net
investment income using the effective interest method. Accrual of
interest is discontinued on any impaired loans where collection of
interest is doubtful.
The Company maintains an allowance for credit losses at a
level that, in management's opinion, is sufficient to absorb
possible credit losses on its impaired loans and to provide
adequate provision for any possible future losses in the portfolio.
Management's judgment is based on past loss experience, current and
projected economic conditions, and extensive situational analysis
of each individual loan.
Effective January 1, 1995, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 114 "Accounting by
Creditors for Impairment of a Loan" and SFAS No. 118 "Accounting by
Creditors for Impairment of a Loan-Income Recognition and
Disclosures". In accordance with these standards, a mortgage loan
is considered to be impaired when it is probable that the Company
will be unable to collect all amounts due according to the
contractual terms of the loan agreement. The measurement of
impaired loans is based on the fair value of the collateral. As
the Company was already providing for impairment of loans through
an allowance for credit losses, the implementation of these
statements had no material effect on the Company's financial
statements.
3. Real estate is carried at the lower of cost or fair value, net
of costs of disposal. Effective January 1, 1996, the Company
adopted SFAS No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of". The
implementation of this statement had no material effect on the
Company's financial statements.
4. Investments in common stock are carried at fair value.
5. Policy loans are carried at their unpaid balances.
6. Short-term investments include securities purchased with
initial maturities of one year or less and are carried at amortized
cost. The Company considers short-term investments to be
available-for-sale and amortized cost approximates fair value.
Gains and losses realized on disposal of investments are
determined on a specific identification basis.
Cash - Cash includes only amounts in demand deposit accounts.
Deferred Policy Acquisition Costs - Policy acquisition costs,
which consist of sales commissions and other costs that vary with
and are primarily related to the production of new and renewal
business, have been deferred to the extent recoverable. Deferred
costs associated with the annuity products are being amortized
over the life of the contracts in proportion to the emergence of
gross profits. Retrospective adjustments of these amounts are made
when the Company revises its estimates of current or future gross
profits. Deferred costs associated with traditional life insurance
are amortized over the premium paying period of the related
policies in proportion to premium revenues recognized.
Amortization of deferred policy acquisition costs totaled $47,089,
$48,054, and $28,199 in 1996, 1995, and 1994, respectively.
Separate Account - Separate account assets and related
liabilities are carried at fair value. The Company's separate
accounts invest in shares of Maxim Series Fund, Inc., a
diversified, open-end management investment company which is an
affiliate of the Company, shares of other external mutual funds, or
government or corporate bonds.
Life Insurance and Annuity Reserves - Life insurance and
annuity policy reserves with life contingencies of $5,242,753, and
$4,675,175 at December 31, 1996 and 1995, respectively, are
computed on the basis of estimated mortality, investment yield,
withdrawals, future maintenance and settlement expenses, and
retrospective experience rating premium refunds. Annuity contract
reserves without life contingencies of $5,779,842 and $6,170,760,
at December 31, 1996 and 1995, respectively, are established at the
contractholder's account value.
Reinsurance - Policy reserves ceded to other insurance
companies are carried as reinsurance receivable on the balance
sheet (See Note 3). The cost of reinsurance related to
long-duration contracts is accounted for over the life of the
underlying reinsured policies using assumptions consistent with
those used to account for the underlying policies.
Policy and Contract Claims - Policy and contract claims
include provisions for reported claims in process of settlement,
valued in accordance with the terms of the related policies and
contracts, as well as provisions for claims incurred and unreported
based primarily on prior experience of the Company.
Participating Fund Account - Participating life and annuity
policy reserves are $3,591,077 and $3,339,316 at December 31, 1996
and 1995, respectively. Participating business approximates 50.3%
of the Company's ordinary life insurance in force and 92.2% of
ordinary life insurance premium income at December 31, 1996.
The liability for undistributed earnings on participating
business was decreased by $3,362 in 1996, which represented $7 of
losses on participating business, a reduction of $2,924 to reflect
the net change in unrealized gains on securities classified as
available-for-sale, net of certain adjustments to policy reserves
and income taxes, and a decrease of $431 due to reinsurance
transactions (See Note 2).
The amount of dividends to be paid from undistributed earnings
on participating business is determined annually by the Board of
Directors. Amounts allocable to participating policyholders are
consistent with established Company practice.
The Company has established a Participating Policyholder
Experience Account (PPEA) for the benefit of all participating
policyholders which is included in the accompanying consolidated
balance sheet. Earnings associated with the operation of the PPEA
are credited to the benefit of all participating policyholders. In
the event that the assets of the PPEA are insufficient to provide
contractually guaranteed benefits, the Company must provide such
benefits from its general assets.
The Company has also established a Participation Fund Account
(PFA) for the benefit of the participating policyholders previously
transferred to the Company from the Parent under an assumption
reinsurance transaction. The PFA is part of the PPEA. The assets
and liabilities associated with these policies are segregated in
the accounting records of the Company. Earnings derived from the
operation of the PFA accrue solely for the benefit of the acquired
participating policyholders.
Recognition of Premium Income and Benefits and Expenses - Life
insurance premiums are recognized as earned. Annuity premiums with
life contingencies are recognized as received. Accident and health
premiums are earned on a monthly pro rata basis. Revenues for
annuity and other contracts without significant life contingencies
consist of contract charges for the cost of insurance, contract
administration, and surrender fees that have been assessed against
the contract account balance during the period. Benefits and
expenses on policies with life contingencies are associated with
premium income by means of the provision for future policy benefit
reserves, resulting in recognition of profits over the life of the
contracts. The average crediting rate on annuity products was
approximately 6.8% in 1996.
Income Taxes - Income taxes are recorded using the asset and
liability approach which requires, among other provisions, the
recognition of deferred tax assets and liabilities for expected
future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating
future tax consequences, all expected future events (other than the
enactments or changes in the tax laws or rules) are considered.
Although realization is not assured, management believes it is more
likely than not that the deferred tax asset, net of a valuation
allowance, will be realized.
Repurchase Agreements and Securities Lending - The Company
enters into repurchase agreements with third-party broker-dealers
in which the Company sells securities and agrees to repurchase
substantially similar securities at a specified date and price.
Such agreements are accounted for as collateralized borrowings.
Interest expense on repurchase agreements is recorded at the coupon
interest rate on the underlying securities. The repurchase fee
received or paid is amortized over the term of the related
agreement and recognized as an adjustment to investment income.
The Company will implement Statement of Financial Accounting
Standards (SFAS) No. 125 "Accounting for Transfer and Servicing of
Financial Assets and Extinguishments of Liabilities" in 1998 as it
relates to repurchase agreements and securities lending
arrangements. Management estimates the effect of the change will
not be material.
Derivatives - The Company engages in hedging activities to manage
interest rate and foreign exchange risk (See Note 6).
2. RELATED-PARTY TRANSACTIONS
On October 31, 1996 the Company recaptured certain pieces of
an individual participating insurance block of business previously
reinsured to the Parent Corporation on December 31, 1992. The
Company recorded, at estimated fair value, the following at October
31, 1996 as a result of this transaction:
Assets Liabilities and
Stockholder's Equity
Cash $162,000 Policy reserves $164,839
Mortgages 19,753 Due to parent corporation 9,180
Other 18 Deferred income taxes 1,283
Undistributed earnings on Stockholder's equity 7,000
participating business 431
$182,302 $182,302
The Company and the Parent Corporation have a number of
service agreements whereby the Parent Corporation administers,
distributes, and underwrites business for the Company and
administers the Company's investment portfolio. Certain operating
expenses represent allocations made by the Parent Corporation to
the Company for services provided pursuant to these service
agreements. These transactions are summarized as follows:
Years Ended December 31,
1996
1995
1994
Investment management expense (included in net
investment income)
$14,800
$15,182
$13,841
Administrative and underwriting payments
(included in operating expenses)
304,599
301,529
269,020
Effective January 1, 1997 all employees of the U.S. operations of
the Parent Corporation and the related benefit plans were
transferred to the Company. All related employee benefit plan
assets and liabilities were transferred from the Parent Corporation
to the Company with no material impact on the Company's financial
position. There will not be any material effect on the Company's
operating expenses as the costs associated with the employees and
these benefit plans are reflected in the present service
agreements.
At December 31, 1996 and 1995, due to Parent Corporation
includes $31,639 and $27,814 due on demand and $119,792 and
$122,160 of notes payable which bear interest and mature at various
dates. These notes may be prepaid in whole or in part at any time
without penalty; the issuer may not demand payment before the
maturity date. The Company also has available an arrangement to
obtain advances from the Parent Corporation to fund short-term
liquidity needs. The due on demand to the Parent Corporation bears
interest at the public bond rate (7.0% and 6.4% at December 31,
1996 and 1995, respectively) while the remainder bear interest at
various rates.
3. REINSURANCE
In the normal course of business, the Company seeks to limit
its exposure to loss on any single insured and to recover a portion
of benefits paid by ceding risks to other insurance enterprises
under excess coverage and co-insurance contracts. The Company
retains a maximum of $1.5 million of coverage per individual life.
Reinsurance contracts do not relieve the Company from its
obligations to policyholders. Failure of reinsurers to honor their
obligations could result in losses to the Company; consequently,
allowances are established for amounts deemed uncollectible. The
Company evaluates the financial condition of its reinsurers and
monitors concentrations of credit risk arising from similar
geographic regions, activities, or economic characteristics of the
reinsurers to minimize its exposure to significant losses from
reinsurer insolvencies. At December 31, 1996 and 1995, reinsurance
receivables with a carrying value of $196,958 and $333,924,
respectively, were due primarily from the Parent Corporation.
Total reinsurance premiums assumed from the Parent Corporation
were $1,693, $1,606 and $2,438, in 1996, 1995, and 1994,
respectively.
The Company considers all accident and health policies to be
short-duration contracts. The following schedule details life
insurance in force and life and accident/health premiums:
Gross Amount
Ceded Primarily to the Parent Corporation
Assumed Primarily From Other Companies
Net Amount
Percentage of Amount Assumed to Net
December 31, 1996:
Life insurance in force:
Individual
$23,409,823
$5,246,079
$3,482,118
$21,645,862
16.1%
Group
47,682,237
1,817,511
49,499,748
3.7%
Total
$71,092,060
$5,246,079
$5,299,629
$71,145,610
Premiums:
Life insurance
$334,127
$(111,743)
$19,633
$465,503
4.2%
Accident/health
592,577
7,493
56,780
641,864
8.8%
Total
$926,704
$(104,250)
$76,413
$1,107,367
December 31, 1995:
Life insurance in force:
Individual
$22,388,520
$7,200,882
$3,476,784
$18,664,422
18.6%
Group
48,415,592
1,954,313
50,369,905
3.9%
Total
$70,804,112
$7,200,882
$5,431,097
$69,034,327
Premiums:
Life insurance
$339,342
$51,688
$21,028
$308,682
6.8%
Accident/health
623,626
9,192
64,495
678,929
9.5%
Total
$962,968
$60,880
$85,523
$987,611
December 31, 1994:
Life insurance in force:
Individual
$21,461,590
$7,411,811
$3,415,596
$17,465,375
19.6%
Group
48,948,669
2,102,228
51,050,897
4.1%
Total
$70,410,259
$7,411,811
$5,517,824
$68,516,272
Premiums:
Life insurance
$322,263
$42,946
$22,009
$301,326
7.3%
Accident/health
579,650
5,169
63,140
637,621
9.9%
Total
$901,913
$48,115
$85,149
$938,947
4. NET INVESTMENT INCOME
Net investment income is summarized as follows:
Years Ended December 31,
1996
1995
1994
Investment income:
Fixed maturities and short-term investments
$601,913
$591,561
$555,103
Mortgage loans on real estate
140,823
171,008
182,544
Real estate
5,292
3,936
5,700
Policy loans
175,746
163,547
116,060
Other
3,319
927,095
930,052
859,407
Investment expenses, including
interest on amounts charged
by the Parent Corporation
of $11,282, $10,778, and $11,145
90,453
95,006
91,761
Net investment income
$836,642
$835,046
$767,646
5. NET REALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains (losses) on investments are as follows:
Years Ended December 31,
1996
1995
1994
Realized gains (losses):
Fixed Maturities
$(11,624)
$28,166
$(39,775)
Mortgage loans on real estate
1,143
1,309
2,120
Real estate
(10)
(102)
Provisions
(10,597)
(22,000)
(34,182)
Net realized gains (losses) on investments
$(21,078)
$7,465
$(71,939)
6. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31, 1996 are summarized as
follows:
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Carrying Value
Held-to-Maturity:
U.S. Treasury Securities and
obligations of U.S. Government
Agencies:
Collateralized mortgage
obligations
$
$
$
$
$
Direct mortgage pass-through
certificates
Other
10,935
630
106
11,459
10,935
Collateralized mortgage obligations
Public utilities
284,954
12,755
320
297,389
284,954
Corporate bonds
1,634,745
41,195
7,360
1,668,580
1,634,745
Foreign governments
12,577
556
3
13,130
12,577
State and municipalities
49,470
1,051
15
50,506
49,470
$ 1,992,681
$ 56,187
$ 7,804
$ 2,041,064
$1,992,681
Available-for-Sale:
U.S. Treasury Securities and
obligations of U.S.
