As filed with the Securities and Exchange Commission on May 7, 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. 5 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 5
(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 On May 1,
1998, pursuant to paragraph (b) of Rule 485.
__X_ 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>
RETIREMENT PLAN SERIES ACCOUNT
This Post-Effective Amendment shall not supersede or affect Post-Effective
Amendment No. 4 to this Registration Statement, which was filed with the
Securities and Exchange Commission on April 28, 1998.
Cross Reference Sheet
Showing Location in Prospectus
and Statement of Additional Information
As Required by Form N-4
FORM N-4 ITEM PROSPECTUS CAPTION
1. Cover Page......................................Cover Page
2 Definitions.....................................Glossary of Special
Terms
3. Synopsis........................................Fee Table; Questions
and Answers about the
Series Account Variable
Annuity
4. Condensed Financial Information.................Condensed Financial
Information
5. General Description of
Registrant, Depositor and
Portfolio Companies...........................Great-West Life &
Annuity Insurance
Company; Retirement
Series Account;
Investments of the
Series Account; Voting
Rights
6. Deductions .....................................Administrative Charges;
Risk Charges, Premium
Taxes and Other
Deductions; Appendix A;
Distribution of the
Contracts
7. General Description of
Variable Annuity Contracts ...................The Contracts;
Investments of the
Series Account;
Statement of Additional
Information
8. Annuity Period..................................Annuity Options
<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
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
24
49
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
401(k) of the Code ("401(k) Plans). For Contracts issued on or after July 8,
1998, initial purchases may also be made with Contributions of earned income
derived from non-retirement plan sources and other eligible sources as
described in the Code, except for Contracts issued in states where such initial
purchases have not been approved by appropriate insurance regulatory
authorities. Contracts may also be purchased for IRA programs for spouses of
Contract Owners. There is no minimum initial Contribution amount with respect to
initial purchases made with rollover proceeds. However, the minimum amount of
initial Contributions made from earned income derived from non-retirement plan
sources is $250. Should you choose to make additional Contributions with earned
income derived from non-retirement plan sources, the minimum amount is $250.
There is no minimum amount for additional Contributions made with eligible
rollover proceeds, as described in the Code.
The Contracts are issued by Great-West Life & Annuity Insurance Company
("GWL&A"). One Orchard Equities, Inc. ("One Orchard") is the principal
underwriter and distributor of the Contracts. The Contracts provide for a
deferred annuity to begin at a future pre-selected date (the "Annuity
Commencement Date"). The Contracts also provide for a death benefit.
Prior to the Annuity Commencement Date, the Contributions can accumulate on a
variable basis, guaranteed basis, or a combination of both. To accumulate on a
variable basis, Contributions will be allocated to the RETIREMENT PLAN SERIES
ACCOUNT (the "Series Account"), a segregated investment account of GWL&A. The
value of the Contributions prior to the Annuity Commencement Date and thus the
amount accumulated to provide annuity payments will depend upon the investment
performance of the Series Account.
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
<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 , 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 , 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;1
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;
the Short-Term Maturity Bond Portfolio, which seeks preservation of capital,
liquidity and maximum total return through investment in an actively managed
portfolio of debt securities;
the Blue Chip Portfolio, which seeks long-term growth of capital and
income; and
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
Page
Fee Table................................................................... 4
Examples.....................................................................5
Glossary of Special Terms....................................................7
Questions and Answers about the Series Account Variable Annuity..............8
Financial Highlights........................................................10
Performance Related Information.............................................13
Great-West Life & Annuity Insurance Company.................................15
Retirement Plan Series Account..............................................15
The Contracts...............................................................16
Accumulation Period.........................................................16
Investments of the Series Account...........................................19
Charges and Deductions......................................................21
Periodic Payment Options....................................................22
Annuity Options.............................................................23
Federal Tax Consequences....................................................25
Voting Rights...............................................................27
Distribution of the Contracts...............................................28
Return Privileges...........................................................28
State Regulation............................................................28
Reports.....................................................................28
Legal Proceedings...........................................................28
Legal Matters...............................................................29
Registration Statement......................................................29
Statement of Additional Information.........................................29
<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
Administrative Surrender Fees
$50 administrative surrender fee if the Contract is surrendered in whole during
first 12 months $25 administrative surrender fee if the Contract is surrendered
in part during first 12 months
Annual Contract Fee...............................................Maximum $303
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.")
- ----------------
3 The annual contract fee ("Contract Maintenance Charge")
will be imposed on all Contracts issued on or after July 8, 1998, if the
Contract Owner does not maintain a Contract Value of at least $5,000, as
determined by the Contract Value as of December 31 of the prior year, except for
Contracts issued in states where appropriate insurance regulatory authorities
have not approved the assessment of such fee.
<PAGE>
<TABLE>
Maxim Series Fund, Inc. Annual Expenses
...(as a percentage of Maxim Series Fund, Inc. average daily net assets)
- ---------------------------------------------------------------------------------------
Investment
Grade U.S. Short-Term
Money Corporate Stock Govt. Small-Cap Growth Maturity Blue
Market Bond Index Mortgage Index Index Bond Chip
PortfolioPortfolio PortfolioSecuritiesPortfolio PortfoliPortfolio 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 1.15%
Maxim 0.46% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60%
Series
Fund
Annual
Expenses
- ---------------------------------------------------------------------------------------
- -------------------------------------------------------------------
Small-Cap
Value Small-Cap Foreign AggressiveCorporate MidCap
index Value Equity Growth Bond Growth
PortfoliPortfolio PortfolioPortfolio 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 0.60% 1.28% 1.33% 1.11% 0.90% 1.05%
Series
Fund
Annual
Expenses
- -------------------------------------------------------------------
EXAMPLES
If you do not take a distribution in whole from your Contract, or if you
annuitize at the end of the applicable time period, you would pay the following
expenses on a $1,000 investment, assuming a 5% annual return on assets:
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year 10 Year
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Money Market Investment 42.63 71.26 104.92 215.62
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Investment Grade Corporate 44.08 75.94 113.30 235.68
Bond Investment Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stock Index Investment 44.08 75.94 113.30 235.68
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 44.08 75.94 113.30 235.68
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value Index Investment 44.08 75.94 113.30 235.68
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 49.76 94.13 145.65 311.84
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MidCap Growth Investment 48.73 90.85 139.84 298.30
Division
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXAMPLES (Cont.)
<TABLE>
If you take a distribution in whole from your Contract at the end of the
applicable time period, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets:
- --------------------------------------------------------------------------------
1 Year 3 Year 5 Year 10 Year
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Investment 92.63 71.26 104.92 215.62
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Investment Grade Corporate 94.08 75.94 113.30 235.68
Bond Investment Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stock Index Investment 94.08 75.94 113.30 235.68
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 94.08 75.94 113.30 235.68
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value Index Investment 94.08 75.94 113.30 235.68
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 99.76 94.13 145.65 311.84
Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MidCap Growth Investment 98.73 90.85 139.84 298.30
Division
- --------------------------------------------------------------------------------
</TABLE>
...The above Examples, which illustrate the highest level of mortality and
expense risk charges assessable under the Contracts, should not be considered a
representation of past or future expenses. The tables currently do not reflect
the imposition of the annual contract fee which is only assessed on Contracts
having a contract value of less than $5,000 and only in states where such charge
has been approved. 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. 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 is a contract maintenance charge of $30 per year if the Contract Value,
as determined on December 31 of the previous year, is below $5,000.4 However,
there are no sales charges (contingent, deferred or otherwise) applied to the
Contract Value. GWL&A deducts from the net asset value of the Series Account an
amount, computed daily for mortality and expense risk guarantees as described
below.
The level of the mortality and expense risk charge applicable to the Contract
during the first calendar year will be based upon the initial account balance of
the Contract, in accordance with the schedule set forth below. The level of the
mortality and expense risk charge applicable in subsequent calendar years will
be based upon the account balance as of December 31 of the previous calendar
year, in accordance with such schedule. The following table sets forth the level
of the mortality and expense risk charges that will apply to a Contract:
- -------------------------------------
Mortality &
Expense Risk Account Balance
Charge
- -------------------------------------
- -------------------------------------
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.")
- ---------------------
4 The $30 contract maintenance
charge shall apply to all Contracts issued on or after July 8, 1998, except with
respect to Contracts sold in states where appropriate insurance regulatory
authorities have not approved the assessment of such charge.
<PAGE>
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.")
Initial Contributions must be eligible rollover distributions (as defined by the
Code) from a qualified plan as described in the Code. In addition, for Contracts
issued on or after July 8, 1998, initial Contributions may also come from other
eligible rollover sources as described in the Code, and earned income derived
from non-retirement plan sources, except for Contracts issued in states where
appropriate insurance regulatory authorities have not approved such initial
Contributions. Contracts may also be used for IRA programs for spouses of
Contract Owners. The minimum amount of initial Contributions made with earned
income derived from non-retirement plan sources is $250. Should you choose to
make additional Contributions with earned income derived from non-retirement
plan sources, the minimum amount is $250. There is no minimum amount for
additional Contributions made with eligible rollover proceeds, as described in
the Code. 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.
- --------------------------------------------------------------------------------
Investment Division Yield Effective Yield
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------
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.
Total Return
<TABLE>
- ----------------------------------------------------------------------------------------
Investment Divisions Date of 1 Year Cumulative Average Annual
a* Inception Total Return Total Return
Since Inception Since Inception
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Foreign 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 August 9, 1995 7.84% 17.54% 6.97%
Mortgage 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 April 1, 1996 5.35% 9.36% 5.24%
Bond
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Money Market July 5, 1995 4.48% 11.47% 4.45%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
MidCap Growth June 30, 1997 N/A 25.50% N/A
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Investment Divisions Date of 1 Year Cumulative Average Annual
o* Inception Total Return Total Return
Since Inception Since Inception
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
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%
- ----------------------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------------------------------------------------
Investment Divisions Date of 1 Year Cumulative Average Annual
o* Inception Total Return Total Return
Since Inception Since Inception
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
U.S. Government July 24, 1995 8.11% 18.44% 7.18%
Mortgage 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 March 13, 1996 5.61% 10.00% 5.43%
Bond
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Money Market November 30, 4.34% 9.53% 4.46%
1995
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
MidCap Growth June 30, 1997 N/A 25.63% N/A
- ----------------------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------------------------------------------------
Investment Divisions Date of 1 Year Cumulative Average Annual
u* Inception Total Return Total Return
Since Inception Since Inception
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Foreign Equity October 3, 1995 -5.93% 3.63% 1.60%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Small-Cap Index September 8, 20.69% 39.73% 15.55%
1995
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Growth Index September 8, 28.94% 67.77% 25.04%
1995
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Small-Cap Aggressive November 17, 24.19% 70.80% 28.68%
Growth 1995
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
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 July 12, 1995 8.38% 17.53% 6.75%
Mortgage 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 March 11, 1995 5.88% 10.47% 3.61%
Bond
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Money Market November 16, 5.00% 10.76% 4.93%
1995
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
MidCap Growth June 30, 1997 N/A 25.78% N/A
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Investment Divisions Date of 1 Year Cumulative Annual Total
z* Inception Total Return Return Since
Since Inception Inception
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
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 July 26, 1995 8.65% 20.14% 7.83%
Mortgage 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 August 16, 1996 6.14% 8.83% 6.33%
Bond
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Money Market July 5, 1995 5.27% 13.57% 5.24%
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
MidCap Growth June 30, 1997 N/A 25.94% N/A
- ----------------------------------------------------------------------------------------
- -----------
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
</TABLE>
<PAGE>
100
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. The initial
contribution must be an eligible rollover distribution (as defined by the Code)
from a qualified plan as described in the Code. For Contracts issued on or after
July 8, 1998, initial Contributions may also be made with earned income derived
from non-retirement plan sources, provided such Contributions are at least $250,
except for Contracts issued in states where the appropriate insurance regulatory
authorities have not approved such initial Contributions. Such Contracts may
also be purchased with initial Contributions from any other eligible rollover
sources as described in the Code. Contracts may also be used for IRA programs
for spouses of Contract Owners. Such spousal IRA programs must be purchased with
a separate application form. 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 its 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
Contract Maintenance Charge
GWL&A has primary responsibility for the administration of all Contracts and
the Series Account. GWL&A will impose an annual contract maintenance charge in
the amount of $30 on all Contracts issued on or after July 8, 1998, if the
Contract Value is not at least $5,000 on December 31 of the prior year, except
for Contracts issued in states where appropriate insurance regulatory
authorities have not approved the assessment of such charge. This charge will be
assessed during the second quarter of the current year. If an Annuity Account is
established after the assessment date, the charge will be deducted on the first
day of the next quarter and will be pro-rated for the remaining portion of the
year. No refund of this charge will be made.
