As filed with the Securities and Exchange Commission on April 28, 1998.
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. 4 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 4 (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 Boros Cicchetti 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, 1998, 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.
<PAGE>
5
RETIREMENT PLAN SERIES ACCOUNT
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
<TABLE>
<S> <C>
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
<PAGE>
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
<PAGE>
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
</TABLE>
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
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
<PAGE>
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 as described under Section 401(a) of the
Internal Revenue Code (the "Code"), including qualified plans as described under
Section 401(k) of the Code ("401(k) Plans"). There is no minimum initial
contribution requirement. Additional contributions may come from earned income
derived from non-retirement plan sources and any eligible rollover sources as
described in the Code. There is no requirement for additional contributions.
Should you choose to make a contribution the minimum additional amount is $250.
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.
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 14 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.
<PAGE>
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, 1998, 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, 1998
<PAGE>
AVAILABLE PORTFOLIOS
<PAGE>
o 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;
o 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;
o 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;
o 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;
o the Small-Cap Index Portfolio, which seeks to provide investment results,
before fees, that correspond to the total return of the Standard & Poor's
Small-Cap 600 Stock Index1;
o the Value Index Portfolio, which seeks to provide investment results, before
fees, that correspond to the total return of the Russell 1000 Value Index2;
o the Growth Index Portfolio, which seeks to provide investment results, before
fees, that correspond to the total return of the Russell 1000 Growth Index;
o 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;
o 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;
o 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;
o 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;
SYMBOL 183 \f "Symbol" \s 10the 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;
the Blue Chip Portfolio, which seeks long-term growth of capital and income.
the MidCap Growth Portfolio, which seeks to provide long-term appreciation
by investing primarily in common stocks of medium-sized (mid-cap) growth
companies.
- -------
1 Standard & Poor's Small-Cap 600 Stock Index is a trademark of The McGraw-Hill
Companies, Inc. and has been licensed for use by Maxim Series Fund, Inc. and
Great-West Life & Annuity Insurance Company. The Portfolio is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no
representation regarding the advisability of using this index. 2 The Frank
Russell Company is not a sponsor of, or in any other way affiliated with, the
Portfolio or the Fund.
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C>
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
<PAGE>
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
</TABLE>
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
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.")
<PAGE>
<TABLE>
Maxim Series Fund, Inc. Annual Expenses
...(as a percentage of Maxim Series Fund, Inc. average daily net assets)
- ------------- ---------- ----------- --------- ------------ ----------- --------- ---------- -----------
Investment
Grade U.S. Govt. Short-Term
Money Corporate Stock Mortgage Small-Cap Growth Maturity Blue
Market Bond Index Securities Index Index Bond Chip
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ------------- ---------- ----------- --------- ------------ ----------- --------- ---------- -----------
- ------------- ---------- ----------- --------- ------------ ----------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management 0.46% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 1.00%
Fees
- ------------- ---------- ----------- --------- ------------ ----------- --------- ---------- -----------
- ------------- ---------- ----------- --------- ------------ ----------- --------- ---------- -----------
Other None None None None None None None 0.15%
Expenses
- ------------- ---------- ----------- --------- ------------ ----------- --------- ---------- -----------
- ------------- ---------- ----------- --------- ------------ ----------- --------- ---------- -----------
TOTAL Maxim
Series Fund 0.46% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 1.15%
Annual
Expenses
- ------------- ---------- ----------- --------- ------------ ----------- --------- ---------- -----------
- ------------- ---------- ----------- --------- ------------ ----------- --------- ----------
TOTAL Maxim
Series Fund 0.46% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
Annual
Expenses
- ------------- ---------- ----------- --------- ------------ ----------- --------- ----------
- -------------- --------- ----------- --------- ------------ ----------- ---------
Small-Cap
Value Small-Cap Foreign Aggressive Corporate MidCap
index Value Equity Growth Bond Growth
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -------------- --------- ----------- --------- ------------ ----------- ---------
- -------------- --------- ----------- ---------- ------------ ------------ -------------
Small-Cap
Value Small-Cap Total Foreign Aggressive Corporate
index Value Return Equity Growth Bond
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -------------- --------- ----------- ---------- ------------ ------------ -------------
- -------------- --------- ----------- --------- ------------ ----------- ---------
Management 0.60% 1.00% 1.00% 1.00% 0.90% 1.00%
Fees
- -------------- --------- ----------- --------- ------------ ----------- ---------
- -------------- --------- ----------- --------- ------------ ----------- ---------
Other None 0.28% 0.33% 0.11% None 0.05%
Expenses
- -------------- --------- ----------- --------- ------------ ----------- ---------
- -------------- --------- ----------- --------- ------------ ----------- ---------
TOTAL Maxim
Series Fund 0.60% 1.28% 1.33% 1.11% 0.90% 1.05%
Annual
Expenses
- -------------- --------- ----------- --------- ------------ ----------- ---------
</TABLE>
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:
<TABLE>
- ---------------------------------- -------------- --------------- --------------- --------------
1 Year 3 Year 5 Year 10 Year
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Money Market Investment Division 42.63 71.26 104.92 215.62
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Investment Grade Corporate 44.08 75.94 113.30 235.68
Bond Investment Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Stock Index Investment Division 44.08 75.94 113.30 235.68
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
U.S. Government Mortgage 44.08 75.94 113.30 235.68
Securities Investment Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Small-Cap Index Investment 44.08 75.94 113.30 235.68
Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Growth Index Investment Division 44.08 75.94 113.30 235.68
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Value Index Investment Division 44.08 75.94 113.30 235.68
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Small-Cap Value Investment 51.10 98.39 153.17 329.23
Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Foreign Equity Investment 51.61 100.02 156.05 335.87
Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Small-Cap Aggressive Growth 49.35 92.82 144.33 306.44
Investment Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Corporate Bond Investment 47.18 85.90 131.06 277.74
Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Short-Term Maturity Bond 44.08 75.94 113.30 235.68
Investment Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Blue Chip Investment Division 49.76 94.13 145.65 311.84
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
MidCap Growth Investment Division 48.73 90.85 139.84 298.30
- ---------------------------------- -------------- --------------- --------------- --------------
</TABLE>
<PAGE>
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:
<TABLE>
- ---------------------------------- -------------- --------------- --------------- --------------
1 Year 3 Year 5 Year 10 Year
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Money Market Investment Division 92.63 71.26 104.92 215.62
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Investment Grade Corporate 94.08 75.94 113.30 235.68
Bond Investment Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Stock Index Investment Division 94.08 75.94 113.30 235.68
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
U.S. Government Mortgage 94.08 75.94 113.30 235.68
Securities Investment Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Small-Cap Index Investment 94.08 75.94 113.30 235.68
Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Growth Index Investment Division 94.08 75.94 113.30 235.68
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Value Index Investment Division 94.08 75.94 113.30 235.68
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Small-Cap Value Investment 101.10 98.39 153.17 329.23
Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Foreign Equity Investment 101.61 100.02 156.05 335.87
Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Small-Cap Aggressive Growth 99.35 92.82 143.33 306.44
Investment Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Corporate Bond Investment 97.18 85.90 131.06 277.74
Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Short-Term Maturity Bond 94.08 75.94 113.30 235.68
Investment Division
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
Blue Chip Investment Division 99.76 94.13 145.65 311.84
- ---------------------------------- -------------- --------------- --------------- --------------
- ---------------------------------- -------------- --------------- --------------- --------------
MidCap Growth Investment Division 98.73 90.85 139.84 298.30
- ---------------------------------- -------------- --------------- --------------- --------------
</TABLE>
...The above Examples should not be considered a representation of past or
future expenses. 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.")
<PAGE>
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, by 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.
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE
SERIES ACCOUNT VARIABLE ANNUITY
<PAGE>
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. With
respect to any contract value allocated to the Fund, 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 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 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.")
There is no minimum initial Contribution amount required. However, initial
Contributions must be eligible rollover distributions (as defined by the Code)
from a qualified plan as described in the Code. Additional Contributions may
come from other eligible rollover sources as described in the Code, in addition
to earned income derived from non-retirement plan sources. The minimum
additional Contribution amount is $250. Contributions may be made at any time
during the Accumulation Period.
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
Selected Data for Accumulation Units
Outstanding Throughout Each Period
For the Years Ended December 31,
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
Investment 1997 By Category 1996 By Category 1995 By Category
Division
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C>
MONEY A O U Z A O U Z A*(3) O*(15) U*(15) Z*(3)
MARKET
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 10.66 $ 10.47 $ 10.54 $ 10.79 $ 10.23 $ 10.02 $ 10.05 $ 10.27 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- -------------------- -------- --------- ---------- --------- ----------- ---------- -------- ----------
Value at beginning $ 10.23 $ 10.02 $ 10.05 $ 10.27 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of period
- -------------------- -------- --------- ---------- --------- ----------- ---------- -------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 11.14 $ 10.93 $ 11.06 $ 11.36 $ 10.66 $ 10.47 $ 10.54 $ 10.79 $ 10.23 $ $ 10.05 $ 10.27
of 10.02
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- -------------------- -------- --------- ---------- --------- ----------- ---------- -------- ----------
Value at end of $ 10.66 $ 10.47 $ 10.54 $ 10.79 $ 10.23 $ 10.02 $ 10.05 $ 10.27
period
- -------------------- -------- --------- ---------- --------- ----------- ---------- -------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 0.52 0.43 0.45 0.49 0.52 0.23 0.02 0.05 0.27
Accumulati0.48 0.46 0.57
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- -------------------- -------- --------- ---------- --------- ----------- ---------- -------- ----------
Increase
(decrease) in 0.49 0.23 0.02 0.05 0.27
value of 0.43 0.45 0.52
Accumulation Units
- -------------------- -------- --------- ---------- --------- ----------- ---------- -------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Number
of
Accumulation
Units 12,004.78 26,660.24 32,201.63 80,773.05 9,449.98 12,173.70 15,907.37 59,518.32 2,395.98 926.69 1,445.29 44,935.09
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- -------------------- -------- --------- ---------- --------- ----------- ---------- -------- ----------
Number of
Accumulation Units 9,449.98 12,173.70 15,907.37 59,518.32 2,395.98 926.69 1,445.29 44,935.09
outstanding at end
of period
- -------------------- -------- --------- ---------- --------- ----------- ---------- -------- ----------
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
Investment 1997 By Category 1996 By Category 1995 By Category
Division
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
INVESTMENT A O U Z A O U Z A*(8) O*(5) U*(11) Z*(6)
GRADE
CORPORATE
BOND
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 10.72 $ 10.82 $ 10.75 $ 10.91 $ 10.48 $ 10.55 $ 10.45 $ 10.58 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ---------- ---------- --------- ----------
Value at $ 10.48 $ 10.55 $ 10.45 $ 10.58 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- ---------- --------- ---------- ---------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 11.37 $ 11.51 $ 11.46 $ 11.66 $ 10.72 $ 10.82 $ 10.75 $ 10.91 $ 10.48 $ 10.55 $ 10.45 $ 10.58
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ---------- ---------- --------- ----------
Value at end of $ 10.72 $ 10.82 $ 10.75 $ 10.91 $ 10.48 $ 10.55 $ 10.45 $ 10.58
period
- ------------------- --------- --------- ---------- --------- ---------- ---------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 0.71 0.24 0.27 0.30 0.33 0.48 0.55 0.45 0.58
Accumulati0.65 0.69 0.75
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ---------- ---------- --------- ----------
Increase
(decrease) in 0.30 0.48 0.55 0.45 0.58
value of 0.24 0.27 0.33
Accumulation Units
- ------------------- --------- --------- ---------- --------- ---------- ---------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Number
of
Accumulation
Units 6,517.10 8,451.89 8,892.12 18,942.32 4,019.39 5,887.41 2,497.98 14,123.28 756.56 1,298.14 2,523.64 7,411.72
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ---------- ---------- --------- ----------
Number of
Accumulation 4,019.39 5,887.41 2,497.98 14,123.28 756.56 1,298.14 2,523.64 7,411.72
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ---------- ---------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
STOCK A O U Z A O U Z A*(1) O*(5) U*(4) Z *(8)
INDEX