Government Agencies:
Collateralized mortgage
obligations
$ 658,612
$ 8,058
$ 3,700
$ 662,970
$ 662,970
Direct mortgage pass-through
certificates
844,291
5,093
10,908
838,476
838,476
Other
359,220
596
2,686
357,130
357,130
Collateralized mortgage obligations
614,773
13,619
3,553
624,839
624,839
Public utilities
628,382
6,523
5,375
629,530
629,530
Corporate bonds
2,907,875
56,551
5,250
2,959,176
2,959,176
Foreign governments
110,013
1,762
5,673
106,102
106,102
State and municipalities
28,353
21
119
28,255
28,255
$ 6,151,519
$ 92,223
$ 37,264
$ 6,206,478
$6,206,478
6. SUMMARY OF INVESTMENTS [Continued]
Fixed maturities owned at December 31, 1995 are summarized as
follows:
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Carrying Value
Held-to-Maturity:
U.S. Treasury Securities and
obligations of U.S.
Government Agencies:
Collateralized mortgage
obligations
$
$
$
$
$
Direct mortgage pass-through
certificates
Other
11,107
1,093
12,200
11,107
Collateralized mortgage obligations
Public utilities
269,671
22,084
95
291,660
269,671
Corporate bonds
1,732,046
83,583
5,867
1,809,762
1,732,046
Foreign governments
18,596
1,087
12
19,671
18,596
State and municipalities
22,784
1,966
24,750
22,784
$ 2,054,204
$ 109,813
$ 5,974
$2,158,043
$ 2,054,204
Available-for-Sale:
U.S. Treasury Securities and
obligations of U.S.
Government Agencies:
Collateralized mortgage
obligations
$ 561,475
$ 9,983
$ 1,948
$ 569,510
$ 569,510
Direct mortgage pass-through
certificates
794,056
11,980
2,233
803,803
803,803
Other
561,736
7,703
39
569,400
569,400
Collateralized mortgage obligations
490,074
18,044
3,304
504,814
504,814
Public utilities
581,482
16,607
2,425
595,664
595,664
Corporate bonds
2,943,918
121,537
26
3,065,429
3,065,429
Foreign governments
141,362
5,021
5,644
140,739
140,739
State and municipalities
13,866
22
60
13,828
13,828
$ 6,087,969
$ 190,897
$ 15,679
$6,263,187
$ 6,263,187
Most of the collateralized mortgage obligations consist of
planned amortization classes with final stated maturities of two to
thirty years and average lives of less than one to fourteen years.
Prepayments on all mortgage-backed securities are monitored monthly
and amortization of the premium and/or the accretion of the
discount associated with the purchase of such securities is
adjusted by such prepayments.
The cumulative effect as of January 1, 1994 of adopting SFAS
No. 115 "Accounting for Certain Investments in Debt and Equity
Securities," increased the opening balance of stockholders' equity
by $6,515 to reflect the net unrealized gains on securities
classified as available-for-sale (previously carried at the lower
of aggregate amortized cost or fair value) and the corresponding
adjustments to deferred policy acquisition costs, policy reserves,
and amounts allocable to the liability for undistributed earnings
on participating business, all net of income taxes.
In November 1995, the Financial Accounting Standards Board
issued a special report entitled "A Guide to Implementation of SFAS
115 on Accounting for Certain Investments in Debt and Equity
Securities". In accordance with the adoption of this guidance, the
Company reassessed the classification of its investment portfolio
in December 1995 and reclassed securities totaling $2,119,814 from
held-to-maturity to available-for-sale. In connection with this
reclassification, an unrealized gain, net of related adjustments
(see above), of $23,449 was recognized in stockholder's equity at
the date of transfer.
The estimated fair value of fixed maturities that are publicly
traded are obtained from an independent pricing service. To
determine fair value for fixed maturities not actively traded, the
Company utilized discounted cash flows calculated at current market
rates on investments of similar quality and term.
The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1996, by projected maturity, are shown
below. Actual maturities will likely differ from these projections
because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.
Held-to-Maturity
Amortized Cost
Estimated Fair Value
Available-for-Sale
Amortized Cost
Estimated Fair Value
Due in one year or less
$197,135
$200,356
$294,236
$308,805
Due after one year through five years
840,192
860,192
1,294,892
1,300,473
Due after five years through ten years
621,900
641,103
934,312
940,880
Due after ten years
140,061
145,287
422,179
432,721
Mortgage-backed securities
2,117,676
2,126,285
Asset-backed securities
193,393
194,126
1,088,224
1,097,314
$1,992,681
$2,041,064
$6,151,519
$6,206,478
Proceeds from sales of securities available-for-sale were
$3,569,608, $4,211,649, and $1,753,445 during 1996, 1995, and 1994,
respectively. The realized gains on such sales totaled $24,919,
$39,755, and $7,030 for 1996, 1995, and 1994, respectively. The
realized losses totaled $40,748, $15,516, and $50,612 for 1996,
1995, and 1994, respectively. During 1996, 1995, and 1994
held-to-maturity securities with an amortized cost of $0, $18,087,
and $15,300 were sold due to credit deterioration with
insignificant realized gains and losses.
At December 31, 1996 and 1995, pursuant to fully
collateralized securities lending arrangements, the Company had
loaned $230,419 and $343,351 of fixed maturities, respectively.
The Company makes limited use of derivative financial
instruments to manage interest rate and foreign exchange risk.
Such hedging activity consists of interest rate swap agreements,
interest rate floors and caps, and foreign currency exchange
contracts. Interest rate floors and caps are interest rate
protection instruments that require the payment by a counter-party
to the Company of an interest differential. This differential
represents the difference between current interest rates and an
agreed-upon rate, the strike rate, applied to a notional principal
amount. Interest rate swap agreements are used to convert the
interest rate on certain fixed maturities from a floating rate to
a fixed rate. Interest rate swap transactions generally involve
the exchange of fixed and floating rate interest payment
obligations without the exchange of the underlying principal
amounts. Foreign currency exchange contracts are used to hedge the
foreign exchange rate risk associated with bonds denominated in
other than U.S. dollars. The differential paid or received on
interest rate and amounts received under interest rate floor and
cap agreements are recognized as an adjustment to net investment
income on the accrual method. Gains and losses on foreign exchange
contracts are deferred and recognized in net investment income when
the hedged transactions are realized.
Although derivative financial instruments taken alone may
expose the Company to varying degrees of market and credit risk
when used solely for hedging purposes, these instruments typically
reduce overall market and interest rate risk. The Company controls
the credit risk of its financial contracts through credit
approvals, limits, and monitoring procedures. As the Company
generally enters into transactions only with high quality
institutions, no losses associated with non-performance on
derivative financial instruments have occurred or are expected to
occur.
The following table summarizes the financial hedge
instruments:
December 31, 1996
Notional Amount
Strike/Swap Rate
Maturity
Interest Rate Floor
$100,000
4.5% [LIBOR]
1999
Interest Rate Caps
260,000
11.0% to 11.82%[CMT]
2000 to 2001
Interest Rate Swaps
187,847
6.203% to 9.35%
01/98 to 02/2003
Foreign Currency Exchange
Contracts
61,012
N/A
09/98 to 03/2003
December 31, 1995
Notional Amount
Strike/Swap Rate
Maturity
Interest Rate Floor
$100,000
4.5% [LIBOR]
1999
Interest Rate Cap
100,000
11.0% [CMT]
2000
Interest Rate Swaps
165,000
6.203% to 9.35%
01/98 to 2/2002
Foreign Currency Exchange
Contracts
66,650
N/A
10/96 to 09/98
LIBOR - London Interbank Offered Rate
CMT - Constant Maturity Treasury Rate
The Company has established specific investment guidelines
designed to emphasize a diversified and geographically dispersed
portfolio of mortgages collateralized by commercial and industrial
properties located in the United States. The Company's policy is
to obtain collateral sufficient to provide loan-to-value ratios of
not greater than 75% at the inception of the mortgages. At
December 31, 1996 approximately 32% and 10% of the Company's
mortgage loans were collateralized by real estate located in
California and Michigan, respectively.
The following represents impairments and other information under
SFAS No. 114:
1996
1995
Impaired Loans
Loans with related allowance for credit losses of $2,793 and $654
$16,443
$3,254
Loans with no related allowance for credit losses
31,709
20,424
Average balance of impaired loans during the year
39,064
29,150
Interest income recognized [while impaired]
923
675
Interest income received and recorded [while impaired] using the
cash basis method of recognition
1,130
857
As part of an active loan management policy and in the
interest of maximizing the future return of each individual loan,
the Company may from time to time alter the original terms of
certain loans. These restructured loans, all performing in
accordance with their modified terms that are not impaired,
aggregated $68,254, and $89,160 at December 31, 1996, and 1995,
respectively.
The following table presents changes in the allowance for
credit losses since January 1, 1995 (date of the adoption of SFAS
No. 114):
1996
1995
Balance, beginning of year
$63,994
$57,987
Provision for loan losses
4,470
15,877
Chargeoffs
(3,468)
(10,480)
Recoveries
246
610
Balance, end of year
$65,242
$63,994
7. COMMERCIAL PAPER
The Company has a commercial paper program which is partially
supported by a $50,000 standby letter-of-credit. At December 31,
1996, commercial paper outstanding has maturities ranging from 49
to 123 days and interest rates ranging from 5.4% to 5.6%. At
December 31, 1995, maturities ranged from 25 to 160 days and
interest rates ranged from 5.7% to 5.9%.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table provides estimated fair value for all
assets and liabilities and hedge contracts considered to be
financial instruments:
December 31,
1996
Carrying Amount
Estimated Fair Amount
1995
Carrying Amount
Estimated Fair Value
ASSETS:
Fixed maturities and short-term
investments
$8,618,167
$8,666,550
$8,452,226
$8,556,065
Mortgage loans on real estate
1,487,575
1,506,162
1,713,195
1,749,514
Policy loans
2,523,477
2,523,477
2,237,745
2,237,745
Common stock
19,715
19,715
9,440
9,440
LIABILITIES:
Annuity contract reserves
without life contingencies
5,779,842
5,821,404
6,170,760
6,268,749
Policyholders' funds
153,867
153,867
154,872
154,872
Due to Parent Corporation
151,431
154,479
149,974
152,347
Repurchase agreements
286,736
286,736
375,299
375,299
Commercial paper
84,682
84,682
84,854
84,854
HEDGE CONTRACTS:
Interest rate floor
62
124
84
1,320
Interest rate cap
173
173
90
90
Interest rate swaps
4,746
4,746
10,052
10,052
Foreign currency exchange
contracts
(8,954)
(8,954)
(4,604)
(4,604)
The estimated fair value of financial instruments has been
determined using available market information and appropriate
valuation methodologies. However, considerable judgment is
necessarily required to interpret market data to develop the
estimates of fair value. Accordingly, the estimates presented are
not necessarily indicative of the amounts the Company could realize
in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
Mortgage loans fair value estimates generally are based on a
discounted cash flow basis. A discount rate "matrix" is
incorporated whereby the discount rate used in valuing a specific
mortgage generally corresponds to that mortgage's remaining term.
The rates selected for inclusion in the discount rate "matrix"
reflect rates that the Company would quote if placing loans
representative in size and quality to those currently in the
portfolio.
Policy loans accrue interest generally at variable rates with
no fixed maturity dates and, therefore, estimated fair value
approximates carrying value.
The fair value of annuity contract reserves without life
contingencies is estimated by discounting the cash flows to
maturity of the contracts, utilizing current credited rates for
similar products.