No Sales Charge
GWL&A will impose no sales charge.
Administrative Surrender Fee
A $50 charge will be imposed for any Contract surrendered in whole during the
first 12 months after issue, excluding the "free look" period and a $25 charge
will be imposed for any Contract surrendered in part during the first 12 months
after issue. This charge reflects the actual expenses associated with the
surrenders GWL&A expects to incur and may not be increased.
Deductions for Premium Taxes
The applicable Premium Tax rates that states and other governmental entities
impose currently range from 0% to 3.5% and are subject to change by the
respective state legislature, by administrative interpretations or by judicial
act. Such Premium Taxes will depend, among other things, on the state of
residence of a Contract Owner and the insurance tax laws and status of GWL&A in
these states when the Premium Taxes are incurred.
GWL&A presently makes no deduction from Contributions for Premium Taxes;
however, it reserves the right to make such deductions from the Contract Value
upon the annuity date.
Deductions for Assumption of Mortality and Expense Risks
GWL&A deducts from the daily net accumulation unit value of the Series
Account an amount, computed daily, which is equal to an annual rate as described
below.
The level of the mortality and expense risk charge applicable to the Contract
during the first calendar year will be based upon the initial account balance of
the Contract, in accordance with the schedule set forth below. The level of the
mortality and expense risk charge applicable in subsequent calendar years will
be based upon the account balance as of December 31 of the previous calendar
year, in accordance with such schedule. The following table sets forth the level
of the mortality and expense risk charges that will apply to a Contract:
M & E Charge Account Balance
- --------------------------------------
0.75% From $0 - 9,999.99
0.50% From $10,000 -
$24,999.99
0.25% From $25,000 -
$49,999.99
0.00% From $50,000 and
greater
Because the mortality and expense risk charge is determined based on the
December 31 account balance of the previous calendar year, Contract Owners may
wish to monitor their account balances closely to ensure timely contributions
are made to the extent possible to reduce the mortality and expense risk charge
that will be applicable in the ensuing year. Each level of this charge is
guaranteed and will not be increased.
GWL&A's assumption of mortality risk guarantees that the annuity payments
made to the beneficiary or other payee will not be affected by the mortality
experience (life span) of persons receiving such payment or of the general
population. GWL&A assumes this "mortality risk" by virtue of the fact that
annuity rates in effect at the time that any Contributions are made cannot be
changed.
GWL&A also assumes the risk that the actual administrative expenses in
connection with the Contracts will exceed the anticipated administrative
expenses. The administrative services which GWL&A provides include: processing
of applications for issuance of the Contracts and establishing individual
Contract Owner records; purchase and redemption of the underlying mutual fund
shares as required; maintenance of records; administration of annuity payments;
accounting and valuation services; and regulatory and reporting services.
If the deduction for mortality and expense risks is insufficient to cover
actual costs and assumed risks, the loss will fall on GWL&A. Conversely, if the
deduction proves more than sufficient, any excess will be added to the GWL&A
surplus.
There are also fees and expenses associated with the underlying mutual fund
(See "Fee Table.")
PERIODIC PAYMENT OPTIONS
GWL&A offers two distribution options that are not considered Annuity
options: The Estate Maximizer Option ("EMO") and the Flexible Payment Option
("FPO"). These options are available for any Contract Owners but with respect to
the EMO, Contract Owners must be at least age 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 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-60
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 , 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.
, 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>
=============================================================================
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>
================================================================================
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), (3), 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,
1998Exhibit
4
is
filed
herewith.
(5) Exhibit 5 is filed herewith.
(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,
1997.
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%
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-59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment No.
5
to its
Registration Statement on Form N-4
to be signed on its behalf, in the City of
Englewood, State of Colorado, on this 4th day of ,
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
/s/ Robert Gratton
May 4th
, 1998 Director and Chairman of the Board (Robert Gratton)
/s/ William T. McCallum
May 4th
, 1998 Director, President and Chief Executive Officer (William T. McCallum)
Signature and Title Date
/s/ Glen Ray Derback
May 4th
, 1998 Vice President and Controller (Glen Ray Derback)
/s/ James Balog
May 4th ,
1998 Director, (James Balog)
/s/ James W. Burns - May 4th
, 1998
Director, (James W. Burns)
/s/ Orest T. Dackow
May 4th
, 1998 Director, (Orest T. Dackow)
- -----------------------------,
1998
Director, (Andre Desmarais)
/s/ Paul Desmarais, Jr.
May 4th
, 1998
Director, (Paul Desmarais, Jr.)
/s/ Robert G. Graham
May 4th
, 1998
Director, (Robert G. Graham)
/s/ N. Berne Hart
May 4th ,
1998
Director, (N. Berne Hart)
Signature and Title Date
/s/ Kevin P. Kavanagh
May 4th
,
1998
Director, (Kevin P. Kavanagh)
/s/ William Mackness
May 4th
, 1998
Director, (William Mackness)
/s/ Jerry Edgar Alan Nickerson
May 4th
, 1998
Director, (Jerry Edgar Alan Nickerson)
/s/ P. Michael Pitfield
May 4th
, 1998
Director, (P. Michael Pitfield)
, 1998
Director, (Michel Plessis-Belair)
/s/ Brian E. Walsh
May 4th
, 1998
Director, (Brian E. Walsh)
By:
/s/ D.C. Lennox
May 4th
, 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.
<PAGE>
Exhibit 10(a) Written Consent of Jorden Burt Boros Cicchetti Berenson & Johnson
LLP
<PAGE>
May 6, 1998
Great-West Life & Annuity Insurance Company Retirement Plan Series Account 8515
E. Orchard Road Englewood, CO 80111
Ladies and Gentlemen:
We have acted as counsel to Great-West Life & Annuity Insurance Company, a
Colorado corporation, regarding 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
<PAGE>
Exhibit 10(b) Written Consent of Deloitte & Touche LLP
<PAGE>
INDEPENDENT AUDITORS' REPORT
We consent to the use in this Post-Effective Amendment No.5
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
30, 1998
Exhibit 10(c) Written Consent of Ruth B. Lurie
May 6, 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
Amendment No. 5 to 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
<PAGE>
Exhibit 4
Variable Annuity Contract
--------------------------------------------------------------
<PAGE>
71
Great-West Life & Annuity Insurance Company A Stock Company
8505 East Orchard Road Englewood, CO 80111
Signed for Great-West Life & Annuity Insurance Company on
the issuance of this Contract.
[GRAPHIC OMITTED]
1
[GRAPHIC OMITTED]
D.C. Lennox, W.T. McCallum, Secretary President and Chief
Executive Officer
PLEASE READ THIS CONTRACT CAREFULLY. It is a Contract which
may provide for payments or values which are not guaranteed
as to Fixed-Dollar Amount and which increase or decrease
according to the investment experience of a Variable Annuity
Account.
20 DAY RIGHT TO EXAMINE: IF NOT SATISFIED WITH THE CONTRACT,
RETURN IT TO THE COMPANY OR AN AUTHORIZED AGENT WITHIN 20
DAYS OF RECEIVING IT. THE CONTRACT WILL BE VOID FROM THE
START AND ALL CONTRIBUTIONS PAID LESS ANNUITY PAYMENTS WILL
BE REFUNDED. ANY INVESTMENT GAINS OR LOSSES ARISING DURING
THIS PERIOD SHALL ACCRUE TO OR BE BORNE BY THE COMPANY.
FIXED AND VARIABLE DEFERRED ANNUITY
FLEXIBLE CONTRIBUTION INDIVIDUAL RETIREMENT ANNUITY. The
Variable Account Value, Guaranteed Account Value, expenses
and charges provisions of this Contract are stated in
Article V (Pages 8-9), Article VIII (Pages 12-13), and the
attached Guaranteed Sub-Account Riders, if any.