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 14.01 $ 14.00 $ 14.06 $ 14.11 $ 11.59 $ 11.55 $ 11.57 $ 11.58 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- --------- ---------- ----------- ---------- -------- ----------
Value at $ 11.59 $ 11.55 $ 11.57 $ 11.58 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- --------- ---------- ----------- ---------- -------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 18.42 $ 18.45 $ 18.56 $ 18.68 $ 14.01 $ 14.00 $ 14.06 $ 14.11 $ 11.59 $ 11.55 $ 11.57 $ 11.58
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- --------- ---------- ----------- ---------- -------- ----------
Value at end of $ 14.01 $ 14.00 $ 14.06 $ 14.11 $ 11.59 $ 11.55 $ 11.57 $ 11.58
period
- ------------------- --------- --------- --------- ---------- ----------- ---------- -------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 4.50 2.42 2.45 2.49 2.53 1.59 1.55 1.57 1.58
Accumulati4.41 4.45 4.57
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- --------- ---------- ----------- ---------- -------- ----------
Increase
(decrease) in 2.53 1.59 1.55 1.57 1.58
value of 2.42 2.45 2.49
Accumulation Units
- ------------------- --------- --------- --------- ---------- ----------- ---------- -------- ----------
Number
of
Accumulation
Units 53,406.89 93,690.46 101,305.87 216,413.98 30,565.13 48,278.77 50,780.90 119,929.73 4,042.63 11,673.47 18,708.73
55,122.00
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- --------- ---------- ----------- ---------- -------- ----------
Number of
Accumulation 30,565.13 48,278.77 50,780.90 119,929.73 4,042.63 11,673.47 18,708.7355,122.00
Units outstanding
at end of period
- ------------------- --------- --------- --------- ---------- ----------- ---------- -------- ----------
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
Investment 1997 By Category 1996 By Category 1995 By Category
Division
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
U.S. A O U Z A O U Z A*(8) O*(5) U*(4) Z*(6)
GOVERNMENT
MORTGAGE
SECURITIES
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 10.82 $ 10.92 $ 10.96 $ 11.00 $ 10.45 $ 10.52 $ 10.54 $ 10.55 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at $ 10.45 $ 10.52 $ 10.54 $ 10.55 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 11.67 $ 11.80 $ 11.88 $ 11.95 $ 10.82 $ 10.92 $ 10.96 $11.00 $ 10.45 $ 10.52 $ 10.54 $ 10.55
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at end of $ 10.82 $ 10.92 $ 10.96 $ 11.00 $ 10.45 $ 10.52 $ 10.54 $ 10.55
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 0.92 0.37 0.40 0.42 0.45 0.45 0.52 0.54 0.55
Accumulati0.85 0.88 0.95
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Increase
(decrease) in 0.42 0.45 0.52 0.54 0.55
value of 0.37 0.40 0.45
Accumulation Units
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number
of
Accumulation
Units 8,773.99 15,501.18 17,934.40 37,775.13 5,272.40 8,847.40 7,526.42 18,157.75 731.02 5,864.01 1,624.61 7,344.94
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number of
Accumulation 5,272.40 8,847.40 7,526.42 18,157.75 731.02 5,864.01 1,624.61 7,344.94
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
SMALL-CAP A O U Z A O U Z A*(1) O*(5) U*(9) Z*(8)
INDEX
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 13.28 $ 13.33 $ 13.38 $ 13.43 $ 11.60 $ 11.62 $ 11.63 $ 11.65 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at $ 11.60 $ 11.62 $ 11.63 $ 11.65 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 15.95 $ 16.04 $ 16.15 $ 16.25 $ 13.28 $ 13.33 $ 13.38 $ 13.43 $ 11.60 $ 11.62 $ 11.63 $ 11.65
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at end of $ 13.28 $ 13.33 $ 13.38 $ 13.43 $ 11.60 $ 11.62 $ 11.63 $ 11.65
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 1.68 1.71 1.75 1.78 1.60 1.62 1.63 1.65
Accumulati2.67 2.71 2.77 2.82
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Increase
(decrease) in 1.68 1.75 1.60 1.62 1.63 1.65
value of 1.71 1.78
Accumulation Units
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number
of
Accumulation
Units 21,596.15 22,264.86 29,959.15 49,337.14 13,245.31 17,113.51 20,809.07 28,991.22 2,240.54 5,959.11 3,318.14 14,397.06
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number of
Accumulation 13,245.31 17,113.51 20,809.07 28,991.22 2,240.54 5,959.11 3,318.14 14,397.06
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
Investment 1997 By Category 1996 By Category 1995 By Category
Division
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
GROWTH A O U Z A O U Z A*(8) O*(5) U*(9) Z*(6)
INDEX
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 14.17 $ 14.22 $ 14.28 $ 14.34 $ 11.69 $ 11.71 $ 11.72 $ 11.74 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at $ 11.69 $ 11.71 $ 11.72 $ 11.74 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 18.18 $ 18.29 $ 18.41 $ 18.53 $ 14.17 $ 14.22 $ 14.28 $ 14.34 $ 11.69 $ 11.71 $ 11.72 $ 11.74
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at end of $ 14.17 $ 14.22 $ 14.28 $ 14.34 $ 11.69 $ 11.71 $ 11.72 $ 11.74
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 2.48 2.51 2.56 2.60 1.69 1.71 1.72 1.74
Accumulati4.01 4.07 4.13 4.19
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Increase
(decrease) in 2.56 1.69 1.71 1.72 1.74
value of 2.48 2.51 2.60
Accumulation Units
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number
of
Accumulation
Units 43,323.40 65,415.29 68,910.66 113,708.4623,490.03 33,100.60 38,890.98 64,886.39 3,339.10 10,056.69 9,367.33 19,673.41
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number of
Accumulation 23,490.03 33,100.60 38,890.98 64,886.39 3,339.10 10,056.69 9,367.33 19,673.41
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
VALUE A O U Z A O U Z A*(8) O*(5) U*(4) Z*(10)
INDEX
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 13.82 $ 13.88 $ 13.93 $ 13.99 $ 11.55 $ 11.56 $ 11.58 $ 11.60 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at $ 11.55 $ 11.56 $ 11.58 $ 11.60 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 18.40 $ 18.52 $ 18.64 $ 18.76 $ 13.82 $ 13.88 $ 13.93 $ 13.99 $ 11.55 $ 11.56 $ 11.58 $ 11.60
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at end of $ 13.82 $ 13.88 $ 13.93 $ 13.99 $ 11.55 $ 11.56 $ 11.58 $ 11.60
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 4.71 2.27 2.32 2.35 2.39 1.55 1.56 1.58 1.60
Accumulati4.58 4.64 4.77
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Increase
(decrease) in 2.35 1.55 1.56 1.58 1.60
value of 2.27 2.32 2.39
Accumulation Units
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number
of
Accumulation
Units 34,549.99 61,417.45 65,117.93 113,775.97 16,778.01 32,274.09 32,323.22 46,735.19 1,666.79 7,395.18 12,134.89 18,036.45
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number of
Accumulation 16,778.01 32,274.09 32,323.22 46,735.19 1,666.79 7,395.18 12,134.89 18,036.45
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
</TABLE>
<TABLE>
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
Investment 1997 By Category 1996 By Category 1995 By Category
Division
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C>
SMALL-CAP A O U Z A O U Z A*(8) O*(5) U*(4) Z*(7)
VALUE
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 12.90 $ 12.95 $ 13.00 $ 13.06 $ 11.02 $ 11.04 $ 11.05 $ 11.07 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at $ 11.02 $ 11.04 $ 11.05 $ 11.07 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 16.37 $ 16.48 $ 16.59 $ 16.69 $ 12.90 $ 12.95 $ 13.00 $ 13.06 $ 11.02 $ 11.04 $ 11.05 $ 11.07
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at end of $ 12.90 $ 12.95 $ 13.00 $ 13.06 $ 11.02 $ 11.04 $ 11.05 $ 11.07
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 1.88 1.91 1.95 1.99 1.02 1.04 1.05 1.07
Accumulati3.47 3.53 3.59 3.63
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Increase
(decrease) in 1.95 1.02 1.04 1.05 1.07
value of 1.88 1.91 1.99
Accumulation Units
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number
of
Accumulation
Units 12,300.05 17,280.05 29,579.62 30,895.89 5,037.63 7,695.51 12,528.51 8,094.84 773.21 1,371.51 5,416.35 2,801.92
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number of
Accumulation 5,037.63 7,695.51 12,528.51 8,094.84 773.21 1,371.51 5,416.35 2,801.92
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
FOREIGN A O U Z A O U Z A*(2) O*(5) U*(12) Z*(13)
EQUITY
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 11.00 $ 10.99 $ 11.01 $ 11.06 $ 10.30 $ 10.27 $ 10.26 $ 10.28 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 10.30 $ 10.31 $ 10.36 $ 10.43 $ 11.00 $ 10.99 $ 11.01 $ 11.06 $ 10.30 $ 10.27 $ 10.26 $ 10.28
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at end of $ 12.08 $ 12.12 $ 12.17 $ 12.22 $ 10.89 $ 10.90 $ 10.92 $ 10.93
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of (0.65) 0.70 0.72 0.75 0.78 0.30 0.27 0.26 0.28
Accumulati(0.70) (0.68) (0.63)
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Increase
(decrease) in 0.72 0.75 0.30 0.27 0.26 0.28
value of 0.70 0.78
Accumulation Units
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number
of
Accumulation
Units 13,468.10 18,078.02 19,626.37 25,784.14 9,442.18 12,679.40 10,789.35 9,174.83 2,788.66 1,670.77 2,190.94 1,192.47
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number of
Accumulation 9,442.18 12,679.40 10,789.35 9,174.83 2,788.66 1,670.77 2,190.94 1,192.47
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
Investment 1997 By Category 1996 By Category 1995 By Category
Division
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
SMALL-CAP A O U Z A O U Z A*(8) O*(7) U*(14) Z*(7)
AGGRESSIVE
GROWTH
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 15.40 $ 15.46 $ 15.52 $ 15.59 $ 11.93 $ 11.95 $ 11.96 $ 11.98 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at $ 11.93 $ 11.95 $ 11.96 $ 11.98 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end
of $ 19.03 $ 19.16 $ 19.27 $ 19.40 $ 15.40 $ 15.46 $ 15.52 $ 15.59 $ 11.93 $ 11.95 $ 11.96 $ 11.98
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at end of $ 15.40 $ 15.46 $ 15.52 $ 15.59 $ 11.93 $ 11.95 $ 11.96 $ 11.98
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 3.47 3.51 3.56 3.61 1.93 1.95 1.96 1.98
Accumulati3.63 3.70 3.75 3.81
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Increase
(decrease) in 3.47 3.56 3.61 1.93 1.95 1.96 1.98
value of 3.51
Accumulation Units
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number
of
Accumulation
Units 37,737.28 64,185.86 59,544.98 69,924.71 19,250.73 30,001.51 23,175.18 24,716.11 1,064.47 5,718.10 1,398.81 4,726.93
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number of
Accumulation 19,250.73 30,001.51 23,175.18 24,716.11 1,064.47 5,718.10 1,398.81 4,726.93
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
CORPORATE A O U Z A O U Z A*(8) O*(5) U*(11) Z*(6)
BOND
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at
beginning $ 11.99 $ 12.11 $ 12.01 $ 12.21 $ 10.95 $ 11.03 $ 10.91 $ 11.06 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at $ 10.95 $ 11.03 $ 10.91 $ 11.06 $ 10.00 $ 10.00 $ 10.00 $ 10.00
beginning of
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Value
at end $ 13.42 $ 13.58 $ 13.50 $ 13.76 $ 11.99 $ 12.11 $ 12.01 $ 12.21 $ 10.95 $ 11.03 $ 10.91 $ 11.06
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Value at end of $ 11.99 $ 12.11 $ 12.01 $ 12.21 $ 10.95 $ 11.03 $ 10.91 $ 11.06
period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
Increase
(decrease)
in
value
of 1.49 1.04 1.08 1.10 1.15 0.95 1.03 0.91 1.06
Accumulati1.43 1.47 1.55
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Increase
(decrease) in 1.10 0.95 1.03 0.91 1.06
value of 1.04 1.08 1.15
Accumulation Units
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number
of
Accumulation
Units 11,596.69 24,206.54 22,675.77 33,423.75 5,084.50 10,767.39 7,111.83 17,630.19 821.90 2,425.21 1,650.00 22,880.14
outstanding
at end
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- --------- -------- ---------- ---------
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
Number of
Accumulation 5,084.50 10,767.39 7,111.83 17,630.19 821.90 2,425.21 1,650.00 22,880.14
Units outstanding
at end of period
- ------------------- --------- --------- ---------- --------- ----------- --------- --------- ----------
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
Investment 1997 By Category 1996 By Category 199
Division 65 By Category
- --------- --------------------------------------- ------------------------------------------ ---------------------------------------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- -------- --------- --------- ----------
SHORT-TERM A O U Z A O U Z A*(16) O*(16) U*(16) Z*(16)
MATURITY
BOND
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- -------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- -------- --------- --------- ----------
Value
at
beginning $ 10.34 $ 10.41 $ 10.45 $ 10.33 $ 10.06 $ 10.07 $ 10.08 $ 10.09 $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- -------- --------- --------- ----------
- -------------------------- ---------------- ----------------- ----------------- ----------------
Value at beginning of $ 10.06 $ 10.07 $ 10.08 $ 10.09
period
- -------------------------- ---------------- ----------------- ----------------- ----------------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- -------- --------- --------- ----------
Value
at end $ 10.89 $ 11.00 $ 11.06 $ 10.96 $ 10.34 $ 10.41 $ 10.45 $ 10.33 $ 10.06 $ 10.07 $ 10.08 $ 10.09
of
period
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- -------- --------- --------- ----------
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- -------- --------- --------- ----------
Increase
(decrease)
in
value
of 0.61 0.28 0.34 0.37 0.07 0.09
Accumulati0.55 0.59 0.63 0.24 0.06 0.08
Units
- --------- -------- --------- ---------- --------- ---------- ---------- ---------- --------- -------- --------- --------- ----------
Number
of
Accumulation
Units 1,209.69 2,989.60 2,031.38 12,503.20 244.56 1,038.88 1,603.91 219.54 N/A N/A N/A N/A
outstanding
at end
of
period
</TABLE>
- --------- -------- --------- ---------- --------- ---------- ----------
- --------- -------- --------- ---------- ---------
BLUE A*(18) O*(18) U*(18) Z*(18)
CHIP
- --------- -------- --------- ---------- ---------
- --------- -------- --------- ---------- ---------
Value
at
beginning $ 12.08 $ 12.12 $ 12.17 $ 12.22
of
period
- --------- -------- --------- ---------- ---------
- --------- -------- --------- ---------- ---------
Value
at end $ 14.84 $ 14.93 $ 15.03 $ 15.13
of
period
- --------- -------- --------- ---------- ---------
- --------- -------- --------- ---------- ---------
Increase
(decrease)
in
value
of 2.86
Accumulati2.76 2.81 2.91
Units
- --------- -------- --------- ---------- ---------
Number
of
Accumulation
Units 18,873.51 25,096.49 33,623.10 50,196.47
outstanding
at end
of
period
- --------- -------- --------- ---------- ---------
- --------- ---------------------------------------
Investment 1997 By Category
Division
- --------- ---------------------------------------
- --------- -------- --------- ---------- ---------
MIDCAP A*(17) O*(17) U*(17) Z*(17)
GROWTH
- --------- -------- --------- ---------- ---------
- --------- -------- --------- ---------- ---------
Value
at
beginning $ 10.00 $ 10.00 $ 10.00 $ 10.00
of
period
- --------- -------- --------- ---------- ---------
- --------- -------- --------- ---------- ---------
Value
at end $ 11.04 $ 11.06 $ 11.07 $ 11.09
of
period
- --------- -------- --------- ---------- ---------
- --------- -------- --------- ---------- ---------
Increase
(decrease)
in
value
of 1.06 1.07
Accumulati1.04 1.09
Units
- --------- -------- --------- ---------- ---------
Number
of
Accumulation
Units N/A N/A 1,485.90
outstandinN/A
at end
of
period
- --------- -------- --------- ---------- ---------
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, 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, 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, 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 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 (17) The inception
date for the MidCap Growth Investment Division was June 30, 1997. (18) The
inception date for the Blue Chip Investment Division was June 30, 1997.