The estimated fair value of policyholders' funds is the same
as the carrying amount as the Company can change the crediting
rates with 30 days notice.
The estimated fair value of due to Parent Corporation is based
on discounted cash flows at current market spread rates on high
quality investments.
The carrying value of repurchase agreements and commercial
paper is a reasonable estimate of fair value due to the short-term
nature of the liabilities.
The estimated fair value of financial hedge instruments, all
of which are held for other than trading purposes, is the estimated
amount the Company would receive or pay to terminate the agreement
at each year-end, taking into consideration current interest rates
and other relevant factors. Included in the net gain position for
interest rates swaps are $160 and $0 of unrealized losses in 1996
and 1995, respectively. Included in the net loss position for
foreign currencies exchange contracts are $8,954 and $5,497 loss
exposures in 1996 and 1995, respectively.
See note 6 for additional information on policies regarding
estimated fair value of fixed maturities.
9. FEDERAL INCOME TAXES
The following is a reconciliation between the federal income
tax rate and the Company's effective rate:
1996
1995
1994
Federal tax rate
35.0%
35.0%
35.0%
Change in tax rate resulting from:
Investment income not subject to federal tax
(1.0)
(0.5)
(1.0)
Release of contingent liability
(4.7)
Change in valuation allowance
0.8
(7.8)
(6.9)
State and environmental taxes
0.7
0.7
0.9
Other, net
(1.4)
0.3
(0.3)
Total
29.4%
27.7%
27.7%
Temporary differences which give rise to the deferred tax
assets and liabilities as of December 31, 1996 and 1995 are as
follows:
1996
Deferred Tax Asset
Deferred Tax Liability
1995
Deferred Tax Asset
Deferred Tax Liability
Policyholder reserves
$151,239
$
$162,073
$
Deferred policy acquisition costs
57,031
55,542
Deferred acquisition cost proxy tax
70,413
58,481
Investment assets
35,658
16,372
Net operating loss carryforwards
12,295
17,588
Tax credits and other
5,366
4,786
Subtotal
274,971
57,031
242,928
71,914
Valuation allowance
(3,536)
(2,073)
Total Deferred Taxes
$271,435
$57,031
$240,855
$71,914
Amounts related to investment assets above include $8,530 and
$33,735 related to the unrealized gains on the Company's fixed
maturities available-for-sale at December 31, 1996 and 1995,
respectively.
The Company files a separate tax return and, therefore, losses
incurred by subsidiaries cannot be offset against operating income
of the Company. At December 31, 1996, the Company's subsidiaries
have approximately $35,128 of net operating loss carryforwards,
expiring through the year 2011. The tax benefit of subsidiaries'
net operating loss carryforwards, net of a valuation allowance of
$1,612 are included in the deferred tax assets.
The Company's valuation allowance was increased/(decreased) in
1996, 1995, and 1994 by $1,463, $(13,145), and $(6,278),
respectively, primarily as a result of taxable income in
subsidiaries which was greater than expected and the resulting
re-evaluation by management of future estimated taxable income in
the subsidiaries.
Under pre-1984 life insurance company income tax laws, a portion of
life insurance company gain from operations was not subject to
current income taxation but was accumulated, for tax purposes, in
a memorandum account designated as "policyholders' surplus
account." The aggregate accumulation in the account is $7,742 and
the Company does not anticipate any transactions which would cause
any part of the amount to become taxable. Accordingly, no
provision has been made for possible future federal income taxes on
this accumulation.
Pursuant to a December 31, 1993 agreement between the Company
and its Parent whereby the Company assumed responsibility for the
Parent Corporation's income tax liability for fiscal years prior to
1994, the Company had previously recorded a contingent liability
provision. The Company's 1996 results of operations include a
release of $25,600 from the provision, to reflect the resolution of
1988 and l989 tax issues with the Internal Revenue Service (IRS).
Audits of tax years 1990 and 1991 are in the process of being
finalized. The IRS is currently auditing tax years 1992 and 1993.
In the opinion of Company management, the amounts paid or accrued
are adequate; however, it is possible that the Company's accrued
amounts may change as a result of the completion of the IRS audits.
10. STOCKHOLDER'S EQUITY, DIVIDEND RESTRICTIONS, AND OTHER MATTERS
All of the Company's outstanding series of preferred stock are
owned by the Parent Corporation. The dividend rate on the Series
A Stated Rate Auction Preferred Stock (STRAPS) is 7.3% through
December 30, 2002. The Series A STRAPS are redeemable at the
option of the Company on or after December 29, 2002 at a price of
$100,000 per share, plus accumulated and unpaid dividends.
The dividend rate on the Series B Straps is 5.8% through
December 30, 1997. The Series B STRAPS are redeemable at the
option of the Company on or after December 29, 1997 at a price of
$100,000 per share, plus accumulated and unpaid dividends.
The Company's Series E 7.5% non-cumulative, non-redeemable
preferred shares are redeemable by the Company after April 1, 1999.
The shares are convertible into common shares at the option of the
holder on or after September 30, 1999, at a conversion price
negotiated between the holder and the Company or at a formula
determined conversion price in accordance with the share
conditions.
The Company received $472 of contributed capital in the form
of deferred tax assets from the Parent Corporation during 1994 in
connection with reinsurance transactions with the Parent.
The Company's net income and capital and surplus, as
determined in accordance with statutory accounting principles and
practices for December 31 are as follows:
1996
1995
1994
(Unaudited)
Net Income
$180,635
$114,931
$70,091
Capital and Surplus
713,324
653,479
621,589
The maximum amount of dividends which can be paid to
stockholders by insurance companies domiciled in the State of
Colorado is subject to restrictions relating to statutory surplus
and statutory net gain from operations. Statutory surplus and net
gains from operations at December 31, 1996 were $584,492 and
$182,044 (unaudited), respectively. The Company should be able to
pay up to $182,044 (unaudited) of dividends without regulatory
approval in 1997.
Dividends of $8,587, $9,217, and $7,475, were paid on
preferred stock in 1996, 1995, and 1994, respectively. In
addition, dividends of $48,083, $39,763, and $32,963, were paid on
common stock in 1996, 1995 and 1994, respectively. Dividends are
paid as determined by the Board of Directors.
The Company is involved in various legal proceedings which
arise in the ordinary course of its business. In the opinion of
management, after consultation with counsel, the resolution of
these proceedings should not have a material adverse effect on its
financial position or results of operations.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements for Retirement Plan Series Account for
the
years ended December 31, 1996 and 1995 as well as the financial
statements for Great-West Life & Annuity Insurance Company for the
years ended December 31, 1996, 1995 and 1994 are included in Part
B.
(b) Exhibits
Items (1), (2), (4) through (6) are incorporated by reference to
Registrant's Form N-4 Registration Statement filed September 13,
1994.
(3) Is filed herewith.
(7) Not applicable
(8) Not applicable
(9) Item 9 is incorporated by reference to
Registrant's registration statement dated
September 13, 1994.
(10) (a) Written Consent of Jorden Burt
Berenson & Johnson, LLP
(b) Written Consent of Deloitte & Touche LLP
(c) Written Consent of Ruth B. Lurie
(11) Not Applicable
(12) Not Applicable
(13) Is filed herewith
(14) Is filed herewith
Item 25. Directors and Officers of the Depositor
Position and
Offices
Name Principal Business Address with
Depositor
James Balog 2205 North Southwinds Boulevard
Director
Vero Beach, Florida 39263
James W. Burns, O.C. (4)
Director
Orest T. Dackow (3) Director
Paul Desmarais, Jr. (4) Director
Robert G. Graham 574 Spoonbill Drive
Director
Sarasota, FL 34236
Position and
Offices
Name Principal Business Address with
Depositor
Robert Gratton (5) Chairman
N. Berne Hart 2552 East Alameda Avenue
Director
Denver, Colorado 80209
Kevin P. Kavanagh (1) Director
William Mackness 61 Waterloo Street
Director
Winnipeg, Manitoba R3N 0S3
William T. McCallum (3) Director,
President and Chief Executive Officer
Jerry E.A. Nickerson H.B. Nickerson & Sons Limited
Director
P.O. Box 130
275 Commercial Street
North Sydney, Nova Scotia B2A 3M2
P. Michael Pitfield, P.C., Q.C. (4)
Director
Michel Plessis-Belair, F.C.A. (4)
Director
Ross J. Turner Genstar Investment Corporation
Director
950 Tower Lane
Metro Tower, Suite 1170
Foster City, California 94404
Brian E. Walsh Trinity L.P. Director
115 Putnam Ave.
Greenwich, Connecticut 06830
Robert D. Bond (3) Senior Vice
President, Financial Services
John A. Brown (3) Senior Vice
President, Financial Services
John T. Hughes (3) Senior Vice
President, Chief Investment Officer
Position and
Offices
Name Principal Business Address with
Depositor
Robert E. Kavanagh (3) Senior
Vice
President, Employee Benefits Sales
D. Craig Lennox (3) Senior Vice
President, General Counsel and Secretary
Dennis Low (3) Executive Vice
President, Financial Services
Alan D. MacLennan (2) Executive
Vice President, Employee Benefits
Steve H. Miller (2) Senior
Vice
President, Employee Benefits Sales
James D. Motz (2) Executive Vice
President, Employee Benefits Operations
Marty Rosenbaum (2) Senior Vice
President, Employee Benefits Operations
Douglas L. Wooden (3) Senior
Vice
President, Financial Services
________________________________________
(1) 100 Osborne Street North, Winnipeg, Manitoba, Canada R3C 3A5.
(2) 8505 East Orchard Road, Englewood, Colorado 80111.
(3) 8515 East Orchard Road, Englewood, Colorado 80111.
(4) Power Corporation of Canada, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
(5) Power Financial Corporation, 751 Victoria Square, Montreal,
Quebec, Canada H2Y 2J3.
Item 26. Persons controlled by or under common control with the
Depositor or Registrant
Power Corporation of Canada
100% Marquette Communications Corporation
100% - 171263 Canada Inc.
68.1% - Power Financial Corporation
86.4% - Great-West Lifeco Inc.
99.5% - The Great-West Life Assurance Company
100% - Great-West Life & Annuity Insurance Company
100% - GW Capital Management, Inc.
100% - Financial Administrative Services Corporation
100% - One Corporation
100% - One Health Plan of Illinois, Inc.
100% - One Health Plan of Texas, Inc.
100% - One Health Plan of California, Inc.
100% - One Health Plan of Colorado, Inc.
100% - One Health Plan of Georgia, Inc.
100% - One Health Plan of North Carolina, Inc.
100% - One Health Plan of Washington, Inc.
100% - One Orchard Equities, Inc.
100% - Great-West Benefit Services, Inc.
13% - Private Healthcare Systems, Inc.
100% - Benefits Communication Corporation
100% - BenefitsCorp Equities, Inc.
94% - Maxim Series Fund, Inc.
100% - Greenwood Property Corporation
100% - GWL Properties Inc.
100% - Great-West Realty Investments Inc.
50% - Westkin Properties, Ltd.
100% - Confed Admin Services, Inc.
100% - Orchard Series Fund
Item 27. Number of Contract Owners
As of February 28, 1997, there were 777 Contract Owners.
Item 28. Indemnification
Provisions exist under the Colorado General Corporation Code and
the Bylaws of GWL&A whereby GWL&A may indemnify a director,
officer, or controlling person of GWL&A against liabilities arising
under the Securities Act of 1933. The following excerpts contain
the substance of these provisions:
Colorado Business Corporation Act
Article 109 - INDEMNIFICATION
Section 7-109-101. Definitions.
As used in this Article:
(1) "Corporation" includes any domestic or foreign
entity that is a predecessor of the corporation by reason of a
merger, consolidation, or other transaction in which the
predecessor's existence ceased upon consummation of the
transaction.
(2) "Director" means an individual who is or was a
director of a corporation or an individual who, while a director of
a corporation, is or was serving at the corporation's request as a
director, officer, partner, trustee, employee, fiduciary or agent
of another domestic or foreign corporation or other person or
employee benefit plan. A director is considered to be serving an
employee benefit plan at the corporation's request if his or her
duties to the corporation also impose duties on or otherwise
involve services by, the director to the plan or to participants in
or beneficiaries of the plan.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with
respect to a proceeding to pay a judgment, settlement, penalty,
fine, including an excise tax assessed with respect to an employee
benefit plan, or reasonable expenses.