Contract No. 12345GP Form No. FCIRA/RO-10/97
<PAGE>
Table
Of
Contents
ARTICLE
I:
DEFINITIONS
3
ARTICLE
II:
OWNERSHIP
PROVISIONS
2.1...............................................Ownership
of
Series
Account4
2.2...............................................Ownership
of
the
Contract4
2.3...........................................Nonforfeitable
4
2.4...............................................Exclusive
Benefit4
2.5................................................Transfer
and
Assignment4
2.6...................................................Loans
Prohibited4
ARTICLE
III:
GENERAL
PROVISIONS
3.1..................................................Entire
Contract5
3.2........................................Non-Participating
5
3.3..............................................Beneficiary
5
3.4................................................Currency
and
Payment
Contributions5
3.5Age
5
3.6..................................................Voting
Rights5
3.7..................................................Reports
6
3.8................................................Contract
Maintenance
Charge6
3.9..................................................Notice
and
Proof6
3.10....................................................Tax
Consequences
of
Payments6
ARTICLE
IV:
CONTRIBUTIONS
PROVISIONS
4.1............................................Contributions
6
4.2.................................................Initial
Contribution6
4.3.................................................Regular
IRA
Contributions6
4.4.............................................Commingling
of
Contributions7
4.5.............................................Designation
of
Regular
IRA
Contributions7
4.6..................................................Excess
Contributions7
4.7..............................................Allocation
of
Contributions7
4.8.....................................................SEP
Contributions
Not
Accepted7
ARTICLE
V:
ACCOUNT
VALUE
PROVISIONS
5.1................................................Variable
Account
Value8
5.2............................................Accumulation
Unit8
5.3............................................Accumulation
Unit
Value8
5.4.....................................................Net
Investment
Factor8
5.5....................................................Risk
Charge8
5.6..............................................Guaranteed
Account
Value9
5.7..............................................Guaranteed
Sub-Account
Riders9
ARTICLE
VI:
TRANSFERS
6.1................................................Transfers
9
6.2................................................Transfer
Terms9
6.3...........................................Intra-Company
Transfers9
<PAGE>
Table
Of
Contents
(continued)
6.4.............................................Non-Taxable
Distribution9
6.5................................................Transfer
Outside
the
Contract9
ARTICLE
VII:
DISTRIBUTIONS
7.1...........................................Distributions
Prior
to
Age
59 1/210
7.2...........................................Distributions
Before
Death10
7.3
Distribution
Upon
Death10
7.4.................................................Minimum
Distributions11
7.5.....................................................IRA
to
IRA
Transfer11
7.6................................................Election
of
Payment
Option11
7.7..................................................Amount
Payable
on
Death
of
the
Owner11
ARTICLE
VIII:
SURRENDER
AND
PARTIAL
WITHDRAWALS
8.1...............................................Surrender
Benefit12
8.2...............................................Surrender
Value12
8.3...............................................Surrender
Charge12
8.4.................................................Partial
Withdrawal12
8.5
Loss
of
Interest
Charge13
8.6..................................................Waiver
of Loss of Interest Charge13
ARTICLE IX: PERIODIC PAYMENT OPTIONS
9.1.....................................................How
to Elect Periodic Payment Options13
9.2...............................................Selection
of
Periodic
Payment
Options13
9.3..................................................Estate
Maximizer
Option
("EMO")13
9.4................................................Flexible
Payment
Option
("FPO")13
9.5............................................Modification
of
Periodic
Payment
Options14
9.6..........................................Administration
Fee14
ARTICLE X: PAYMENT OPTIONS (OTHER THAN PERIODIC PAYMENTS)
10.1 How to Elect Payment Options15
10.2 Selection of Payment Options15
10.3 Variable Dollar Payment Options15
10.4 Fixed Dollar Payment Options16
ARTICLE XI: MODIFICATIONS
11.1 Contract Modification...................................17
11.2 Modification of Guaranteed Sub-Account Riders, If Any...17
11.3 Modification of Variable Sub-Accounts...................17
<PAGE>
FCIRA/RO-10/97 Page
4
<PAGE>
Article
I:
Definitions
<PAGE>
Accumulation Period- the period between the Effective Date and
the Annuity Commencement Date.
Accumulation
Unit
- -
an accounting unit used to determine the variable contract value before the
Annuity Commencement Date.
Annuitant - the person upon whose life the payment of an annuity
is based. The Annuitant will at all times be the Owner of the
Contract.
Annuity Account - a record that reflects the total value of the
Owner's Variable and Guaranteed Sub-Accounts.
Annuity Account Value - the sum of the Variable and Guaranteed
Sub-Accounts credited to the Owner under the Annuity Account.
Annuity Commencement Date - The date on which a one sum payment
is to be made, or the date on which payments commence under a
payment option.
Annuity Payment Period - the period beginning on the Annuity
Commencement Date and continuing until all annuity payments have
been made under the Contract.
Annuity Unit - an accounting unit used to determine the dollar
value of any variable dollar annuity payment after the first
annuity payment is made.
Beneficiary - the person(s) designated by the Owner to receive
distributions, if any, payable upon the death of the Owner.
Certificate - represents the amount deposited into the Guaranteed
Certificate Fund, if offered, under each Interest Guarantee
Period. Each Certificate has its own interest rate and term.
Code - the Internal Revenue Code of 1986, as amended.
Company - Great-West Life & Annuity Insurance Company.
Contribution - amounts allocated to a Guaranteed or Variable
Sub-Account prior to any Premium Tax, if applicable, or other
deductions.
Contract - this Flexible Contribution Individual Retirement
Annuity which is a binding agreement between the Owner and the
Company.
Effective Date - the date on which the first Contribution is
credited to the Annuity Account.
Eligible Fund - a registered management investment company in
which the assets of the Series Account may be invested.
Guaranteed Account - the portion of this individual annuity
contract providing Guaranteed Sub-Accounts, each of which
guarantees principal.
Guaranteed Account Value - the sum of the values of the
Guaranteed Sub-Accounts credited to the Owner under the Annuity
Account.
Guaranteed Interest Rate - a minimum interest rate applicable to
Guaranteed Sub-Accounts equal to an annual effective rate of 3%.
Guaranteed Sub-Account - a sub-division of the Guaranteed
Account. Such subdivision(s) is described in greater detail in
the attached Guaranteed Sub-Account Riders, if any.
Home Office - the Company's Home Office located at 8505 East
Orchard Road, Englewood, Colorado 80111.
Intra-Company Transfer - amounts moved within and between any of
the Variable and Guaranteed Sub-Accounts.
Investment Division - there is within the Series Account an
Investment Division for each Variable Sub-Account. Each
Investment Division invests in one or more Eligible Funds. The
Company may change the Eligible Funds within an Investment
Division at its sole discretion subject to compliance with
applicable law.
Individual Retirement Annuity (IRA) - an annuity contract used
for a retirement savings program that is intended to satisfy the
requirements of Section 408 of the Internal Revenue Code of 1986,
as amended.
<PAGE>
Article I: Definitions (continued)
<PAGE>
Loss of Interest Charge - a charge which may be applied whenever
amounts deposited into the Guaranteed Certificate Fund are
transferred as described in Section 6.1 prior to Certificate
Maturity Date. The Loss of Interest Charge is calculated by
reducing the credited interest rates declared by the Company to
the Guaranteed Interest Rate credited on the affected
certificates. Thus, the charge equals the difference between the
amount of interest which would have been credited using the
credited interest rate declared by the Company and the amount of
interest credited using the Guaranteed Interest Rate on each
affected Certificate from the initial deposit date up to the time
of transfer.
Owner - the person who is entitled to all rights and benefits
under the Contract. The Annuitant will at all times be the Owner
of the Contract.
Partial
Withdrawal
- -
a withdrawal of some of the Annuity Account Values prior to the Annuity
Commencement Date which is not an IRA to IRA transfer and not a distribution.
Payee - any person receiving distributions or annuity payments
under the Individual Retirement Annuity Contract, as designated
by the Owner.
Premium Tax - the amount of premium tax, if any, charged by a
state or other government authority.
Request - any request in a form, either written, telephoned or
computerized, satisfactory to the Company and received by the
Company at its Home Office, from the Owner, or the Owner's
designee as required by any provision of this Contract, or as
required by the Company.
Series Account - The Retirement Plan Series Account, a separate
investment account established by Great-West Life & Annuity
Insurance Company under Colorado law and registered as a unit
investment trust under the Investment Company Act of 1940, as
amended. The Series Account is separate from the general assets
of the Company.
Surrender - a withdrawal of all Annuity Account Values prior to
the Annuity Commencement Date which is not an IRA to IRA transfer
and not a distribution.
Transfer - the moving of money from one sub-account to another
sub-account or outside the Contract.
Valuation Date - the date on which the new asset value of each
Eligible Fund is determined.
Valuation Period - the period between the ending of two
successive Valuation Dates.
Variable Account - the portion of the Series Account to which Contributions
under the Contracts may be allocated. The Variable Account consists of Variable
Sub-Accounts, each having its own Accumulation Unit and Annuity Unit Value.
Variable Account Value - the sum of the values of the Variable Sub-Accounts
credited to the Owner under the Annuity Account.
Variable Sub-Account - a sub-division of the Variable Account. Each
Variable Sub-Account has its own Accumulation Unit and Annuity Unit
Value containing the value credited to the Owner from an Investment
Division.
<PAGE>
Article II: Ownership Provisions
<PAGE>
2.1 OWNERSHIP OF SERIES ACCOUNT
The Company has absolute ownership of the assets of the Series Account. All
monies invested in the Series Account, however, are held separate and apart
from the Company's general assets. The assets of such separate account
which are equal to the reserves and other Contract
liabilities with respect to such account shall not be chargeable with
liabilities arising out of any other Company business.
2.2
OWNERSHIP
OF
THE
CONTRACT
The Annuitant will at all times be the Owner of the Contract.
2.3
NONFORFEITABLE
The entire interest of the Owner is nonforfeitable.
2.4
EXCLUSIVE
BENEFIT
The Contract is established for the exclusive benefit of the Owner and
the Beneficiary.
2.5
TRANSFER
AND
ASSIGNMENT
The Contract is not transferable. The Owner may not sell or transfer
the Contract and may not name a secondary Owner. No benefits under the
Contract may be assigned; except the Contract may be transferred to a
former spouse of the Owner under a divorce decree or written
instrument incident to such divorce. In the event of such transfer,
the transferee shall for all purposes be treated as the Owner of the
Contract.
2.6
LOANS
PROHIBITED
The Owner may not borrow any money under the Contract or pledge the Annuity
Account Value or any portion thereof as security for a loan.
<PAGE>
Article
III:
General
Provisions
<PAGE>
3.1
ENTIRE
CONTRACT
The Contract, application, tables, Guaranteed Sub-Account Riders, if
any, and any other rider issued in conjunction with the Contract
constitute the entire contract between the Owner and the Company, as
well as any Beneficiary. A copy of the application is attached to the
Contract when issued to the Owner.
The Contract supersedes all prior representations, statements,
warranties, promises and agreements of any kind, whether oral or
written, relating to the subject matter of the Contract.
All statements in the application, in the absence of fraud,
as determined by a court of competent jurisdiction have been
accepted as representations and not as warranties.
3.2
NON-PARTICIPATING
The Contract is non-participating. It is not eligible to
share in the Company's divisible surplus.
3.3
BENEFICIARY
The Owner may, by Request, designate or change a Beneficiary from time to time.
When recorded by the Company, a change of Beneficiary will take effect as of the
date the Request was submitted by the Owner. If the Owner dies before the date
the Request was recorded, the change will take effect as of the date of the
Request except to the extent that the Company has made a payment or has
otherwise taken action on a designation or change before receipt or recording of
the designation or change of Beneficiary.
Unless otherwise provided in the Beneficiary designation, the following
provisions will apply:
(A) upon the death of the Owner, the Annuity Account Value shall pass to
any
surviving primary Beneficiary and if more than one, the Annuity Account
Value shall be shared equally among them.
(B)
if
a
primary Beneficiary dies before the Owner, that Beneficiary's intended
share will be shared equally among the surviving primary beneficiaries.
(C) if there is no surviving primary Beneficiary, the Annuity Account
Value shall pass to any surviving contingent Beneficiary, and if more
than one, shall be shared equally among them.
(D) if no Beneficiary has been designated, or no Beneficiary survives
the Owner, the Annuity Account Value will pass to the Owner's estate.