<PAGE>
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.
<TABLE>
- -------------------------------- ------------------------------- -------------------------------
Investment Division Yield Effective Yield
- -------------------------------- ------------------------------- -------------------------------
- -------------------------------- ------------------------------- -------------------------------
<S> <C> <C>
Money Market a* 4.52% 4.62%
- -------------------------------- ------------------------------- -------------------------------
- -------------------------------- ------------------------------- -------------------------------
Money Market o* 4.77% 4.88%
- -------------------------------- ------------------------------- -------------------------------
- -------------------------------- ------------------------------- -------------------------------
Money Market u* 5.02% 5.14%
- -------------------------------- ------------------------------- -------------------------------
- -------------------------------- ------------------------------- -------------------------------
Money Market z* 5.27% 5.41%
- -------------------------------- ------------------------------- -------------------------------
</TABLE>
Yield and effective Yield for the Money Market Investment Division is
for the 7-day period ended December 31, 1997. Yield calculations take into
account recurring charges against the Series Account and the Money Market
Portfolio. All yield and effective yield information is annualized.
<TABLE>
Total Return
- --------------------------- ------------------ ------------------- ------------------- -------------------
<S> <C>
Investment Divisions a* Date of Inception 1 Year Cumulative Total Average Annual
Return Since Total Return
Inception Since Inception
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
ded 12/31/96Foreign Equity June 23, 1995 -6.40% 2.02% 0.80%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Index June 20, 1995 20.09% 53.02% 18.28%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Growth Index August 9, 1995 28.31% 70.32% 24.87%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Aggressive August 9, 1995 23.58% 73.63% 25.88%
Growth
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Stock Index June 20, 1995 31.43% 79.77% 26.04%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Value August 9, 1995 26.91% 58.32% 21.12%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Blue Chip June 30, 1997 N/A 18.26% N/A
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Value Index August 9, 1995 34.80% 78.89% 27.75%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
U.S. Government Mortgage August 9, 1995 7.84% 17.54% 6.97%
Securities
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Investment Grade August 9, 1995 6.05% 14.66% 5.87%
Corporate Bond
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Corporate Bond August 9, 1995 11.88% 33.95% 12.97%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Short-Term Maturity Bond April 1, 1996 5.35% 9.36% 5.24%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Money Market July 5, 1995 4.48% 11.47% 4.45%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
MidCap Growth June 30, 1997 N/A 25.50% N/A
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Investment Divisions o* Date of Inception 1 Year Cumulative Total Average Annual
Return Since Total Return
Inception Since Inception
- --------------------------- ------------------ ------------------- ------------------- -------------------
- ----------------------------------- ------------------- --------------------- ------------------
Investment Divisions o* Date of Inception 1 Year ended Since Inception
12/31/96
- ----------------------------------- ------------------- --------------------- ------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Foreign Equity July 24, 1995 -6.17% -0.05% -0.02%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Index July 24, 1995 20.39% 48.89% 17.71%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Growth Index July 24, 1995 28.62% 73.04% 25.19%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Aggressive August 3, 1995 23.88% 77.02% 26.69%
Growth
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Stock Index July 24, 1995 31.76% 77.04% 26.36%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Value July 24, 1995 27.23% 61.97% 21.84%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Blue Chip June 30, 1997 N/A 18.45% N/A
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Value Index July 24, 1995 33.41% 80.16% 27.27%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Investment Divisions o* Date of Inception 1 Year Cumulative Total Average Annual
Return Since Total Return
Inception Since Inception
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
U.S. Government Mortgage July 24, 1995 8.11% 18.44% 7.18%
Securities
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Investment Grade July 24, 1995 6.32% 15.51% 6.09%
Corporate Bond
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Corporate Bond July 24, 1995 12.16% 35.28% 13.18%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Short-Term Maturity Bond March 13, 1996 5.61% 10.00% 5.43%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Money Market November 30, 1995 4.34% 9.53% 4.46%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
MidCap Growth June 30, 1997 N/A 25.63% N/A
- --------------------------- ------------------ ------------------- ------------------- -------------------
<PAGE>
- --------------------------- ------------------ ------------------- ------------------- -------------------
Investment Divisions u* Date of Inception 1 Year Cumulative Total Average Annual
Return Since Total Return
Inception Since Inception
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
ded 12/31/96Foreign Equity October 3, 1995 -5.93% 3.63% 1.60%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Index September 8, 1995 20.69% 39.73% 15.55%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Growth Index September 8, 1995 28.94% 67.77% 25.04%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Aggressive November 17, 1995 24.19% 70.80% 28.68%
Growth
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Stock Index July 12, 1995 32.08% 76.72% 25.88%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Value July 12, 1995 27.54% 60.45% 21.06%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Blue Chip June 30, 1997 N/A 18.64% N/A
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Value Index July 12, 1995 33.75% 80.09% 26.84%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
U.S. Government Mortgage July 12, 1995 8.38% 17.53% 6.75%
Securities
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Investment Grade September 19, 6.58% 13.48% 5.69%
Corporate Bond 1995
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Corporate Bond September 19, 12.43% 30.87% 12.50%
1995
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Short Term Maturity Bond March 11, 1995 5.88% 10.47% 3.61%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Money Market November 16, 1995 5.00% 10.76% 4.93%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
MidCap Growth June 30, 1997 N/A 25.78% N/A
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Investment Divisions z* Date of Inception 1 Year Cumulative Total Average Annual
Return Since Total Return
Inception Since Inception
- --------------------------- ------------------ ------------------- ------------------- -------------------
- ----------------------------------- ------------------- --------------------- ------------------
Investment Divisions z* Date of Inception 1 Year ended Since Inception
12/31/96
- ----------------------------------- ------------------- --------------------- ------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Foreign Equity October 4, 1995 -5.69% 3.75% 1.65%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Index August 9, 1995 20.99% 47.46% 17.59%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Growth Index July 26, 1995 29.26% 72.92% 25.21%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Aggressive August 3, 1995 24.50% 79.14% 27.32%
Growth
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Stock Index August 9, 1995 32.41% 77.77% 27.12%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Small-Cap Value August 3, 1995 27.86% 63.12% 22.47%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Blue Chip June 30, 1997 N/A 18.84%
N/A
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Value Index August 13, 1995 34.08% 73.47% 27.04%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
U.S. Government Mortgage July 26, 1995 8.65% 20.14% 7.83%
Securities
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Investment Grade July 26, 1995 6.85% 17.16% 6.72%
Corporate Bond
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Corporate Bond July 26, 1995 12.71% 36.86% 13.75%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Short Term Maturity Bond August 16, 1996 6.14% 8.83% 6.33%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
Money Market July 5, 1995 5.27% 13.57% 5.24%
- --------------------------- ------------------ ------------------- ------------------- -------------------
- --------------------------- ------------------ ------------------- ------------------- -------------------
MidCap Growth June 30, 1997 N/A 25.94% N/A
- --------------------------- ------------------ ------------------- ------------------- -------------------
- -----------
</TABLE>
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
<PAGE>
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, Blue Chip Investment Division, MidCap Growth
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 14 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 qualified plan 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 is generally 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 was at least 70 1/2 at death and died after
distribution of his or her interest has begun, the remaining portion of such
interest will continue to be distributed at least as rapidly as under the method
of distribution being used prior to the individual's death.
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 70 1/2 .
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 LLC, 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.
Founders Asset Management, LLC ("Founders") located at 2930 East Third
Avenue, Denver, Colorado, 80206, serves as the sub-adviser to the Blue Chip
Portfolio. Founders is registered as an investment adviser with the Securities
and Exchange Commission. Subject to review and supervision by the Investment
Adviser and the Board of Directors of the Fund, Founders is responsible for the
actual management of the Blue Chip Portfolio and for making decisions to buy,
sell or hold any particular security.
T. Rowe Price Associates, Inc. ("T. Rowe Price") located at 100 East Pratt
Street, Baltimore, Maryland, 21202, serves as the sub-adviser of the MidCap
Growth Portfolio. T. Rowe Price 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, T. Rowe Price is
responsible for the actual management of the MidCap Portfolio 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 in GWL&A's sole discretion, 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
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 70 1/2.
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 59 1/2 may be
subject to an early withdrawal penalty imposed by the Code. Distributions after
age 59 1/2 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 70 1/2 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 ss.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 70 1/2 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 generally 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, if 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)(iii). Similarly, a Contract Owner may receive a distribution from
an IRA and within 60 days roll it over into a 403(b) Plan, only if all the funds
in the IRA are attributable to a previous rollover distribution from a 403(b)
Plan. Section 408(d)(3)(A)(iii). 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 70 1/2. 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.
Premature Withdrawals
Distributions made before the Contract Owner attains age 59 1/2 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. Other
exemptions may apply. For more details, consult a qualified tax adviser.
If exception (iii) above is applicable at the time of the distribution but
the series of payments is later modified or discontinued (other than because of
death or disability), before the Contract Owner reaches age 59 1/2 or, within
five years of the date of the first payment, whichever is later, the Contract
Owner is liable for the 10% penalty plus interest on all payments received
before age 59 1/2. This penalty is imposed in the year the modification or
discontinuance occurs.
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 Boros Cicchetti 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.
<PAGE>
B-112
RETIREMENT PLAN 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) 495-4952
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, 1998, 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, 1998
<PAGE>
TABLE OF CONTENTS
Page
CUSTODIAN AND INDEPENDENT AUDITORS...............................B-3
UNDERWRITER......................................................B-3
CALCULATION OF PERFORMANCE DATA..................................B-4
FINANCIAL STATEMENTS.............................................B-5
<PAGE>
CUSTODIAN AND INDEPENDENT AUDITORS
...A. Custodian
... The assets of Retirement Plan 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 share 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 $25 million, which cover 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 consolidated financial statements of GWL&A at December 31, 1997 and 1996
and each of the three years in the period ended December 31, 1997, as well as
the financial statements of the Series Account for the years ended December 31,
1997, and 1996, which are included in this Statement of Additional Information
have been audited by Deloitte & Touche LLP, independent auditors, as set forth
in their reports appearing herein and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
UNDERWRITER
...The offering of the Contracts is made on a continuous basis by One Orchard
Equities, Inc., 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 1994 through 1997 and no payment was made to One
Orchard Equities, Inc. in 1997.
<PAGE>
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, 1997 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, 1997 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 "Charges
and Deductions" on page 21 of 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.
<PAGE>
B..Total Return Quotations for All Investment Divisions
...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, 1997. 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
Contract is affected solely by the investment results of the Series Account.
<PAGE>
PART B
FINANCIAL STATEMENTS
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
===============================================================================
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
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, 1997, and the related statement of operations for the year then
ended and the statements of changes in net assets for each of the two years in
the period 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 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 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, 1997, and 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.
February 12, 1998
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT OF
GREAT - WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
- -------------------------------------------------------------------------------------------------------
ASSETS
Shares Cost Value
<S> <C> <C> <C> <C> <C> <C>
Investments in underlying affiliated funds:
Maxim Series Fund, Inc Corporate Bond 1,043,774 $1,284,452 $1,250,547
Maxim Series Fund, Inc Foreign Equity 859,807 892,210 797,651
Maxim Series Fund, Inc Founders Blue Chip 1,889,907 1,925,781 1,932,935
Maxim Series Fund, Inc Growth Index 2,894,409 4,765,799 5,356,670
Maxim Series Fund, Inc Investment Grade Corporate Bond 384,430 496,668 494,232
Maxim Series Fund, Inc Money Market 1,689,350 1,690,493 1,690,493
Maxim Series Fund, Inc Short-Term Maturity Bond 202,881 206,522 205,602
Maxim Series Fund, Inc Small-Cap Aggressive Growth 2,933,801 4,506,340 4,493,319
Maxim Series Fund, Inc Small-Cap Index 1,578,888 2,085,062 1,987,500
Maxim Series Fund, Inc Small-Cap Value (Ariel) 1,630,916 1,900,838 1,492,921
Maxim Series Fund, Inc Stock Index 2,934,032 8,715,483 8,647,726
Maxim Series Fund, Inc T Rowe Price Mid-Cap Growth 14,882 16,311 16,473
Maxim Series Fund, Inc US Government Mortgage Securities 809,091 950,323 950,086
Maxim Series Fund, Inc Value Index 2,774,338 4,503,787 5,031,563
----------------------------
Total Investments $33,940,069 34,347,718
==============
Other assets and
liabilities:
Premium due and accrued 40,985
Investment income due and accrued 230
Due to Great-West Life & Annuity Insurance Company (7,954)
Other liabilities (938)
--------------
NET ASSETS APPLICABLE TO OUTSTANDING UNITS OF CAPITAL (Note 5) $34,380,041
==============
</TABLE>
See notes to financial statements.