(5) "Official capacity" means, when used with respect to
a director, the office of director in the corporation and, when
used with respect to a person other than a director as contemplated
in Section 7-109-107, means the office in the corporation held by
the officer or the employment, fiduciary, or agency relationship
undertaken by the employee, fiduciary, or agent on behalf of the
corporation. "Official capacity" does not include service for any
other domestic or foreign corporation or other person or employee
benefit plan.
(6) "Party" includes a person who was, is, or is
threatened to be made a named defendant or respondent in a
proceeding.
(7) "Proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
Section 7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this
section, a corporation may indemnify a person made a party to the
proceeding because the person is or was a director against
liability incurred in any proceeding if:
(a) The person conducted himself or herself in good
faith;
(b) The person reasonably believed:
(I) In the case of conduct in an official
capacity with the corporation, that his or her conduct was in the
corporation's best interests; or
(II) In all other cases, that his or her
conduct was at least not opposed to the corporation's best
interests; and
(c) In the case of any criminal proceeding, the
person had no reasonable cause to believe his or her conduct was
unlawful.
(2) A director's conduct with respect to an employee
benefit plan for a purpose the director reasonably believed to be
in the interests of the participants in or beneficiaries of the
plan is conduct that satisfies the requirements of subparagraph
(II) of paragraph (b) of subsection (1) of this section. A
director's conduct with respect to an employee benefit plan for a
purpose that the director did not reasonably believe to be in the
interests of the participants in or beneficiaries of the plan shall
be deemed not to satisfy the requirements of subparagraph (a) of
subsection (1) of this section.
(3) The termination of any proceeding by judgment,
order, settlement, or conviction, or upon a plea of nolo contendere
or its equivalent, is not, of itself, determinative that the
director did not meet the standard of conduct described in this
section.
(4) A corporation may not indemnify a director under
this section:
(a) In connection with a proceeding by or in the
right of the corporation in which the director was adjudged liable
to the corporation; or
(b) In connection with any proceeding charging that
the director derived an improper personal benefit, whether or not
involving action in his official capacity, in which proceeding the
director was adjudged liable on the basis that he or she derived an
improper personal benefit.
(5) Indemnification permitted under this section in
connection with a proceeding by or in the right of a corporation is
limited to reasonable expenses incurred in connection with the
proceeding.
Section 7-109-103. Mandatory Indemnification of Directors.
Unless limited by the articles of incorporation, a
corporation shall be required to indemnify a person who is or was
a director of the corporation and who was wholly successful, on the
merits or otherwise, in defense of any proceeding to which he was
a party, against reasonable expenses incurred by him in connection
with the proceeding.
Section 7-109-104. Advance of Expenses to Directors.
(1) A corporation may pay for or reimburse the
reasonable expenses incurred by a director who is a party to a
proceeding in advance of the final disposition of the proceeding
if:
(a) The director furnishes the corporation a
written affirmation of his good-faith belief that he has met the
standard of conduct described in Section 7-109-102;
(b) The director furnishes the corporation a
written undertaking, executed personally or on the director's
behalf, to repay the advance if it is ultimately determined that he
or she did not meet such standard of conduct; and
(c) A determination is made that the facts then
know to those making the determination would not preclude
indemnification under this article.
(2) The undertaking required by paragraph (b) of
subsection (1) of this section shall be an unlimited general
obligation of the director, but need not be secured and may be
accepted without reference to financial ability to make repayment.
(3) Determinations and authorizations of payments under
this section shall be made in the manner specified in Section
7-109-106.
Section 7-109-105. Court-Ordered Indemnification of Directors.
(1) Unless otherwise provided in the articles of
incorporation, a director who is or was a party to a proceeding may
apply for indemnification to the court conducting the proceeding or
to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court considers
necessary, may order indemnification in the following manner:
(a) If it determines the director is entitled to
mandatory indemnification under section 7-109-103, the court shall
order indemnification, in which case the court shall also order the
corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnification.
(b) If it determines that the director is fairly
and reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not the director met the
standard of conduct set forth in section 7-109-102 (1) or was
adjudged liable in the circumstances described in Section 7-109-102
(4), the court may order such indemnification as the court deems
proper; except that the indemnification with respect to any
proceeding in which liability shall have been adjudged in the
circumstances described Section 7-109-102 (4) is limited to
reasonable expenses incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-ordered
indemnification.
Section 7-109-106. Determination and Authorization of
Indemnification of Directors.
(1) A corporation may not indemnify a director under
Section 7-109-102 unless authorized in the specific case after a
determination has been made that indemnification of the director is
permissible in the circumstances because he has met the standard of
conduct set forth in Section 7-109-102. A corporation shall not
advance expenses to a director under Section 7-109-104 unless
authorized in the specific case after the written affirmation and
undertaking required by Section 7-109-104(1)(a) and (1)(b) are
received and the determination required by Section 7-109-104(1)(c)
has been made.
(2) The determinations required to be made subsection
(1) of this section shall be made:
(a) By the board of directors by a majority vote of
those present at a meeting at which a quorum is present, and only
those directors not parties to the proceeding shall be counted in
satisfying the quorum.
(b) If a quorum cannot be obtained, by a majority
vote of a committee of the board of directors designated by the
board of directors, which committee shall consist of two or more
directors not parties to the proceeding; except that directors who
are parties to the proceeding may participate in the designation of
directors for the committee.
(3) If a quorum cannot be obtained as contemplated in
paragraph (a) of subsection (2) of this section, and the committee
cannot be established under paragraph (b) of subsection (2) of this
section, or even if a quorum is obtained or a committee designated,
if a majority of the directors constituting such quorum or such
committee so directs, the determination required to be made by
subsection (1) of this section shall be made:
(a) By independent legal counsel selected by a vote
of the board of directors or the committee in the manner specified
in paragraph (a) or (b) of subsection (2) of this section or, if a
quorum of the full board cannot be obtained and a committee cannot
be established, by independent legal counsel selected by a majority
vote of the full board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible; except that, if
the determination that indemnification is permissible is made by
independent legal counsel, authorization of indemnification and
advance of expenses shall be made by the body that selected such
counsel.
Section 7-109-107. Indemnification of Officers, Employees,
Fiduciaries, and Agents.
(1) Unless otherwise provided in the articles of
incorporation:
(a) An officer is entitled to mandatory
indemnification under section 7-109-103, and is entitled to apply
for court-ordered indemnification under section 7-109-105, in each
case to the same extent as a director;
(b) A corporation may indemnify and advance
expenses to an officer, employee, fiduciary, or agent of the
corporation to the same extent as a director; and
(c) A corporation may indemnify and advance
expenses to an officer, employee, fiduciary, or agent who is not a
director to a greater extent, if not inconsistent with public
policy, and if provided for by its bylaws, general or specific
action of its board of directors or shareholders, or contract.
Section 7-109-108. Insurance.
A corporation may purchase and maintain insurance on behalf of
a person who is or was a director, officer, employee, fiduciary, or
agent of the corporation and who, while a director, officer,
employee, fiduciary, or agent of the corporation, is or was serving
at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary, or agent of any other domestic or
foreign corporation or other person or of an employee benefit plan
against any liability asserted against or incurred by the person in
that capacity or arising out of his or her status as a director,
officer, employee, fiduciary, or agent whether or not the
corporation would have the power to indemnify the person against
such liability under the Section 7-109-102, 7-109-103 or 7-109-107.
Any such insurance may be procured from any insurance company
designated by the board of directors, whether such insurance
company is formed under the laws of this state or any other
jurisdiction of the United States or elsewhere, including any
insurance company in which the corporation has an equity or any
other interest through stock ownership or otherwise.
Section 7-109-109. Limitation of Indemnification of Directors.
(1) A provision concerning a corporation's
indemnification of, or advance of expenses to, directors that is
contained in its articles of incorporation or bylaws, in a
resolution of its shareholders or board of directors, or in a
contract, except for an insurance policy or otherwise, is valid
only to the extent the provision is not inconsistent with Sections
7-109-101 to 7-109-108. If the articles of incorporation limit
indemnification or advance of expenses, indemnification or advance
of expenses are valid only to the extent not inconsistent with the
articles of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a
corporation's power to pay or reimburse expenses incurred by a
director in connection with an appearance as a witness in a
proceeding at a time when he or she has not been made a named
defendant or respondent in the proceeding.
Section 7-109-110. Notice to Shareholders of Indemnification of
Director.
If a corporation indemnifies or advances expenses to a
director under this article in connection with a proceeding by or
in the right of the corporation, the corporation shall give written
notice of the indemnification or advance to the shareholders with
or before the notice of the next shareholders' meeting. If the
next shareholder action is taken without a meeting at the
instigation of the board of directors, such notice shall be given
to the shareholders at or before the time the first shareholder
signs a writing consenting to such action.
Bylaws of GWL&A
Article II, Section 11. Indemnification of Directors.
The Company may, by resolution of the Board of Directors,
indemnify and save harmless out of the funds of the Company to the
extent permitted by applicable law, any director, officer, or
employee of the Company or any member or officer of any committee,
and his heirs, executors and administrators, from and against all
claims, liabilities, costs, charges and expenses whatsoever that
any such director, officer, employee or any such member or officer
sustains or incurs in or about any action, suit, or proceeding that
is brought, commenced, or prosecuted against him for or in respect
of any act, deed, matter or thing whatsoever made, done, or
permitted by him in or about the execution of his duties of his
office or employment with the Company, in or about the execution of
his duties as a director or officer of another company which he so
serves at the request and on behalf of the Company, or in or about
the execution of his duties as a member or officer of any such
Committee, and all other claims, liabilities, costs, charges and
expenses that he sustains or incurs, in or about or in relation to
any such duties or the affairs of the Company, the affairs of such
Committee, except such claims, liabilities, costs, charges or
expenses as are occasioned by his own willful neglect or default.
The Company may, by resolution of the Board of Directors, indemnify
and save harmless out of the funds of the Company to the extent
permitted by applicable law, any director, officer, or employee of
any subsidiary corporation of the Company on the same basis, and
within the same constraints as, described in the preceding
sentence.
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.
Item 29. Principal Underwriter
(a) Orchard Series Fund
(b) Directors and Officers of One Orchard.
Position and
Offices
Name Principal Business Address with
Underwriter
Alan D. Mac Lennan 8505 E. Orchard Road
Director
Englewood, Colorado 80111
Robert E. Kavanagh 8505 E. Orchard Road
President and Director
Englewood, Colorado 80111
Stanley Kenyon Bldg. 400, Suite 1200
Director
1000 Abernathy Road
Atlanta, GA 30328
Glen R. Derback 8515 E. Orchard Road
Treasurer
Englewood, Colorado 80111
Beverly A. Byrne 8515 E. Orchard Road
Secretary
Englewood, Colorado 80111
Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions
Compensation
One Orchard -0- -0- -0-
-0-
Item 30. Location of Accounts and Records
All accounts, books, or other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules
promulgated thereunder are maintained by the Registrant through
GWL&A, 8515 E. Orchard Road, Englewood, Colorado 80111.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective
amendment to this Registration Statement as frequently as is
necessary to ensure that the audited financial statements in the
Registration Statement are never more than 16 months old for so
long as payments under the variable annuity contracts may be
accepted.
(b) Registrant undertakes to include either (1) as part
of any application to purchase a contract offered by the
Prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a postcard or similar
written communication affixed to or included in the Prospectus that
the applicant can remove to send for a Statement of Additional
Information.
(c) Registrant undertakes to deliver any Statement of
Additional Information and any financial statements required to be
made available under this form promptly upon written or oral
request.
(d) GWL&A represents that the fees and charges
deducted
under the Contracts, in the aggregate, are reasonable in relation
to the services rendered, the expenses to be incurred, and the
risks assumed by GWL&A.
C-1
<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 pursuant to Rule
485(b) and has duly caused this Post-Effective Amendment No. 3 to
its Registration Statement to be signed on its behalf, in the City
of Englewood, State of Colorado on this 24th day of
April , 1997.