3.4
CURRENCY
AND
PAYMENT
CONTRIBUTIONS
All amounts to be paid to or by the Company must be in the currency of the
United States of America. All Contributions to the Contract must be made payable
to the Company or its designated agent.
3.5
AGE
The maximum issue age is 90. If the age of the Annuitant has been
misstated, the payments established will be made on the basis of the
correct age. If payments were too large because of misstatement, the
difference with interest may be deducted by the Company from the next
payment or payments. If payments were too small, the difference with
interest may be added by the Company to the next payment. This interest
will result in an annual effective rate which will not be less than the
Guaranteed Interest Rate per year of 3%, as determined by the Company.
Regular
IRA Contributions may not be made for any tax year during or after which
the Owner has attained age 70 1/2.
3.6
VOTING
RIGHTS
The Company will vote the shares of an Eligible Fund. To the extent
required by law, the Company will vote according to the instructions of the
Owner in proportion to the interest in the Variable Sub-Account. In such
event, the Company will send proxy materials and form(s) to the Owner for a
reply. If no reply is received by the date specified in the proxy
materials, the Company will vote shares of the appropriate Eligible Fund in
the same proportion as shares of the Eligible Fund for which replies have
been received.
During the Annuity Payment Period, the number of votes will decrease as the
assets held to fund annuity payments decrease. The Payee will be entitled
to receive the proxy materials and form(s) otherwise provided to the Owner,
and all other
provisions concerning voting rights will apply to the Payee of a Variable
Dollar Payment Option.
3.7
REPORTS
The Company will furnish the Owner, not less frequently than annually on a
calendar year basis, a statement of the Annuity Account Value. The Company
will furnish the Owner copies of any
shareholder reports of the Eligible Funds and of any other notices, reports
or documents required by law.
<PAGE>
Article III: General Provisions (continued)
<PAGE>
3.8
CONTRACT
MAINTENANCE
CHARGE
The Company may assess a contract maintenance charge each calendar year.
The contract maintenance charge will not be more than $30 per Annuity
Account per year if the Contract value is not at least $5,000 on December
31st of the prior year. The annual amount will be deducted from each
Owner's Annuity Account in existence during the second quarter of the
current year. If an Annuity Account is established for an Owner after the
date of assessment, the contract maintenance charge will be deducted on the
first day of the next quarter and will be pro-rated for the remaining
portion of the year. No refund of this charge will be made.
The deduction will be pro-rated among the Owner's Variable and Guaranteed
Sub-Accounts based upon their Variable and Guaranteed Account Values on the
date of deduction. Whenever a deduction for a contract maintenance charge
is to be made from a Variable Sub-Account, the Company will cancel
Accumulation Units having a total value equal to the amount of the
deduction.
3.9 NOTICE AND PROOF
The Company reserves the right to require satisfactory proof to establish
the age, continued life or death of any person, or the
designation of any Beneficiary before making any payment. Any notice or
demand by the Company to or upon the Owner, or any other person may be
given by mailing it to that person's last known address as stated in the
Company's file.
Any application, report, Request, election, direction, notice or demand by
the Owner, or any other person must be made in a form satisfactory to the
Company.
3.10
TAX
CONSEQUENCES
OF
PAYMENTS
The Owner or Beneficiary, as the case may be, must determine the timing and
amount of any benefit payable. Nothing contained herein shall be construed to be
tax or legal advice and the Company assumes no responsibility or liability for
any damages or costs, including but not limited to taxes, penalties, interest or
attorney's fees incurred by the Owner, the Annuitant, the Payee, the
Beneficiary, or any other person arising out of any such determination.
3.11
POSTPONEMENT
If
the
Company receives a request for surrender or partial withdrawal, the Company
may postpone any cash payment for no more than 6 months (30 days in West
Virginia) other than for payment of any premium to the Company.
<PAGE>
Article IV: Contribution Provisions
<PAGE>
FCIRA/RO-10/97
Page
7
4.1
CONTRIBUTIONS
Contributions under the Contract are not fixed. Except in the case of a
rollover Contribution (as permitted by Code Sections 402(c), 403(a)(4),
403(b)(8), or 408(d)(3)), no Contributions will be accepted unless they are
by check, money order, or wire transfer, and the total of such
Contributions shall not exceed $2,000, or such other maximum as the Code
may allow, for any taxable year.
No Contribution will be accepted unless the Company has also received the
appropriate Request forms for establishment of the IRA, designation of
Contribution and direction to allocate to the sub-account(s).
4.2
INITIAL
CONTRIBUTION
The initial Contribution to the Contract may be an eligible rollover
distribution (defined by the Code) from a plan qualified under Code Section
401(a), a rollover from a Tax Sheltered Annuity as defined in Code Section
403, a rollover from a deductible existing IRA, or an initial contribution
made from earned income derived from non-retirement plan sources.
4.3
REGULAR
IRA
CONTRIBUTIONS
Provided the Owner has made a rollover Contribution as provided under
Article 4.2 of the Contract, the Company will accept IRA Contributions
throughout the Owner's tax year. Such
Contributions must be made by check, money order, or wire transfer on
behalf of the Owner. The appropriate Request forms must accompany the
Contributions to accurately designate and allocate the Contributions. The
minimum amount of such Contribution must be at least $250 and must not
include any amount contributed on behalf of the Owner's spouse. The Company
reserves the right to modify the minimum IRA Contribution.
If the Owner wishes to ensure that the initial Contribution will be
eligible to be rolled back into a qualified plan at some future date, no
regular IRA Contributions should be made to the Contract containing the
initial Contribution.
If the Owner wishes to make regular IRA Contributions, the Owner must
complete and submit an application to the Company at its Home Office for an
additional Contract to accept regular IRA Contributions. It shall be the
Owner's sole responsibility to determine whether to make annual regular IRA
Contributions and to determine whether such Contributions should be made to
the Contract containing the initial Contribution or to a separate Contract
issued specifically to accept such regular Contributions.
Any refund of premiums (other than those attributable to excess
Contributions) will be applied before the close of the calendar year
following the year of the refund toward the payment of additional premiums
or the purchase of additional benefits.
4.4
COMMINGLING
OF
CONTRIBUTIONS
Consult your tax advisor about the consequences of contributing rollover
proceeds from a qualified plan under 401(a), rollover proceeds from other
eligible sources (as defined by the Code) and non-retirement plan earned
income into the same IRA account.
4.5
DESIGNATION
OF
REGULAR
IRA
CONTRIBUTIONS
Regular
IRA Contributions for a tax year of the Owner may be made on or before the
due date of the Owner's federal income tax return for that year, not
including any extensions for filing that return. Such Contributions made
after December 31 for the preceding tax year must be designated as such by
the Owner.
The Owner must designate each regular IRA Contribution or portion thereof
made, to be:
(a) a regular Contribution for the current year; or
(b) a regular Contribution for the prior year.
The Company will rely exclusively upon information provided by
the Owner in determining the appropriate designation of each
regular IRA Contribution.
4.6
EXCESS
CONTRIBUTIONS
The Company will not knowingly accept a regular IRA Contribution
in excess of $2,000 made by the Owner or spouse for a tax year.
Should the Company discover that it has received a Contribution
which would bring the Owner's or spouse's regular IRA
Contribution for a tax year to over $2,000, the Company is not
obligated to return the excess to the Owner except upon the
Owner's written authorization. The Owner is solely responsible
for the determination of any excess Contributions and timely
withdrawal thereof.
<PAGE>
Article
IV:
Contribution
Provisions
(continued)
<PAGE>
4.7
ALLOCATION
OF
CONTRIBUTIONS
Contributions, less Premium Tax, if any, will be allocated in the
Annuity Account among any number of currently offered Variable
and Guaranteed Sub-Accounts in accordance with the latest
recorded Request of the Owner. Allocations shall be effective
upon the Company's receipt of the Contribution. Contributions
received after 4:00 p.m. EST/EDT shall be deemed to have been
received on the next business day.
The allocation of Contributions may be changed at any time upon the
Company's receipt at its Home Office of the Request of the Owner.
A
change
of
allocation will be effective for Contributions which are received after the
Company's receipt and recording of such Request.
4.8
SEP
CONTRIBUTIONS
NOT
ACCEPTED
The Company will not accept SEP (simplified employee pension)
Contributions, as defined under Code Section 408(k), to the
Contract.
<PAGE>
Article V: Account Value Provisions
<PAGE>
5.1
VARIABLE
ACCOUNT
VALUE
The Variable Account Value for the Owner on any date during the
Accumulation Period will be the sum of the values of the Variable
Sub-Accounts.
The value of the Owner's interest in a Variable Sub-Account
will be determined by multiplying the number of the Owner's
Accumulation Units by the accumulation unit value for that
Variable Sub-Account.
5.2
ACCUMULATION
UNIT
For each Contribution, the number of Accumulation Units
credited for the Owner to a Variable Sub-Account will be
determined by dividing the amount of such Contribution by
the accumulation unit value for that Variable Sub-Account on
the next Valuation Date on which such Contribution was
allocated.
Contributions received at the Home Office of the Company
before 4:00 p.m. EST/EDT of a Valuation Date will be
allocated as requested and shall be applied as of that date.
All Contributions received after 4:00 p.m. EST/EDT shall be
applied as of the following Valuation Date.
5.3
ACCUMULATION
UNIT
VALUE
The accumulation unit value of a Variable Sub-Account on any Valuation Date
is equal to the accumulation unit value of that Variable Sub-Account as of
the immediately preceding Valuation Date multiplied by the net investment
factor as described in Section 5.4, for the Valuation Period ending on the
Valuation Date on which the accumulation unit value is being determined.
The accumulation unit value may increase, decrease, or remain unchanged as
a result of the investment experience of the Eligible Fund.
The established dollar value for the initial accumulation unit value of
each Variable Sub-Account is $10.
5.4
NET
INVESTMENT
FACTOR
The
net
investment factor for any Variable Sub-Account for any Valuation period 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 Eligible 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 Eligible 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 reserved for in
the Variable Sub-Account, which is determined by the Company to have resulted
from the investment operations of the Variable Sub-Account.
(b) is the net result of:
(i) the net asset value per share of the Eligible 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 reserved for in
the Variable Sub-Account for the immediately preceding Valuation Period.
(c) is an amount representing the risk charge deducted from each Variable
Sub-Account on a daily basis. The risk charge is equal to an annual rate applied
to the daily net asset value of each Variable Sub-Account where the annual rate
is determined from the Risk Charge Schedule attached to this Contract.
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.
5.5
RISK
CHARGE
The risk charge compensates the Company for its assumption of certain mortality
and expense risks. This charge is described above in Section 5.4 (c). The
Company's current schedule at the time of issue of the Contract is shown in the
attached Risk Charge Schedule. The Company has the right to prospectively adjust
the schedule subject to compliance with applicable law.
<PAGE>
Article V: Account Value Provisions (continued)
<PAGE>
5.6
GUARANTEED
ACCOUNT
VALUE
The Guaranteed Account Value on any date during the Accumulation Period
will be the sum of the values of the Guaranteed Sub-Accounts credited to
the Owner under the Annuity Account.