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
PERIOD TO DECEMBER 31, 1997
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
Aggressive Growth &
Aggressive Aggressive Growth Fund Income
Growth Growth Fund V Bond Fund Bond Fund Bond Fund Bond Fund Fund I
Fund IV I II III V
III
Investment Investment Investment
Division Investment Division Investment Investment Investment Investment Division
Division Division Division Division Division
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME $296,048 $180,575 $522,320 $46,222 $23,920 $97,627 $5,501 $51,205
EXPENSES - mortality and
expense risks
by category: (Note 3)
A 1,926 4,267 3,934 591 437 853 63 1,467
O 1,361 4,127 4,142 622 394 1,168 145 1,425
U 933 2,313 2,070 300 162 456 48 830
--------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 291,828 169,868 512,174 44,709 22,927 95,150 5,245 47,483
--------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) 109,311 197,228 225,343 11,258 4,008 43,015 612 241,401
on investments
Net change in unrealized
appreciation (depreciation) (109,743) 518,182 (91,548) 1,203 (2,037) (38,334) (887) 2,543
on investments
--------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED 243,944
GAIN (LOSS) ON INVESTMENTS (432) 715,410 133,795 12,461 1,971 4,681 (275)
--------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $291,396 $885,278 $645,969 $57,170 $24,898 $99,831 $4,970 $291,427
==================================================================================================
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
PERIOD TO DECEMBER 31, 1997
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
Growth &
Income Growth Fund Growth Fund Growth Fund International Short Term Total
Fund II IV V Fund II Fund II Retirement
III
Investment Investment Investment Investment Investment Plan Series
Division Investment Division Division Division Division Account
Division
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME $326,791 $476,590 $606,921 $25 $54,852 $67,440 $2,756,037
EXPENSES - mortality and expense
risks
by category: (Note 3)
A 3,192 5,361 932 - 1,042 843 24,908
O 3,847 5,906 910 - 860 1,064 25,971
U 1,916 3,234 746 - 374 545 13,927
------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 317,836 462,089 604,333 25 52,576 64,988 2.601.231
------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on 232,205 1,607,874 96,680 - 9,037 - 2,777,972
investments
Net change in unrealized
appreciation (depreciation) on 371,104 (482,950) (460,984) 162 (111,625) - (404,914)
investments
------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS: 603,309 1,124,924 (364,304) 162 (102.588) - 2,373,058
------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $921,145 $240,029 $187 $(50,012) $64,988 $5,064,289
$1,587,013
==========================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 1997 and 1996
- -------------------------------------------------------------------------------------------------------------------------------
Aggressive Growth Fund Aggressive Growth Aggressive Growth Fund Bond Fund I
III Fund IV V
Investment Division Investment Division Investment Division Investment Division
1997 1996 1997 1996 1997 1996 1997 1996
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income $291,828 $82,950 $213,515 $512,174 $100,262 $44,709 $20,768
$169,868
Net realized gain (loss) on 109,311 536 197,228 13,792 225,343 995 11,258 (387)
investments
Net change in unrealized (109,743) 10,260 518,182 59,519 (91,548) 81,392 1,203 (3,253)
appreciation (depreciation) in
investments
-------------------------------------------------------------------------------------------
Increase (decrease) in net 291,396 93,746 885,278 286,826 645,969 182,649 57,170 17,128
assets resulting from operations
-------------------------------------------------------------------------------------------
FROM UNIT TRANSACTIONS (by
category):
Purchase payments:
A 213,924 154,945 485,937 356,156 442,850 262,233 65,593 55,025
O 219,241 181,447 621,760 337,592 631,514 383,608 104,923 64,109
U 221,167 252,684 737,307 400,584 876,636 272,988 104,251 102,340
Z 280,139 178,104 889,700 528,402 809,572 245,674 169,140 119,305
Redemptions:
A (75,402) (14,191) (97,235) (95,553) (95,556) (13,962) (14,636) (7,470)
O (69,992) (26,595) (26,031) (108,822) (13,077) (27,262) (30,444)
(118,068)
U (44,372) (20,168) (80,868) (29,231) (161,123) (9,990) (14,944) (18,028)
Z (54,580) (10,130) (67,744) (98,500) (9,085) (234) (4,855)
(109,750)
Net transfers:
A (21,144) - (64,259) 135 (41,748) 2,320 (11,921) -
O (72,135) (11,339) 11,091 15,689 63,838 (22,733) (1,374) (2,517)
U (39,202) (8,248) 1,949 (109,491) 39,622 31,653 (22,634)
(155,231)
Z 66,343 - 36,776 111,110 91,746 30,645 51,645 -
-------------------------------------------------------------------------------------------
Increase in net assets
resulting from unit transactions 623,987 676,509 1,533,058 1,168,243 456,834 254,831
2,157,160 2,300,916
-------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 915,383 770,255 1,819,884 1,350,892 514,004 271,959
3,042,438 2,946,885
NET ASSETS:
Beginning of period 1,071,786 301,531 497,543 154,363 435,894 163,935
2,317,427 1,505,255
-------------------------------------------------------------------------------------------
End of period $1,505,255 $435,894
$1,987,169 $1,071,786 $5,359,865 $2,317,427 $4,452,140 $949,898
===========================================================================================
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 1997 and 1996
- ------------------------------------------------------------------------------------------------------------------------------
Bond Fund II Bond Fund III Bond Fund V Growth & Income Fund
I
Investment Division Investment Division Investment Division Investment Division
1997 1996 1997 1996 1997 1996 1997 1996
-------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income $22,927 $13,251 $95,150 $36,284 $5,245 $1,001 $47,483 $53,454
Net realized gain (loss) on 4,008 134 43,015 532 612 (8) 241,401 502
investments
Net change in unrealized (2,037) (1,914) (38,334) 1,107 (887) (33) 2,543 5,154
appreciation (depreciation) in
investments
-------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from 24,898 11,471 99,831 37,923 4,970 960 291,427 59,110
operations
-------------------------------------------------------------------------------------------
FROM UNIT TRANSACTIONS (by
category):
Purchase payments:
A 46,637 37,298 103,236 50,877 13,958 2,455 165,879 121,497
O 43,333 53,768 236,693 103,463 32,009 15,941 188,560 115,481
U 62,355 35,822 256,665 80,174 8,091 16,276 310,646 137,409
Z 61,620 103,669 283,368 99,286 - 2,211 402,298 243,139
A (6,248) (801) (17,091) (1,024) (3,775) - (28,273) (14,452)
O (6,648) (5,477) (18,947) (5,690) (11,733) (5,467) (11,555) (909)
U (4,333) (15,096) (21,292) (9,197) (3,482) - (21,784) (6,867)
Z (232) - (24,598) (61,862) (175) - (51,905) (7,955)
A (13,170) (2,533) (4,878) (2,237) - - (24,615) -
O (8,023) - (46,399) - - - (46,529) 252
U 12,824 (20,932) (34,420) (9,688) - - (2,571) (22,729)
Z (6,670) (35,819) (53,738) (96,878) 133,335 - (39,171) 10,435
-------------------------------------------------------------------------------------------
Increase in net assets
resulting from unit 181,445 149,899 658,599 147,224 168,228 31,416 840,980 575,301
transactions
-------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 206,343 161,370 758,430 185,147 173,198 32,376 634,411
1,132,407
NET ASSETS:
Beginning of period 287,771 126,401 491,975 306,828 32,376 - 786,891 152,480
===========================================================================================
End of period $494,114 $287,771 $491,975 $205,574 $32,376 $786,891
$1,250,405 $1,919,298
===========================================================================================
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 1997 and 1996
- ------------------------------------------------------------------------------------------------------------------------------
Growth & Income Fund Growth Fund II Growth Fund IV Growth Fund V
III
Investment Division Investment Division Investment Division Investment Division
1997 1996 1997 1996 1997 1996 1997 1996
-------------------------------------------------------------------------------------------
FROM OPERATIONS: (1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income $317,836 $68,504 $462,089 $48,532 $604,333 $1,643 $25 $-
Net realized gain (loss) on 232,205 3,962 1,607,874 7,453 96,680 166 - -
investments
Net change in unrealized
appreciation (depreciation) in 371,104 144,470 (482,950) 383,100 (460,984) 52,815 162 -
investments
-------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from 921,145 216,936 1,587,013 439,085 240,029 54,624 187 -
operations
-------------------------------------------------------------------------------------------
FROM UNIT TRANSACTIONS (by
category):
Purchase payments:
A 372,263 192,893 577,159 357,620 135,089 52,930 - -
O 590,546 325,707 985,749 494,735 187,325 71,708 - -
U 742,595 326,828 1,101,048 455,854 299,984 86,945 - -
Z 793,311 342,275 1,814,876 900,190 227,408 62,559 16,286 -
A (58,633) (8,550) (113,621) (17,480) (26,484) (3,953) - -
O (137,567) (12,590) (148,832) (21,037) (35,510) (5,072) - -
U (40,569) (29,696) (117,771) (12,100) (21,700) (3,632) - -
Z (92,885) (16,802) (99,524) (87,684) (91,281) (3,004) - -
A (30,298) 4,997 (93,891) 129 (5,897) - - -
O 22,881 5,476 (87,493) (2,328) (16,262) 5,642 - -
U (154,287) (45,082) (143,697) (41,760) (33,446) - - -
-
Z 407,811 27,224 (135,413) 8,300 200,018 - -
-------------------------------------------------------------------------------------------
Increase in net assets 1,112,680 3,538,590 819,244 264,123 16,286 -
resulting from unit 2,415,168 2,034,439
transactions
-------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 1,329,616 5,125,603 1,059,273 318,747 16,473 -
3,336,313 2,473,524
NET ASSETS:
Beginning of period 454,396 3,510,180 433,293 114,546 - -
1,784,012 1,036,656
-------------------------------------------------------------------------------------------
End of period $16,473 $
$5,120,325 $1,784,012 $8,635,783 $3,510,180 $1,492,566 $433,293
===========
================================================================================
(1) The Investment Division commenced
operations on June 30, 1997.
See notes to financial (Continued)
statements.
</TABLE>
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 1997 and 1996
- -----------------------------------------------------------------------------------------------------------------------------
----------------------------
International Fund II Short Term Fund II Total Retirement Plan
Series Account
Investment Division Investment Division
1997 1996 1997 1996 1997 1996
------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income $52,576 $184 $64,988 $39,948 $2,691,231 $680,296
Net realized gain (loss) on 9,037 529 - - 2,777,972 28,206
investments
Net change in unrealized (111,625) 15,421 - - (404,914) 748,038
appreciation (depreciation) in
investments
------------------------------------------------------------------------------------
Increase (decrease) in net assets (50,012) 16,134 64,988 39,948 5,064,289 1,456,540
resulting from operations
------------------------------------------------------------------------------------
FROM UNIT TRANSACTIONS (by category):
Purchase payments:
A 105,800 87,026 79,177 99,328 2,807,502 1,830,283
O 107,358 128,370 240,054 153,218 4,189,065 2,429,147
U 132,439 102,657 307,894 200,154 5,161,078 2,470,715
Z 144,783 74,578 1,465,120 237,273 7,357,621 3,136,665
A (42,167) (12,782) (41,210) (25,435) (620,331) (215,653)
O (15,342) (10,276) (174,101) (21,462) (884,379) (184,127)
U (24,527) (260,642) (96,163) (817,407) (250,168)
Z (42,432) (1,356,617) (115,280) (2,022,713) (384,401)
A (19,511) (2,760) (9,920) (51) (341,252) -
O (32,804) 88,971 (17,741) (124,238) (29,599)
U (10,692) (10,568) 130,738 43,314 (507,822) (96,756)
Z 80,962 10,572 126,332 31,313 959,976 96,902
------------------------------------------------------------------------------------
Increase in net assets resulting 383,867 366,817 595,796 488,468 15,157,100 8,803,008
from unit transactions
------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 333,855 382,951 660,784 528,416 20,221,389 10,259,548
NET ASSETS:
Beginning of period 463,573 80,622 1,038,219 509,803 14,158,652 3,899,104
------------------------------------------------------------------------------------
End of period $797,428 $463,573 $1,699,003 $1,038,219 $34,380,041 $14,158,652
====================================================================================
See notes to financial statements.
</TABLE>
<PAGE>
RETIREMENT PLAN SERIES ACCOUNT
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997 AND 1996
- --------------------------------------------------------------------------------
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:
<TABLE>
Retirement Plan Series
Investment Division Underlying Fund Investment
------------------------ -------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund Maxim Series Fund, Inc. - Small-Cap Index
III
Aggressive Growth Fund Maxim Series Fund, Inc. - Growth Index
IV
Aggressive Growth Fund Maxim Series Fund, Inc. - Small-Cap Aggressive Growth
V
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 & Income Fund I Maxim Series Fund, Inc. - Founders Blue Chip
*
Growth & Income Fund Maxim Series Fund, Inc. - Value Index
III
Growth Fund II Maxim Series Fund, Inc. - Stock Index
Growth Fund IV Maxim Series Fund, Inc. - Small-Cap Value (Ariel)
Growth Fund V Maxim Series Fund, Inc. - T Rowe Price Mid-Cap Growth
International Fund II Maxim Series Fund, Inc. - Foreign Equity
Short Term Fund II Maxim Series Fund, Inc. - Money Market
* Effective June 30, 1997, the current objective was changed for this fund.
Growth & Income Fund I previously invested in Maxim Series Fund, Inc. - Total
Return.
</TABLE>
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 that 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.
Net Transfers - Net transfers include transfers between investment
divisions of the Series Account as well as transfers between other
investment options of the Company.
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), 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 at December 31, 1997, for each investment division.