RETIREMENT PLAN SERIES ACCOUNT
(Registrant)
By: /s/ W.T. McCallum
William T. McCallum, President and
Chief Executive Officer of
Great-West
Life & Annuity Insurance Company
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
(Depositor)
By: /s/ W.T. McCallum
William T. McCallum, President and
Chief Executive Officer
As required by the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the
capacities with Great-West Life & Annuity Insurance Company and on
the dates indicated:
Signature and Title Date
/s/ R. Gratton*
4/24 , 1997
Director and Chairman of the Board
(Robert Gratton)
/s/ W.T. McCallum
4/24 , 1997
Director, President and Chief
Executive Officer (William T. McCallum)
Signature and Title Date
/s/ G.R. Derback
4/24 , 1997
Vice President and Controller
(Glen Ray Derback)
/s/ J. Balog*
4/24 , 1997
Director, (James Balog)
/s/ J.W. Burns*
4/24 , 1997
Director, (James W. Burns)
/s/ O.T. Dackow*
4/24 , 1997
Director, (Orest T. Dackow)
/s/ P. Desmarais, Jr.*
4/24 , 1997
Director, (Paul Desmarais, Jr.)
/s/ R.G. Graham*
4/24 , 1997
Director, (Robert G. Graham)
/s/ N.B. Hart*
4/24 , 1997
Director, (N. Berne Hart)
/s/ K.P. Kavanagh
4/24 , 1997
Director, (Kevin P. Kavanagh)
Signature and Title Date
/s/ W. Mackness*
4/24 , 1997
Director, (William Mackness)
/s/ J.E.A. Nickerson*
4/24 , 1997
Director, (Jerry Edgar Alan Nickerson)
/s/ P.M. Pitfield*
4/24 , 1997
Director, (P. Michael Pitfield)
, 1997
Director, (Michel Plessis-Belair)
/s/ R.J. Turner*
4/24 , 1997
Director, (Ross J. Turner)
/s/ B.E. Walsh*
4/24 , 1997
Director, (Brian E. Walsh)
By: /s/ D.C. Lennox
4/24 , 1997
D.C. Lennox
Attorney-in-fact pursuant to Powers of Attorney filed
with the Registration Statement on September 13, 1994 and
Post-Effective Amendment No. 2 to this Registration Statement.
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
UNDERWRITING AGREEMENT
THIS UNDERWRITING AGREEMENT made this 1st day of January 1997,
by and between One Orchard Equities, Inc. (the "Underwriter") and
Great-West Life & Annuity Insurance Company (the "Insurance
Company"), on its own behalf and on behalf of the Retirement Plan
Series Account of Great-West Life & Annuity Insurance Company (the
"Series Account"), as follows:
WHEREAS, the Insurance Company has registered the Series
Account as a unit investment trust under the Investment Company Act
of 1940, as amended (the "1940 Act") and has registered the
Contracts under the Securities Act of 1933;
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and
is a member of the National Association of Securities Dealers, Inc.
(the "NASD"); and
WHEREAS, the Insurance Company and the Series Account desire
to have the Contracts sold and distributed through the Underwriter,
and the Underwriter is willing to sell and distribute such
Contracts under the terms stated herein;
NOW THEREFORE, the parties hereto agree as follows:
1. Representations, Responsibilities and Warranties of Insurance
Company
1.01 The Insurance Company represents that it has the authority,
and hereby agrees to, grant the Underwriter the right to serve as
the distributor and principal underwriter of the Contracts during
the term of this Agreement.
1.02 The Insurance Company represents and warrants that it is duly
licensed as an insurance company under the laws of the State of
Colorado and that it has taken all appropriate actions to establish
the Series Account in accordance with state and federal laws.
1.03 The Insurance Company agrees to update and maintain a current
prospectus for the Contracts as required by law.
1.04 The Insurance Company represents that it reserves the right
to appoint or refuse to appoint, any proposed associated person of
the Underwriter as an agent or broker of the Insurance Company.
The Insurance Company also retains the right to terminate such
agents or brokers once appointed.
1.05 On behalf of the Series Account, the Insurance Company shall
furnish the Underwriter with copies of all financial statements and
other documents which the Underwriter reasonably requests for use
in connection with the distribution of the contracts.
2. Representations, Responsibilities and Warranties of
Underwriter
2.01 Underwriter represents that it has the authority and hereby
agrees to serve as distributor and principal underwriter of the
Contracts during the term of this Agreement.
2.02 The Underwriter represents that it is duly registered as a
broker-dealer under the 1934 Act and is a member in good standing
of the NASD and to the extent necessary to offer the Contracts,
shall be duly registered or otherwise qualified under the
securities laws of any state or other jurisdiction.
2.03 The Underwriter agrees to use its best efforts to solicit
applications for the Contracts, and to undertake, at its own
expense, to provide all sales services relative to the Contracts
and otherwise to perform all duties and functions which are
necessary and proper for the distribution of the Contracts.
2.04 The Underwriter agrees to offer the Contracts for sale in
accordance with the prospectus therefor, then in effect. The
Underwriter represents and agrees that it is not authorized to give
any information or make any representations concerning the
Contracts other than those contained in the current prospectus as
filed with the SEC or in such sales literature as may be authorized
by the Insurance Company.
2.05. The Underwriter shall be fully responsible for carrying out
its sales, underwriting and compliance supervisory obligations
hereunder in compliance with the NASD Conduct Rules and all other
relevant federal and state securities laws and regulations.
Without limiting the generality of the foregoing, the Underwriter
agrees that it shall have full responsibility for:
(a) ensuring that no person shall offer or sell the Contracts on
its behalf until such person is duly registered as a representative
of the Underwriter, and duly licensed and appointed by the
Insurance Company;
(b) ensuring that no person shall offer or sell the Contracts on
its behalf until the Underwriter has confirmed that the Insurance
Company is appropriately licensed, or otherwise qualified to offer
and sell such Contracts under the federal securities laws and any
applicable state or jurisdictional securities and/or insurance laws
in each state or jurisdiction in which such Contracts may be
lawfully sold;
(c) continually training, supervising, and controlling all
registered representatives and other agents of the Underwriter for
purposes of complying with the NASD Conduct Rules and with federal
and state securities laws which may be applicable to the offering
and sale of the Contracts. In this respect, the Underwriter shall:
(1) conduct training programs (including the preparation and
utilization of training materials) as is necessary, in the
Underwriter's opinion, to comply with applicable laws and
regulations;
(2) establish and implement reasonable written procedures for the
supervision of the sales practices of agents, representatives or
brokers who sell the Contracts; and
(3) take reasonable steps to ensure that its associated persons
shall not make recommendations to an applicant to purchase a
Contract in the absence of reasonable grounds to believe that the
purchase of the Contract is suitable for such applicants; and
(d) supervising and ensuring compliance with NASD rules of all
administrative functions performed by the Underwriter with respect
to the offering and sale of the Contracts and representations with
respect to the Series Account.
2.06 The Underwriter, or its affiliates, on behalf of the
Insurance Company, shall apply for the proper insurance licenses in
the appropriate states or jurisdictions for the designated persons
associated with the Underwriter or with independent broker-dealers
which have entered into agreements with the Underwriter for the
sale of the Contracts. The Underwriter agrees to pay all licensing
or other fees necessary to properly authorize such persons for the
sale of the Contracts.
2.07 The Underwriter shall have the responsibility for paying (i)
all commissions or other fees to its associated persons which are
due for the sale of the Contracts and (ii) any compensation to
independent broker-dealers and their associated persons due under
the terms of any sales agreements between the Underwriter and such
broker-dealers. Provided, however, the Insurance Company retains
the ultimate right to reject any commission rate allowed by the
Underwriter. Furthermore, no associated person or independent
broker-dealer shall have an interest in the surrender charges,
deductions or other fees payable to Underwriter as set forth
herein. The Underwriter shall have the responsibility for
calculating and furnishing periodic reports to the Insurance
Company as to the sale of the Contracts, and as to the commissions
and service fees payable to persons selling the Contracts.
3. Records and Confidentiality
3.01 The Insurance Company and the Underwriter shall cause to be
maintained and preserved for the periods prescribed, such accounts,
books, records, files and other documents and materials ("Records")
as are required of it by the 1940 Act and any other applicable laws
and regulations. The Records of the Insurance Company, the Series
Account and the Underwriter as to all transactions hereunder shall
be maintained so as to disclose clearly and accurately the nature
and details of the transactions.
3.02 The Underwriter shall cause the Insurance Company to be
furnished with such Records, or copies thereof, as the Insurance
Company may reasonably request for the purpose of meeting its
reporting and recordkeeping requirements under the insurance laws
of the State of Colorado and any other applicable states or
jurisdictions.
3.03 The Insurance Company shall cause the Underwriter to be
furnished with any Records, or copies thereof, as the Underwriter
may reasonably request for the purpose of meeting its reporting and
recordkeeping requirements under the federal securities laws or the
securities laws of any inquiring jurisdiction.
3.04 The Underwriter agrees and understands that all Records shall
be the sole property of the Insurance Company and that such
property shall be held by the Underwriter, or its agents during the
term of this agreement. Upon termination, all Records shall be
returned to the Insurance Company.
3.05 Insurance Company agrees and understands that the Underwriter
may maintain copies of the Records as is required by any relevant
securities law, the SEC, the NASD or any other self regulatory
agency.
3.06 Underwriter shall establish and maintain facilities and
procedures for the safekeeping of all Records relative to this
Agreement.
3.07 The parties hereto agree that all Records pertaining to the
business of the other party which are exchanged or received
pursuant to this Agreement, shall remain confidential and shall not
be voluntarily disclosed to any other person, except to the extent
disclosure thereof may be required by law. All such confidential
information in the possession of each of the parties hereto shall
be returned to the party from whom it was obtained upon the
termination or expiration of this Agreement.
4. Relationship of the Parties
4.01 Notwithstanding anything in this Agreement to the contrary,
the Underwriter or the Insurance Company may enter into sales
agreements with independent broker-dealers for the sale of the
Contracts.
4.02 All such sales agreements as described in 4.01, above, which
are entered into by the Insurance Company or the Underwriter shall
provide that each independent broker-dealer will assume full
responsibility for continued compliance by itself and its
associated persons with NASD Conduct Rules and applicable federal
and state securities laws. All associated persons of such
independent broker-dealers soliciting applications for the
Contracts shall be duly and appropriately licensed and/or appointed
for the sale of the Contracts under the insurance laws of the
applicable state or jurisdiction in which the Contracts may be
lawfully sold.
4.03 The services of the Underwriter to the Series Account
hereunder are not to be deemed exclusive and the Underwriter shall
be free to render similar services to others so long as the
services rendered hereunder are not interfered with or impaired.
5. Term and Termination
5.01 Subject to termination, the Agreement shall remain in full
force and effect for one year, and shall continue in full force and
effect from year to year until terminated as provided below. Each
additional year shall be an additional term of this Agreement.
5.02 This Agreement may be terminated:
(a) by either party upon sixty (60) days written notice to the
other party;
(b) immediately, upon written notice in the event of bankruptcy or
insolvency of one party;
(c) at any time upon mutual written consent of the parties;
(d) immediately in the event of its assignment; provided however,
"assigned" shall not include any transaction exempted from section
15(b)(2) of the 1940 Act;
(e) immediately in the event that the Underwriter no longer
qualifies as a broker-dealer under applicable federal law; and
(f) immediately in the event of fraud, misrepresentation,
conversion or unlawful withholding of funds by a party.
5.03 Upon termination of this Agreement, all authorization,
rights, and obligations shall cease except the obligations to
settle accounts hereunder, including payments or premiums or
contributions subsequently received for Contracts in effect at the
time of termination or issued pursuant to applications received by
the Insurance Company prior to termination.
5.04 After notice of termination, the parties agree to cooperate
to effectuate an orderly transition of all accounts, payments and
Records.
6. Miscellaneous
6.01 This Agreement shall be subject to the provisions of the 1940
Act, the 1934 Act and the rules, regulations and rulings
thereunder. In addition it shall be subject to the rulings of the
NASD, as issued from time to time, and any exemptions from the 1940
Act the SEC may grant. All terms of this Agreement will be
interpreted and construed in accordance with compliance of this
section 6.01.
6.02 Except as otherwise provided, Underwriter acknowledges that
Insurance Company retains the overall right and responsibility to
direct and control the activities of the Underwriter.
6.03 If any provisions of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall remain in full force and effect.
6.04 This Agreement constitutes the entire Agreement between the
parties hereto and may not be modified except in a written
instrument executed by all the parties hereto.
6.05 This Agreement shall be governed by the internal laws of the
State of Colorado.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective duly authorized officers and have caused
their respective seals to be affixed hereto, as of the day and year
first written above.