5.7
GUARANTEED
SUB-ACCOUNT
RIDERS
The computation of the value of a Guaranteed Sub-Account is described in
the attached Guaranteed Sub-Account Rider(s), if any.
<PAGE>
Article
VI:
Transfers
<PAGE>
6.1
TRANSFERS
The Owner may make transfers by Request. Transfers will be accepted after the
appropriate administrative forms and other procedures are executed.
Beneficiaries may make Transfers in limited circumstances as discussed below.
6.2
TRANSFER
TERMS
The following provisions apply:
a.
A Transfer will take effect on the later of the date elected or the date
the Request is received at the Home Office. For Transfers from or into a
Variable Sub-Account, a unit value is calculated by the Company. If such
Request is received after 4:00 p.m. EST/EDT, the Transfer will take
effect based on the unit value on the later of the date elected or the
date following the date the Request is received.
b. When required by the Company, the Owner, or Beneficiary will execute forms
provided by the Company.
c. No Transfers are permitted after the Annuity Commencement Date.
d.
A Transfer from a Guaranteed Sub-Accounts shall be subject to the terms
of the attached Guaranteed Sub-Accounts Rider(s), if any.
e. If a Transfer is made within 30 days of the Annuity Commencement Date, the
Company may delay the annuity commencement by 30 days.
f. If the Owner dies prior to the Annuity Commencement Date, one Transfer
may be made after the death of the Owner by the Beneficiary to effect the
election of a payment option.
6.3
INTRA-COMPANY
TRANSFERS
The following provisions will apply:
a. Monies in the Guaranteed Certificate Fund cannot be transferred prior to
Certificate Maturity Date, except in the following situations:
(1) the Annuitant dies; or
(2)
the Annuitant elects a payment option with a life contingency or an
annuity payment period of at least (36) thirty-six months.
b. Subject to the provisions of Section 6.3.a., at any time prior to the
Annuity Commencement Date, the Owner, by Request, may Transfer all or a
portion of the Annuity Account Value within and between the Variable and
Guaranteed Sub-Accounts currently offered by the Company.
c. No surrender charge will apply to Intra-Company Transfers.
6.4
NON-TAXABLE
DISTRIBUTION
No amount transferred pursuant to these provisions will be treated as a
taxable distribution to the Owner.
6.5 TRANSFER OUTSIDE THE CONTRACT
A Transfer outside the Contract to another investment vehicle qualified
under Code Sections 401(a) or 408 will be considered a Surrender or Partial
Withdrawal in accordance with the provisions of Article VIII of this
Contract.
<PAGE>
Article VII: Distributions
<PAGE>
7.1 DISTRIBUTIONS PRIOR TO AGE 59 1/2
Distributions from the Contract made prior to age 59 1/2 and not
rolled-over or transferred as provided in the Code, are subject to tax
penalties except if made on account of the disability of the Owner (as
evidenced to the Internal Revenue Service by the approval of the
Owner's application for disability benefits under the Social Security
Act or by certification made by a licensed physician), the death of
the Owner or as part of a series of substantially equal annual or more
frequent periodic payments as described in Section 7.2 of the
Contract.
7.2
DISTRIBUTIONS
BEFORE
DEATH
The Owner's entire interest in the policy must be distributed, or
begin to be distributed, by the Owner's required beginning date, which
is the April 1 following the calendar year in which the Owner reaches
age 70.
For each succeeding year, a distribution must be made on or before
December 31. By the required beginning date, the Owner may elect to
have the balance in the policy distributed in one of the following
forms:
(a) a single sum payment;
(b) equal or substantially equal payments over the life of the Owner;
(c) equal or substantially equal payments over the lives of the Owner
and his or her designated beneficiary;
(d) equal or substantially equal payments over a specified period that
may not be longer than the Owner's life expectancy;
(e)
equal
or
substantially equal payments over a specified period that may not be
longer than the joint life and last survivor expectancy of the Owner and
his or her designated beneficiary.
All distributions made hereunder shall be made in accordance with
section 408(a)(6) or section 408(b)(3) of the Code and the regulations
thereunder, including the incidental death benefit requirements of
section 401(a)(9) of the Code, the minimum distribution incidental
benefit requirement of Prop. Treas. Reg. ss.1.401(a)(9)-2, and the
regulations thereunder. Payments must be either non-increasing or may
increase only in accordance with Prop. Treas. Reg. ss.1.401(a)(9)-1,
Q&A F-3.
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. Unless
otherwise elected by the Owner by the time distributions are required to
begin, life expectancies shall be recalculated annually. Such election
shall be irrevocable by the individual and shall apply to all subsequent
years. The life expectancy of a non-spouse beneficiary may not be
recalculated. Instead, life expectancy will be calculated using the
attained age of such Beneficiary during the calendar year in which the
Beneficiary attains age 70 1/2, and payments for subsequent years 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.
7.3
DISTRIBUTION
UPON
DEATH
(a) Distributions beginning before death. If the Owner dies while
receiving distributions, but before the entire interest has been
distributed, the remainder will continue to be distributed at least as
rapidly as under the method of distribution being used prior to the
individual's death
(b) Distributions beginning after death. If the Owner dies before
distribution of his or her interest begins, distribution of the
individual's entire interest shall be completed by December 31 of the
calendar year containing the fifth anniversary of the individual's
death, except to the extent that an election is made to receive
distribution in accordance with (1) or (2) below:
(1) If the Owner's interest is payable to a designated beneficiary,
then the entire interest of the individual may be distributed in equal
or substantially equal payments over the life or over a period certain
not greater than the life expectancy of the designated beneficiary
commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Owner died.
(2) If the Owner's spouse is not the named beneficiary, the method of
distribution selected will assure that at least 50% of the present
value of the amount available for distribution is paid within the
Owner's life expectancy and that such method of distribution complies
with the requirements of Code section 408(b)(3) and the regulations
thereunder.
<PAGE>
Article
VII:
Distributions
(continued)
<PAGE>
(3)
If
the
designated beneficiary is the Owner's surviving spouse, the date
distributions are required to begin in accordance with (1) above
shall not be earlier than the later of (A) December 31 of the
calendar year immediately following the calendar year in which the
individual died or (B) December 31 of the calendar year in which the
individual would have attained age 70 1/2.
(4) If the designated beneficiary is the 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.
(c) 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. For purposes of distributions beginning after the 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.
(d) Distributions under this section are considered to have begun if
distributions are made on account of the Owner reaching his or her
required beginning date or if prior to the required beginning date
distributions irrevocably commence to an individual over a period
permitted and in an annuity form acceptable under section 1.401(a)(9) of
the Regulations.
7.4
MINIMUM
DISTRIBUTIONS
An individual may satisfy the minimum distribution requirements under
sections 408(a)(6) and 408(b)(3) of the Code by receiving a distribution
from one IRA that is equal to the amount required to satisfy the minimum
distribution requirements for two or more IRAs. For this purpose, the Owner
of two or more IRAs may use the alternative method described in Notice
88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements.
7.5
IRA
TO
IRA
TRANSFER
A Transfer of funds from the Contract directly to another IRA either at the
Owner's Request or at the Request of the trustee of such IRA, is not a
rollover. Because there is no distribution to the Owner, the Transfer is
tax-free. Since it is not a rollover, it is not affected by the one-year
waiting period that is required between rollovers.
7.6 ELECTION OF PAYMENT OPTION
If the Owner dies the designated Beneficiary may, subject to the other
provisions of the Contract, elect that payment be made under one or a
combination of the payment options.
7.7 AMOUNT PAYABLE ON DEATH OF THE
OWNER
(A) If the Owner dies before the Annuity Commencement Date, the amount
payable will be the Annuity Account Value as of the date of death,
less Premium Tax, if any.
(B) If the Owner dies after the Annuity Commencement Date, the amount
payable will be the amount remaining to be paid under the method of
distribution in effect on the date of the Owner's death.
(C)
No surrender charge or Loss of Interest Charge will apply to the Amount
Payable on Death of the Owner, described above.
<PAGE>
Article VIII: Surrender and Partial Withdrawals
<PAGE>
8.1 SURRENDER BENEFIT
Subject to the provisions of the Contract, the Owner may Surrender the
Contract for the Surrender Value. In no event shall any cash surrender
benefit be less than the minimum nonforfeiture amount at that time,
that is required by law. The Company shall make the distribution as
soon as practicable after receipt of the Request.
8.2
SURRENDER
VALUE
The Surrender Value is:
(A) the value of all monies held in the Variable Sub-Accounts; plus
(B) the value of all monies held in the Guaranteed Certificate Fund
relating to the Contract, less
(C) the Loss of Interest Charge on all monies held in the Guaranteed
Certificate Fund relating to the Contract, less
(D) the surrender charge, if any, less
(E) Premium Tax, if any.
The Surrender will take effect on the later of the date elected or the date
the Request is received at the Home Office. If such request is received
after 4:00 p.m. EST/EDT, the Surrender will take effect based on the unit
value on the later of the date elected or the date following the date the
Request is received.
8.3 SURRENDER CHARGE
A surrender charge of $50 will apply if the Owner surrenders the
Contract at any time during the 12 month period commencing on the
Effective Date, provided however that no surrender charge will apply
if the Contract is returned for refund in connection with the "20 Day
Free Look" provisions described on the face page of the Contract. The
Company has the right to change the surrender charge subject to
compliance with applicable law.
8.4
PARTIAL
WITHDRAWAL
A charge of $25 will apply on any Partial Withdrawal Request during
the 12 month period commencing on the Effective Date. The Company has
the right to change this charge subject to compliance with applicable
law.
The Owner may make a Partial Withdrawal at any time while this
Contract is in force, subject to the terms of the Contract. After any
Partial Withdrawal, the Annuity Account Value must be at least equal
to the minimum initial Contribution as described in Section 4.3 of the
Contract. Therefore, the maximum Partial Withdrawal will be:
o the Surrender Value described in Section 8.2; less
o the minimum initial Contribution.
By Request, the Owner must elect the Variable or Guaranteed
Sub-Account(s), or a combination of them, from which a Partial
Withdrawal is to be made and the amount to be withdrawn from each
sub-account. If an adequate election is not made, the Request
will be denied and no Partial Withdrawal will be processed.
Partial Withdrawals will be paid in a single sum only. The
Annuity Account Value will be reduced by the Partial Withdrawal
amount and the surrender charge, if any.
The following terms apply:
A. A Partial Withdrawal will take effect on the later of the date
elected or the date the Request is received at the Home Office.
If such Request is received after 4:00 p.m. EST/EDT, the Partial
Withdrawal will take effect based on the unit value on the later
of the date elected or the date following the date the Request is
received.
B.
When required by the Company, the Owner, or Beneficiary will execute
forms provided by the Company.
C. No Partial Withdrawals are permitted after the Annuity
Commencement Date.
D.
A
Partial Withdrawal from a Guaranteed Sub-Accounts shall be subject to
the terms of the attached Guaranteed Sub-Accounts Riders, if any.