<TABLE>
Units Unit Value Total Variable
Investment Division: Annuity Contract
Liabilities
---------------------------------------------------------
Aggressive Growth Fund III:
<S> <C> <C> <C>
Category A 21,596.153383 $15.948739 $344,431
Category O 22,264.861889 16.043404 357,204
Category U 29,959.148005 16.146940 483,749
Category Z 49,337.142833 16.251132 801,785
<PAGE>
Units Unit Value Total Variable
Investment Division: Annuity Contract
Liabilities
---------------------------------------------------------
---------------------------------------------------------
Aggressive Growth Fund IV:
Category A 43,323.395720 18.175827 787,439
Category O 65,415.288966 18.293051 1,196,645
Category U 68,910.664580 18.411436 1,268,744
Category Z 113,708.460216 18.530165 2,107,037
Aggressive Growth Fund V:
Category A 37,737.283435 19.032687 718,242
Category O 64,185.860546 19.156586 1,229,582
Category U 59,544.976700 19.272097 1,147,557
Category Z 69,924.707708 19.403144 1,356,759
Bond Fund I:
Category A 8,773.986458 11.665489 102,353
Category O 15,501.175344 11.800717 182,925
Category U 17,934.402608 11.877870 213,023
Category Z 37,775.125038 11.954888 451,597
Bond Fund II:
Category A 6,517.097297 11.372094 74,113
Category O 8,451.885131 11.506800 97,254
Category U 8,892.123622 11.462216 101,923
Category Z 18,942.315222 11.657677 220,824
Bond Fund III:
Category A 11,596.694555 13.416116 155,583
Category O 24,206.539202 13.582117 328,776
Category U 22,675.769892 13.504281 306,220
Category Z 33,423.752352 13.757476 459,826
Bond Fund V:
Category A 1,209.686898 10.891182 13,175
Category O 2,989.599584 10.997847 32,879
Category U 2,031.384895 11.064279 22,476
Category Z 12,503.204953 10.960689 137,044
Growth & Income Fund I:
Category A 18,873.506402 14.836288 280,013
Category O 25,096.491155 14.931777 374,735
Category U 33,623.099326 15.028384 505,301
Category Z 50,196.469216 15.125559 759,249
Growth & Income Fund III:
Category A 34,549.993140 18.398910 635,682
Category O 61,417.447650 18.515890 1,137,199
Category U 65,117.934735 18.635672 1,213,516
Category Z 113,775.973917 18.755524 2,133,928
Units Unit Value Total Variable
Annuity Contract
Liabilities
Investment Division:
---------------------------------------------------------
Growth Fund II:
Category A 53,406.892124 18.416587 983,573
Category O 93,690.457055 18.445038 1,728,124
Category U 101,305.866164 18.564261 1,880,669
Category Z 216,413.980262 18.683725 4,043,417
Growth Fund IV:
Category A 12,300.051755 16.372679 201,385
Category O 17,280.045955 16.481298 284,798
Category U 29,579.615766 16.586756 490,630
Category Z 30,895.892064 16.693265 515,753
Growth Fund V:
Category A - 11.044132 -
Category O - 11.058060 -
Category U - 11.072004 -
Category Z 1,485.900639 11.085977 16,473
International Fund II:
Category A 13,468.104879 10.299012 138,708
Category O 18,078.020447 10.314447 186,465
Category U 19,626.373072 10.361524 203,359
Category Z 25,784.140225 10.428730 268,896
Short Term Fund II:
Category A 12,004.775508 11.142872 133,768
Category O 26,660.236729 10.927160 291,321
Category U 32,201.626801 11.063550 356,264
Category Z 80,773.048954 11.360850 917,650
---------------------
TOTAL $34,380,041
=====================
</TABLE>
<PAGE>
<TABLE>
RETIREMENT PLAN SERIES ACCOUNT
Exhibit B
6. SELECTED DATA
The following is a summary of selected data for a
unit of capital of the Series Account.
-----------------------------------------------------------------------------------------
Aggressive Growth Fund III Aggressive Growth Fund IV
-----------------------------------------------------------------------------------------
A O U Z A O U Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date Commenced 06/01/95 06/01/95 06/01/95 06/01/95 07/24/95 07/24/95 07/24/95 07/24/95
Operations
1997
Beginning Unit Value $13.28 $13.33 $13.38 $13.43 $14.17 $14.22 $14.28 $14.34
=================================------------=================================-----------
Ending Unit Value $15.95 $16.04 $16.15 $16.25 $18.18 $18.29 $18.41 $18.53
=================================------------=================================-----------
Number of Units 49,337.14
Outstanding 21,596.15 22,264.86 29,959.15 43,323.40 65,415.29 68,910.66 113,708.46
=================================------------=================================-----------
1996
Beginning Unit Value $11.60 $11.62 $11.63 $11.65 $11.69 $11.71 $11.72 $11.74
=================================------------=================================-----------
Ending Unit Value $13.28 $13.33 $13.38 $13.43 $14.17 $14.22 $14.28 $14.34
=================================------------=================================-----------
Number of Units 28,991.22
Outstanding 13,245.31 17,113.51 20,809.07 23,490.03 33,100.60 38,890.98 64,886.39
=================================------------=================================-----------
1995
Beginning Unit Value $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
=================================------------=================================-----------
Ending Unit Value $11.60 $11.62 $11.63 $11.65 $11.69 $11.71 $11.72 $11.74
=================================------------=================================-----------
Number of Units 2,240.54 5,959.11 3,318.14 14,397.06 3,339.10 9,367.33
Outstanding 10,056.69 19,673.41
=================================------------=================================-----------
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6. SELECTED DATA
<TABLE>
-----------------------------------------------------------------------------------------
Aggressive Growth Fund V Bond Fund I
-----------------------------------------------------------------------------------------
A O U Z A O U Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date Commenced 08/03/95 08/03/95 08/03/95 08/03/95 07/12/95 07/12/95 07/12/95 07/12/95
Operations
1997
Beginning Unit Value $15.40 $15.46 $15.52 $15.59 $10.82 $10.92 $10.96 $11.00
=================================------------=================================-----------
Ending Unit Value $19.03 $19.16 $19.27 $19.40 $11.67 $11.80 $11.88 $11.95
=================================------------=================================-----------
Number of Units 69,924.71 8,773.99
Outstanding 37,737.28 64,185.86 59,544.98 15,501.18 17,934.40 37,775.13
=================================------------=================================-----------
1996
Beginning Unit Value $11.93 $11.95 $11.96 $11.98 $10.45 $10.52 $10.54 $10.55
=================================------------=================================-----------
Ending Unit Value $15.40 $15.46 $15.52 $15.59 $10.82 $10.92 $10.96 $11.00
=================================------------=================================-----------
Number of Units 24,716.11 5,272.40 8,847.40 7,526.42
Outstanding 19,250.73 30,001.51 23,175.18 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 $11.93 $11.95 $11.96 $11.98 $10.45 $10.52 $10.54 $10.55
=================================------------=================================-----------
Number of Units 1,064.47 5,718.10 1,398.81 4,726.93 731.02 5,864.01 1,624.61 7,344.94
Outstanding
=================================------------=================================-----------
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6. SELECTED DATA
<TABLE>
-----------------------------------------------------------------------------------------
Bond Fund II Bond Fund III
-----------------------------------------------------------------------------------------
A O U Z A O U Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date Commenced 07/24/95 07/24/95 07/24/95 07/24/95 07/24/95 07/24/95 07/24/95 07/24/95
Operations
1997
Beginning Unit Value $10.72 $10.82 $10.75 $10.91 $11.99 $12.11 $12.01 $12.21
=================================------------=================================-----------
Ending Unit Value $11.37 $11.51 $11.46 $11.66 $13.42 $13.58 $13.50 $13.76
=================================------------=================================-----------
Number of Units 6,517.10 8,451.89 8,892.12 18,942.32
Outstanding 11,596.69 24,206.54 22,675.77 33,423.75
=================================------------=================================-----------
1996
Beginning Unit Value $10.48 $10.55 $10.45 $10.58 $10.95 $11.03 $10.91 $11.06
=================================------------=================================-----------
Ending Unit Value $10.72 $10.82 $10.75 $10.91 $11.99 $12.11 $12.01 $12.21
=================================------------=================================-----------
Number of Units 4,019.39 5,887.41 2,497.98 14,123.28 5,084.50 7,111.83
Outstanding 10,767.39 17,630.19
=================================------------=================================-----------
1995
Beginning Unit Value $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
=================================------------=================================-----------
Ending Unit Value $10.48 $10.55 $10.45 $10.58 $10.95 $11.03 $10.91 $11.06
=================================------------=================================-----------
Number of Units 756.56 1,298.14 2,523.64 7,411.72 821.90 2,425.21 1,650.00
Outstanding 22,880.14
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6. SELECTED DATA
<TABLE>
-----------------------------------------------------------------------------------------
Bond Fund V Growth & Income Fund I
-----------------------------------------------------------------------------------------
A O U Z A O U Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date Commenced 03/13/96 03/13/96 03/13/96 03/13/96 07/24/95 07/24/95 07/24/95 07/24/95
Operations
1997
Beginning Unit Value $10.34 $10.41 $10.45 $10.33 $12.08 $12.12 $12.17 $12.22
=================================------------=================================-----------
Ending Unit Value $10.89 $11.00 $11.06 $10.96 $14.84 $14.93 $15.03 $15.13
=================================------------=================================-----------
Number of Units 1,209.69 2,989.60 2,031.38 12,503.20
Outstanding 18,873.51 25,096.49 33,623.10 50,196.47
=================================------------=================================-----------
1996
Beginning Unit Value $10.06 $10.07 $10.08 $10.09 $10.89 $10.90 $10.92 $10.93
=================================------------=================================-----------
Ending Unit Value $10.34 $10.41 $10.45 $10.33 $12.08 $12.12 $12.17 $12.22
=================================------------=================================-----------
Number of Units 244.56 1,038.88 1,603.91 219.54
Outstanding 10,571.44 15,356.64 12,390.53 26,371.06
=================================------------=================================-----------
1995
Beginning Unit Value $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
=================================------------=================================-----------
Ending Unit Value $10.06 $10.07 $10.08 $10.09 $10.89 $10.90 $10.92 $10.93
=================================------------=================================-----------
Number of Units - - - - 1,177.80 5,184.26 2,940.80 4,666.32
Outstanding
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6. SELECTED DATA
<TABLE>
-----------------------------------------------------------------------------------------
Growth & Income Fund III Growth Fund II
-----------------------------------------------------------------------------------------
A O U Z A O U Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date Commenced 07/12/95 07/12/95 07/12/95 07/12/95 06/01/95 06/01/95 06/01/95 06/01/95
Operations
1997
Beginning Unit Value $13.82 $13.88 $13.93 $13.99 $14.01 $14.00 $14.06 $14.11
=================================------------=================================-----------
Ending Unit Value $18.40 $18.52 $18.64 $18.76 $18.42 $18.45 $18.56 $18.68
=================================------------=================================-----------
Number of Units
Outstanding 34,549.99 61,417.45 65,117.93 113,775.97 53,406.89 93,690.46 101,305.87 216,413.98
=================================------------=================================-----------
1996
Beginning Unit Value $11.55 $11.56 $11.58 $11.60 $11.59 $11.55 $11.57 $11.58
=================================------------=================================-----------
Ending Unit Value $13.82 $13.88 $13.93 $13.99 $14.01 $14.00 $14.06 $14.11
=================================------------=================================-----------
Number of Units 46,735.19
Outstanding 16,778.01 32,274.09 32,323.22 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 $11.55 $11.56 $11.58 $11.60 $11.59 $11.55 $11.57 $11.58
=================================------------=================================-----------
Number of Units 1,666.79 7,395.18 18,036.45 4,042.63
Outstanding 12,134.89 11,673.47 18,708.73 55,122.00
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6. SELECTED DATA
<TABLE>
-----------------------------------------------------------------------------------------
Growth Fund IV Growth Fund V
-----------------------------------------------------------------------------------------
A O U Z A O U Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date Commenced 07/12/95 07/12/95 07/12/95 07/12/95 06/30/97 06/30/97 06/30/97 06/30/97
Operations
1997
Beginning Unit Value $12.90 $12.95 $13.00 $13.06 $10.00 $10.00 $10.00 $10.00
=================================------------=================================-----------
Ending Unit Value $16.37 $16.48 $16.59 $16.69 $11.04 $11.06 $11.07 $11.09
=================================------------=================================-----------
Number of Units 30,895.89 - - - 1,485.90
Outstanding 12,300.05 17,280.05 29,579.62
=================================------------=================================-----------
1996
Beginning Unit Value $11.02 $11.04 $11.05 $11.07
=================================------------=================================-----------
Ending Unit Value $12.90 $12.95 $13.00 $13.06
=================================------------=================================-----------
Number of Units 5,037.63 7,695.51 8,094.84
Outstanding 12,528.51
=================================------------=================================-----------
1995
Beginning Unit Value $10.00 $10.00 $10.00 $10.00
=================================------------=================================-----------
Ending Unit Value $11.02 $11.04 $11.05 $11.07
=================================------------=================================-----------
Number of Units 773.21 1,371.51 5,416.35 2,801.92
Outstanding
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
6. SELECTED DATA
<TABLE>
-----------------------------------------------------------------------------------------
International Fund II Short Term Fund II
-----------------------------------------------------------------------------------------
A O U Z A O U Z
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date Commenced 06/01/95 06/01/95 06/01/95 06/01/95 07/05/95 07/05/95 07/05/95 07/05/95
Operations
1997
Beginning Unit Value $11.00 $10.99 $11.01 $11.06 $10.66 $10.47 $10.54 $10.79
=================================------------=================================-----------
Ending Unit Value $10.30 $10.31 $10.36 $10.43 $11.14 $10.93 $11.06 $11.36
=================================------------=================================-----------
Number of Units 25,784.14
Outstanding 13,468.10 18,078.02 19,626.37 12,004.78 26,660.24 32,201.63 80,773.05
=================================------------=================================-----------
1996
Beginning Unit Value $10.30 $10.27 $10.26 $10.28 $10.23 $10.02 $10.05 $10.27
=================================------------=================================-----------
Ending Unit Value $11.00 $10.99 $11.01 $11.06 $10.66 $10.47 $10.54 $10.79
=================================------------=================================-----------
Number of Units 9,442.18 9,174.83 9,449.98
Outstanding 12,679.40 10,789.35 12,173.70 15,907.37 59,518.32
=================================------------=================================-----------
1995
Beginning Unit Value $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
=================================------------=================================-----------
Ending Unit Value $10.30 $10.27 $10.26 $10.28 $10.23 $10.02 $10.05 $10.27
=================================------------=================================-----------
Number of Units 2,788.66 1,670.77 2,190.94 1,192.47 2,395.98 926.69 1,445.29
Outstanding 44,935.09
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
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:
<TABLE>
For the Year Ended December 31,
--------------------------------------
1997 1996
--------------------------------------
<S> <C> <C>
Maxim - Corporate Bond 630,881 146,580
Maxim - Foreign Equity 421,784 362,084
Maxim - Founders Blue Chip 1,889,907
Maxim - Growth Index 1,347,646 1,180,597
Maxim - Investment Grade Corp Bond 162,095 155,770
Maxim - Money Market 651,202 563,394
Maxim - Short-Term Maturity Bond 170,767 32,114
Maxim - Small-Cap Aggressive Growth 1,868,777 932,503
Maxim - Small-Cap Index 719,273 614,566
Maxim - Small-Cap Value (Ariel) 1,285,180 238,373
Maxim - Stock Index 1,458,700 975,408
Maxim - T Rowe Price Mid-Cap Growth 14,882
Maxim - Total Return (584,099) 490,755
Maxim - U.S. Government Mortgage Securities 431,998 244,885
Maxim - Value Index 1,560,915 855,254
</TABLE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
================================================================================
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