Great-West Life & Annuity Insurance Company
/s/ Joan Preyer__________________ By: _/s/ William T.
McCallum __________
Witness: William T. McCallum
President and Chief
Executive Officer
One Orchard Equities, Inc.
/s/ Diana L. Ryan _____________ By: _/s/ Robert E.
Kavanagh ____________
Witness: Robert E. Kavanagh
President
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 pursuant to Rule
485(b) and has duly caused this Post-Effective Amendment No. 3 to
its Registration Statement to be signed on its behalf, in the City
of Englewood, State of Colorado on this 24th day of
April , 1997.
RETIREMENT PLAN SERIES ACCOUNT
(Registrant)
By: /s/ W.T. McCallum
William T. McCallum, President and
Chief Executive Officer of
Great-West
Life & Annuity Insurance Company
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
(Depositor)
By: /s/ W.T. McCallum
William T. McCallum, President and
Chief Executive Officer
As required by the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the
capacities with Great-West Life & Annuity Insurance Company and on
the dates indicated:
Signature and Title Date
/s/ R. Gratton*
4/24 , 1997
Director and Chairman of the Board
(Robert Gratton)
/s/ W.T. McCallum
4/24 , 1997
Director, President and Chief
Executive Officer (William T. McCallum)
Signature and Title Date
/s/ G.R. Derback
4/24 , 1997
Vice President and Controller
(Glen Ray Derback)
/s/ J. Balog*
4/24 , 1997
Director, (James Balog)
/s/ J.W. Burns*
4/24 , 1997
Director, (James W. Burns)
/s/ O.T. Dackow*
4/24 , 1997
Director, (Orest T. Dackow)
/s/ P. Desmarais, Jr.*
4/24 , 1997
Director, (Paul Desmarais, Jr.)
/s/ R.G. Graham*
4/24 , 1997
Director, (Robert G. Graham)
/s/ N.B. Hart*
4/24 , 1997
Director, (N. Berne Hart)
/s/ K.P. Kavanagh
4/24 , 1997
Director, (Kevin P. Kavanagh)
Signature and Title Date
/s/ W. Mackness*
4/24 , 1997
Director, (William Mackness)
/s/ J.E.A. Nickerson*
4/24 , 1997
Director, (Jerry Edgar Alan Nickerson)
/s/ P.M. Pitfield*
4/24 , 1997
Director, (P. Michael Pitfield)
, 1997
Director, (Michel Plessis-Belair)
/s/ R.J. Turner*
4/24 , 1997
Director, (Ross J. Turner)
/s/ B.E. Walsh*
4/24 , 1997
Director, (Brian E. Walsh)
By: /s/ D.C. Lennox
4/24 , 1997
D.C. Lennox
Attorney-in-fact pursuant to Powers of Attorney filed
with the Registration Statement on September 13, 1994 and
Post-Effective Amendment No. 2 to this Registration Statement.
Yield and Effective Yield Calculations
Money Market Investment Division
A - Band 0.75% Mortality and Expense Charge + $30 Contract
Maintenence Charge
Assume a $1000 Initial Investment
$1000/10.656212 (Beginning Unit Value) = 93.841976 Units
Per Unit CMC Expense $30/93.841976 = $0.3197
"For the 7 day period, $0.3197/365 * 7" $0.0061
a = Value of one accumulation unit at the beginning of the
period $10.656212
b = Value of one accumulation unit at the end of the period
$10.66478162
c = Annual maintenece charges accrued in the period $0.0061
d = Average number of units outstanding in the period 93.841976
e = Base Period Return 0.023175%
e = Yield = (b-a-c/d) / a = 0.023175%
f = Annualized Yield e x (365/7) = 1.205%
g = Effective Yield ((1 +e)^365/7)-1 1.212%
O - Band 0.50% Mortality and Expense Charge + $0 Contract
Maintenence Charge
a = Value of one accumulation unit at the beginning of the
period $10.463391
b = Value of one accumulation unit at the end of the period
$10.47230570
c = Annual maintenece charges accrued in the period $-
d = Average number of units outstanding in the period 1
e = Base Period Return 0.085199%
e = Yield = (b-a-c/d) / a = 0.085199%
f = Annualized Yield e x (365/7) = 4.430%
g = Effective Yield ((1 +e)^365/7)-1 4.528%
U - Band 0.25% Mortality and Expense Charge + $0 Contract
Maintenence Charge
a = Value of one accumulation unit at the beginning of the
period $10.526846
b = Value of one accumulation unit at the end of the period
$10.53630791
c = Annual maintenece charges accrued in the period $-
d = Average number of units outstanding in the period 1
e = Base Period Return 0.089884%
e = Yield = (b-a-c/d) / a = 0.089884%
f = Annualized Yield e x (365/7) = 4.674%
g = Effective Yield ((1 +e)^365/7)-1 4.783%
Z - Band 0.00% Mortality and Expense Charge + $0 Contract
Maintenence Charge
a = Value of one accumulation unit at the beginning of the
period $10.782191
b = Value of one accumulation unit at the end of the period
$10.79240202
c = Annual maintenece charges accrued in the period $-
d = Average number of units outstanding in the period 1
e = Base Period Return 0.094703%
e = Yield = (b-a-c/d) / a = 0.094703%
f = Annualized Yield e x (365/7) = 4.925%
g = Effective Yield ((1 +e)^365/7)-1 5.045%
<PAGE>
Yield and Effective Yield Calculations
Total Return Calculation
A - Band 0.75% Mortality and Expense Charge + $30 Contract
Maintenence Charge
Foreign Equity
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,038.01 " 6/23/95 10.094841
N = 1.00 12/31/95 10.302761
P = " $1,000.00 " 12/31/96 11.0034889
"Therefore, 1 year total return is" 3.80%
Since Inception Total Return :
ERV = " $1,044.31 " 6/23/95 10.094841
N = 1.52 12/31/95 10.302761
P = " $1,000.00 " 12/31/96 11.0034889
"Therefore, since inception total return is" 2.89%
Small-Cap Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,114.46 " 6/20/95 10.422443
N = 1.00 12/31/95 11.604409
P = " $1,000.00 " 12/31/96 13.28072814
"Therefore, 1 year total return is" 11.45%
Since Inception Total Return :
ERV = " $1,228.30 " 6/20/95 10.422443
N = 1.53 12/31/95 11.604409
P = " $1,000.00 " 12/31/96 13.28072814
"Therefore, since inception total return is" 14.37%
Growth Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,181.89 " 8/9/95 10.6713
N = 1.00 12/31/95 11.689177
P = " $1,000.00 " 12/31/96 14.16603094
"Therefore, 1 year total return is" 18.19%
Since Inception Total Return :
ERV = " $1,285.65 " 8/9/95 10.6713
N = 1.39 12/31/95 11.689177
P = " $1,000.00 " 12/31/96 14.16603094
"Therefore, since inception total return is" 19.74%
Small-Cap Aggressive Growth
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,261.23 " 8/9/95 10.961883
N = 1.00 12/31/95 11.927781
P = " $1,000.00 " 12/31/96 15.40151721
"Therefore, 1 year total return is" 26.12%
Since Inception Total Return :
ERV = " $1,363.17 " 8/9/95 10.961883
N = 1.39 12/31/95 11.927781
P = " $1,000.00 " 12/31/96 15.40151721
"Therefore, since inception total return is" 24.88%
Stock Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,178.98 " 6/20/95 10.244542
N = 1.00 12/31/95 11.59037
P = " $1,000.00 " 12/31/96 14.01252472
"Therefore, 1 year total return is" 17.90%
Since Inception Total Return :
ERV = " $1,321.86 " 6/20/95 10.244542
N = 1.53 12/31/95 11.59037
P = " $1,000.00 " 12/31/96 14.01252472
"Therefore, since inception total return is" 19.99%
Small-Cap Value
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,140.67 " 8/9/95 10.341606
N = 1.00 12/31/95 11.019784
P = " $1,000.00 " 12/31/96 12.90057435
"Therefore, 1 year total return is" 14.07%
Since Inception Total Return :
ERV = " $1,205.61 " 8/9/95 10.341606
N = 1.39 12/31/95 11.019784
P = " $1,000.00 " 12/31/96 12.90057435
"Therefore, since inception total return is" 14.35%
Total Return
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,079.16 " 8/9/95 10.316024
N = 1.00 12/31/95 10.887181
P = " $1,000.00 " 12/31/96 12.07565232
"Therefore, 1 year total return is" 7.92%
Since Inception Total Return :
ERV = " $1,128.74 " 8/9/95 10.316024
N = 1.39 12/31/95 10.887181
P = " $1,000.00 " 12/31/96 12.07565232
"Therefore, since inception total return is" 9.07%
Value Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,167.37 " 8/9/95 10.359646
N = 1.00 12/31/95 11.54602
P = " $1,000.00 " 12/31/96 13.82491494
"Therefore, 1 year total return is" 16.74%
Since Inception Total Return :
ERV = " $1,292.66 " 8/9/95 10.359646
N = 1.39 12/31/95 11.54602
P = " $1,000.00 " 12/31/96 13.82491494
"Therefore, since inception total return is" 20.21%
U.S. Government Mortgage Securities
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,005.07 " 8/9/95 9.924985
N = 1.00 12/31/95 10.451024
P = " $1,000.00 " 12/31/96 10.81748968
"Therefore, 1 year total return is" 0.51%
Since Inception Total Return :
ERV = " $1,048.09 " 8/9/95 9.924985
N = 1.39 12/31/95 10.451024
P = " $1,000.00 " 12/31/96 10.81748968
"Therefore, since inception total return is" 3.43%
Investment Grade Corporate Bond
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = $993.62 8/9/95 9.918349
N = 1.00 12/31/95 10.475492
P = " $1,000.00 " 12/31/96 10.72288688
"Therefore, 1 year total return is" -0.64%
Since Inception Total Return :
ERV = " $1,039.28 " 8/9/95 9.918349
N = 1.39 12/31/95 10.475492
P = " $1,000.00 " 12/31/96 10.72288688
"Therefore, since inception total return is" 2.80%
Corporate Bond
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,065.22 " 8/9/95 10.015917
N = 1.00 12/31/95 10.949251
P = " $1,000.00 " 12/31/96 11.9918779
"Therefore, 1 year total return is" 6.52%
Since Inception Total Return :
ERV = " $1,155.45 " 8/9/95 10.015917
N = 1.39 12/31/95 10.949251
P = " $1,000.00 " 12/31/96 11.9918779
"Therefore, since inception total return is" 10.92%
Short-Term Bond
Assume a $1000 Initial Investment
Since Inception Total Return :
ERV = " $1,015.59 " 4/1/96 9.959249
N = 0.75 12/31/95 N/A
P = " $1,000.00 " 12/31/96 10.33798625
"Therefore, since inception total return is" 1.56%
Money Market
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,012.96 " 7/5/95 9.995853
N = 1.00 12/31/95 10.225472
P = " $1,000.00 " 12/31/96 10.66478162
"Therefore, 1 year total return is" 1.30%
Since Inception Total Return :
ERV = " $1,022.21 " 7/5/95 9.995853
N = 1.49 12/31/95 10.225472
P = " $1,000.00 " 12/31/96 10.66478162
"Therefore, since inception total return is" 1.48%
<PAGE>
Yield and Effective Yield Calculations
Total Return Calculation
O - Band 0.50% Mortality and Expense Charge + $0 Contract
Maintenence Charge
Foreign Equity
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,070.69 " 7/24/95 10.320042
N = 1.00 12/31/95 10.266556
P = " $1,000.00 " 12/31/96 10.99229017
"Therefore, 1 year total return is" 7.07%
Since Inception Total Return :
ERV = " $1,065.14 " 7/24/95 10.320042
N = 1.44 12/31/95 10.266556
P = " $1,000.00 " 12/31/96 10.99229017
"Therefore, since inception total return is" 4.49%