E. If a Partial Withdrawal is made within 30 days of the Annuity
Commencement Date, the Company may delay the Annuity Commencement
Date by 30 days provided such delay does not violate the Code or
regulations pertaining thereto.
F. If the Owner dies prior to the Annuity Commencement Date, the
Beneficiary will be accorded the same rights as the Owner was
with respect to a Partial Withdrawal.
<PAGE>
Article VIII: Surrender and Partial Withdrawals (continued)
<PAGE>
8.5 LOSS OF INTEREST CHARGE
On any total or partial Transfer, distribution, or payment
from the Annuity Account, the Loss of Interest Charge will
be deducted from amounts distributed from any Guaranteed
Certificate Fund prior to the Certificate Maturity Date.
8.6 WAIVER OF LOSS OF INTEREST CHARGE
The Loss of Interest Charge will be waived in the event the
Owner selects a payment option of substantially level
payments over a period of at least five years, on account of
death or disability of the Owner (as evidenced by the
Owner's approval for disability benefits under the Social
Security Act or by certification by a licensed physician),
for qualified first time homebuyer distributions or for
qualifying educational expenses (as defined by the Code).
<PAGE>
Article IX: Periodic Payment Options
<PAGE>
9.1 HOW TO ELECT PERIODIC PAYMENT
OPTIONS
The Owner may Request that all or part of the Annuity
Account be applied to a periodic payment option. While
periodic payments are being received, the Owner may continue
to exercise all contractual rights that are available prior
to electing one of the periodic payment options. Once
elected, the applicable option(s) may be revoked by the
Owner at any time, by submitting a Request to the Company's
Home Office. Any revocation will apply only to the amounts
not yet paid. Once an option is revoked, it may not be
elected again.
9.2 SELECTION OF PERIODIC PAYMENT
OPTIONS
The Flexible Payment Option is available for any Owner. The Estate
Maximizer Option is available only for Owners who are at least 70 1/2 years
of age.
An Owner electing a periodic payment option at or after age
59 1/2 will be subject to no penalties and no Loss of
Interest Charge for payments from unmatured guaranteed
certificates as long as payments are substantially level and
are to be paid over a period of not less than five year.
An Owner electing a periodic payment option prior to age 59 1/2 will be
subject to a Loss of Interest Charge to any payment made from an
unmatured guaranteed certificate. As well, an early withdrawal penalty
imposed by the Code may apply. All payments made to an Owner upon the
Owner's attainment of age 70 1/2 from any periodic payment option must
comply with the minimum distribution rules prescribed by the Code.
If
any
payment to be made under the elected periodic payment option will be less
than $100, the Company may make the periodic payments in the most frequent
interval which produces a payment of at least $100.
9.3
ESTATE
MAXIMIZER
OPTION
("EMO")
The Company will calculate and distribute an annual amount
using the method contained in the Code's minimum
distribution regulations. The Owner must specify the initial
distribution date. Subsequent distributions will be made on
the 15th day of any month or such other date as the Company
may designate or allow. The annual distribution is
determined by dividing the current value of the Annuity
Account by a life expectancy factor from tables designated
by the Internal Revenue Service ("IRS"). The factor will be
based on either the Owner's life expectancy or the joint
life expectancy of the Owner and the Owner's spouse and will
be redetermined for each calendar year's distribution. The
current value to be used in this calculation is the Annuity
Account Value on December 31 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.
9.4
FLEXIBLE
PAYMENT
OPTION
("FPO")
FPO payments are available on a monthly, quarterly, semi-annual or annual basis.
The Owner must specify the initial distribution date. Subsequent distributions
will be made on the 15th day of any month or such other dates the Company may
designate or allow.
<PAGE>
Article
IX:
Periodic
Payment
Options
(continued)
<PAGE>
Under each of the methods of distribution described below, the annual
distribution amount must be greater than or equal to the minimum distribution
amount required by the Code and applicable regulations.
One of three following methods of distribution may be elected:
a. Specified Payment - payments of a designated dollar amount. The current value
to be used in this calculation is the Annuity Account Value on the December 31st
prior to the year for which the payment is being made. 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 Annuity Account Value is zero.
b. Specified Period - payments for a designated time period. Each annual
distribution is determined by dividing the Annuity Account Value by the
number of years remaining in the elected period. The current value used in
this calculation is the Annuity Account Value on the December 31st prior to
the year for which the payment is being made. 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 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 Annuity
Account Value is zero.
c. Interest Earnings only - payments equal to the interest earnings portion
only on guaranteed certificates. This method of distribution is only
available to Owners who have all monies invested in the guaranteed
certificates. 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 Annuity Account Value is zero.
For purposes of determination of amounts to be distributed under each of
the referenced distribution methods, life expectancy will be recalculated
annually based on Internal Revenue Code ss.401(a)(9) or applicable
regulations.
The withdrawals from the Annuity Account for purposes of any of the
periodic payment options will be prorated over all Variable and/or
Guaranteed Sub-Accounts.
9.5
MODIFICATION
OF
PERIODIC
PAYMENT
OPTIONS
The Company may offer new or cease offering existing periodic payment
options. No such modification shall affect the terms, provisions or
conditions which are or may be applicable to periodic payment options
elected prior to such modifications.
9.6
ADMINISTRATION
FEE
The Company's current administration fee, if any, will apply to each
periodic payment. The fee is intended to cover costs associated with the
administration of periodic payments and is subject to change by the
Company.
<PAGE>
Article X: Payment Options (Other Than Periodic Payments)
<PAGE>
10.1 HOW TO ELECT PAYMENT OPTIONS
The Request of the Owner is required to elect, or change the election of, a
payment option and must be received by the Company at least 30 days prior
to the Annuity Commencement Date. If a Partial Withdrawal is made within 30
days of the Annuity Commencement Date, the Company may delay the Annuity
Commencement Date by 30 days.
10.2
SELECTION
OF
PAYMENT
OPTIONS
(a) A total or partial single sum payment or one of the variable or fixed
dollar payment options or a combination of them may be elected.
(b) If the Owner elects to apply any or all of the Guaranteed Account Value
to a variable dollar method of payment option, or any or all of the
Variable Account Value to a fixed dollar method of payment option, a
Transfer must be made prior to the Annuity Commencement Date. Procedures
for Transfers are described in Article VI of the contract.
(c) If a single sum payment is elected, the amount to be paid is the
Surrender Value and will be subject to any applicable surrender charge.
(d) If a variable dollar payment option is elected, the amount to be
applied is the Variable Account Value, as of the date the amount of the
first monthly payment is determined, less Premium Tax, if any.
(e) If a fixed dollar method of payment option is elected, the amount to be
applied is the Guaranteed Account Value, as of the Annuity Commencement
Date, less Premium Tax, if any.
(f) The minimum amount that may be applied under the elected payment
option is equal to the minimum initial Contribution as described in
Section 4.3 of the Contract. If the amount is less than the minimum
initial Contribution, the Company may pay it in a single sum. If any
payment to be made under the elected payment option will be less than
$50, the Company may make the payments in the most frequent interval
which produces a payment of at least $50. The maximum amount that may
be applied under any elected payment option is $1,000,000. For the
application of any greater amount, the Company's consent is required.
10.3
VARIABLE
DOLLAR
PAYMENT
OPTIONS
The guaranteed annuity tables are based on mortality from the 1983 Table
(a) for Individual Annuity Valuation (blended 60% male and 40% female) and
a guaranteed interest rate of 3% per year. The Company may offer a better
rate than the guaranteed rate shown.
The following variable dollar payment options are available:
(a) Option 1: Variable Life Annuity with
Guaranteed
Period
Monthly payments for the guaranteed Annuity Payment Period elected or
the lifetime of the Annuitant whichever is longer. The guaranteed
Annuity Payment Period elected may be 5, 10, 15, or 20 years. Upon death
of the Annuitant, the Beneficiary will begin to receive the remaining
payments at the same monthly interval elected by the Owner. See Table A.
(b) Option 2: Variable Life Annuity
Monthly payments for Annuitant's lifetime, without a guaranteed
period. See Table A.
(c) Option 3: Any Other Form
Any other form of variable annuity which is acceptable to the
Company.
These variable dollar payment options are subject to the following
provisions:
(a) Amount of First Monthly Payment
The first monthly payment under a variable dollar payment option will be
based on the value of each Variable Account on the 5th
Valuation Date preceding the Annuity Commencement Date. It will be
determined by applying the appropriate rate from the applicable Table to
the amount applied under the payment option. The first monthly payment
will be the sum of the variable dollar annuity payments for each
Variable Sub-Account.
(b)
Annuity
Units
The number of Annuity Units paid to the Annuitant for each
variable sub-account is determined by dividing the amount of the
first monthly payment by the sub-account's annuity unit value on
the 5th Valuation Date preceding the date the first payment is
due. The number of Annuity Units used to calculate each payment
for a Variable Sub-Account remains fixed during the Annuity
Payment Period.
<PAGE>
Article X: Payment Options (Other Than Periodic Payments)
(continued)
<PAGE>
(c) Amount of Monthly Payments after the first monthly payment will vary
depending upon the investment experience of the Variable
Sub-Accounts. The subsequent dollar amount paid from each sub-account is
determined by multiplying (a) by (b) where (a) is the number of
sub-account Annuity Units to be paid and (b) is the sub-account annuity
unit value on the 5th Valuation Date preceding the date the annuity
payment is due. The total dollar amount of each variable dollar annuity
payment will be the sum of the variable dollar annuity payments for each
Variable Sub-Account. The Company guarantees that the dollar amount of
each payment after the first will not be affected by variations in
expenses or mortality experience.
10.4
FIXED
DOLLAR
PAYMENT
OPTIONS
The guaranteed annuity tables are based on mortality from the 1983 Table
(a) for Individual Annuity Valuation (blended 60% male and 40% female) and
a guaranteed interest rate of 3% per year. The Company may offer a better
rate than the guaranteed rate shown.
The following fixed dollar payment options are available:
(a)
Option
1:
Specified
Amount
Annuity payments at 12-, 6-, 3-, or 1- month intervals, of an
amount elected by the Owner for an Annuity Payment Period of not
more than 240 months. Upon death of the Annuitant, the
Beneficiary will begin to receive the remaining payments at the
same monthly interval elected by the Owner. See Table B.
(b) Option 2: Specified Period
Annuity payments at 12-, 6-, 3-, or 1- month intervals, for the
number of months elected for an Annuity Payment Period of not
more than 240 months. Upon death of the Annuitant, the
Beneficiary will begin to receive the remaining payments at the
same monthly interval elected by the Owner. See Table B.
(c) Option 3: Fixed Life Annuity with
Guaranteed
Period
Monthly payments for the guaranteed Annuity Payment Period elected which
may be 5, 10, 15, or 20 years or the lifetime of the Annuitant whichever
is longer. Upon death of the Annuitant, the Beneficiary will begin to
receive the remaining payments at the same monthly interval elected by
the Owner. See Table C.