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, 1997 and 1996, 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, 1997. 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, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
January 23, 1998
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
(Dollars in Thousands)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS 1997 1996
- ------
-------------- ---------------
INVESTMENTS:
Fixed Maturities:
Held-to-maturity, at amortized cost (fair value $2,151,476
and $ 2,082,716 $ 1,992,681
$2,041,064)
Available-for-sale, at fair value (amortized cost $6,541,422
and 6,698,629 6,206,478
$6,151,519)
Common stock 39,021 19,715
Mortgage loans on real estate, net 1,235,594 1,487,575
Real estate, net 93,775 67,967
Policy loans 2,657,116 2,523,477
Short-term investments, available-for-sale (cost approximates 399,131 419,008
fair value)
-------------- ---------------
Total Investments 13,205,982 12,716,901
Cash 126,278 125,182
Reinsurance receivable 84,364 196,958
Deferred policy acquisition costs 255,442 282,780
Investment income due and accrued 165,827 198,441
Other assets 121,543 57,244
Premiums in course of collection 77,008 74,693
Deferred income taxes 193,820 214,404
Separate account assets 7,847,451 5,484,631
-------------- ---------------
TOTAL ASSETS $ 22,077,715 $ 19,351,234
============== ===============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY 1997 1996
- ------------------------------------
-------------- ---------------
POLICY BENEFIT LIABILITIES:
Policy reserves $ 11,102,719 $ 11,022,595
Policy and contract claims 375,499 372,327
Policyholders' funds 165,106 153,867
Experience refunds 84,935 87,399
Provision for policyholders' dividends 62,937 51,279
GENERAL LIABILITIES:
Due to Parent Corporation 126,656 151,431
Repurchase agreements 325,538 286,736
Commercial paper 54,058 84,682
Other liabilities 605,032 488,818
Undistributed earnings on
participating business 141,865 133,255
Separate account liabilities 7,847,451 5,484,631
-------------- ---------------
Total Liabilities 20,891,796 18,317,020
-------------- ---------------
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, issued, and outstanding,
liquidation value of $20.90 per share 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 690,748 664,265
Unrealized gains (losses) on securities available-for-sale, net 52,807 14,951
Retained earnings 313,532 226,166
-------------- ---------------
Total Stockholder's Equity 1,185,919 1,034,214
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 22,077,715 $ 19,351,234
============== ===============
</TABLE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(Dollars in Thousands)
- ------------------------------------------------------------------------------------------------------
1997 1996 1995
------------- ------------- -------------
REVENUES:
<S> <C> <C> <C>
Annuity contract charges and premiums $ 115,054 $ 91,881 $ 79,816
Life, accident, and health premiums earned (net of
premiums ceded (recaptured) totaling $(94,646),
$(104,250) and $60,880) 1,163,855 1,107,367 987,611
Net investment income 897,572 836,642 835,046
Net realized gains (losses) on investments 9,800 (21,078) 7,465
------------- ------------- -------------
2,186,281 2,014,812 1,909,938
------------- ------------- -------------
BENEFITS AND EXPENSES:
Life and other policy benefits (net of reinsurance
recoveries totaling $44,871, $52,675,
and $43,574) 543,903 515,750 557,469
Increase in reserves 245,811 229,198 98,797
Interest paid or credited to contractholders 527,784 561,786 562,263
Provision for policyholders' share of earnings
(losses)
on participating business 3,753 (7) 2,027
Dividends to policyholders 63,799 49,237 48,150
------------- ------------- -------------
1,385,050 1,355,964 1,268,706
Commissions 102,150 106,561 122,926
Operating expenses 419,616 336,719 314,810
Premium taxes 23,108 25,021 26,884
------------- -------------
-------------
1,929,924 1,824,265 1,733,326
INCOME BEFORE INCOME TAXES 256,357 190,547 176,612
------------- ------------- -------------
PROVISION FOR INCOME TAXES:
Current 103,794 77,134 88,366
Deferred (6,197) (21,162) (39,434)
------------- ------------- -------------
97,597 55,972 48,932
------------- ------------- -------------
NET INCOME $ 158,760 $ 134,575 $ 127,680
============= ============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(Dollars in Thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
Net
Additional Unrealized
Preferred Stock Common Stock Paid-In Gains Retained
---------------------- ---------------------
Shares Amount Shares Amount Capital (Losses) Earnings Total
---------- ---------- ----------- -------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 2,000,800 $ 121,800 7,032,000 $ 7,032 $ 657,265 $ (78,427) $ 69,561 $ 777,231
Change in net unrealized
gains (losses) 137,190 137,190
Dividends (48,980) (48,980)
Net income 127,680 127,680
---------- ---------- ----------- -------- ---------- ----------- ---------- ------------
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
Change in net unrealized
gains (losses) 37,856 37,856
Capital contributions 26,483 26,483
Dividends (71,394) (71,394)
Net income 158,760 158,760
---------- ---------- ----------- -------- ---------- ----------- ---------- ------------
BALANCE, DECEMBER 31, 1997 2,000,800 $ 121,800 7,032,000 $ 7,032 $ 690,748 $ 52,807 $ 313,532 $ 1,185,919
========== ========== =========== ======== ========== =========== ========== ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(Dollars in Thousands)
- ------------------------------------------------------------------------------------------------------
1997 1996 1995
-------------- ------------- -------------
OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 158,760 $ 134,575 $ 127,680
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain (loss) allocated to participating 3,753 (7) 2,027
policyholders
Amortization of investments 409 15,518 26,725
Realized losses (gains) on disposal of
investments
and provisions for mortgage loans and (9,800) 21,078 (7,465)
real estate
Amortization 46,929 49,454 49,464
Deferred income taxes (6,224) (20,258) (39,763)
Changes in assets and liabilities:
Policy benefit liabilities 498,114 358,393 346,975
Reinsurance receivable 112,594 136,966 (38,776)
Accrued interest and other receivables 30,299 24,778 (17,617)
Other, net 58,865 (8,076) 8,834
-------------- ------------- -------------
Net cash provided by operating 893,699 712,421 458,084
activities
-------------- ------------- -------------
INVESTING ACTIVITIES:
Proceeds from sales, maturities, and
redemptions of investments:
Fixed maturities
Held-to-maturity
Sales 18,821
Maturities and redemptions 359,021 516,838 655,993
Available-for-sale
Sales 3,174,246 3,569,608 4,211,649
Maturities and redemptions 771,737 803,369 253,747
Mortgage loans 248,170 235,907 260,960
Real estate 36,624 2,607 4,401
Common stock 17,211 1,888
Purchases of investments:
Fixed maturities
Held-to-maturity (439,269) (453,787) (490,228)
Available-for-sale (4,314,722) (4,753,154) (4,932,566)
Mortgage loans (2,532) (23,237) (683)
Real estate (64,205) (15,588) (5,302)
Common stock (29,608) (12,113) (4,218)
-------------- ------------- -------------
Net cash used in investing (243,327) (127,662) (27,426)
activities
-------------- ------------- -------------
(Continued)
</TABLE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(Dollars in Thousands)
- ------------------------------------------------------------------------------------------------------
1997 1996 1995
------------- ------------- -------------
FINANCING ACTIVITIES:
<S> <C> <C> <C>
Contract withdrawals, net of deposits $ (577,538) $ (413,568) $ (217,190)
Due to Parent Corporation (19,522) 1,457 (9,143)
Dividends paid (71,394) (56,670) (48,980)
Net commercial paper repayments (30,624) (172) (4,832)
Net repurchase agreements (repayments) borrowings 38,802 (88,563) (191,195)
Capital contributions 11,000 7,000
------------- ------------- -------------
Net cash used in financing activities (649,276) (550,516) (471,340)
------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH 1,096 34,243 (40,682)
CASH, BEGINNING OF YEAR 125,182 90,939 131,621
------------- ------------- -------------
CASH, END OF YEAR $ 126,278 $ 125,182 $ 90,939
============= ============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Income taxes $ 86,829 $ 103,700 $ 83,841
Interest 15,124 15,414 17,016
See notes to consolidated financial statements. (Concluded)
</TABLE>
<PAGE>
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1997, 1996,
AND 1995 (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.
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. The measurement of impaired
loans is based on the fair value of the collateral.
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
$44,298, $47,089, and $48,054 in 1997, 1996, and 1995, 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. and Orchard Series Fund, Inc., both
diversified, open-end management investment companies which are
affiliates 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 $5,741,596 and $5,242,753, at
December 31, 1997 and 1996, 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
$5,346,516 and $5,766,533, at December 31, 1997 and 1996, 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 $3,901,297 and $3,591,077 at December 31, 1997 and 1996,
respectively. Participating business approximates 50.5% and 50.3% of the
Company's ordinary life insurance in force and 91.1% and 92.2% of
ordinary life insurance premium income at December 31, 1997 and 1996,
respectively.
The liability for undistributed earnings on participating business was
increased (decreased) by $8,610 and $(3,362) in 1997 and 1996, which
represented $3,753 and $(7) of gains (losses) on participating business,
increases (decreases) of $2,102 and $(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
increases (decreases) of $2,755 and $(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. 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 6.6%, 6.8%, and 7.2% in 1997, 1996,
and 1995.
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 have a material affect on
the Company's financial statements.
Derivatives - The Company makes limited use of derivative financial
instruments to manage interest rate, market, and foreign exchange risk.
Such hedging activity consists of interest rate swap agreements,
interest rate floors and caps, foreign currency exchange contracts and
equity swaps. The differential paid or received under the terms of these
contracts 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.
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 amount. Interest rate floors and caps are interest
rate protection instruments that require the payment by a counter-party
to the Company of an interest rate differential. The differential
represents the difference between current interest rates and an
agreed-upon rate, the strike rate, applied to a notional principal
amount. Foreign currency exchange contracts are used to hedge the
foreign exchange rate risk associated with bonds denominated in other
than U.S. dollars. Equity swap transactions generally involve the
exchange of variable market performance of a basket of securities for a
fixed interest rate.
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.
2. RELATED-PARTY TRANSACTIONS
On June 30, 1997 the Company recaptured all remaining 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 June 30, 1997 as a
result of this transaction:
<TABLE>
Assets Liabilities and Stockholder's
Equity
-------- -------------------------------
<S> <C> <C>
Cash $ 160,000 Policy reserves $ 155,798
Bonds 17,975 Due to parent corporation 9,373
Other 60 Deferred income taxes 2,719
Undistributed earnings on
participating business (855)
Stockholder's equity 11,000
----------- ----------
$ 178,035 $ 178,035
=========== ==========
</TABLE>
<PAGE>
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:
<TABLE>
Assets Liabilities and Stockholder's
Equity
--------- -------------------------------
<S> <C> <C>
Cash $ 162,000 Policy reserves $ 164,839
Mortgages 19,753 Due to parent corporation 9,180
Other 118 Deferred income taxes 1,283
Undistributed earnings on
participating business (431)
Stockholder's equity 7,000
============ ===========
$ 181,871 $ 181,871
============ ===========
</TABLE>
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
also transferred to the Company (see Note 9). The transfer did not have
a material effect on the Company's operating expenses as the costs
associated with the employees and the benefit plans were charged
previously to the Company under administrative service agreements
between the Company and the Parent Corporation.
Prior to January 1997, the Parent Corporation administered, distributed,
and underwrote business for the Company and administered the Company's
investment portfolio under various administrative agreements. As of
January 1, 1997, the Company performs these services for the U.S.
operations of the Parent Corporation. The following represents
allocations between the two companies for services provided pursuant to
these service agreements:
<TABLE>
Years Ended December 31,
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Investment management revenue (expense) $ 801 $ (14,800) $ (15,182)
Administrative and underwriting revenue 6,292 (304,599) (301,529)
(payments)
</TABLE>
At December 31, 1997 and 1996, due to Parent Corporation includes $8,957
and $31,639 due on demand and $117,699 and $119,792 of notes payable
which bear interest and mature at various dates through December 31,
2005. 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
due on demand to the Parent Corporation bears interest at the public
bond rate (7.1% and 7.0% at December 31, 1997 and 1996, respectively)
while the remainder bear interest at various rates ranging from 6.6% to
9.5%.
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, 1997 and
1996, the reinsurance receivable had a carrying value of $84,364 and
$196,958, respectively.
Total reinsurance premiums assumed from the Parent Corporation were
$1,712, $1,693, and $1,606 in 1997, 1996, and 1995, 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:
<TABLE>
Assumed
Ceded Primarily Percentage
Primarily From of Amount
to
Gross the Parent Other Net Assumed to
Amount Corporation Companies Amount Net
------------- ------------ ------------ ------------- -----------
December 31, 1997:
Life insurance in
force:
<S> <C> <C> <C> <C> <C>
Individual $ 24,598,679 $ 4,040,398 $ 3,667,235 $ 24,225,516 15.1%
Group 51,179,343 2,031,477 53,210,820 3.8%
------------- ------------ ------------ -------------
Total $ 75,778,022 $ 4,040,398 $ 5,698,712 $ 77,436,336
============= ============ ============ =============
Premiums:
Life insurance $ 361,093 $ (127,291)$ 19,923 $ 508,307 3.9%
Accident/health 628,398 32,645 59,795 655,548 9.1%
------------- ------------ ------------ -------------
Total $ 989,491 $ (94,646)$ 79,718 $ 1,163,855
============= ============ ============ =============
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
============= ============ ============ =============
</TABLE>
<PAGE>
<TABLE>
4. NET INVESTMENT INCOME
Net investment income is summarized as follows:
Years Ended December 31,
------------------------------------------------
1997 1996 1995
--------------- --------------- --------------
Investment income:
Fixed maturities and short-term
<S> <C> <C> <C>
investments $ 633,975 $ 601,913 $ 591,561
Mortgage loans on real estate 118,274 140,823 171,008
Real estate 20,990 5,292 3,936
Policy loans 194,826 175,746 163,547
Other 22,119 3,321
--------------- --------------- --------------
990,184 927,095 930,052
Investment expenses, including
interest on amounts charged
by the Parent Corporation
of $9,758, $11,282, and $10,778 92,612 90,453 95,006
--------------- --------------- --------------
Net investment income $ 897,572 $ 836,642 $ 835,046
=============== =============== ==============
5. NET REALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains (losses) on investments are as follows:
Years Ended December 31,
-------------------------------------------------
1997 1996 1995
--------------- --------------- ---------------
Realized gains (losses):
Fixed Maturities $ 15,966 $ (11,624) $ 28,166
Mortgage loans on real estate 1,081 1,143 1,309
Real estate 363 (10)
Provisions (7,610) (10,597) (22,000)
--------------- --------------- ---------------
Net realized gains (losses) on $ 9,800 $ (21,078) $ 7,465
investments
=============== =============== ===============
</TABLE>
<PAGE>
6. SUMMARY OF INVESTMENTS
Fixed maturities owned at December 31, 1997 are summarized as follows:
<TABLE>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
---------- --------- ---------- ----------- -----------
Held-to-Maturity:
U.S. Treasury Securities
<S> <C> <C> <C> <C>
and obligations of U.S. $ $ 1,186 $ 25 $ 27,044 $ 25,883
Government 25,883
Agencies - Other:
Collateralized mortgage 174
obligations 5,006 5,180 5,006
Public utilities 11,214 3
245,394 256,605 245,394
Corporate bonds 1,668,710 57,036 3,069 1,722,677
1,668,710
Foreign governments 659
10,268 10,927 10,268
State and municipalities 1,588
127,455 129,043 127,455
--------- ---------- -----------
---------- -----------
$ 2,082,716 $ 71,857 $ 3,097 $ 2,151,476 $
2,082,716
========== ========= ========== =========== ===========
Available-for-Sale:
U.S. Treasury Securities
and
obligations of U.S.
Government
Agencies
Collateralized mortgage
obligations $ $ 17,339 $ 310 $ $
652,975 670,004 670,004
Direct mortgage
pass-through
certificates 7,911 2,668
917,216 922,459 922,459
Other 1,794 244
297,337 298,887 298,887
Collateralized mortgage
obligations 19,494 1,453
682,158 700,199 700,199
Public utilities 8,716 1,320
549,435 556,831 556,831
Corporate bonds 3,265,039 107,740 4,350
3,368,429 3,368,429
Foreign governments 4,115 60
131,586 135,641 135,641
State and municipalities 503
45,676 46,179 46,179
-----------
---------- --------- ---------- -----------
$ 6,541,422 $ 167,612 $ 10,405 $ $
6,698,629 6,698,629
========== ========= ========== =========== ===========
</TABLE>
<PAGE>
6. SUMMARY OF INVESTMENTS [Continued]
Fixed maturities owned at December 31, 1996 are summarized as follows:
<TABLE>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair Carrying
Cost Gains Losses Value Value
---------- ---------- ---------- ---------- -----------
Held-to-Maturity:
U.S. Treasury Securities
and
<S> <C> <C> <C>
obligations of U.S. $ $ 630 $ 106 $ $
Government 10,935 11,459 10,935
Agencies - Other:
Public utilities 12,755 320
284,954 297,389 284,954
Corporate bonds 1,634,745 41,195 7,360 1,668,580
1,634,745
Foreign governments 556 3
12,577 13,130 12,577
State and municipalities 1,051 15
49,470 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 $ $ 8,058 $ 3,700 $ $
658,612 662,970 662,970
Direct mortgage
pass-through
certificates 5,093 10,908
844,291 838,476 838,476
Other 596 2,686
359,220 357,130 357,130
Collateralized mortgage
obligations 13,619 3,553
614,773 624,839 624,839
Public utilities 6,523 5,375
628,382 629,530 629,530
Corporate bonds 2,907,875 56,551 5,250 2,959,176
2,959,176
Foreign governments 1,762 5,673
110,013 106,102 106,102
State and municipalities 21 119
28,353 28,255 28,255
-----------
---------- ---------- ---------- ----------
$ 6,151,519 $ 92,223 $ 37,264 $ 6,206,478 $
6,206,478
========== ========== ========== ========== ===========
</TABLE>
The collateralized mortgage obligations consist primarily of sequential
and planned amortization classes with final stated maturities of two to
thirty years and average lives of less than one to fifteen 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.
In November 1995, the Financial Accounting Standards Board issued a
special report entitled "A Guide to Implementation of Statement of
Financial Accounting Standards No. 115 (SFAS No. 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
totalling $2,119,814 from held-to-maturity to available-for-sale. In
connection with this reclassification, an unrealized gain, net of
related adjustments, of $23,449 was recognized in stockholder's equity
at the date of transfer.
See Note 8 for additional information on policies regarding estimated
fair value of fixed maturities.
The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1997, 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.
<TABLE>
Held-to-Maturity Available-for-Sale
------------------------- -------------------------
Amortized Estimated Amortized Estimated
Cost Fair Value Cost Fair Value
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Due in one year or less $ 286,088 $ 290,164 $ 447,703 $ 462,719
Due after one year through five 787,376 809,237 1,182,390 1,209,692
years
Due after five years through ten 718,818 751,753 842,019 865,153
years
Due after ten years 129,957 137,190 447,642 466,949
Mortgage-backed securities 5,006 5,180 2,252,349 2,292,662
Asset-backed securities 155,471 157,952 1,369,319 1,401,454
------------ -----------
=========== ============ ===========
$ 2,082,716 $ 2,151,476 $ 6,541,422 $ 6,698,629
============ =========== ============ ===========
</TABLE>
Proceeds from sales of securities available-for-sale were $3,174,246,
$3,569,608, and $4,211,649 during 1997, 1996, and 1995, respectively.
The realized gains on such sales totaled $20,543, $24,919, and $39,755
for 1997, 1996, and 1995, respectively. The realized losses totaled
$10,643, $40,748, and $15,516 for 1997, 1996, and 1995, respectively.
During 1997, 1996, and 1995 held-to-maturity securities with an
amortized cost of $0, $0, and $18,087 were sold due to credit
deterioration with insignificant realized gains and losses.
At December 31, 1997 and 1996, pursuant to fully collateralized
securities lending arrangements, the Company had loaned $162,817 and
$230,419 of fixed maturities, respectively.
The Company engages in hedging activities to manage interest rate and
exchange risk. The following table summarizes the 1997 financial hedge
instruments:
<TABLE>
Notional Strike/Swap
December 31, 1997 Amount Rate Maturity
--------------------------------- --------------- ---------------------- -----------------
<S> <C> <C> <C>
Interest Rate Floor $ 100,000 4.5% (LIBOR) 1999
Interest Rate Caps 565,000 6.75% to 11.82%(CMT) 1999 to 2002
Interest Rate Swaps 212,139 6.20% to 9.35% 01/98 to 02/2003
Foreign Currency
Exchange Contracts 57,168 N/A 09/98 to 07/2006
Equity Swap 100,000 5.64% 12/98
</TABLE>
<PAGE>
The following table summarizes the 1996 financial hedge instruments:
<TABLE>
Notional Strike/Swap
December 31, 1996 Amount Rate Maturity
--------------------------------- --------------- ---------------------- ---------------
<S> <C> <C> <C>
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 6.20% to 9.35% 01/98 to 02/2003
Foreign Currency
Exchange Contracts 61,012 N/A 09/98 to 03/2003
</TABLE>
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, 1997 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 with respect
to impaired loans:
<TABLE>
1997 1996
----------- -----------
<S> <C> <C> <C>
Loans with related allowance for credit losses of $2,493 and $ 13,193 $ 16,443
$2,793
Loans with no related allowance for credit losses 20,013 31,709
Average balance of impaired loans during the year 37,890 39,064
Interest income recognized [while impaired] 2,428 923
Interest income received and recorded [while impaired] using
the 2,484 1,130
cash basis method of recognition
</TABLE>
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 $64,406, and $68,254 at December
31, 1997, and 1996, respectively.
The following table presents changes in the allowance for credit losses:
<TABLE>
1997 1996 1995
---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Balance, beginning of year $ 65,242 63,994 $ 57,987 $
Provision for loan losses 4,521 4,470 15,877
Chargeoffs (2,521) (3,468) (10,480)
Recoveries 246 610
================ ================ ================
Balance, end of year $ 67,242 65,242 $ 63,994 $
================ ================ ================
</TABLE>
<PAGE>
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, 1997, commercial
paper outstanding has maturities ranging from 41 to 99 days and interest
rates ranging from 5.6% to 5.8%. At December 31, 1996, maturities ranged
from 49 to 123 days and interest rates ranged from 5.4% to 5.6%.
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:
<TABLE>
December 31,
-------------------------------------------------------
1997 1996
---------------------------- --------------------------
Estimated
Carrying Estimated Carrying Fair
Amount Fair Value Amount Value
------------ -------------- ----------- -------------
ASSETS:
Fixed maturities and
short-
<S> <C> <C> <C> <C>
term investments $ 9,180,476 $ 9,249,235 $ 8,618,167 $ 8,666,550
Mortgage loans on
real estate 1,235,594 1,261,949 1,487,575 1,506,162
Policy loans 2,657,116 2,657,116 2,523,477 2,523,477
Common stock 39,021 39,021 19,715 19,715
LIABILITIES:
Annuity contract reserves
without life 5,346,516 5,373,818 5,766,533 5,808,095
contingencies
Policyholders' funds 165,106 165,106 153,867 153,867
Due to Parent Corporation 126,656 124,776 151,431 154,479
Repurchase agreements 325,538 325,538 286,736 286,736
Commercial paper 54,058 54,058 84,682 84,682
HEDGE CONTRACTS:
Interest rate floor 25 25 62 124
Interest rate cap 130 130 173 173
Interest rate swaps 4,265 4,265 4,746 4,746
Foreign currency
exchange contracts 3,381 3,381 (8,954) (8,954)
Equity swaps 856 856
</TABLE>
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.
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.
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 $0 and $160 of unrealized losses in 1997 and 1996,
respectively. Included in the net loss position for foreign currency
exchange contracts are $0 and $8,954 of loss exposures in 1997 and 1996,
respectively.
9. EMPLOYEE BENEFIT PLANS
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. See Note 2 for further discussion.
The Company's defined benefit pension plan (pension plan) covers
substantially all of its employees. The benefits are based on years of
service, age at retirement, and the compensation during the last seven
years of employment. The Company's funding policy is to contribute
annually the maximum amount that can be deducted for federal income tax
purposes. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned
in the future. Investments of the pension plan are managed by the
Company and invested primarily in investment contracts and separate
accounts.
The Company's Parent had previously accounted for the pension plan under
the Canadian Institute of Chartered Accountants (CICA) guidelines and
had recorded a prepaid pension asset of $19,091. As generally accepted
accounting principles do not materially differ from CICA guidelines and
the transfer is between related parties, the prepaid pension asset was
transferred at cost. As a result, the Company recorded the following
effective January 1, 1997:
<TABLE>
<S> <C> <C>
Prepaid pension cost $ 19,091 Undistributed earnings $ 3,608
on
participating
business
Stockholder's equity 15,483
=============== ==============
$ 19,091 $ 19,091
=============== ==============
</TABLE>
<PAGE>
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
87, "Employers Accounting for Pensions" effective January 1, 1997,
immediately following the transfer. The following table sets forth the
pension plan's funded status and amounts at December 31, 1997, in
accordance with SFAS No. 87:
<TABLE>
Actuarial present value of accumulated benefit obligation,
<S> <C> <C>
including vested benefits of $88,235 $ 91,387
Actuarial present value of projected benefit obligation
for service rendered to date 112,331
Plan assets at fair value 162,422
--------------
Plan assets in excess of projected benefit obligation 50,091
Unrecognized net (gain) loss from past experience
different from that assumed (8,595)
Unrecognized net obligation being recognized over 15 years (21,198)
--------------
Prepaid pension cost included in other assets $ 20,298
==============
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of
the projected benefit obligation were 7.0% and 4.5%, respectively.
Components of net pension cost for the year ended December 31, 1997 were
as follows:
Service cost - benefits earned during the period $ 5,491
Interest accrued on projected benefit obligation 7,103
Return on plan assets (28,072)
Net amortization and deferral 14,271
---------------
Net pension benefit $ (1,207)
===============
</TABLE>
The Company also sponsors a post-retirement medical plan (medical plan)
which provides health benefits to employees who have worked for 15 years
and attained age 65 while in service with the Company. The medical plan
is contributory and contains other cost sharing features which may be
adjusted annually for the expected general inflation rate. The Company's
policy will be to fund the cost of the medical plan benefits in amounts
determined at the discretion of management. The Plan as of January 1,
1997 was not funded. The Parent Company was not required under CICA
guidelines to record any liability related to the Plan.
Effective January 1, 1997, on the date of transfer, the Company has
adopted SFAS No. 106, "Post-retirement Benefits Other Than Pensions."
The Company has elected to delay recognition of the unfunded accumulated
post-retirement benefit obligation and has set up a transition
obligation to be amortized over 20 years.
<PAGE>
The following table sets forth the medical plan status of December 31, 1997:
<TABLE>
Accumulated post-retirement benefit obligation:
<S> <C>
Retirees $ 4,985
Fully eligible active plan participants 2,438
Other active plan participants 12,031
---------------
19,454
Unrecognized net gain (loss) from past experience different from (1,500)
that assumed
Unrecognized net transition obligation at December 31, 1997,
being recognized over 20 years (15,352)
---------------
Accrued post-retirement benefit obligation included in other $ 2,602
liabilities
===============
</TABLE>
For measurement purposes, a 7.5% annual rate of increase in the per
capita cost of covered health care benefits was assumed. The health care
cost trend rate assumption has a significant effect on the amounts
reported. To illustrate, increasing the assumed health care cost trend
rates by 1% in each year would increase the accumulated post-retirement
benefit obligation as of December 31, 1997 by $3,847.
The weighted average discount rate used in determining the accumulated
post-retirement benefit obligation was 7.0%.
Components of net other post-retirement benefit cost for the year ended
December 31, 1997 were as follows:
<TABLE>
<S> <C>
Service cost - benefits earned during the year $ 1,158
Interest accrued on benefits obligation 1,191
Net amortization and deferral 808
---------------
Net other post-retirement benefit cost $ 3,157
===============
</TABLE>
The Company sponsors a defined contribution 401(k) retirement plan which
provides eligible participants with the opportunity to defer up to 15%
of compensation. The Company matches 50% of the first 5% of participant
contributions. Company contributions for the year ended December 31,
1997 totalled $3,475.
10. FEDERAL INCOME TAXES
The following is a reconciliation between the federal income tax rate
and the Company's effective rate:
<TABLE>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Federal tax rate 35.0 % 35.0 % 35.0 %
Change in tax rate resulting from:
Settlement of prior years tax (6.5) (4.7)
Provision for contingencies 8.4
Change in valuation allowance 0.8 (7.8)
Investment income not subject to (0.3) (1.0) (0.5)
federal tax
State and environmental taxes 0.6 0.7 0.7
Other, net 0.9 (1.4) 0.3
======== ======== ========
Total 38.1 % 29.4 % 27.7 %
======== ======== ========
</TABLE>
<PAGE>
Temporary differences which give rise to the deferred tax assets and liabilities
as of December 31, 1997 and 1996 are as follows:
<TABLE>
1997 1996
-------------------------- --------------------------
Deferred Deferred Tax Deferred Deferred Tax
Tax Asset Liability Tax Asset Liability
----------- ------------- ----------- -------------
<S> <C> <C> <C>
Policyholder reserves $ 163,975 $ $ 151,239 $
Deferred policy acquisition 47,463 57,031
costs
Deferred acquisition cost
proxy tax 79,954 70,413
Investment assets 2,226 35,658
Net operating loss 9,427 12,295
carryforwards
Other 10,729 5,366
----------- ------------ ---------- ------------
Subtotal 255,582 58,192 274,971 57,031
Valuation allowance (3,570) (3,536)
=========== ============ ========== ============
Total Deferred Taxes $ 252,012 $ 58,192 $ 271,435 $ 57,031
=========== ============ ========== ============
</TABLE>
Amounts related to investment assets above include $30,085 and $8,530
related to the unrealized gains on the Company's fixed maturities
available-for-sale at December 31, 1997 and 1996, 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, 1997, the Company's subsidiaries have
approximately $26,934 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 $3,570 and $3,536
are included in the deferred tax assets at December 31, 1997 and 1996,
respectively.
The Company's valuation allowance was increased/(decreased) in 1997,
1996, and 1995 by $34, $1,463, and $(13,145), respectively, as a result
of the 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 1997 and 1996 results of operations include a release of
$47,750 and $25,600 from the provision, to reflect the resolution of
certain tax issues related to 1990 - 1991 and 1988 - 1989 audit years,
respectively, with the Internal Revenue Service (IRS). In addition, in
1997 the tax provision was increased for contingent items related to
open tax years. 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.
<PAGE>
11. 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.
Through December 30, 1997, the Series B STRAPS had a dividend rate of
5.8%. Thereafter, short-term dividend periods of approximately 49 days
will be in effect. The dividend rate for each short-term dividend period
will be determined in accordance with a formula set out in the share
conditions. The Series B STRAPS are redeemable at the option of the
Company at the end of any short-term dividend period, 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's net income and capital and surplus, as determined in
accordance with statutory accounting principles and practices for
December 31 are as follows:
<TABLE>
1997 1996 1995
-------------- -------------- ---------------
(Unaudited)
<S> <C> <C> <C>
Net Income $ 181,312 $ 180,634 $ 114,931
Capital and Surplus 759,429 713,324 653,479
</TABLE>
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, 1997 were $759,429 and $180,834 (unaudited), respectively. The
Company should be able to pay up to $180,834 (unaudited) of dividends in
1998.
Dividends of $8,854, $8,587, and $9,217, were paid on preferred stock in
1997, 1996, and 1995, respectively. In addition, dividends of $62,540,
$48,083, and $39,763, were paid on common stock in 1997, 1996 and 1995,
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, 1997 and 1996 as
well as the financial statements for Great-West Life &
Annuity Insurance Company for the years ended December 31,
1997, 1996 and 1995 are included in Part B.
(b) Exhibits
Exhibits (1), (2), (4), (5), and (6) are incorporated by
reference to Registrant's Form N-4 Registration Statement
filed September 13, 1994.
(3) Exhibit 3 is incorporated by reference to Registrant's
Post-Effective Amendment No. 3 to its Registration Statement
dated April 24, 1998.
(7) Not applicable
(8) Not applicable
(9) Exhibit 9 is incorporated by reference to Registrant's
registration statement dated September 13, 1994.
(10) (a) Written Consent of Jorden Burt Boros Cicchetti Berenson &
Johnson, LLP
(b) Written Consent of Deloitte & Touche LLP
(c) Written Consent of Ruth B. Lurie
(11) Not Applicable
(12) Not Applicable
(13) Exhibit 13 is incorporated by reference to Registrant's
Post-Effective Amendment No. 3 to its Registration Statement
dated April 24, 1998.
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
Andre Desmarais (4) Director
Paul Desmarais, Jr. (4) Director
Position and Offices
Name Principal Business Address with Depositor
Robert G. Graham 574 Spoonbill Drive Director
Sarasota, FL 34236
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
Brian E. Walsh Trinity L.P. Director
115 Putnam Ave.
Greenwich, Connecticut 06830
John A. Brown (3) Senior Vice President,
Financial Services
Donna A. Goldin (2) Executive Vice President
and Chief Operating Officer,
One Corporation
Mitchell T. Graye (3) Senior Vice President and
Chief Financial Officer
Position and Offices
Name Principal Business Address with Depositor
<TABLE>
<S> <C>
John T. Hughes (3) Senior Vice President, Chief
Investment Officer
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
Charles P. Nelson (3) Senior Vice President,
Public/Nonprofit Markets
Marty Rosenbaum (2) Senior Vice President,
Employee Benefits
Operations
Robert K. Shaw (3) Senior Vice President,
Individual Markets
Douglas L. Wooden (3) Executive Vice President,
Financial Services
</TABLE>
- ----------------------------------------
(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
81.2% - Great-West Lifeco Inc.
99.5% - The Great-West Life Assurance Company
100% - Great-West Life & Annuity Insurance Company
100% - First Great-West Life & Annuity Insurance Company
100% - GW Capital Management, LLC
100% - Orchard Capital Management, LLC
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 Health Plan of Ohio, Inc.
100% - One Health Plan of Tennessee, Inc.
100% - One Health Plan of Oregon, Inc.
100% - One Health Plan of Florida, Inc.
100% - One Health Plan of Indiana, Inc.
100% - One Health Plan of Massachusetts, 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.
95% - 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.
92% - Orchard Series Fund**
* New England Life Insurance Company - 5%
** New England Life Insurance Company - 8%
<PAGE>
Item 27. Number of Contract Owners
As of February 27, 1998, there were 1629 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.
(1) In this section, the following terms shall have the following
meanings:
(a)"expenses" means reasonable expenses incurred in a legal
proceeding, including expenses of investigation and
preparation, expenses in connection with an appearance as a
witness, and fees and disbursement of counsel, accountants or
other experts;
(b) "liability" means an obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty or fine;
(c) "party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding;
(d)"proceeding" means any threatened, pending or completed
action, suit, or proceeding whether civil, criminal,
administrative or investigative, and whether formal or
informal.
(2)Subject to applicable law, if any person who is a director, officer
or employee of the corporation is made a party to a proceeding
because the person is or was a director, officer or employee of the
corporation, the corporation shall indemnify the person, or the
estate or personal representative of the person, from and against all
liability and expenses incurred by the person in the proceeding (and
advance to the person expenses incurred in the proceeding) if, with
respect to the matter(s) giving rise to the proceeding:
(a) the person conducted himself or herself in good faith; and
(b) the person reasonably believed that his or her conduct was in
the corporation's best interests; and
(c) in the case of any criminal proceeding, the person had no
reasonable cause to believe that his or her conduct was unlawful;
and
(d)if the person is or was an employee of the corporation, the
person acted in the ordinary course of the person's employment
with the corporation.
(3)Subject to applicable law, if any person who is or was serving as a
director, officer or employee of another company or entity at the
request of the corporation is made a party to a proceeding because
the person is or was serving as a director, officer or employee of
the other company or entity, the corporation shall indemnify the
person, or the estate or personal representative of the person, from
and against all liability and expenses incurred by the person in the
proceeding (and advance to the person expenses incurred in the
proceeding) if:
(i)the person is or was appointed to serve at the request of the
corporation as a director, officer or employee of the other
company or entity in accordance with Indemnification
Procedures approved by the Board of Directors of the
corporation; and
(ii) with respect to the matter(s) giving rise to the proceeding:
(a) the person conducted himself or herself in good faith;
and
(b) the person reasonably believed 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 that his or her conduct was
unlawful; and
(d) if the person is or was an employee of the other
company or entity, the person acted in the ordinary
course of the person's employment with the other
company or entity.
Item 29. Principal Underwriter
(a) Orchard Series Fund
(b) Directors and Officers of One Orchard.
Position and Offices
Name Principal Business Address with Underwriter
Bradley A. Cornish 8505 E. Orchard Road President and
Englewood, Colorado 80111 Director
Alan D. Mac Lennan 8505 E. Orchard Road 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
<TABLE>
Net
Name of Underwriting Compensation
Principal Discounts and on Brokerage
Underwriter Commissions Redemption Commissions Compensation
<S> <C> <C> <C> <C>
One Orchard -0- -0- -0- -0-
</TABLE>
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 expected to be incurred, and the
risks assumed by GWL&A.
<PAGE>
S-115
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. 4 to its Registration Statement to be signed on its
behalf, in the City of Englewood, State of Colorado on this 24th day of April ,
1998.
RETIREMENT PLAN SERIES ACCOUNT
(Registrant)
By: /s/ William 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/ William 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
<TABLE>
<S> <C> <C>
/s/ Robert Gratton April 23 , 1998
- ------------------------------------------------ ---------------
Director and Chairman of the Board
(Robert Gratton)
/s/ William T. McCallum April 23 , 1998
- ------------------------------------------- ---------------
Director, President and Chief
Executive Officer (William T. McCallum)
Signature and Title Date
/s/ Glen Ray Derback April 23 , 1998
- ----------------------------------------------- ---------------
Vice President and Controller
(Glen Ray Derback)
/s/ James Balog April 23 , 1998
- --------------------------------------------------- ---------------
Director, (James Balog)
/s/ James W. Burns _ April 23 , 1998
- ----------------------------------------------- ---------------
Director, (James W. Burns)
/s/ Orest T. Dackow April 23 , 1998
- ----------------------------------------------- ---------------
Director, (Orest T. Dackow)
______________________________ __________, 1998
Director, (Andre Desmarais)
/s/ Paul Desmarais, Jr. April 23 , 1998
- ------------------------------------------------- ---------------
Director, (Paul Desmarais, Jr.)
/s/ Robert G. Graham April 23 , 1998
- ------------------------------------------------ ---------------
Director, (Robert G. Graham)
/s/ N. Berne Hart April 23 , 1998
- ---------------------------------------------------- -------------
Director, (N. Berne Hart)
Signature and Title Date
/s/ Kevin P. Kavanagh April 23 , 1998
- ------------------------------------------------ ---------------
Director, (Kevin P. Kavanagh)
/s/ William Mackness April 23 , 1998
- -------------------------------------------------- ---------------
Director, (William Mackness)
/s/ Jerry Edgar Alan Nickerson April 23 , 1998
- -------------------------------------------- ---------------
Director, (Jerry Edgar Alan Nickerson)
/s/ P. Michael Pitfield April 23 , 1998
- --------------------------------------------------- ---------------
Director, (P. Michael Pitfield)
, 1998
Director, (Michel Plessis-Belair)
/s/ Brian E. Walsh April 23 , 1998
- -------------------------------------------------- ---------------
Director, (Brian E. Walsh)
By: /s/ D. C. Lennox _ April 23 , 1998
-------------------------------------------- ---------------
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.
</TABLE>
Exhibit 10(a)
Written Consent of Jorden Burt Boros Cicchetti Berenson & Johnson LLP
<PAGE>
April 28, 1998
Great-West Life & Annuity Insurance Company
Retirement Plan Series Account
8515 E. Orchard Road
Englewood, CO 80111
Re: Retirement Plan Series Account
Post-Effective Amendment No. 4 to the Registration Statement on Form N-4
File No. 33-83928
Ladies and Gentlemen:
We have acted as counsel to Great-West Life & Annuity Insurance Company, a
Colordo corporation, rearding the federal securities laws applicable to the
issuance and sale of the Contracts described herein. We hereby consent to the
reference to us under the heading "Legal Matters" in the prospectus filed today
with the Securities and Exchange Commission.
Very Truly Yours,
/s/ Jorden Burt Boros Cicchetti Berenson & Johnson, LLP
Jorden Burt Boros Cicchetti Berenson & Johnson, LLP
Exhibit 10(b)
Written Consent of Deloitte & Touche LLP
<PAGE>
INDEPENDENT AUDITORS' REPORT
We consent to the use in this Post-Effective Amendment No. 4 to Registration
Statement No. 33-83928 of Retirement Plan Series Account of Great-West Life &
Annuity Insurance Company of our report dated February 12, 1998 on the financial
statements of Retirement Plan Series Account and our report dated January 23,
1998 on the financial statements of Great-West Life & Annuity Insurance Company
and to the reference to us under the heading "Independent Auditors" appearing in
the Statement of Additional Information, which is a part of such Registration
Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Denver, Colorado
April 27, 1998
Exhibit 10(c)
Written Consent of Ruth B. Lurie
<PAGE>
April 28, 1998
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
Englewood, CO 80111
RE: Retirement Plan Series Account
Ladies and Gentlemen:
I hereby consent to the use of my name under the caption "Legal Opinions" in
the Prospectus for Retirement Plan Series Account contained in the Registration
Statement Form N-4 filed by Great-West Life & Annuity Insurance Company and
Retirement Plan Series Account with the Securities and Exchange Commission under
the Securities Act of 1933 and the Investment Company Act of 1940 and the
amendments thereto.
Sincerely,
/s/ Ruth B. Lurie
Ruth B. Lurie
Vice President, Counsel and
Associate Secretary