Small-Cap Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,147.29 " 7/24/95 10.775083
N = 1.00 12/31/95 11.615539
P = " $1,000.00 " 12/31/96 13.32639897
"Therefore, 1 year total return is" 14.73%
Since Inception Total Return :
ERV = " $1,236.78 " 7/24/95 10.775083
N = 1.44 12/31/95 11.615539
P = " $1,000.00 " 12/31/96 13.32639897
"Therefore, since inception total return is" 15.92%
Growth Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,214.93 " 7/24/95 10.571727
N = 1.00 12/31/95 11.706101
P = " $1,000.00 " 12/31/96 14.22207003
"Therefore, 1 year total return is" 21.49%
Since Inception Total Return :
ERV = " $1,345.29 " 7/24/95 10.571727
N = 1.44 12/31/95 11.706101
P = " $1,000.00 " 12/31/96 14.22207003
"Therefore, since inception total return is" 22.90%
Small-Cap Aggressive Growth
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,294.44 " 8/3/95 10.821778
N = 1.00 12/31/95 11.946018
P = " $1,000.00 " 12/31/96 15.46344122
"Therefore, 1 year total return is" 29.44%
Since Inception Total Return :
ERV = " $1,428.92 " 8/3/95 10.821778
N = 1.41 12/31/95 11.946018
P = " $1,000.00 " 12/31/96 15.46344122
"Therefore, since inception total return is" 28.78%
Stock Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,212.00 " 7/24/95 10.418458
N = 1.00 12/31/95 11.550683
P = " $1,000.00 " 12/31/96 13.99945597
"Therefore, 1 year total return is" 21.20%
Since Inception Total Return :
ERV = " $1,343.72 " 7/24/95 10.418458
N = 1.44 12/31/95 11.550683
P = " $1,000.00 " 12/31/96 13.99945597
"Therefore, since inception total return is" 22.80%
Small-Cap Value
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,173.59 " 7/24/95 10.175242
N = 1.00 12/31/95 11.037995
P = " $1,000.00 " 12/31/96 12.95409591
"Therefore, 1 year total return is" 17.36%
Since Inception Total Return :
ERV = " $1,273.10 " 7/24/95 10.175242
N = 1.44 12/31/95 11.037995
P = " $1,000.00 " 12/31/96 12.95409591
"Therefore, since inception total return is" 18.28%
Total Return
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,111.95 " 7/24/95 10.239489
N = 1.00 12/31/95 10.902751
P = " $1,000.00 " 12/31/96 12.12329612
"Therefore, 1 year total return is" 11.19%
Since Inception Total Return :
ERV = " $1,183.97 " 7/24/95 10.239489
N = 1.44 12/31/95 10.902751
P = " $1,000.00 " 12/31/96 12.12329612
"Therefore, since inception total return is" 12.46%
Value Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,200.37 " 7/24/95 10.277388
N = 1.00 12/31/95 11.561775
P = " $1,000.00 " 12/31/96 13.87843931
"Therefore, 1 year total return is" 20.04%
Since Inception Total Return :
ERV = " $1,350.39 " 7/24/95 10.277388
N = 1.44 12/31/95 11.561775
P = " $1,000.00 " 12/31/96 13.87843931
"Therefore, since inception total return is" 23.23%
U.S. Government Mortgage Securities
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,037.67 " 7/24/95 9.963139
N = 1.00 12/31/95 10.519428
P = " $1,000.00 " 12/31/96 10.91574108
"Therefore, 1 year total return is" 3.77%
Since Inception Total Return :
ERV = " $1,095.61 " 7/24/95 9.963139
N = 1.44 12/31/95 10.519428
P = " $1,000.00 " 12/31/96 10.91574108
"Therefore, since inception total return is" 6.55%
Investment Grade Corporate Bond
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,026.20 " 7/24/95 9.961507
N = 1.00 12/31/95 10.546598
P = " $1,000.00 " 12/31/96 10.8228688
"Therefore, 1 year total return is" 2.62%
Since Inception Total Return :
ERV = " $1,086.47 " 7/24/95 9.961507
N = 1.44 12/31/95 10.546598
P = " $1,000.00 " 12/31/96 10.8228688
"Therefore, since inception total return is" 5.94%
Corporate Bond
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,097.97 " 7/24/95 10.040001
N = 1.00 12/31/95 11.029525
P = " $1,000.00 " 12/31/96 12.11011697
"Therefore, 1 year total return is" 9.80%
Since Inception Total Return :
ERV = " $1,206.19 " 7/24/95 10.040001
N = 1.44 12/31/95 11.029525
P = " $1,000.00 " 12/31/96 12.11011697
"Therefore, since inception total return is" 13.92%
Short-Term Bond
Assume a $1000 Initial Investment
Since Inception Total Return :
ERV = " $1,041.54 " 3/13/96 9.997906
N = 0.80 12/31/95 N/A
P = " $1,000.00 " 12/31/96 10.41325273
"Therefore, since inception total return is" 4.15%
Money Market
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,045.38 " 11/30/95 9.976393
N = 1.00 12/31/95 10.017734
P = " $1,000.00 " 12/31/96 10.4723057
"Therefore, 1 year total return is" 4.54%
Since Inception Total Return :
ERV = " $1,049.71 " 11/30/95 9.976393
N = 1.08 12/31/95 10.017734
P = " $1,000.00 " 12/31/96 10.4723057
"Therefore, since inception total return is" 4.57%
<PAGE>
Yield and Effective Yield Calculations
Total Return Calculation
U - Band 0.25% Mortality and Expense Charge + $0 Contract
Maintenence Charge
Foreign Equity
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,073.38 " 10/3/95 9.998404
N = 1.00 12/31/95 10.261732
P = " $1,000.00 " 12/31/96 11.01475113
"Therefore, 1 year total return is" 7.34%
Since Inception Total Return :
ERV = " $1,101.65 " 10/3/95 9.998404
N = 1.24 12/31/95 10.261732
P = " $1,000.00 " 12/31/96 11.01475113
"Therefore, since inception total return is" 8.09%
Small-Cap Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,150.16 " 9/8/95 11.556167
N = 1.00 12/31/95 11.632399
P = " $1,000.00 " 12/31/96 13.3790964
"Therefore, 1 year total return is" 15.02%
Since Inception Total Return :
ERV = " $1,157.75 " 9/8/95 11.556167
N = 1.31 12/31/95 11.632399
P = " $1,000.00 " 12/31/96 13.3790964
"Therefore, since inception total return is" 11.81%
Growth Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,217.97 " 9/8/95 10.974529
N = 1.00 12/31/95 11.723289
P = " $1,000.00 " 12/31/96 14.27860636
"Therefore, 1 year total return is" 21.80%
Since Inception Total Return :
ERV = " $1,301.07 " 9/8/95 10.974529
N = 1.31 12/31/95 11.723289
P = " $1,000.00 " 12/31/96 14.27860636
"Therefore, since inception total return is" 22.21%
Small-Cap Aggressive Growth
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,297.66 " 11/17/95 11.283325
N = 1.00 12/31/95 11.958605
P = " $1,000.00 " 12/31/96 15.51815602
"Therefore, 1 year total return is" 29.77%
Since Inception Total Return :
ERV = " $1,375.32 " 11/17/95 11.283325
N = 1.12 12/31/95 11.958605
P = " $1,000.00 " 12/31/96 15.51815602
"Therefore, since inception total return is" 32.90%
Stock Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,215.04 " 7/12/95 10.505048
N = 1.00 12/31/95 11.567617
P = " $1,000.00 " 12/31/96 14.05510347
"Therefore, 1 year total return is" 21.50%
Since Inception Total Return :
ERV = " $1,337.94 " 7/12/95 10.505048
N = 1.47 12/31/95 11.567617
P = " $1,000.00 " 12/31/96 14.05510347
"Therefore, since inception total return is" 21.88%
Small-Cap Value
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,176.52 " 7/12/95 10.337634
N = 1.00 12/31/95 11.053651
P = " $1,000.00 " 12/31/96 13.00480887
"Therefore, 1 year total return is" 17.65%
Since Inception Total Return :
ERV = " $1,258.01 " 7/12/95 10.337634
N = 1.47 12/31/95 11.053651
P = " $1,000.00 " 12/31/96 13.00480887
"Therefore, since inception total return is" 16.88%
Total Return
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,114.74 " 9/19/95 10.645384
N = 1.00 12/31/95 10.918643
P = " $1,000.00 " 12/31/96 12.17149861
"Therefore, 1 year total return is" 11.47%
Since Inception Total Return :
ERV = " $1,143.36 " 9/19/95 10.645384
N = 1.28 12/31/95 10.918643
P = " $1,000.00 " 12/31/96 12.17149861
"Therefore, since inception total return is" 11.01%
Value Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,203.38 " 7/12/95 10.34811
N = 1.00 12/31/95 11.578831
P = " $1,000.00 " 12/31/96 13.93372398
"Therefore, 1 year total return is" 20.34%
Since Inception Total Return :
ERV = " $1,346.50 " 7/12/95 10.34811
N = 1.47 12/31/95 11.578831
P = " $1,000.00 " 12/31/96 13.93372398
"Therefore, since inception total return is" 22.41%
U.S. Government Mortgage Securities
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,040.28 " 7/12/95 10.106202
N = 1.00 12/31/95 10.535307
P = " $1,000.00 " 12/31/96 10.9597086
"Therefore, 1 year total return is" 4.03%
Since Inception Total Return :
ERV = " $1,084.45 " 7/12/95 10.106202
N = 1.47 12/31/95 10.535307
P = " $1,000.00 " 12/31/96 10.9597086
"Therefore, since inception total return is" 5.67%
Investment Grade Corporate Bond
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,028.77 " 9/19/95 10.100498
N = 1.00 12/31/95 10.453319
P = " $1,000.00 " 12/31/96 10.7540964
"Therefore, 1 year total return is" 2.88%
Since Inception Total Return :
ERV = " $1,064.71 " 9/19/95 10.100498
N = 1.28 12/31/95 10.453319
P = " $1,000.00 " 12/31/96 10.7540964
"Therefore, since inception total return is" 5.01%
Corporate Bond
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,100.74 " 9/19/95 10.318946
N = 1.00 12/31/95 10.911618
P = " $1,000.00 " 12/31/96 12.01084784
"Therefore, 1 year total return is" 10.07%
Since Inception Total Return :
ERV = " $1,163.96 " 9/19/95 10.318946
N = 1.28 12/31/95 10.911618
P = " $1,000.00 " 12/31/96 12.01084784
"Therefore, since inception total return is" 12.57%
Short-Term Bond
Assume a $1000 Initial Investment
Since Inception Total Return :
ERV = " $1,043.39 " 3/11/95 10.015347
N = 1.81 12/31/95 N/A
P = " $1,000.00 " 12/31/96 10.4499374
"Therefore, since inception total return is" 4.34%
Money Market
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,048.21 " 11/16/95 9.988482
N = 1.00 12/31/95 10.051674
P = " $1,000.00 " 12/31/96 10.53630791
"Therefore, 1 year total return is" 4.82%
Since Inception Total Return :
ERV = " $1,054.85 " 11/16/95 9.988482
N = 1.12 12/31/95 10.051674
P = " $1,000.00 " 12/31/96 10.53630791
"Therefore, since inception total return is" 4.87%
<PAGE>
Yield and Effective Yield Calculations
Total Return Calculation
Z - Band 0.00% Mortality and Expense Charge + $0 Contract
Maintenence Charge
Foreign Equity
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,076.07 " 10/4/95 10.051661
N = 1.00 12/31/95 10.276613
P = " $1,000.00 " 12/31/96 11.05835347
"Therefore, 1 year total return is" 7.61%
Since Inception Total Return :
ERV = " $1,100.15 " 10/4/95 10.051661
N = 1.24 12/31/95 10.276613
P = " $1,000.00 " 12/31/96 11.05835347
"Therefore, since inception total return is" 7.99%
Small-Cap Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,153.03 " 8/9/95 11.020542
N = 1.00 12/31/95 11.649285
P = " $1,000.00 " 12/31/96 13.43201701
"Therefore, 1 year total return is" 15.30%
Since Inception Total Return :
ERV = " $1,218.82 " 8/9/95 11.020542
N = 1.39 12/31/95 11.649285
P = " $1,000.00 " 12/31/96 13.43201701
"Therefore, since inception total return is" 15.25%
Growth Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,221.02 " 7/26/95 10.716308
N = 1.00 12/31/95 11.740268
P = " $1,000.00 " 12/31/96 14.33507926
"Therefore, 1 year total return is" 22.10%
Since Inception Total Return :
ERV = " $1,337.69 " 7/26/95 10.716308
N = 1.43 12/31/95 11.740268
P = " $1,000.00 " 12/31/96 14.33507926
"Therefore, since inception total return is" 22.51%
Small-Cap Aggressive Growth
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,300.89 " 8/3/95 10.831287
N = 1.00 12/31/95 11.980335
P = " $1,000.00 " 12/31/96 15.58504527
"Therefore, 1 year total return is" 30.09%
Since Inception Total Return :
ERV = " $1,438.89 " 8/3/95 10.831287
N = 1.41 12/31/95 11.980335
P = " $1,000.00 " 12/31/96 15.58504527
"Therefore, since inception total return is" 29.42%
Stock Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,218.08 " 8/9/95 10.510302
N = 1.00 12/31/95 11.584266
P = " $1,000.00 " 12/31/96 14.11056714
"Therefore, 1 year total return is" 21.81%
Since Inception Total Return :
ERV = " $1,342.55 " 8/9/95 10.510302
N = 1.39 12/31/95 11.584266
P = " $1,000.00 " 12/31/96 14.11056714
"Therefore, since inception total return is" 23.52%
Small-Cap Value
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,179.45 " 8/3/95 10.23401
N = 1.00 12/31/95 11.069583
P = " $1,000.00 " 12/31/96 13.05599026
"Therefore, 1 year total return is" 17.94%
Since Inception Total Return :
ERV = " $1,275.75 " 8/3/95 10.23401
N = 1.41 12/31/95 11.069583
P = " $1,000.00 " 12/31/96 13.05599026
"Therefore, since inception total return is" 18.84%
Total Return
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,117.55 " 8/3/95 10.311235
N = 1.00 12/31/95 10.934527
P = " $1,000.00 " 12/31/96 12.21986307
"Therefore, 1 year total return is" 11.75%
Since Inception Total Return :
ERV = " $1,185.10 " 8/3/95 10.311235
N = 1.41 12/31/95 10.934527
P = " $1,000.00 " 12/31/96 12.21986307
"Therefore, since inception total return is" 12.79%
Value Index
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,206.39 " 9/13/95 10.811891
N = 1.00 12/31/95 11.595504
P = " $1,000.00 " 12/31/96 13.98870218
"Therefore, 1 year total return is" 20.64%
Since Inception Total Return :
ERV = " $1,293.83 " 9/13/95 10.811891
N = 1.30 12/31/95 11.595504
P = " $1,000.00 " 12/31/96 13.98870218
"Therefore, since inception total return is" 21.94%
U.S. Government Mortgage Securities
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,042.92 " 7/26/95 9.950491
N = 1.00 12/31/95 10.5506
P = " $1,000.00 " 12/31/96 11.003379
"Therefore, 1 year total return is" 4.29%
Since Inception Total Return :
ERV = " $1,105.81 " 7/26/95 9.950491
N = 1.43 12/31/95 10.5506
P = " $1,000.00 " 12/31/96 11.003379
"Therefore, since inception total return is" 7.27%
Investment Grade Corporate Bond
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,031.36 " 7/26/95 9.950579
N = 1.00 12/31/95 10.578512
P = " $1,000.00 " 12/31/96 10.91028018
"Therefore, 1 year total return is" 3.14%
Since Inception Total Return :
ERV = " $1,096.45 " 7/26/95 9.950579
N = 1.43 12/31/95 10.578512
P = " $1,000.00 " 12/31/96 10.91028018
"Therefore, since inception total return is" 6.64%
Corporate Bond
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,103.49 " 7/26/95 10.052139
N = 1.00 12/31/95 11.060962
P = " $1,000.00 " 12/31/96 12.20569628
"Therefore, 1 year total return is" 10.35%
Since Inception Total Return :
ERV = " $1,214.24 " 7/26/95 10.052139
N = 1.43 12/31/95 11.060962
P = " $1,000.00 " 12/31/96 12.20569628
"Therefore, since inception total return is" 14.51%
Short-Term Bond
Assume a $1000 Initial Investment
Since Inception Total Return :
ERV = " $1,025.33 " 8/15/96 10.071344
N = 0.38 12/31/95 N/A
P = " $1,000.00 " 12/31/96 10.32641125
"Therefore, since inception total return is" 2.53%
Money Market
Assume a $1000 Initial Investment
1 Year Total Return :
ERV = " $1,050.85 " 7/5/95 10.003031
N = 1.00 12/31/95 10.270189
P = " $1,000.00 " 12/31/96 10.79240202
"Therefore, 1 year total return is" 5.08%
Since Inception Total Return :
ERV = " $1,078.91 " 7/5/95 10.003031
N = 1.49 12/31/95 10.270189
P = " $1,000.00 " 12/31/96 10.79240202
"Therefore, since inception total return is" 5.23%
<PAGE>
A B C D E F G H
12/31/95
(E/D)-1 (E/C)-1 (E/C)^(365/Total # of
Days)-1
Since Inception Since
Inception
Fund Date of Inception Unit Value at Inception Unit Value
12-31-95 Unit Value 12-31-96 1 Year Returns Cummulitive Returns
Annualized Returns
(Ending 12-31-96) (Ending 12-31-96)
(Ending 12-31-96)
Investment Divisions (A-Band) Date of Inception
Foreign Equity "June 23, 1995" 10.094841 10.302761
11.0034889 6.80% 9.00% 5.82%
Small-Cap Index "June 20, 1995" 10.422443 11.604409
13.28072814 14.45% 27.42% 17.15%
Growth Index "August 9, 1995" 10.6713 11.689177
14.16603094 21.19% 32.75% 22.52%
Small-Cap Aggressive Growth "August 9, 1995" 10.961883
11.927781 15.40151721 29.12% 40.50% 27.61%
Stock Index "June 20, 1995" 10.244542 11.59037
14.01252472 20.90% 36.78% 22.69%
Small-Cap Value "August 9, 1995" 10.341606 11.019784
12.90057435 17.07% 24.74% 17.18%
Total Return "August 9, 1995" 10.316024 10.887181
12.07565232 10.92% 17.06% 11.96%
Value Index "August 9, 1995" 10.359646 11.54602
13.82491494 19.74% 33.45% 22.99%
U.S. Government Mortgage Securities "August 9, 1995"
9.924985 10.451024 10.81748968 3.51% 8.99% 6.37%
Investment Grade Corporate Bond "August 9, 1995" 9.918349
10.475492 10.72288688 2.36% 8.11% 5.75%
Corporate Bond "August 9, 1995" 10.015917 10.949251
11.9918779 9.52% 19.73% 13.78%
Short-Term Maturity Bond "April 1, 1996" 9.959249 N/A
10.33798625 N/A 3.80% N/A
Money Market "July 5, 1995" 9.995853 10.225472 10.66478162
4.30% 6.69% 4.44%
Blue Chip "May 1, 1997" N/A N/A N/A N/A N/A N/A
Mid-Cap Growth "May 1, 1997" N/A N/A N/A N/A N/A N/A
Investment Divisions (O-Band) Date of Inception
Foreign Equity "July 24, 1995" 10.320042 10.266556
10.99229017 7.07% 6.51% 4.49%
Small-Cap Index "July 24, 1995" 10.775083 11.615539
13.32639897 14.73% 23.68% 15.92%
Growth Index "July 24, 1995" 10.571727 11.706101
14.22207003 21.49% 34.53% 22.90%
Small-Cap Aggressive Growth "August 3, 1995" 10.821778
11.946018 15.46344122 29.44% 42.89% 28.78%
Stock Index "July 24, 1995" 10.418458 11.550683
13.99945597 21.20% 34.37% 22.80%
Small-Cap Value "July 24, 1995" 10.175242 11.037995
12.95409591 17.36% 27.31% 18.28%
Total Return "July 24, 1995" 10.239489 10.902751
12.12329612 11.19% 18.40% 12.46%
Value Index "July 24, 1995" 10.277388 11.561775
13.87843931 20.04% 35.04% 23.23%
U.S. Government Mortgage Securities "July 24, 1995"
9.963139 10.519428 10.91574108 3.77% 9.56% 6.55%
Investment Grade Corporate Bond "July 24, 1995" 9.961507
10.546598 10.8228688 2.62% 8.65% 5.94%
Corporate Bond "July 24, 1995" 10.040001 11.029525
12.11011697 9.80% 20.62% 13.92%
Short-Term Maturity Bond "March 13, 1996" 9.997906 N/A
10.41325273 N/A 4.15% N/A
Money Market "November 30, 1995" 9.976393 10.017734
10.4723057 4.54% 4.97% 4.57%
Blue Chip "May 1, 1997" N/A N/A N/A N/A N/A N/A
Mid-Cap Growth "May 1, 1997" N/A N/A N/A N/A N/A N/A
Investment Divisions (U-Band) Date of Inception
Foreign Equity "October 3, 1995" 9.998404 10.261732
11.01475113 7.34% 10.17% 8.09%
Small-Cap Index "September 8, 1995" 11.556167 11.632399
13.3790964 15.02% 15.77% 11.81%
Growth Index "September 8, 1995" 10.974529 11.723289
14.27860636 21.80% 30.11% 22.21%
Small-Cap Aggressive Growth "November 17, 1995" 11.283325
11.958605 15.51815602 29.77% 37.53% 32.90%
Stock Index "July 12, 1995" 10.505048 11.567617
14.05510347 21.50% 33.79% 21.88%
Small-Cap Value "July 12, 1995" 10.337634 11.053651
13.00480887 17.65% 25.80% 16.88%
Total Return "September 19, 1995" 10.645384 10.918643
12.17149861 11.47% 14.34% 11.01%
Value Index "July 12, 1995" 10.34811 11.578831
13.93372398 20.34% 34.65% 22.41%
U.S. Government Mortgage Securities "July 12, 1995"
10.106202 10.535307 10.9597086 4.03% 8.45% 5.67%
Investment Grade Corporate Bond "September 19, 1995"
10.100498 10.453319 10.7540964 2.88% 6.47% 5.01%
Corporate Bond "September 19, 1995" 10.318946 10.911618
12.01084784 10.07% 16.40% 12.57%
Short-Term Maturity Bond "March 11, 1995" 10.015347 N/A
10.4499374 N/A 4.34% N/A
Money Market "November 16, 1995" 9.988482 10.051674
10.53630791 4.82% 5.48% 4.87%
Blue Chip "May 1, 1997" N/A N/A N/A N/A N/A N/A
Mid-Cap Growth "May 1, 1997" N/A N/A N/A N/A N/A N/A
Investment Divisions (Z-Band) Date of Inception
Foreign Equity "October 4, 1995" 10.051661 10.276613
11.05835347 7.61% 10.02% 7.99%
Small-Cap Index "August 9, 1995" 11.020542 11.649285
13.43201701 15.30% 21.88% 15.25%
Growth Index "July 26, 1995" 10.716308 11.740268
14.33507926 22.10% 33.77% 22.51%
Small-Cap Aggressive Growth "August 3, 1995" 10.831287
11.980335 15.58504527 30.09% 43.89% 29.42%
Stock Index "August 9, 1995" 10.510302 11.584266
14.11056714 21.81% 34.25% 23.52%
Small-Cap Value "August 3, 1995" 10.23401 11.069583
13.05599026 17.94% 27.57% 18.84%
Total Return "August 3, 1995" 10.311235 10.934527
12.21986307 11.75% 18.51% 12.79%
Value Index "September 13, 1995" 10.811891 11.595504
13.98870218 20.64% 29.38% 21.94%
U.S. Government Mortgage Securities "July 26, 1995"
9.950491 10.5506 11.003379 4.29% 10.58% 7.27%
Investment Grade Corporate Bond "July 26, 1995" 9.950579
10.578512 10.91028018 3.14% 9.64% 6.64%
Corporate Bond "July 26, 1995" 10.052139 11.060962
12.20569628 10.35% 21.42% 14.51%
Short-Term Maturity Bond "August 15, 1996" 10.071344 N/A
10.32641125 N/A 2.53% N/A
Money Market "July 5, 1995" 10.003031 10.270189 10.79240202
5.08% 7.89% 5.23%
Blue Chip "May 1, 1997" N/A N/A N/A N/A N/A N/A
Mid-Cap Growth "May 1, 1997" N/A N/A N/A N/A N/A N/A
A B Yield Effective Yield
Money Market Yield Calculations Unit Value 12-24-96 Unit Value
12-31-96 ((B/A)-1) * 52 ((B/A)^52)-1
Money Marketa 10.656212 10.66478162 4.18% 4.27%
Money Marketo 10.463391 10.4723057 4.43% 4.53%
Money Marketu 10.526846 10.53630791 4.67% 4.78%
Money Marketz 10.782191 10.79240202 4.92% 5.05%