(d) Option 4: Fixed Life Annuity with
Installment Refund Period
Monthly payments for the life of the Annuitant or until the
sum of the payments made equals the amount applied,
whichever is longer. See Table E.
(e) Option 5: Fixed Life Annuity
Monthly payments for the Annuitant's lifetime, without a
guaranteed period. See Table C.
(f) Option 6: Joint and One-Half Survivor Fixed Annuity
Fixed monthly payments to an Annuitant for life, with
one-half of the fixed payment amount continuing to the
survivor for life. See Table D for the minimum monthly
amount.
(g) Option 7: Any Other Form
Any other form of fixed annuity which is acceptable to the
Company. Upon death of the Annuitant, the Beneficiary will
begin to receive the remaining payments at the same monthly
interval elected by the Owner. Payments under these fixed
dollar payment options are guaranteed by the Company as to
dollar amount throughout the Annuity Payment Period.
<PAGE>
Article X: Payment Options (Other Than Periodic Payments)
(continued)
<PAGE>
(c) Amount of Monthly Payments after the first monthly payment will vary
depending upon the investment experience of the Variable
Sub-Accounts. The subsequent dollar amount paid from each sub-account is
determined by multiplying (a) by (b) where (a) is the number of
sub-account Annuity Units to be paid and (b) is the sub-account annuity
unit value on the 5th Valuation Date preceding the date the annuity
payment is due. The total dollar amount of each variable dollar annuity
payment will be the sum of the variable dollar annuity payments for each
Variable Sub-Account. The Company guarantees that the dollar amount of
each payment after the first will not be affected by variations in
expenses or mortality experience.
10.4
FIXED
DOLLAR
PAYMENT
OPTIONS
The guaranteed annuity tables are based on mortality from the 1983 Table
(a) for Individual Annuity Valuation (blended 60% male and 40% female) and
a guaranteed interest rate of 3% per year. The Company may offer a better
rate than the guaranteed rate shown.
The following fixed dollar payment options are available:
(a) Option 1: Specified Amount
Annuity payments at 12-, 6-, 3-, or 1- month intervals, of an amount elected by
the Owner for an Annuity Payment Period of not more than 240 months. Upon death
of the Annuitant, the Beneficiary will begin to receive the remaining payments
at the same monthly interval elected by the Owner. See Table B.
(b) Option 2: Specified Period
Annuity payments at 12-, 6-, 3-, or 1- month intervals, for the number of months
elected for an Annuity Payment Period of not more than 240 months. Upon death of
the Annuitant, the Beneficiary will begin to receive the remaining payments at
the same monthly interval elected by the Owner. See Table B.
(c) Option 3: Fixed Life Annuity with
Guaranteed Period
Monthly payments for the guaranteed Annuity Payment Period elected which
may be 5, 10, 15, or 20 years or the lifetime of the Annuitant whichever
is longer. Upon death of the Annuitant, the Beneficiary will begin to
receive the remaining payments at the same monthly interval elected by
the Owner. See Table C.
(d) Option 4: Fixed Life Annuity with
Installment Refund Period
Monthly payments for the life of the Annuitant or until the sum
of the payments made equals the amount applied, whichever is
longer. See Table E.
(e) Option 5: Fixed Life Annuity
Monthly payments for the Annuitant's lifetime, without a
guaranteed period. See Table C.
(f) Option 6: Joint and One-Half Survivor Fixed Annuity
Fixed monthly payments to an Annuitant for life, with one-half of the fixed
payment amount continuing to the survivor for life. See Table D for the minimum
monthly amount.
(g) Option 7: Any Other Form
Any other form of fixed annuity which is acceptable to the Company. Upon
death of the Annuitant, the Beneficiary will begin to receive the remaining
payments at the same monthly interval elected by the Owner. Payments under
these fixed dollar payment options are guaranteed by the Company as to
dollar amount throughout the Annuity Payment Period.
<PAGE>
Article
XI:
Modifications
<PAGE>
11.1
CONTRACT
MODIFICATION
The Contract may be modified at any time by written agreement between the
Company and the Owner. However, the Company reserves the right to amend the
Contract at any time without the consent of the Owner, in order to comply
with future changes in the Code and any regulations or rulings thereunder
as required to maintain conformity with state law. The Company will provide
the Owner with a copy of such amendment.
The Company may also, at any time and without the consent of the Owner or
other person, but upon 30 days written notice to the Owner, modify the
Contract in any respect to conform it to changes in tax or other law,
including applicable regulations or rulings.
After issue, modifications to the Contract under the Contract Modification
provisions become part of the Contract.
Only the President, a Vice-President or the Secretary of the Company can
modify or waive any provision of this Contract.
11.2 MODIFICATION OF GUARANTEED
SUB-ACCOUNT RIDER(S), IF ANY
Any Guaranteed Sub-Account Rider may be modified at any time by written
agreement between the Company and the Owner. No such modification will,
without the written consent of the Owner, affect the terms, provisions, or
conditions of the rider(s) which are or may be applicable to Contributions
prior to the date of such modification.
Provided however, if the Company ceases to offer the Guaranteed Certificate
Fund, 30 days written notice will be given to the Owner, no new
Contributions will be allocated and no new Certificates will be issued
after the cessation date. Amounts allocated to Certificates prior to such
date will continue to receive the credited interest rate until the
Certificate Maturity Date.
11.3 MODIFICATION OF VARIABLE
SUB-ACCOUNTS
Notwithstanding the other Contract Modification provisions, the Company may
offer new or cease offering existing Variable Sub-Accounts. No such
modification shall affect the terms, provisions or conditions which are or
may be applicable to Contributions previously paid to any Variable
Sub-Account which is no longer offered by the Company provided, however, if
the Company ceases to offer a Variable Sub-Account 30 days notice will be
given to the Owner. The Owner must then Transfer the value of the Variable
Sub-Account to another Variable Sub-Account then offered by the Company. If
the Owner fails to make such Transfer then the Company upon notification to
the Owner may make an automatic allocation on behalf of the Owner to any
Variable or Guaranteed Sub-Account which allows for immediate Transfers
subject to applicable law. Such allocation will become effective until such
time as a Request for a different allocation is received. The Company will
periodically notify the Owner of the current offering of Variable or
Guaranteed Sub-Accounts.
<PAGE>
===
..
===
TABLE A - Variable Life Annuity
Monthly Payment for Each $1,000
of Annuity Account Value
Age of Without Guaranteed With Guaranteed Period
Payee Period
5 Years 10 Years 15 Years 20 Years
50 4.05 4.04 4.02 3.98 3.93
55 4.43 4.42 4.38 4.32 4.22
60 4.94 4.92 4.85 4.73 4.55
65 5.65 5.60 5.46 5.22 4.89
70 6.63 6.53 6.23 5.75 5.18
75 8.05 7.81 7.14 6.24 5.38
If payments commence on any other date than the exact age of the Annuitant as
shown above, the amount of the monthly payment shall be determined by the
Company on the actuarial basis used by it in determining the above amounts.
<PAGE>
FCIRA/RO-10/97 Page 20
<PAGE>
=====================================================================
=====================================================================
TABLE B - Income of Specified Amount
Income for a Specified Period
Monthly Payment for Each $1,000
of Annuity Account Value
Years Payment
3 28.99
4 22.06
5 17.91
6 15.14
7 13.16
8 11.68
9 10.53
10 9.61
11 8.86
12 8.24
13 7.71
14 7.26
15 6.87
16 6.53
17 6.23
18 5.96
19 5.73
20 5.51
To determine the payment for other frequencies of payment, multiply the above
monthly payment by the following factors:
Factor
Quarterly payment 2.99
Semi-annual payment 5.97
Annual payment 11.87
If payments are for an amount or duration different than that outlined above,
the Company will determine the proper amount or duration using the actuarial
basis used to determine the above Table.
<PAGE>
FCIRA/RO-10/97 Page 21
<PAGE>
===============================================================================
==========================================================================
TABLE C - Fixed Life Annuity
Monthly Payment for Each $1,000
of Annuity Account Value
Age of Payee Without Guaranteed With Guaranteed Period
Period
5 Years 10 Years 15 Years 20 Years
50 4.05 4.04 4.02 3.98 3.93
55 4.43 4.42 4.38 4.32 4.22
60 4.94 4.92 4.85 4.73 4.55
65 5.65 5.60 5.46 5.22 4.89
70 6.63 6.53 6.23 5.75 5.18
75 8.05 7.81 7.14 6.24 5.38
If payments commence on any other date than the exact age of the Annuitant as
shown above, the amount of the monthly payment shall be determined by the
Company on the actuarial basis used by it in determining the above amounts.
<PAGE>
============================================================
============================================================
TABLE D - Joint and One-Half Survivor Fixed Annuity
Monthly Payment for Each $1,000
of Annuity Account Value
If Designated Payee Is Age
Age of Annuitant 50 55 60 65 70 75
50 3.81 4.04 4.30 4.60 4.94 5.33
55 3.87 4.13 4.43 4.78 5.17 5.62
60 3.92 4.21 4.56 4.96 5.42 5.95
65 3.96 4.28 4.67 4.14 5.69 6.32
70 3.99 4.33 4.76 5.29 5.94 6.72
75 4.01 4.37 4.83 5.42 6.17 7.10
If payments commence on any other date than the exact age of the Annuitant as
shown above, the amount of the monthly payment shall be determined by the
Company on the actuarial basis used by it in determining the above amounts.
<PAGE>
FCIRA/RO-10/97(OR) Page 22
<PAGE>
===============================================================================
===============================================================================
TABLE E - Joint and One-Fixed Life Annuity with Installment Refund Period
Monthly Payment for Each $1,000
of Annuity Account Value
Age of Annuitant Payment
50 4.42
55 4.67
60 4.97
65 5.30
70 5.83
75 6.72
If payments commence on any other date than the exact age of the Annuitant as
shown above, the amount of the monthly payment shall be determined by the
Company on the actuarial basis used by it in determining the above amounts.
<PAGE>
===============================================================================
===============================================================================
RISK CHARGE SCHEDULE
Annuity Account Values Risk Charge
[$0.00 - $ 9,999.99] [.75%]
[$10,000.00 - $24,999.99] [.50%]
[$25,000.00 - $49,999.99] [.25%]
[$50,000.00 and greater] [.00%]
<PAGE>
Guaranteed Certificate Fund
GUARANTEED SUB-ACCOUNT RIDER ATTACHED TO AND FORMING PART OF CONTRACT
THE GUARANTEED CERTIFICATE FUND IS A GUARANTEED SUB-ACCOUNT, WHEREBY CREDITED
INTEREST RATES ARE CREDITED TO CONTRIBUTIONS HELD FOR VARYING INTEREST GUARANTEE
PERIODS. THE COMPANY MAY OFFER CERTIFICATES TO THE OWNER WHO MAY, BY REQUEST,
ALLOCATE ANY CONTRIBUTION TO ANY ONE CERTIFICATE. THE OWNER MAY ALLOCATE HIS
CONTRIBUTIONS ONLY TO THOSE CERTIFICATES CURRENTLY BEING OFFERED BY THE COMPANY.
IF THE OWNER ALLOCATES CONTRIBUTIONS TO CERTIFICATES NOT CURRENTLY OFFERED BY
THE COMPANY, THE COMPANY WILL ALLOCATE SUCH CONTRIBUTIONS TO THE SUB-ACCOUNT
INDICATED ON THE APPLICATION ATTACHED TO THE CONTRACT.
<PAGE>
DEFINITIONS
Certificate - represents the amount deposited into the Guaranteed Certificate
Fund under each Interest Guarantee Period, Term and credited interest rate. Each
Certificate has its own credited interest rate and Term.
Term - the duration of the Certificate expressed in months, which will consist
of two periods:
(a)an initial window period during which Contributions are received. The
duration of the window period will be specified by the Company.
(b)a holding period which begins on the day after the end of the window
period and ends on the Certificate Maturity Date.
The Terms available may be limited by the Company.
Certificate Maturity Date - the last day of the Term.
Interest Guarantee Period - the period from the date of the Contribution to the
Certificate Maturity Date.
INTEREST CREDITING AND SELECTION OF
METHOD OF PAYMENT
The credited interest rate on an annual effective basis will be compounded daily
and will equal the annual effective rate declared by the Company. The credited
interest rate will never be less than 3%. A Contribution to the Guaranteed
Certificate Fund, until the Certificate Maturity Date, will earn a credited
interest rate for the Certificate's Interest Guarantee Period.
If the Owner dies, is disabled as defined by the Code or has attained age 59
1/2, then upon Request from the Owner amounts deposited into the Guaranteed
Certificate Fund may be paid in a single sum or applied to a payment option
pursuant to Article IX of this Contract prior to the Certificate Maturity Date.
Such amounts will receive the credited interest rate from the date of
Contribution to the date the amount is paid or applied to the elected payment
option. No Transfers from the Guaranteed Certificate Fund may be made prior to
the Certificate Maturity Date.
If the Owner does not meet the requirements described in the previous paragraph,
amounts contributed into the Guaranteed Certificate Fund must remain in the
Certificate until the Certificate Maturity Date. Thus, no payment option may be
elected, and no distributions or Intra-Company Transfers will be permitted prior
to the Maturity Date of each respective Certificate.
In the event of Surrender under Article VIII of the Contract, the provisions of
such Article will apply.
CERTIFICATE MATURITY
Prior to the Certificate Maturity Date, the Company will offer a Guaranteed or
Variable Sub-Account into which the value of the Certificate may be contributed
on its Maturity Date. The sub-account so offered may be either the Guaranteed
Certificate Fund or another sub-account. The Owner may elect, by Request, to
Transfer the value of the Certificate on its Maturity Date. If the Owner fails
to make such Request, then the Company at its sole
Guaranteed Certificate Fund (continued)
discretion will make an allocation to the Guaranteed Sub-account indicated in
the application to the Contract. Such allocation will become effective until
such time as a Request, for a different allocation is received.
If the Guaranteed Certificate Fund is offered, the value of the Certificate on
its Maturity Date may, upon Request, be contributed to a new Certificate which
has its own interest rate and Term. The credited interest rate of this new
Certificate may be higher or lower than the credited interest rate of any other
Certificate or Contribution.
If another sub-account is offered, the value of the Certificate on its Maturity
Date may, upon Request, be contributed to that sub-account. The credited
interest rate of this Contribution may be higher or lower than the credited
interest rate of any other Contribution. If the value of the Certificate on its
Maturity Date is transferred to a Variable Sub-Account there will be no credited
interest rate.
TRANSFERS
The terms of Article VI of the Contract will apply to any
Transfer to or from the Guaranteed Certificate Fund.
VALUE OF GUARANTEED CERTIFICATE FUND
The value of the Guaranteed Certificate Fund of the Owner will be determined by
adding the Guaranteed Certificate Fund sub-account Contributions and credited
interest, and subtracting any Partial Withdrawals, Surrenders, amounts payable
on death, amounts applied under a payment option, Transfers, and Premium Tax, if
any.
LOSS OF INTEREST CHARGE
The Transfer, distribution or application to a payment option prior to the
Certificate Maturity Date of funds in a Certificate shall be known as breaking a
Certificate. If a Certificate is broken, a Loss of Interest Charge may be
assessed, as defined in Article I and in Section 8.5 of this Contract. However,
the Loss of Interest Charge may be waived as described in Section 8.6.
Signed for Great-West Life & Annuity Insurance Company on the issuance of the
contract (unless a different date is shown here).
[GRAPHIC OMITTED]
W.T. McCallum,
President and Chief Executive Officer
<PAGE>
Exhibit 5
Variable Annuity Application
================================================================================
<PAGE>
IRA APPLICATION
(FLEXIBLE CONTRIBUTION INDIVIDUAL RETIREMENT ANNUITY)
PLEASE PRINT - PRESS FIRMLY
Great-West
Life & Annuity Insurance Company
Securities offered through The Great-West Life Assurance Company
Great-West Life & Annuity
IRA/401(k) Operations
P.O. Box 1400
Denver, CO 80201
Withdrawal from:
Social Security Number Last Name First Name MI
Address (No. & Street) City State Zip Code
Phone # Marital Status MarriedSingle Birth Date
( ) vorced WidowedMonth/Day/Year
Sex Male Primary Language (if other than English)
Female
Rollover Allocation:
Investment Options Percent
International:
IF-2 Maxim Foreign Equity %
Aggressive Growth:
AG-3 Maxim Small-Cap Index %
AG-4 Maxim Growth Index %
AG-5 Maxim Small-Cap Aggressive Growth %
Growth:
GF-2 Maxim Stock Index %
GF-4 Maxim Small-Cap Value %
GF-5 Maxim Mid-Cap Growth %
Growth & Income:
G&I-1 Maxim Blue Chip %
G&I-3 Maxim Value Index %
Bond:
BF-1 Maxim U.S. Government Mortgage Securities %
BF-2 Maxim Investment Grade Corporate Bond %
BF-3 Maxim Corporate Bond %
BF-5 Maxim Ultra Short-Term Bond %
Guaranteed Certificates:
3 Year - Great-West General Assets %
5 Year - Great-West General Assets %
7 Year - Great-West General Assets %
Short-Term Money Market:
MMF-2 Maxim Money Market %
Allocations should be in whole numbers and total 100%
Note: The Contract for Rollover contributions will be issued at the time
Great-West accepts this application form.
Beneficiary Designation: (Check ONE)
Beneficiary designated Form G1223R for
as indicated below multiple beneficiaries attached.
Primary Beneficiary info:
Last Name First Name
Social Security # Relationship
Contingent Beneficiary Info:
Last Name First Name
Social Security # Relationship
Compliance Information:
The Securities and Exchange Act of 1934 requires that we have reasonable grounds
to believe, based upon the information provided by you, that your investment
selections are suitable given your objectives and financial situation. Please
answer the following questions relating to the suitability of your investment
choices.
Are you associated with an NASD member firm as a Partner, Officer, Registered
Representative or employee? Yes No If yes, please list the name of the NASD
member firm: _________________
Annual Income:
Below $50,000
$50,000-$99,999
$100,000+
Investment Objectives
Primary/Secondary
Capital Preservation
Income
Growth
Moderate Growth
Aggressive Growth
Approximate Net Worth: $ Liquid Assets $
# of Dependents:______ Years of investment experience:__________
Federal Income Tax Bracket 15% 28% 31%
Applicant Certification and Signature:
I agree that this Application, if approved, shall become part of my IRA
Contract(s) with Great-West. I understand that the Contract may provide for
payments or values which are not guaranteed to be fixed dollar amounts and which
increase or decrease according to the investment experience of the underlying
fund(s).
I agree that my financial status, tax status and investment objectives reflect
my decision for electing the investment options in my IRA portfolio.
I state that I have read and understand the Applicant Acknowledgments on the
reverse side of this form.
I also state that the information provided by me is complete and accurate to the
best of my knowledge.
I understand that in the event this form is incomplete my Rollover will be
delayed or my monies returned as specified in the Prospectus.
I, as Applicant, hereby state that should this application be accepted, the
accompanying Contract ___ will ___ will not replace an existing Individual
Retirement Annuity.
Signature: Date:
G1222R(rev 1/98) Original - Great-West's Home Office Canary - Applicant
Information Regarding Your Rollover Contribution:
The Rollover Contribution must be an eligible rollover distribution from a
qualified plan, ss.403(b) tax sheltered annuity, an IRA, or a Qualified
Group Annuity Contract issued by the Great-West Life & Annuity Insurance
Company (Great-West). Qualifying rollovers and contributions are subject to
all applicable Federal rules and regulations.
Great-West may charge a Contract Maintenance Charge of up to $30 per year.
ThisIRA is being established as an annual IRA-Rollover Contract, of which,
once approved and accepted by Great-West, you are the Owner.
Great-West Must report this Rollover distribution on IRS form 1099-R.
Applicant Acknowledgments:
I have received the current prospectus which applies to this Contract.
I understand that the Contract may provide for payments or values which are
not guaranteed to be fixed dollar amounts and which increase or decrease
according to the investment experience of the underlying mutual fund(s).
I understand that my rollover monies will be allocated as I have indicated
on the reverse of this form.
I understand that my ongoing contributions (if any) will be allocated has I
have indicated on the reverse of this form. I also understand that these
allocations (minimum of $250 per contribution - maximum of $2,000 annually)
can be changed through Great-West's Key Talk automated system, or by
completing an IRA Change Form (G1224R).
I acknowledge that unless I direct otherwise, if I have elected to allocate
my Rollover monies into a Guaranteed Certificate Fund (also referred to here
as the "Guaranteed Term Fund"), at maturity these monies will be placed into
a new certificate, with a new term, at the current interest rate. This
interest rate may differ from the interest rates earned previously.
If not satisfied with this Contract, I understand that I may return it to
Great-West's Home Office in Colorado within 20 days of receiving it. The
contract will be void from the start and all contributions will be refunded.
Any investment gains or losses arising during this period shall accrue to or
be borne by Great-West. Upon written request, Great-West will provide the
Owner factual information regarding the benefits and provisions of this
Contract.
I understand that any person, who, with intent to defraud or who knowingly
facilitates a fraud against an insurer, submits an application or files a
claim containing a false or deceptive statement is guilty of insurance
fraud. I certify that under penalty of perjury that my Social Security or
Tax Identification Number shown on the reverse of this form is correct.
I hereby acknowledge that I am the Owner of a Flexible Contribution
Individual Retirement Annuity (IRA) under Great-West's Retirement Plan
Series Account and have either completed the Beneficiary Designation section
of this form (single beneficiary) or have completed and attached a
Designation of Beneficiary form (G1223R) (for multiple beneficiaries), and
hereby designate the person(s) noted as revocable beneficiary(ies) of any
monies payable upon my death under said IRA.
PRINCIPAL CERTIFICATION AND SIGNATURE: (To be completed by Great-West Life &
Annuity)
Signature: Date:
