-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rok6GLU/pZ5xDVs/yj13536CFv45FgjjBFP+kZjVI4myBxqAt8bdJyx1A4WBOxjE 2JCyruHqABNKJLa0nqeZbQ== 0000837276-02-000125.txt : 20020430 0000837276-02-000125.hdr.sgml : 20020430 ACCESSION NUMBER: 0000837276-02-000125 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 20020430 EFFECTIVENESS DATE: 20020501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE CO CENTRAL INDEX KEY: 0000836687 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-63692 FILM NUMBER: 02625503 BUSINESS ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: SUITE 400 CITY: WEST CHESTER STATE: PA ZIP: 19380-1478 BUSINESS PHONE: 610-425-3516 MAIL ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: P. O. BOX 2700 CITY: WEST CHESTER STATE: PA ZIP: 19380-2700 FORMER COMPANY: FORMER CONFORMED NAME: SPECIALTY MANAGERS SEPARATE ACCOUNT B DATE OF NAME CHANGE: 19910529 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN CAPITAL SPECIALTY MANAGERS SEPARATE ACCOUNT B DATE OF NAME CHANGE: 19890914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE CO CENTRAL INDEX KEY: 0000836687 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05626 FILM NUMBER: 02625504 BUSINESS ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: SUITE 400 CITY: WEST CHESTER STATE: PA ZIP: 19380-1478 BUSINESS PHONE: 610-425-3516 MAIL ADDRESS: STREET 1: 1475 DUNWOODY DRIVE STREET 2: P. O. BOX 2700 CITY: WEST CHESTER STATE: PA ZIP: 19380-2700 FORMER COMPANY: FORMER CONFORMED NAME: SPECIALTY MANAGERS SEPARATE ACCOUNT B DATE OF NAME CHANGE: 19910529 FORMER COMPANY: FORMER CONFORMED NAME: WESTERN CAPITAL SPECIALTY MANAGERS SEPARATE ACCOUNT B DATE OF NAME CHANGE: 19890914 485BPOS 1 sdadvn-4.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on April 29, 2002 Registration Nos. 333-63692; 811-05626 - ------------------------------------------------------------------------------- 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. 1 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 154 [X] (Check appropriate box or boxes) SEPARATE ACCOUNT B (Exact Name of Registrant) GOLDEN AMERICAN LIFE INSURANCE COMPANY (Name of Depositor) 1475 Dunwoody Drive West Chester, Pennsylvania 19380-1478 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code (610) 425-3400 Linda E. Senker, Esq. Kimberly J. Smith ING ING 1475 Dunwoody Drive 1475 Dunwoody Drive West Chester, PA 19380-1478 West Chester, PA 19380-1478 (610) 425-4139 (610) 425-3427 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: As soon as practical after the effective date of the Registration Statement It is proposed that this filing will become effective (check appropriate box): [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 [X] on May 1, 2002 pursuant to paragraph (b) of Rule 485 [ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485 [ ] on (date) pursuant to paragraph (a)(1) of Rule 485 If appropriate, check the following box: [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Being Registered: Deferred Combination Variable and Fixed Annuity Contracts - ---------------------------------------------------------------------------- Part A PROFILE AND PROSPECTUS OF SMARTDESIGN ADVANTAGE VARIABLE ANNUITY SmartDesign Advantage--May 1-2002--10.doc ING VARIABLE ANNUITIES GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- PROFILE OF SMARTDESIGN ADVANTAGE DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACT MAY 1, 2002 ---------------------------------------------------------------------- This Profile is a summary of some of the more important points that you should know and consider before purchasing the Contract. The Contract is more fully described in the full prospectus which accompanies this Profile. Please read the prospectus carefully. ---------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. THE ANNUITY CONTRACT The Contract offered in this prospectus is a deferred combination variable and fixed annuity contract between you and Golden American Life Insurance Company. The Contract features a 2% premium credit option, which is currently available only at Contract issue. The Contract provides a means for you to invest on a tax-deferred basis in (i) one or more of the mutual fund investment portfolios through our Separate Account B and/or (ii) in a Fixed Account of Golden American with guaranteed interest periods. The investment portfolios are listed below. Generally, the investment portfolios are designed to offer a better return than the Fixed Account. The Fixed Account is described in a separate prospectus titled Fixed Account II. However, this is NOT guaranteed. You may not make any money, and you can even lose the money you invest in the investment portfolios. The Contract offers a choice of death benefit options. You may choose from three option packages which determine your death benefit, minimum premium and annual free withdrawal. Your choice of option package will affect your mortality and expense risk charge. SMARTDESIGN ADVANTAGE PROFILE PROSPECTUS BEGINS AFTER 121820 PAGE 13 OF THIS PROFILE The differences are summarized as follows:
- ----------------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III - ----------------------------------------------------------------------------------------------------- MORTALITY AND EXPENSE RISK CHARGE 1.45% 1.65% 1.80% - ----------------------------------------------------------------------------------------------------- The greater of: The greatest of: The greatest of: (1) the Standard Death (1) the Standard Death (1) the Standard Death Benefit on the claim Benefit on the claim Benefit on the claim date; or date; or date; or (2) the contract value on (2) the contract value on (2) the contract value on the claim date*. the claim date*; or the claim date*.; or (3) the Annual Ratchet (3) the Annual Ratchet death benefit on the death benefit claim date. on the claim date; or (4) the 5% Roll-Up death benefit on the claim date. - -------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- MINIMUM INITIAL PURCHASE Non- Non- Non- PAYMENT Qualified: Qualified: Qualified: Qualified: Qualified: Qualified: $15,000 $1,500 $5,000 $1,500 $5,000 $1,500 - ----------------------------------------------------------------------------------------------------------------------------- FREE WITHDRAWALS 10% of your contract 10% of your contract 10% of your contract value each contract value each contract value each contract year, non-cumulative year, non-cumulative year, cumulative to a maximum 30% - -----------------------------------------------------------------------------------------------------
* less credits added since or within 12 months prior to death Please see "Purchase and Availability of the Contract", "Death Benefit During the Accumulation Phase", and "Free Withdrawal Amount" for a complete description of the features of each option package. Subject to state availability, you may also elect, for an additional charge, an earnings multiplier benefit rider. Please see "Expenses" for a description of any applicable charge. The earnings multiplier benefit rider provides a separate death benefit in addition to the death benefit provided under the option package you select. For a description of the earnings multiplier benefit rider, please see below. To find out about availability, check with our Customer Service Center. The Contract, like all deferred variable annuity contracts, has two phases: the accumulation phase and the income phase. The accumulation phase is the period between the contract date and the date on which you start receiving the annuity payments under your Contract. The amounts you accumulate during the accumulation phase will determine the amount of annuity payments you will receive. The income phase begins on the annuity start date, which is the date you start receiving regular annuity payments from your Contract. You determine (1) the amount and frequency of premium payments, (2) your investment allocations, (3) transfers between investment options, (4) the type of annuity to be paid after the accumulation phase, (5) the beneficiary who will receive the death benefits, (6) the type of death benefit, and (7) the amount and frequency of withdrawals. 121820 SMARTDESIGN ADVANTAGE PROFILE 2 2. YOUR ANNUITY PAYMENTS (THE INCOME PHASE) When you want to begin receiving payments from your contract, you may select from the options available. The contract offers several income phase payment options (see "The Income Phase"). In general, you may: o Receive income phase payments for a specified period of time or for life; o Receive income phase payments monthly, quarterly, semi-annually or annually; o Select an income phase payment option that provides for payments to your beneficiary; or o Select income phase payments that are fixed or vary depending upon the performance of the variable investment options you select. 3. PURCHASE (BEGINNING OF THE ACCUMULATION PHASE) The minimum initial payment to purchase the Contract, and the maximum age at which you may purchase the Contract depend on the option package that you select.
---------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III ---------------------------------------------------------------------------------------------- Minimum Initial $15,000 (non-qualified) $5,000 (non-qualified) $5,000 (non-qualified) Payment $1,500 (qualified) $1,500 (qualified) $1,500 (qualified) ---------------------------------------------------------------------------------------------- Maximum Age to Purchase 85 80 80 ----------------------------------------------------------------------------------------------
You may make additional premium payments until the contract anniversary after your 86th birthday. The minimum additional premium payment we will accept is $50 regardless of the option package you select. Under certain circumstances, we may waive the minimum initial and additional premium payment requirement. Any initial or additional premium payment that would cause the contract value of all annuities that you maintain with us to exceed $1,000,000 requires our prior approval. Who may purchase this Contract? The Contract may be purchased by individuals as part of a personal retirement plan (a "non-qualified Contract"), or as a Contract that qualifies for special tax treatment when purchased as either an Individual Retirement Annuity (IRA) or in connection with a qualified retirement plan (each a "qualified Contract"). IRAs and other qualified plans already have the tax-deferral feature found in this Contract. For an additional cost, the Contract provides other benefits including death benefits and the ability to receive a lifetime income. See "Expenses" in this profile. The Contract is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes. The tax-deferred feature is more attractive to people in high federal and state tax brackets. YOU SHOULD NOT BUY THIS CONTRACT: (1) IF YOU ARE LOOKING FOR A SHORT-TERM INVESTMENT; (2) IF YOU CANNOT RISK GETTING BACK LESS MONEY THAN YOU PUT IN; OR (3) IF YOUR ASSETS ARE IN A PLAN WHICH PROVIDES FOR TAX-DEFERRAL AND YOU SEE NO OTHER REASON TO PURCHASE THIS CONTRACT. Replacing your existing annuity contract(s) with the Contract may not be beneficial to you. Your existing Contract may be subject to fees or penalties on surrender. PREMIUM CREDIT OPTION. At the time of application you may elect the premium credit option. If you so elect, a credit will be added to your Contract based on all premium payments received within 60 days of the contract date ("initial premium"). The credit will be a minimum of 2% of initial premium and will be allocated among the investment options you have selected in proportion to your initial premium. If available in your state at that time, prior to the third contract anniversary and prior to every third contract anniversary thereafter, you may elect to have a new credit added to your Contract. Each three year period 121820 SMARTDESIGN ADVANTAGE PROFILE 3 beginning with the addition of a premium credit is known as a "renewal period". The credit will be a minimum of 2% of your contract value on the applicable contract anniversary. Each new premium credit will be allocated among your variable investment options in proportion to your contract value in the variable investment options. If no contract value is then allocated to the variable investment options, the new premium credit will be allocated to a specially designated subaccount, currently the Liquid Asset Subaccount. If you do not elect the premium credit option, we will discontinue the option on the contract anniversary at the start of the next renewal period. Once you elect not to renew the premium credit option, it cannot be subsequently resumed. We will assess a charge for each premium credit which will be deducted from your contract value for a period of up to three years following the addition of a premium credit. The premium credit option charge will be deducted from your contract value in both the subaccounts and the Fixed Account. The charge will equal 0.60% of your contract value in the subaccounts on an annual basis and will reduce the interest which would otherwise have been credited to your contract value in the Fixed Account by 0.60% on an annual basis. See "Expenses." If you anticipate that you will need to make withdrawals from your Contract during the first three contract years, you may not want to elect the premium credit option. Your sales representative can help you decide if the premium credit option is right for you. THE EXPENSES FOR A CONTRACT PROVIDING A PREMIUM CREDIT, AS THIS CONTRACT DOES, MAY BE HIGHER THAN FOR CONTRACTS NOT PROVIDING A PREMIUM CREDIT. OVER TIME, AND UNDER CERTAIN CIRCUMSTANCES, THE AMOUNT OF THE PREMIUM CREDIT MAY BE MORE THAN OFFSET BY THE ADDITIONAL FEES AND CHARGES ASSOCIATED WITH THE PREMIUM CREDIT. 4. THE INVESTMENT PORTFOLIOS You can direct your money into (1) the Fixed Account, and/or (2) into any one or more of the following mutual fund investment portfolios through our Separate Account B. Keep in mind that while an investment in the fixed account earns a fixed interest rate, an investment in any investment portfolio, depending on market conditions, may cause you to make or lose money. The investment portfolios available under your Contract are: 121820 SMARTDESIGN ADVANTAGE PROFILE 4
GCG TRUST ING VARIABLE PRODUCTS TRUST Core Bond Series ING VP Convertible Portfolio(1) (Class S) International Enhanced EAFE Series (Service Class) ING VP Large Company Value Portfolio(1) (Class S) J.P. Morgan Fleming Small Cap Equity Series ING VP LargeCap Growth Portfolio(1) (Class S) (Service Class) ING VP MagnaCap Portfolio(1) (Class S) Janus Growth and Income Series INVESCO VARIABLE INVESTMENT FUNDS, INC. Liquid Asset Series INVESCO VIF-Financial Services Fund Research Series INVESCO VIF-Health Sciences Fund Total Return Series INVESCO VIF-Leisure Fund Value Equity Series INVESCO VIF-Utilities Fund AIM VARIABLE INSURANCE FUNDS JANUS ASPEN SERIES AIM V.I. Dent Demographic Trends Fund (Series II) Janus Aspen Series Worldwide Growth Portfolio AIM V.I. Growth Fund (Series II) (Service Class) ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. PIMCO VARIABLE INSURANCE TRUST Alliance Bernstein Value Portfolio (Class B) PIMCO High Yield Portfolio Alliance Growth and Income Portfolio (Class B) PIONEER VARIABLE CONTRACTS TRUST Alliance Premier Growth Portfolio (Class B) Pioneer Fund VCT Portfolio (Class II) FIDELITY(R)VARIABLE INSURANCE PRODUCTS FUND Pioneer Small Company VCT Portfolio (Class II) Fidelity(R)VIP Growth Portfolio (Class 2) PRUDENTIAL SERIES FUND, INC. Fidelity(R)VIP Equity-Income Portfolio (Class 2) Jennison Portfolio (Class II) Fidelity(R)VIP Contrafund Portfolio (Class 2) SP Jennison International Growth Portfolio (Class II) ING GET FUND PUTNAM VARIABLE TRUST ING Get Fund (1) Putnam VT Growth and Income (Class IB) ING PARTNERS, INC. Putnam VT International Growth and Income ING JP Morgan Mid Cap Value Portfolio(1) (Class IB) (Service Class) Putnam VT Voyager Fund II (Class IB) ING MFS Capital Opportunities Portfolio(1) UBS SERIES TRUST (Initial Class) UBS Tactical Allocation Portfolio(1) (Class I) ING MFS Global Growth Portfolio(1) (Service Class) ING Van Kampen Comstock Portfolio(1) (Service Class) ING VARIABLE INSURANCE TRUST ING VP Worldwide Growth Portfolio(1) ING VARIABLE PORTFOLIOS, INC. ING VP Index Plus LargeCap Portfolio(1) (Class S) ING VP Index Plus MidCap Portfolio(1) (Class S) ING VP Index Plus SmallCap Portfolio(1) (Class S) ING VP Value Opportunity Portfolio(1) (Class S)
(1) Effective May 1, 2002 this fund has changed its name to the name listed above. See Appendix B -- The Investment Portfolios for a complete list of former and current fund names. RESTRICTED FUNDS. We may designate any investment option as a Restricted Fund and limit the amount you may allocate or transfer to a Restricted Fund. We may establish any such limitation, at our discretion, as a percentage of premium or contract value or as a specified dollar amount and change the limitation at any time. Currently, we have not designated any investment option as a Restricted Fund. We may, with 30 days notice to you, designate any investment portfolio as a Restricted Fund or change the limitations on existing contracts with respect to new premiums added to such investment portfolio and also with respect to new transfers to such investment portfolio. For more detailed information, see "Restricted Funds" in the prospectus for the Contract. 5. EXPENSES The Contract has insurance features and investment features, and there are charges related to each. For the insurance features, the Company deducts a mortality and expense risk charge, an asset-based administrative charge and an annual contract administrative charge of $30. We also deduct a charge for the premium credit option, if elected. We deduct the mortality and expense risk charge, the asset-based 121820 SMARTDESIGN ADVANTAGE PROFILE 5 administrative charge, and the premium credit option charge, if applicable, daily directly from your contact value in the investment portfolios. We also deduct the premium credit option charge from your contract value in the Fixed Account. We will also make a daily deduction, during the guarantee period, of a guarantee charge, equal on an annual basis to the percentage shown below, from amounts allocated to the GET Fund. The mortality and expense risk charge and the asset-based administrative charge, on an annual basis, are as follows:
-------------------------------------------------------------------------------------------- OPTION OPTION OPTION PACKAGE I PACKAGE II PACKAGE III -------------------------------------------------------------------------------------------- Mortality & Expense Risk Charge 1.45% 1.65% 1.80% Asset-Based Administrative Charge 0.15% 0.15% 0.15% Total 1.60% 1.80% 1.95% Optional Asset-Based Premium Credit Charge 0.60% 0.60% 0.60% Total With Optional Premium Credit Charge 2.20% 2.40% 2.55% -------------------------------------------------------------------------------------------- GET Fund Guarantee Charge* 0.50% 0.50% 0.50% Total With Optional Premium Credit Charge and GET Fund Guarantee Charge 2.70% 2.90% 3.05% --------------------------------------------------------------------------------------------
* applied to amounts invested in the GET Fund investment option only During the income phase, the Mortality & Expense Risk Charge, on an annual basis, is equal to 1.25% of amounts invested in the subaccounts. The Premium Credit Option Charge is also deducted during the income phase, if otherwise applicable. There is currently no Administrative Charge during the income phase. We reserve the right to impose a charge of up to 0.25% during the income phase in the future. If we are imposing this charge when you enter the income phase, it will apply to you during the entire income phase. See "The Income Phase- Charges Deducted." EARNINGS MULTIPLIER BENEFIT RIDER CHARGE If you choose to purchase the earnings multiplier benefit rider, we will deduct a separate quarterly charge for the rider on each quarterly contract anniversary and pro rata when the rider terminates. We deduct the rider charge directly from your contract value in the investment portfolios; if the value in the investment portfolios is insufficient, the rider charge will be deducted from your contract value in the Fixed Account. The quarterly rider charge is 0.0625% of the contract value (0.25% annually). Each investment portfolio has charges for investment management fees and other expenses. These charges, which vary by investment portfolio, currently range from 0.54% to 2.26% annually (see following table) of the portfolio's average daily net asset balance. If you withdraw money from your Contract, or if you begin receiving annuity payments, we may deduct a premium tax of 0%-3.5% to pay to your state. We deduct a surrender charge if you surrender your Contract or withdraw an amount exceeding the free withdrawal amount. The free withdrawal amount for a contract year is 10% of contract value, based on the contract value on the date of withdrawal, less any prior withdrawals in that contract year. Under Option Package III, any unused free withdrawal amount may carry forward to successive contract years, but in no event would the free withdrawal amount at any time exceed 30% of contract value. The following table shows the schedule of the surrender charge that will apply. The surrender charge is a percent of each premium payment withdrawn. 121820 SMARTDESIGN ADVANTAGE PROFILE 6 COMPLETE YEARS ELAPSED 0 1 2 3+ SINCE PREMIUM PAYMENT SURRENDER CHARGE 6% 5% 4% 0% The following table is designed to help you understand the Contract charges. The "Total Annual Insurance Charges" column is divided into two: One part reflects the mortality and expense risk charge (based on Option Package III), the asset-based administrative charge, the annual contract administrative charge as 0.04% (based on an average contract value of $68,000), and the earnings multiplier benefit rider charge of 0.25%. The second part reflects the same insurance charges, but without the rider charge. The "Total Annual Investment Portfolio Charges" column reflects the portfolio charges for each portfolio (after any applicable waivers or reductions) and is based on actual expenses as of December 31, 2001, except for (i) portfolios that commenced operations during 2001 where the charges have been estimated, and (ii) newly formed portfolios where the charges have been estimated. Expenses for the GET Fund also reflect the asset-based GET Fund guarantee charge of 0.50% of assets in the GET Fund. Because a GET Fund series has a five year period to maturity, no GET Fund expenses are included in the 10 year example for the GET Fund. The column "Total Annual Charges" reflects the sum of the previous two columns. The columns under the heading "Examples" show you how much you would pay under the Contract for a 1-year period and for a 10-year period. As required by the Securities and Exchange Commission, the examples assume that you invested $1,000 in a Contract that earns 5% annually and that you withdraw your money at the end of Year 1 or at the end of Year 10 (based on Option Package III). The 1 Year examples below include a 6% surrender charge. For Years 1 and 10, the examples show the total annual charges assessed during that time and assume that you have elected Option Package III. For these examples, the premium tax is assumed to be 0%.
- ------------------------------------------------------------------------------------------------------------------------- EXAMPLES: --------- TOTAL ANNUAL TOTAL ANNUAL TOTAL CHARGES AT THE END OF: INSURANCE CHARGES CHARGES 1 YEAR 10 YEARS ----------------- ------- ------ -------- WITH W/O TOTAL ANNUAL WITH W/O WITH W/O WITH W/O THE ANY INVESTMENT THE ANY THE ANY THE ANY RIDER RIDER PORTFOLIO RIDER RIDER RIDER RIDER RIDER RIDER INVESTMENT PORTFOLIO CHARGES CHARGE CHARGES CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE - ------------------------------------------------------------------------------------------------------------------------- THE GCG TRUST Core Bond 2.24% 1.99% 1.01% 3.25% 3.00% $93 $90 $355 $332 - ------------------------------------------------------------------------------------------------------------------------- Eagle Value Equity 2.24% 1.99% 0.95% 3.19% 2.94% $92 $90 $349 $326 - ------------------------------------------------------------------------------------------------------------------------- International Enhanced EAFE 2.24% 1.99% 1.26% 3.50% 3.25% $95 $93 $377 $355 - ------------------------------------------------------------------------------------------------------------------------- J.P. Morgan Fleming Small Cap Equity 2.24% 1.99% 1.16% 3.40% 3.15% $94 $92 $368 $346 - ------------------------------------------------------------------------------------------------------------------------- Janus Growth & Income 2.24% 1.99% 1.11% 3.35.% 3.10% $94 $91 $364 $341 - ------------------------------------------------------------------------------------------------------------------------- Liquid Asset 2.24% 1.99% 0.54% 2.78% 2.53% $88 $86 $311 $287 - ------------------------------------------------------------------------------------------------------------------------- Research 2.24% 1.99% 0.89% 3.13% 2.88% $92 $89 $344 $320 - ------------------------------------------------------------------------------------------------------------------------- Total Return 2.24% 1.99% 0.89% 3.13% 2.88% $92 $89 $344 $320 - ------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUND AIM V.I. Dent Demographic Trends Fund 2.24% 1.99% 1.45% 3.69% 3.44% $97 $95 $394 $372 - ------------------------------------------------------------------------------------------------------------------------- AIM V.I. Growth 2.24% 1.99% 1.13% 3.37% 3.12% $94 $91 $366 $343 - ------------------------------------------------------------------------------------------------------------------------- 121820 SMARTDESIGN ADVANTAGE PROFILE 7 - ------------------------------------------------------------------------------------------------------------------------- EXAMPLES: --------- TOTAL ANNUAL TOTAL ANNUAL TOTAL CHARGES AT THE END OF: INSURANCE CHARGES CHARGES 1 YEAR 10 YEARS ----------------- ------- ------ -------- WITH W/O TOTAL ANNUAL WITH W/O WITH W/O WITH W/O THE ANY INVESTMENT THE ANY THE ANY THE ANY RIDER RIDER PORTFOLIO RIDER RIDER RIDER RIDER RIDER RIDER INVESTMENT PORTFOLIO CHARGES CHARGE CHARGES CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE - ------------------------------------------------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein Value 2.24% 1.99% 1.20% 3.44% 3.19% $107 $105 $478 $458 - ------------------------------------------------------------------------------------------------------------------------- Alliance Growth and Income 2.24% 1.99% 0.92% 3.16% 2.91% $92 $89 $347 $323 - ------------------------------------------------------------------------------------------------------------------------- Alliance Premier Growth 2.24% 1.99% 1.29% 3.53% 3.28% $96 $93 $380 $358 FIDELITY VARIABLE INSURANCE PRODUCTS FUND Fidelity Contrafund(R) 2.24% 1.99% 0.94% 3.18% 2.93% $92 $90 $348 $325 - ------------------------------------------------------------------------------------------------------------------------- Fidelity Equity-Income 2.24% 1.99% 0.84% 3.08% 2.83% $91 $89 $339 $316 - ------------------------------------------------------------------------------------------------------------------------- Fidelity Growth 2.24% 1.99% 0.93% 3.17% 2.92% $92 $90 $348 $324 ING PARTNERS, INC. - ------------------------------------------------------------------------------------------------------------------------- ING J.P. Morgan Mid Cap Value 2.24% 1.99% 1.35% 3.59% 3.34% $96 $94 $385 $363 - ------------------------------------------------------------------------------------------------------------------------- ING MFS Capital Opportunities 2.24% 1.99% 0.90% 3.14% 2.89% $92 $89 $345 $321 - ------------------------------------------------------------------------------------------------------------------------- ING MFS Global Growth 2.24% 1.99% 1.45% 3.69% 3.44% $97 $95 $394 $372 - ------------------------------------------------------------------------------------------------------------------------- ING Van Kampen Comstock 2.24% 1.99% 1.20% 3.44% 3.19% $95 $92 $372 $349 ING GET FUND - ------------------------------------------------------------------------------------------------------------------------- ING GET Fund 2.74% 2.49% 1.00% 3.74% 3.49% $98 $95 N/A N/A - ------------------------------------------------------------------------------------------------------------------------- ING VARIABLE PORTFOLIOS, INC. ING VP Index Plus LargeCap 2.24% 1.99% 1.10% 3.34% 3.09% $90 $87 $325 $301 - ------------------------------------------------------------------------------------------------------------------------- ING VP Index Plus MidCap 2.24% 1.99% 0.80% 3.04% 2.79% $91 $88 $336 $312 - ------------------------------------------------------------------------------------------------------------------------- ING VP Index Plus SmallCap 2.24% 1.99% 0.85% 3.09% 2.84% $91 $89 $340 $317 - ------------------------------------------------------------------------------------------------------------------------- ING VP Value Opportunity 2.24% 1.99% 0.96% 3.20% 2.95% $92 $90 $350 $327 - ------------------------------------------------------------------------------------------------------------------------- ING VARIABLE INSURANCE TRUST ING VP Worldwide Growth 2.24% 1.99% 1.23% 3.47% 3.22% $95 $92 $375 $352 ING VARIABLE PRODUCTS TRUST - ------------------------------------------------------------------------------------------------------------------------- ING VP Convertible 2.24% 1.99% 1.10% 3.34% 3.09% $94 $91 $363 $340 - ------------------------------------------------------------------------------------------------------------------------- ING VP LargeCap Growth 2.24% 1.99% 1.10% 3.34% 3.09% $94 $91 $363 $340 - ------------------------------------------------------------------------------------------------------------------------- ING VP Large Company Value 2.24% 1.99% 1.10% 3.34% 3.09% $94 $91 $363 $340 - ------------------------------------------------------------------------------------------------------------------------- ING VP MagnaCap 2.24% 1.99% 1.10% 3.34% 3.09% $94 $91 $363 $340 - ------------------------------------------------------------------------------------------------------------------------- 121820 SMARTDESIGN ADVANTAGE PROFILE 8 - ------------------------------------------------------------------------------------------------------------------------- EXAMPLES: --------- TOTAL ANNUAL TOTAL ANNUAL TOTAL CHARGES AT THE END OF: INSURANCE CHARGES CHARGES 1 YEAR 10 YEARS ----------------- ------- ------ -------- WITH W/O TOTAL ANNUAL WITH W/O WITH W/O WITH W/O THE ANY INVESTMENT THE ANY THE ANY THE ANY RIDER RIDER PORTFOLIO RIDER RIDER RIDER RIDER RIDER RIDER INVESTMENT PORTFOLIO CHARGES CHARGE CHARGES CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE - ------------------------------------------------------------------------------------------------------------------------- INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF-- Financial Services 2.24% 1.99% 1.07% 3.31% 3.06% $93 $91 $360 $337 - ------------------------------------------------------------------------------------------------------------------------- INVESCO VIF-- Health Sciences 2.24% 1.99% 1.06% 3.30% 3.05% $93 $91 $359 $336 - ------------------------------------------------------------------------------------------------------------------------- INVESCO VIF-- Leisure 2.24% 1.99% 1.39% 3.63% 3.38% $97 $94 $389 $367 - ------------------------------------------------------------------------------------------------------------------------- INVESCO VIF-- Utilities 2.24% 1.99% 1.15% 3.39% 3.14% $96 $94 $387 $365 - ------------------------------------------------------------------------------------------------------------------------- JANUS ASPEN SERIES Janus Aspen Series -- Worldwide Growth 2.24% 1.99% 0.94% 3.18% 2.93% $92 $90 $348 $325 THE PIMCO VARIABLE INSURANCE TRUST - ------------------------------------------------------------------------------------------------------------------------- PIMCO High Yield 2.24% 1.99% 0.75% 2.99% 2.74% $90 $88 $331 $307 - ------------------------------------------------------------------------------------------------------------------------- PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT 2.24% 1.99% 1.04% 3.28% 3.03% $93 $91 $358 $335 - ------------------------------------------------------------------------------------------------------------------------- Pioneer Small Company VCT 2.24% 1.99% 1.68% 3.92% 3.67% $99 $97 $414 $392 - ------------------------------------------------------------------------------------------------------------------------- PRUDENTIAL SERIES FUND, INC. Jennison 2.24% 1.99% 1.04% 3.28% 3.03% $93 $91 $358 $335 - ------------------------------------------------------------------------------------------------------------------------- SP Jennison International Growth 2.24% 1.99% 2.26% 4.50% 4.25% $105 $103 $461 $441 - ------------------------------------------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST Putnam VT -- Growth and Income 2.24% 1.99% 0.76% 3.00% 2.75% $90 $88 $332 $308 - ------------------------------------------------------------------------------------------------------------------------- Putnam VT-- International Growth and Income 2.24% 1.99% 1.23% 3.47% 3.22% $95 $92 $375 $352 - ------------------------------------------------------------------------------------------------------------------------- Putnam VT Voyager Fund II 2.24% 1.99% 1.87% 4.11% 3.86% $101 $99 $430 $409 UBS SERIES TRUST - ------------------------------------------------------------------------------------------------------------------------- UBS Tactical Allocation 2.24% 1.99% 0.92% 3.16% 2.91% $92 $89 $347 $323 - -------------------------------------------------------------------------------------------------------------------------
The "Total Annual Investment Portfolio Charges" column above reflects current expense reimbursements for applicable investment portfolios. For more detailed information, see "Fees and Expenses" in the prospectus for the Contract. 6. TAXES Under a qualified Contract, your premiums are generally pre-tax contributions and accumulate on a tax-deferred basis. Premiums and earnings are generally taxed as income when you make a withdrawal or begin receiving annuity payments, presumably when you are in a lower tax bracket. 121820 SMARTDESIGN ADVANTAGE PROFILE 9 Under a non-qualified Contract, premiums are paid with after-tax dollars, and any earnings will accumulate tax-deferred. You will generally be taxed on these earnings, but not on premiums, when you make a withdrawal, begin receiving annuity payments, or we pay a death benefit. For owners of most qualified Contracts, when you reach age 70 1/2 (or, in some cases, retire), you will be required by federal tax laws to begin receiving payments from your annuity or risk paying a penalty tax. In those cases, we can calculate and pay you the minimum required distribution amounts at your request. If you are younger than 59 1/2 when you take money out, in most cases, you will be charged a 10% federal penalty tax on the taxable amount withdrawn. 7. WITHDRAWALS You can withdraw your money at any time during the accumulation phase. You may elect in advance to take systematic withdrawals which are described on page 12. Withdrawals above the free withdrawal amount may be subject to a surrender charge. We will apply a market value adjustment if you withdraw your money from the Fixed Account more than 30 days before the applicable maturity date. Income taxes and a penalty tax may apply to amounts withdrawn. 8. PERFORMANCE The value of your Contract will fluctuate depending on the investment performance of the portfolio(s) you choose. The following chart shows average annual total return for each portfolio that was in operation for the entire year of 2001. These numbers reflect the deduction of the mortality and expense risk charge (based on Option III), the asset-based administrative charge, the annual contract fee and the earnings multiplier benefit rider charge, but do not reflect deductions for any surrender charges. If surrender charges were reflected, they would have the effect of reducing performance. Please keep in mind that past performance is not a guarantee of future results. --------------------------------------------------------------- INVESTMENT PORTFOLIO 2001 --------------------------------------------------------------- Managed by Eagle Asset Management, Inc. Value Equity -6.53% --------------------------------------------------------------- Managed by ING Investment Management, LLC Liquid Asset 1.52% --------------------------------------------------------------- Managed by ING Investments, LLC ING VP Worldwide Growth -20.31% --------------------------------------------------------------- Managed by Janus Capital Management LLC Janus Growth and Income -11.46% --------------------------------------------------------------- Managed by Prudential Series Fund, Inc. Jennison Portfolio -20.30% SP Jennison International -37.14% --------------------------------------------------------------- Managed by Massachusetts Financial Services Company Research -23.07% Total Return -1.75% --------------------------------------------------------------- Managed By Pacific Investment Management Company Core Bond(5) 0.16% PIMCO High Yield 0.05% ----------------------- (1) Prior to April 1, 1999, a different firm managed the Portfolio. (2) Prior to March 1, 1999, a different firm managed the Portfolio. (3) Prior to February 1, 2000, a different firm managed the Portfolio. (4) Prior to May 1, 2000, a different firm managed the Portfolio. (5) Prior to May 1, 2001, a different firm managed the Portfolio using a different investment style. 121820 SMARTDESIGN ADVANTAGE PROFILE 10 9. DEATH BENEFIT The death benefit, and earnings multiplier benefit, if elected, is payable when the first of the following persons dies: the contract owner, joint owner, or annuitant (if a contract owner is not an individual). Assuming you are the contract owner, if you die during the accumulation phase, your beneficiary will receive a death benefit unless the beneficiary is your surviving spouse and elects to continue the Contract. You must select a death benefit. We cannot process your application unless you elect Option I, Option II or Option III. The death benefit paid depends on the death benefit under the option package that you have chosen. The death benefit value is calculated at the close of the business day on which we receive written notice and due proof of death, as well as required claim forms, at our Customer Service Center (the "claim date"). If your beneficiary elects to delay receipt of the death benefit until a date after the time of your death, the amount of the benefit payable in the future may be affected. If you die after the annuity start date and you are the annuitant, your beneficiary will receive the death benefit you chose under the annuity option then in effect. Please see "Federal Tax Considerations" in the prospectus. The death benefit may be subject to certain mandatory distribution rules required by federal tax law. There are three option packages available under your Contract. You select an option package at the time of application. The differences in the death benefits under the three option packages are summarized as follows:
--------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III --------------------------------------------------------------------------------------------- DEATH BENEFIT The greater of: The greatest of: The greatest of: 1) the Standard Death 1) the Standard Death 1) the Standard Benefit; or Benefit; or Death Benefit; or 2) the contract 2) the contract 2) the contract value*. value*; or value*; or 3) the Annual Ratchet 3) the Annual death benefit. Ratchet death benefit; or 4) the 5% Roll-Up death benefit. ---------------------------------------------------------------------------------------------
* reduced by the amount of any credits added since or within 12 months prior to death Option Packages II and III are not available where a Contract is held by joint owners. For purposes of calculating the death benefits, certain investment portfolios may be designated as "Special Funds." Selecting a Special Fund may limit or reduce the death benefit. Currently, no investment portfolios have been designated as Special Funds. We may in the future stop or suspend offering any of the option packages to new Contracts. A change in ownership of the Contract may affect the amount of the death benefit. Please see ""Death Benefit Choices" in the prospectus for details on the calculation of the death benefits and further details on the effect of withdrawals and transfers to Special Funds on the calculation of the death benefits. TRANSFERABILITY. You may transfer from one option package to another. o Transfers may only occur on a contract anniversary. o A written request for the transfer must be received by us within 60 days before a contract anniversary. o Certain minimum contract values must be met. 121820 SMARTDESIGN ADVANTAGE PROFILE 11 See "Transfers Between Option Packages" in the Prospectus for more information on transferability and the impact of transfers between option packages on your death benefit. Note: All death benefits may not be available in every state. We may, with 30 days notice to you, designate any investment portfolio as a Special Fund on existing Contracts with respect to new premiums added to such investment portfolio and also with respect to new transfers to such investment portfolio. Keep in mind that selecting a Special Fund may limit or reduce the death benefit. For the period during which a portion of the contract value is allocated to a Special Fund, we may, at our discretion, reduce the mortality and expense risk charge attributable to that portion of the contract value. The reduced mortality and expense risk charge will be applicable only during the period contract value is allocated to a Special Fund. EARNINGS MULTIPLIER BENEFIT RIDER. The earnings multiplier benefit rider is an optional rider that provides a separate death benefit in addition to the death benefit provided under the death benefit options available under the option packages. The rider is subject to state availability and is available only for issues ages 75 or under. It may be added at issue of the Contract or on the next contract anniversary following introduction of the rider in a state, if later. The date on which the rider is added is referred to as the "rider effective date." The rider provides a benefit equal to a percentage of the gain under the Contract, up to a gain equal to 300% of premiums adjusted for withdrawals ("Maximum Base"). Currently, where the rider is added at issue, the earnings multiplier benefit is equal to 40% (25% for issue ages 70 and above) of the lesser of: 1) the Maximum Base; and 2) the contract value on the date we receive written notice and due proof of death, as well as required claims forms, minus premiums adjusted for withdrawals. If the rider is added to a Contract after issue, the earnings multiplier benefit is equal to 40% (25% for issue ages 70 and above) of the lesser of: 1) 300% of the contract value on the rider effective date, plus subsequent premiums adjusted for subsequent withdrawals; and 2) the contract value on the date we receive written notice and due proof of death, as well as required claims forms, minus the sum of the contract value on the rider effective date plus subsequent premiums adjusted for subsequent withdrawals. The adjustment to the benefit for withdrawals is pro rata, meaning that the benefit will be reduced by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. There is an extra charge for this feature and once selected, it may not be revoked. The earnings enhancement benefit rider does not provide a benefit if there is no gain under the Contract. As such, the Company would continue to assess a charge for the rider, even though no benefit would be payable at death under the rider if there are no gains under the Contract. Please see 6 for a description of the earnings multiplier benefit rider charge. THE RIDER IS AVAILABLE FOR BOTH NON-QUALIFIED AND QUALIFIED CONTRACTS. PLEASE SEE THE DISCUSSIONS OF POSSIBLE TAX CONSEQUENCES IN SECTIONS TITLED "INDIVIDUAL RETIREMENT ANNUITIES," "TAXATION OF NON-QUALIFIED CONTRACTS," AND "TAXATION OF QUALIFIED CONTRACTS," IN THE PROSPECTUS. 10. OTHER INFORMATION FREE LOOK. If you cancel the Contract within 10 days after you receive it, you will receive a refund of the adjusted contract value. We determine your contract value at the close of business on the day we receive your written refund request. For purposes of the refund during the free look period, (i) we adjust your contract value for any market value adjustment (if you have invested in the Fixed Account), (ii) then we exclude any credit initially applied, and (iii) then we include a refund of any charges deducted from your contract value. Because of the market risks associated with investing in the portfolios and the potential positive or negative effect of the market value adjustment, the contract value returned may be greater or less than the premium payment you paid. Some states require us to return to you the amount of the premium paid, excluding any credit, (rather than the contract value) in which case you will not be subject to investment risk during the free look period. Also, in some states, you may be entitled to a longer free look period. 121820 SMARTDESIGN ADVANTAGE PROFILE 12 TRANSFERS AMONG INVESTMENT PORTFOLIOS AND THE FIXED ACCOUNT. You can make transfers among your investment portfolios and your investment in the Fixed Account as frequently as you wish without any current tax implications. Transfers to a GET Fund series may only be made during the offering period for that GET Fund Series. See "GET Fund" in the Prospectus. The minimum amount for a transfer is $100. There is currently no charge for transfers, and we do not limit the number of transfers allowed. The Company may, in the future, charge a $25 fee for any transfer after the twelfth transfer in a contract year or limit the number of transfers allowed. We also reserve the right to limit the number of transfers you may make and may otherwise modify or terminate transfer privileges if required by our business judgment or in accordance with applicable law. Keep in mind that a transfer or withdrawal may cause a market value adjustment. A market value adjustment could increase or decrease your contract value and/or the amount you transfer or withdraw. Transfers between Special Funds and Non-Special Funds will impact your death benefit and benefits under an optional benefit rider, if any. Also, a transfer to a Restricted Fund will not be permitted to the extent that it would increase the contract value in the Restricted Fund to more than the applicable limits following the transfer. Transfers from Restricted Funds are not limited. If the result of multiple transfers is to lower the percentage of total contract value in the Restricted Fund, the reallocation will be permitted even if the percentage of contract value in the Restricted Fund is greater than the limit. See "Restricted Funds" in the Prospectus for more information. NO PROBATE. In most cases, when you die, the person you choose as your beneficiary will receive the death benefit without going through probate. See "Federal Tax Considerations -- Taxation of Death Benefit Proceeds" in the prospectus. ADDITIONAL FEATURES. This Contract has other features you may be interested in. There is no additional charge for these features. These include: Dollar Cost Averaging. This is a program that allows you to invest a fixed amount of money in the investment portfolios each month, which may give you a lower average cost per unit over time than a single one-time purchase. Dollar cost averaging requires regular investments regardless of fluctuating price levels, and does not guarantee profits or prevent losses in a declining market. This option is currently available only if you have $1,200 or more in the Liquid Asset investment portfolio or in the Fixed Account with either a 6-month or 1-year guaranteed interest period. Transfers from the Fixed Account under this program will not be subject to a market value adjustment. If you invest in Restricted Funds, your ability to dollar cost average may be limited. There is no additional charge for these features. Please see "Transfers Among Your Investments" in the Prospectus for more complete information. See the Fixed Account II prospectus. Systematic Withdrawals. During the accumulation phase, you can arrange to have money sent to you at regular intervals throughout the year. Within limits these withdrawals will not result in any surrender charge. Withdrawals from your money in the Fixed Account under this program are not subject to a market value adjustment. Of course, any applicable income and penalty taxes will apply on amounts withdrawn. If you invest in Restricted Funds, your systematic withdrawals may be affected. Please see "Withdrawals" in the prospectus for more complete information. See the Fixed Account II prospectus. Automatic Rebalancing. If your contract value is $10,000 or more, you may elect to have the Company automatically readjust the money between your investment portfolios periodically to keep the blend you select. Investments in the Fixed Account are not eligible for automatic rebalancing. If you invest in Restricted Funds, automatic rebalancing may be affected. Please see "Transfers Among Your Investments" in the Prospectus for more complete information. See the Fixed Account II prospectus. 121820 SMARTDESIGN ADVANTAGE PROFILE 13 11. INQUIRIES If you need more information after reading this profile and the prospectus, please contact us at: CUSTOMER SERVICE CENTER P.O. BOX 2700 WEST CHESTER, PENNSYLVANIA 19380 (800) 366-0066 or your registered representative. 121820 SMARTDESIGN ADVANTAGE PROFILE 14 This page intentionally left blank. - -------------------------------------------------------------------------------- GOLDEN AMERICAN LIFE INSURANCE COMPANY SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE COMPANY SMARTDESIGN ADVANTAGE DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY PROSPECTUS - -------------------------------------------------------------------------------- MAY 1, 2002 This prospectus describes SmartDesign Advantage, a group and individual deferred variable annuity contract (the "Contract") offered by Golden American Life Insurance Company (the "Company," "we" or "our"). The Contract is available in connection with certain retirement plans that qualify for special federal income tax treatment ("qualified Contracts") as well as those that do not qualify for such treatment ("non-qualified Contracts"). The Contract provides a means for you to invest your premium payments and credits, if applicable, in one or more of the available mutual fund investment portfolios. You may also allocate premium payments and credits, if applicable, to our Fixed Account with guaranteed interest periods. Your contract value will vary daily to reflect the investment performance of the investment portfolio(s) you select and any interest credited to your allocations in the Fixed Account. The investment portfolios available under your Contract and the portfolio managers are listed on the back of this cover. For Contracts sold in some states, some guaranteed interest periods or subaccounts may not be available. You have a right to return a Contract within 10 days after you receive it for a refund of the adjusted contract value, less credits we added, if applicable, (which may be more or less than the premium payments you paid), or if required by your state, the original amount of your premium payment. Longer free look periods apply in some states and in certain situations. REPLACING AN EXISTING ANNUITY WITH THE CONTRACT MAY NOT BE BENEFICIAL TO YOU. YOUR EXISTING ANNUITY MAY BE SUBJECT TO FEES OR PENALTIES ON SURRENDER, AND THE CONTRACT MAY HAVE NEW CHARGES. This prospectus provides information that you should know before investing and should be kept for future reference. A Statement of Additional Information ("SAI"), dated, May 1, 2002, has been filed with the Securities and Exchange Commission ("SEC"). It is available without charge upon request. To obtain a copy of this document, write to our Customer Service Center at P.O. Box 2700, West Chester, Pennsylvania 19380 or call (800) 366-0066, or access the SEC's website (http://www.sec.gov). The table of contents of the SAI is on the last page of this prospectus and the SAI is made part of this prospectus by reference. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE EXPENSES FOR A CONTRACT PROVIDING A PREMIUM CREDIT, AS THIS CONTRACT DOES, MAY BE HIGHER THAN FOR CONTRACTS NOT PROVIDING A PREMIUM CREDIT. OVER TIME, AND UNDER CERTAIN CIRCUMSTANCES, THE AMOUNT OF THE PREMIUM CREDIT MAY BE MORE THAN OFFSET BY THE ADDITIONAL FEES AND CHARGES ASSOCIATED WITH THE PREMIUM CREDIT. AN INVESTMENT IN ANY SUBACCOUNT THROUGH THE ING GET FUND, ING VARIABLE PORTFOLIOS, INC., AIM VARIABLE INSURANCE FUNDS, ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC., UBS SERIES TRUST, FIDELITY VARIABLE INSURANCE PRODUCTS FUND, THE GCG TRUST, INVESCO VARIABLE INVESTMENT FUNDS, INC., JANUS ASPEN SERIES, ING VARIABLE INSURANCE TRUST, ING VARIABLE PRODUCTS TRUST, THE PIMCO VARIABLE INSURANCE TRUST, PIONEER VARIABLE CONTRACTS TRUST, ING PARTNERS, INC., THE PRUDENTIAL SERIES FUND, INC. OR PUTNAM VARIABLE TRUST IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED BY ANY BANK OR BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. - -------------------------------------------------------------------------------- THE INVESTMENT PORTFOLIOS AND THE MANAGERS ARE LISTED ON THE BACK OF THIS COVER. - -------------------------------------------------------------------------------- The investment portfolios available under your Contract and the portfolio managers are:
AIM ADVISORS, INC. J. P. MORGAN FLEMING ASSET MANAGEMENT AIM V.I. Dent Demographic Trends Fund (LONDON) LIMITED (Series II) International Enhanced EAFE Series (Service Class) AIM V.I. Growth Fund (Series II) J. P. MORGAN FLEMING ASSET MANAGEMENT ALLIANCE CAPITAL MANAGEMENT L.P. (USA) INC. AllianceBernstein Value Portfolio (Class B) J. P. Morgan Fleming Small Cap Equity Series (Service Class) Alliance Growth and Income Portfolio(Class B) JANUS CAPITAL MANAGEMENT, LLC Alliance Premier Growth Portfolio (Class B) Janus Growth and Income Series EAGLE ASSET MANAGEMENT, INC. Janus Aspen Series Worldwide Growth Portfolio Value Equity Series (Service Shares) FIDELITY MANAGEMENT & RESEARCH COMPANY JENNISON ASSOCIATES, LLC Fidelity VIP Equity-Income Portfolio Jennison Portfolio (Class II) (Service Class 2) SP Jennison International Growth Portfolio Fidelity VIP Growth Portfolio (Service Class 2) (Class II) Fidelity VIP Contrafund Portfolio MASSACHUSETTS FINANCIAL SERVICES COMPANY (Service Class 2) ING MFS Capital Opportunities Portfolio (Initial Class) ING GET FUND ING MFS Global Growth Portfolio (Service Class) ING GET Fund Research Series ING INVESTMENT MANAGEMENT, LLC Total Return Series Liquid Asset Series PACIFIC INVESTMENT MANAGEMENT COMPANY Core Bond Series ING INVESTMENTS, LLC PIMCO High Yield Portfolio ING VIT Worldwide Growth Portfolio PIONEER INVESTMENT MANAGEMENT, INC. ING VP Convertible Portfolio (Class S) Pioneer Fund VCT Portfolio (Class II) ING VP Large Company Value Portfolio Pioneer Small Company VCT Portfolio (Class II) (Class S) PUTNAM INVESTMENT MANAGEMENT, LLC ING VP Index Plus Large Cap (Class S) Putnam VT Growth and Income ING VP Index Plus Mid Cap (Class S) Portfolio (Class IB) ING VP Index Plus Small Cap (Class S) Putnam VT International Growth and Income ING VP LargeCap Growth Portfolio(Class S) Portfolio (Class IB) ING VP MagnaCap Portfolio (Class S) Putnam VT Voyager Fund II Portfolio (Class IB) ING VP Value Opportunity (Class S) ROBERT FLEMING INC. INVESCO FUNDS GROUP, INC. ING JP Morgan Mid Cap Value Portfolio (Service Class) INVESCO VIF-Financial Services Fund UBS GLOBAL ASSET MANAGEMENT INVESCO VIF-Health Sciences Fund UBS Tactical Allocation Portfolio (Class I) INVESCO VIF-Leisure Fund VAN KAMPEN INVESCO VIF-Utilities Fund ING Van Kampen Comstock Portfolio (Service Class)
The above mutual fund investment portfolios are purchased and held by corresponding divisions of our Separate Account B. We refer to the divisions as "subaccounts" and the money you place in the Fixed Account's guaranteed interest periods as "Fixed Interest Allocations" in this prospectus. - -------------------------------------------------------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- PAGE Index of Special Terms.................................................... 1 Fees and Expenses......................................................... 2 Performance Information................................................... 18 Golden American Life Insurance Company.................................... 20 The Trusts and Funds...................................................... 20 Golden American Separate Account B........................................ 22 The Investment Portfolios................................................. 22 Special Funds............................................................. 34 The Annuity Contract...................................................... 34 Contract Date and Contract Year ...................................... 34 Annuity Start Date.................................................... 35 Contract Owner........................................................ 35 Annuitant............................................................. 35 Beneficiary........................................................... 36 Purchase and Availability of the Contract............................. 37 Crediting of Premium Payments......................................... 37 Additional Credit to Premium.......................................... 38 Administrative Procedures............................................. 39 Contract Value........................................................ 39 Cash Surrender Value.................................................. 40 Surrendering to Receive the Cash Surrender Value...................... 40 The Subaccounts....................................................... 41 Addition, Deletion or Substitution of Subaccounts and Other Changes... 41 The Fixed Account..................................................... 41 Other Contracts......................................................... 41 Other Important Provisions.............................................. 41 Withdrawals............................................................... 42 Transfers Among Your Investments.......................................... 45 - -------------------------------------------------------------------------------- i - -------------------------------------------------------------------------------- TABLE OF CONTENTS (CONTINUED) - -------------------------------------------------------------------------------- PAGE Death Benefit Choices..................................................... 47 Death Benefit During the Accumulation Phase........................... 47 Option Package I.................................................. 48 Option Package II................................................. 48 Option Package III................................................ 48 Transfers Between Option Packages................................. 50 Earnings Multiplier Benefit Rider................................. 51 Death Benefit During the Income Phase................................. 51 Continuation After Death- Spouse...................................... 52 Continuation After Death- Non-Spouse.................................. 52 Required Distributions upon Contract Owner's Death.................... 53 Charges and Fees.......................................................... 53 Charge Deduction Subaccount........................................... 53 Charges Deducted from the Contract Value.............................. 54 Surrender Charge.................................................. 54 Nursing Home Waiver............................................... 54 Free Withdrawal Amount............................................ 54 Surrender Charge for Excess Withdrawals........................... 54 Premium Taxes..................................................... 55 Administrative Charge............................................. 55 Transfer Charge................................................... 55 Charges Deducted from the Subaccounts................................. 55 Mortality and Expense Risk Charge................................. 55 Asset-Based Administrative Charge................................. 55 Premium Credit Option Charge...................................... 55 Earnings Multiplier Benefit Charge................................ 56 Trust and Fund Expenses............................................... 56 The Income Phase.......................................................... 56 Other Contract Provisions................................................. 60 - -------------------------------------------------------------------------------- ii - -------------------------------------------------------------------------------- TABLE OF CONTENTS (CONTINUED) - -------------------------------------------------------------------------------- PAGE Other Information......................................................... 62 Federal Tax Considerations................................................ 63 Statement of Additional Information Table of Contents..................................................... 133 Appendix A Investment Portfolio Descriptions..................................... A1 Appendix B Surrender Charge for Excess Withdrawals Example....................... B1 Appendix C The Fixed Account II.................................................. C1 Appendix D Fixed Interest Division............................................... D1 Appendix E Withdrawal Adjustment for 5% Roll-Up Death Benefit Examples........... E1 Appendix F Projected Schedule of GET Fund Offerings.............................. F1 Appendix G Condensed Financial Information....................................... G1 iii This page intentionally left blank. - -------------------------------------------------------------------------------- INDEX OF SPECIAL TERMS - -------------------------------------------------------------------------------- The following special terms are used throughout this prospectus. Refer to the page(s) listed for an explanation of each term: SPECIAL TERM PAGE Accumulation Unit 18 Annual Ratchet 50 Annuitant 35 Annuity Start Date 35 Cash Surrender Value 40 Contract Date 34 Contract Owner 35 Contract Value 39 Contract Year 34 Earnings Multiplier Benefit 51 Fixed Interest Allocation 31 Free Withdrawal Amount 54 GET Fund 30 Market Value Adjustment 33 Net Investment Factor 18 Restricted Funds 30 5% Roll-up 49 Special Funds 34 Standard Death Benefit 49 The following terms as used in this prospectus have the same or substituted meanings as the corresponding terms currently used in the Contract: TERM USED IN THIS PROSPECTUS CORRESPONDING TERM USED IN THE CONTRACT Accumulation Unit Value Index of Investment Experience Annuity Start Date Annuity Commencement Date Contract Owner Owner or Certificate Owner Contract Value Accumulation Value Transfer Charge Excess Allocation Charge Fixed Interest Allocation Fixed Allocation Free Look Period Right to Examine Period Guaranteed Interest Period Guarantee Period Subaccount(s) Division(s) Net Investment Factor Experience Factor Regular Withdrawals Conventional Partial Withdrawals Withdrawals Partial Withdrawals 1 - -------------------------------------------------------------------------------- FEES AND EXPENSES - -------------------------------------------------------------------------------- CONTRACT OWNER TRANSACTION EXPENSES* Surrender Charge: COMPLETE YEARS ELAPSED 0 1 2 3+ SINCE PREMIUM PAYMENT SURRENDER CHARGE 6% 5% 4% 0% Transfer Charge......................................... $25 per transfer, if you make more than 12 transfers in a contract year ** * If you invested in a Fixed Interest Allocation, a Market Value Adjustment may apply to certain transactions. This may increase or decrease your contract value and/or your transfer or surrender amount. ** We currently do not impose this charge, but may do so in the future. ANNUAL CONTRACT ADMINISTRATIVE CHARGE* Administrative Charge............................................. $30 (We waive this charge if the total of your premium payments is $50,000 or more or if your contract value at the end of a contract year is $50,000 or more.) * We deduct this charge on each contract anniversary and on surrender. There is currently no Administrative Charge during the income phase. We reserve the right to impose a charge of up to 0.25% during the income phase in the future. If we are imposing this charge when you enter the income phase, it will apply to you during the entire income phase. SEPARATE ACCOUNT ANNUAL CHARGES*
------------------------------------------------------------------------------------------- OPTION OPTION OPTION PACKAGE I PACKAGE II PACKAGE III ------------------------------------------------------------------------------------------- Mortality & Expense Risk Charge** 1.45% 1.65% 1.80% Asset-Based Administrative Charge 0.15% 0.15% 0.15% Total 1.60% 1.80% 1.95% Optional Asset-Based Premium Credit Charge 0.60% 0.60% 0.60% Total With Optional Premium Credit Charge 2.20% 2.40% 2.55% ------------------------------------------------------------------------------------------- GET Fund Guarantee Charge*** 0.50% 0.50% 0.50% Total With Optional Premium Credit Charge and GET Fund Guarantee Charge 2.70% 2.90% 3.05% -------------------------------------------------------------------------------------------
* As a percentage of average daily assets in each subaccount. The Separate Account Annual Charges are deducted daily. ** During the income phase, the Mortality & Expense Risk Charge, on an annual basis, is equal to 1.25% of amounts invested in the subaccounts. The Premium Credit Option Charge is also deducted during the income phase, if otherwise applicable. *** The GET Fund Guarantee Charge is deducted daily during the guarantee period from amounts allocated to the GET Fund investment option. Please see below for a description of the GET Fund guarantee. 2 EARNINGS MULTIPLIER BENEFIT RIDER CHARGE* Quarterly Charge................................ 0.0625% of contract value (0.25% annually) * We deduct the rider charge from the subaccounts in which you are invested on each quarterly contract anniversary and pro rata on termination of the Contract; if the value in the subaccounts is insufficient, the rider charge will be deducted from the Fixed Interest Allocation(s) nearest maturity, and the amount deducted may be subject to a Market Value Adjustment. FUND EXPENSE TABLE(1)
- -------------------------------------------------------------------------------------------------------------------------------- TOTAL FUND NET FUND DISTRIBUTION ANNUAL ANNUAL AND/OR EXPENSES TOTAL EXPENSES INVESTMENT SERVICE WITHOUT WAIVERS AFTER ADVISORY (12B-1) OTHER WAIVERS OR OR WAIVERS OR Fund Name FEES FEE EXPENSES REDUCTIONS REDUCTIONS REDUCTIONS - -------------------------------------------------------------------------------------------------------------------------------- GCG Trust - Core Bond Series(2) 1.00% 0.00% 0.01% 1.01% 0.00% 1.01% - -------------------------------------------------------------------------------------------------------------------------------- GCG Trust - Eagle Value Equity Series 0.94% 0.00% 0.01% 0.95% 0.00% 0.95% - -------------------------------------------------------------------------------------------------------------------------------- GCG Trust- International Enhanced EAFE Series (Series S)(3) 1.00% 0.25% 0.01% 1.26% 0.00% 1.26% - -------------------------------------------------------------------------------------------------------------------------------- GCG Trust- Janus Growth and Income Series 0.90% 0.25% 0.01% 1.11% 0.00% 1.11% - -------------------------------------------------------------------------------------------------------------------------------- GCG Trust- J.P. Morgan Fleming Small Cap Series (Series S)(3) 1.15% 0.00% 0.01% 1.16% 0.00% 1.16% - -------------------------------------------------------------------------------------------------------------------------------- GCG Trust - Liquid Asset Series 0.53% 0.00% 0.01% 0.54% 0.00% 0.54% - -------------------------------------------------------------------------------------------------------------------------------- GCG Trust - Research Series 0.88% 0.00% 0.01% 0.89% 0.00% 0.89% - -------------------------------------------------------------------------------------------------------------------------------- GCG Trust - Total Return Series 0.88% 0.00% 0.01% 0.89% 0.00% 0.89% - -------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Dent Demographic Trends Fund (Series II)(4) 0.85% 0.25% 0.59% 1.69% 0.24% 1.45% - -------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Growth Fund (Series II) 0.62% 0.25% 0.26% 1.13% 0.00% 1.13% - -------------------------------------------------------------------------------------------------------------------------------- AllianceBernstein Value Portfolio (Class B)(5) 0.75% 0.25% 1.47% 2.47% 1.27% 1.20% - -------------------------------------------------------------------------------------------------------------------------------- Alliance Growth and Income Portfolio (Class B) 0.63% 0.25% 0.04% 0.92% 0.00% 0.92% - -------------------------------------------------------------------------------------------------------------------------------- Alliance Premier Growth Portfolio (Class B) 1.00% 0.25% 0.04% 1.29% 0.00% 1.29% - -------------------------------------------------------------------------------------------------------------------------------- Fidelity Contrafund(R)Portfolio (Service Class 2)(6) 0.58% 0.25% 0.11% 0.94% 0.00% 0.94% Fidelity Equity-Income Portfolio (Service Class 2)(6) 0.48% 0.25% 0.11% 0.84% 0.00% 0.84% - -------------------------------------------------------------------------------------------------------------------------------- Fidelity Growth Portfolio (Service Class 2)(6) 0.58% 0.25% 0.10% 0.93% 0.00% 0.93% - -------------------------------------------------------------------------------------------------------------------------------- ING GET Fund 0.60% 0.25% 0.15% 1.00% 0.00% 1.00% - -------------------------------------------------------------------------------------------------------------------------------- ING J.P. Morgan MidCap Value Portfolio (Service Class) (7) 0.75% 0.25% 0.35% 1.35% 0.00% 1.35% - -------------------------------------------------------------------------------------------------------------------------------- ING MFS Capital Opportunities Portfolio 0.65% 0.00% 0.25% 0.90% 0.00% 0.90% - -------------------------------------------------------------------------------------------------------------------------------- ING MFS Global Growth Portfolio (Service Class)(7) 0.60% 0.25% 0.60% 1.45% 0.00% 1.45% - -------------------------------------------------------------------------------------------------------------------------------- ING Van Kampen Comstock Portfolio (Service Class)(7) 0.60% 0.25% 0.35% 1.20% 0.00% 1.20% - -------------------------------------------------------------------------------------------------------------------------------- ING VP Convertible Portfolio (Class S)(8) 0.75% 0.25% 6.33% 7.33% 6.23% 1.10% - -------------------------------------------------------------------------------------------------------------------------------- ING VP Index Plus LargeCap Portfolio (Class S)(9) 0.35% 0.25% 0.09% 0.69% 0.00% 0.69% - -------------------------------------------------------------------------------------------------------------------------------- ING VP Index Plus MidCap Portfolio (Class S) (9) 0.40% 0.25% 0.15% 0.80% 0.00% 0.80% - -------------------------------------------------------------------------------------------------------------------------------- ING VP Index Plus SmallCap Portfolio (Class S)(9) 0.40% 0.25% 0.31% 0.96% 0.11% 0.85% - -------------------------------------------------------------------------------------------------------------------------------- ING VP LargeCap Growth Portfolio (Class S) (8) 0.75% 0.25% 6.19% 7.19% 6.09% 1.10% - -------------------------------------------------------------------------------------------------------------------------------- ING VP Large Company Value Portfolio (Class S)(8) 0.75% 0.25% 7.57% 8.57% 7.47% 1.10% - -------------------------------------------------------------------------------------------------------------------------------- ING VP MagnaCap Portfolio (Class S)(8) 0.75% 0.25% 0.53% 1.53% 0.43% 1.10% - -------------------------------------------------------------------------------------------------------------------------------- ING VP Value Opportunity Portfolio (Class S) (9) 0.60% 0.25% 0.11% 0.96% 0.00% 0.96% - -------------------------------------------------------------------------------------------------------------------------------- ING VP Worldwide Growth Portfolio(8) 1.00% 0.25% 1.72% 2.97% 1.74% 1.23% - -------------------------------------------------------------------------------------------------------------------------------- INVESCO VIF - Financial Services Fund (10) 0.75% 0.00% 0.32% 1.07% 0.00% 1.07% - -------------------------------------------------------------------------------------------------------------------------------- INVESCO VIF - Health Sciences Fund(10) 0.75% 0.00% 0.31% 1.06% 0.00% 1.06% - -------------------------------------------------------------------------------------------------------------------------------- INVESCO VIF- Leisure Fund(10) 0.75% 0.00% 0.64% 1.39% 0.00% 1.39% - -------------------------------------------------------------------------------------------------------------------------------- INVESCO VIF - Utilities Fund(11) 0.60% 0.00% 0.77% 1.37% 0.00% 1.37% - -------------------------------------------------------------------------------------------------------------------------------- Janus Aspen Series - Worldwide Growth Portfolio (Service Shares)(12) 0.65% 0.25% 0.04% 0.94% 0.94% - -------------------------------------------------------------------------------------------------------------------------------- PIMCO High Yield Portfolio(13) 0.25% 0.15% 0.36% 0.76% 0.01% 0.75% - -------------------------------------------------------------------------------------------------------------------------------- Pioneer Fund VCT Portfolio (Class II) 0.65% 0.25% 0.14% 1.04% 0.00% 1.04% - -------------------------------------------------------------------------------------------------------------------------------- Pioneer Small Company VCT Portfolio (Class II)(14) 0.75% 0.25% 5.71% 6.71% 5.03% 1.68% - -------------------------------------------------------------------------------------------------------------------------------- Prudential Series - Jennison Portfolio (Class II) 0.60% 0.25% 0.19% 1.04% 0.00% 1.04% - -------------------------------------------------------------------------------------------------------------------------------- Prudential Series - SP Jennison International - -------------------------------------------------------------------------------------------------------------------------------- Growth Portfolio (Class II)(15) 0.85% 0.25% 1.16% 2.26% 0.00% 2.26% - -------------------------------------------------------------------------------------------------------------------------------- Putnam VT - Growth and Income Fund (Class 1B)(16) 0.46% 0.25% 0.05% 0.76% 0.00% 0.76% - -------------------------------------------------------------------------------------------------------------------------------- Putnam VT - International Growth and Income Fund (Class 1B) (16) 0.80% 0.25% 0.18% 1.23% 0.00% 1.23% - -------------------------------------------------------------------------------------------------------------------------------- Putnam VT Voyager Fund II (Class 1B) (16) 0.70% 0.25% 0.92% 1.87% 0.00% 1.87% - -------------------------------------------------------------------------------------------------------------------------------- UBS Tactical Allocation Portfolio (Class 1) 0.50% 0.25% 0.17% 0.92% 0.00% 0.92% - --------------------------------------------------------------------------------------------------------------------------------
3 Footnotes to the "Fund Expense Table" (1) The Company may receive compensation from each of the funds or the funds' affiliates based on an annual percentage of the average net assets held in that fund by the Company. The percentage paid may vary from one fund company to another. For certain funds, some of this compensation may be paid out of 12b-1 fees or service fees that are deducted from fund assets. Any such fees deducted from fund assets are disclosed in this Fund Expense Table and the fund prospectuses. The Company may also receive additional compensation from certain funds for administrative, recordkeeping or other services provided by the Company to the funds or the funds' affiliates. These additional payments are made by the funds or the funds' affiliates to the Company and do not increase, directly or indirectly, the fees and expenses shown above. See "Fees - Fund Expenses" for additional information. (2) Annualized. (3) Estimated investment advisory fee for year 2002. (4) The Fund's advisor has contractually agreed to waive advisory fees or reimburse expenses of Series I or Series II shares to the extent necessary to limit Total Fund Annual Expenses (excluding Rule 12b-1 Plan fees, if any, interest, taxes, dividend expense on short sales, extraordinary items and increases in expenses due to expense offset arrangements, if any) to 1.30%. Further, the Fund's distributor has agreed to reimburse Rule 12b-1 Distribution Plan fees to the extent necessary to limit Series II Total Fund Annual Expenses to 1.45%. Management (Advisory) Fees and 12b-1 Fee were 0.71% and 0.15%, respectively, after fee waivers and reimbursements. (5) The investment adviser has agreed to waive its fees and reimburse the Portfolio to limit total expenses to 1.20% through April 30, 2002. Including the reimbursements and waivers the Management (Advisory) Fees, Other Expenses and Total Net Fund Annual Expenses were 0.00%, 0.95%, and 1.20%, respectively, for the year ended December 31, 2001. Fees and Expenses Waived or Reimbursed and Total Net Fund Annual Expenses shown in the above table have been restated to reflect the change in the expense limitation from 1.20% to 1.45% effective May 1, 2002. (6) Actual annual class operating expenses were lower because a portion of the brokerage commissions that the fund paid was used to reduce the fund's expenses. In addition, through arrangements with the fund's custodian, credits realized as a result of uninvested cash balances are used to reduce a portion of the fund's custodian expenses. These offsets may be discontinued at any time. (7) Other Expenses shown in the above table are based on estimated amounts for the current fiscal year and include a Shareholder Services fee of 0.25%. (8) ING Investments, LLC has entered into written expense limitation agreements with each Portfolio under which it will limit expenses of the Portfolio, excluding interest, taxes, brokerage and extraordinary expenses subject to possible reimbursement to ING Investments, LLC within three years. The amount of each Portfolio's expenses waived or reimbursed during the last fiscal year by ING Investments, LLC is shown under the heading "Fees and Expenses Waived or Reimbursed" in the table above. For the Emerging Markets Fund and Natural Resources Trust, the expense limits will continue through at least July 26, 2002. For the Worldwide Growth Portfolio, the expense limits will continue through at least December 31, 2002. For the remaining ING VP portfolios, the expense limits will continue through at least October 31, 2002. (9) The table above shows the estimated operating expenses for Class S shares of each Portfolio as a ratio of expenses to average daily net assets. Because Class S shares are new, these estimates are based on each Portfolio's actual operating expenses for Class R shares for the Portfolios' most recently completed fiscal year and fee waivers to which the investment adviser has agreed for each Portfolio. Because Class S shares are new, Other Expenses is the amount of Other Expenses incurred by Class R shareholders for the year ended December 31, 2001. ING Investments, LLC, the investment adviser to each Portfolio, has entered into written expense limitation agreements with each Portfolio (except Balanced, Growth and Income, Bond and Money Market) under which it will limit expenses of the Portfolios, excluding interest, brokerage and extraordinary expenses, subject to possible reimbursement to ING Investments, LLC within three years. The amount of each Portfolio's expenses waived or reimbursed during the last fiscal year by the Portfolio's investment adviser is shown under the heading "Fees and Expenses Waived or Reimbursed" in the table above. For each Portfolio, the expense limits will continue through at least December 31, 2002. (10) The Fund's actual Other Expenses and Total Fund Annual Expenses were lower than the figures shown because its custodian fees were reduced under an expense offset arrangement. (11) Certain expenses of the Fund were absorbed voluntarily by INVESCO pursuant to a commitment between the Fund and INVESCO. This commitment may be changed at any time following consultation with the board of directors. After absorption, but excluding any expense offset arrangements, the Fund's Other Expenses and Total Fund Annual Expenses for the fiscal year ended December 31, 2001 were 0.55% and 1.15%, respectively, of the Fund's average net assets. 4 (12) Long-term shareholders may pay more than the economic equivalent of the maximum front-end sales charges permitted by the National Association of Securities Dealers, Inc. All expenses are shown without the effect of any expense offset arrangements. The fees and expenses listed above were determined based on net assets as of the fiscal year ended October 31, 2001. (13) "Other Expenses" reflects a 0.35% administrative fee, a 0.15% service fee, and a 0.01% representing the Portfolio's pro rate Trustees' Fee. PIMCO has contractually agreed to reduce total annual portfolio operating expenses to the extent they would exceed, due to the payment of organizational expenses and Trustees' fees, 0.75% of average daily net assets. Without such reduction, Total Annual Expenses for the fiscal year ended December 31, 2001 would have been 0.76%. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. (14) The Total Net Fund Annual Expenses in the table above reflect the expense limitation in effect through December 31, 2002 under which Pioneer has agreed not to impose all or a portion of its management fee and if necessary, to limit other ordinary operating expenses to the extent required to reduce Class I expenses to 1.25% of the average daily net assets attributable to Class I shares; the portion of the portfolio expenses attributable to Class II shares will be reduced only to the extent such expenses are reduced for Class I shares. The Portfolio commenced operations on January 19, 2001, therefore expenses shown above are annualized. Including the reimbursements and waivers applied by Pioneer, the Management (Advisory) Fees, Other Expenses and Total Fund Annual Expenses for the year ended December 31, 2001 were 0.00%, 1.25%, and 1.25%, respectively, for Class I Shares and 0.00%, 1.43%, and 1.68%, respectively, for Class II Shares. (15) For the year ended December 31, 2001, the Portfolio's investment adviser voluntarily subsidized a portion of the Portfolio's total expenses. This subsidy is not reflected in the table above. Had this subsidy of 0.62% been reflected above, Total Net Fund Annual Expenses would have been 1.64%. (16) Reflects an increase in 12b-1 fees payable to Putnam Investment Management, LLC ("Putnam Management"). The Trustees currently limit payments on class IB shares of 0.25% of average net assets. Actual 12b-1 fees during the most recent fiscal year were 0.22% of average net assets. THE PURPOSE OF THE FOREGOING TABLES IS TO HELP YOU UNDERSTAND THE VARIOUS COSTS AND EXPENSES THAT YOU WILL BEAR DIRECTLY AND INDIRECTLY. SEE THE PROSPECTUSES OF THE ING GET FUND, ING VARIABLE PORTFOLIOS, INC., AIM VARIABLE INSURANCE FUNDS, ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC., UBS SERIES TRUST, FIDELITY VARIABLE INSURANCE PRODUCTS FUND, THE GCG TRUST, INVESCO VARIABLE INVESTMENT FUNDS, INC., JANUS ASPEN SERIES, ING VARIABLE INSURANCE TRUST, ING VARIABLE PRODUCTS TRUST, THE PIMCO VARIABLE INSURANCE TRUST, PIONEER VARIABLE CONTRACTS TRUST, ING PARTNERS, INC., THE PRUDENTIAL SERIES FUND, INC. AND PUTNAM VARIABLE TRUST FOR ADDITIONAL INFORMATION ON MANAGEMENT OR ADVISORY FEES AND IN SOME CASES ON OTHER PORTFOLIO EXPENSES. Premium taxes (which currently range from 0% to 3.5% of premium payments) may apply, but are not reflected in the tables above or in the examples below. EXAMPLES: The following four examples are designed to show you the expenses you would pay on a $1,000 investment that earns 5% annually. Each example assumes election of Option Package III. The examples reflect the deduction of a mortality and expense risk charge, an asset-based administrative charge, and the annual contract administrative charge as an annual charge of 0.04% of assets (based on an average contract value of $68,000). Expenses for the GET Fund also reflect the asset-based GET Fund guarantee charge of 0.50% of assets in the GET Fund. Because a GET Fund series has a five year period to maturity, no GET Fund expenses are shown in the 10 year expense column for the GET Fund. Examples 1 and 2 also assume you elected the earnings multiplier benefit rider with a charge of 0.25% of the contract value annually. Each example also assumes that any applicable expense reimbursements of underlying portfolio expenses will continue for the periods shown. If Option Package I or II is elected instead of Option Package III used in the examples, the actual expenses will be less than those represented in the examples. Note that surrender charges may apply if you choose to annuitize your Contract within the first 3 contract years. Thus, in the 5 event you annuitize your Contract under circumstances which require a surrender charge, you should refer to Examples 1 and 3 below which assume applicable surrender charges. Example 1: If you surrender your Contract at the end of the applicable time period and elected the premium credit and the earnings multiplier benefit rider, you would pay the following expenses for each $1,000 invested:
- ----------------------------------------------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------- GCG TRUST Core Bond $ 99 $161 $205 $429 - ----------------------------------------------------------------------------------------- International Enhanced EAFE $102 $168 $216 $451 - ----------------------------------------------------------------------------------------- J.P. Morgan Fleming Small Cap Equity $101 $165 $212 $442 - ----------------------------------------------------------------------------------------- Janus Growth and Income $101 $164 $209 $438 - ----------------------------------------------------------------------------------------- Liquid Asset $ 95 $147 $182 $386 - ----------------------------------------------------------------------------------------- Research $ 98 $157 $199 $418 - ----------------------------------------------------------------------------------------- Total Return $ 98 $157 $199 $418 - ----------------------------------------------------------------------------------------- Value Equity $ 99 $159 $202 $424 - ----------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent Demographic Trends $104 $174 $225 $467 - ----------------------------------------------------------------------------------------- AIM V.I. Growth $101 $164 $210 $440 - ----------------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein Value $114 $203 $272 $549 - ----------------------------------------------------------------------------------------- Alliance Growth and Income $ 99 $158 $200 $421 - ----------------------------------------------------------------------------------------- Alliance Premier Growth $102 $169 $218 $454 - ----------------------------------------------------------------------------------------- FIDELITY VARIABLE INSURANCE PRODUCTS - ----------------------------------------------------------------------------------------- Fidelity VIP Growth $ 99 $158 $201 $422 - ----------------------------------------------------------------------------------------- Fidelity VIP Equity-Income $ 98 $156 $196 $414 - ----------------------------------------------------------------------------------------- Fidelity VIP Contrafund $ 99 $159 $201 $423 - ----------------------------------------------------------------------------------------- ING GET FUND ING GET Fund $104 $171 $221 N/A ING PARTNERS, INC. - ----------------------------------------------------------------------------------------- ING JP Morgan Mid Cap Value $103 $171 $221 $459 - ----------------------------------------------------------------------------------------- ING MFS Capital Opportunities $ 98 $157 $199 $419 - ----------------------------------------------------------------------------------------- ING MFS Global Growth $104 $174 $225 $467 - ----------------------------------------------------------------------------------------- ING Van Kampen Comstock $101 $166 $214 $446 - ----------------------------------------------------------------------------------------- ING VARIABLE INSURANCE TRUST - ----------------------------------------------------------------------------------------- ING VP Worldwide Growth $102 $167 $215 $448 - ----------------------------------------------------------------------------------------- ING VARIABLE PORTFOLIOS, INC. ING VP Index Plus LargeCap $ 96 $151 $189 $400 - ----------------------------------------------------------------------------------------- ING VP Index Plus MidCap $ 97 $154 $194 $410 - ----------------------------------------------------------------------------------------- ING VP Index Plus SmallCap $ 98 $156 $197 $414 - ----------------------------------------------------------------------------------------- ING VP Value Opportunity $ 99 $159 $202 $424 - ----------------------------------------------------------------------------------------- 6 - ----------------------------------------------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------- ING VARIABLE PRODUCTS TRUST ING VP Convertible $100 $163 $209 $437 - ----------------------------------------------------------------------------------------- ING VP Large Company Value $100 $163 $209 $437 - ----------------------------------------------------------------------------------------- ING VP LargeCap Growth $100 $163 $209 $437 - ----------------------------------------------------------------------------------------- ING VP MagnaCap $100 $163 $209 $437 - ----------------------------------------------------------------------------------------- INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF-Financial Services $100 $162 $207 $434 - ----------------------------------------------------------------------------------------- INVESCO VIF-Health Sciences $100 $162 $207 $433 - ----------------------------------------------------------------------------------------- INVESCO VIF-Leisure $103 $172 $223 $462 - ----------------------------------------------------------------------------------------- INVESCO VIF-Utilities $103 $171 $222 $461 - ----------------------------------------------------------------------------------------- JANUS ASPEN SERIES Janus Aspen Series Worldwide Growth $ 99 $159 $201 $423 PIMCO VARIABLE INSURANCE TRUST - ----------------------------------------------------------------------------------------- PIMCO High Yield $ 97 $153 $192 $405 - ----------------------------------------------------------------------------------------- PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT $100 $162 $206 $432 - ----------------------------------------------------------------------------------------- Pioneer Small Company VCT $106 $180 $236 $487 - ----------------------------------------------------------------------------------------- PRUDENTIAL SERIES FUND, INC. Jennison $100 $162 $206 $432 - ----------------------------------------------------------------------------------------- SP Jennison International Growth $112 $197 $263 $533 - ----------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST Putnam VT Growth and Income $ 97 $153 $192 $406 - ----------------------------------------------------------------------------------------- Putnam VT International Growth and Income $102 $167 $215 $448 - ----------------------------------------------------------------------------------------- Putnam VT Voyager II $108 $186 $245 $502 UBS SERIES TRUST - ----------------------------------------------------------------------------------------- UBS Tactical Allocation $ 99 $158 $200 $421 - -----------------------------------------------------------------------------------------
7 Example 2: If you do not surrender your Contract at the end of the applicable time period and elected the premium credit and the earnings multiplier benefit rider, you would pay the following expenses for each $1,000 invested:
- ----------------------------------------------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------- GCG TRUST Core Bond $39 $121 $205 $429 - ----------------------------------------------------------------------------------------- International Enhanced EAFE $42 $128 $216 $451 - ----------------------------------------------------------------------------------------- J.P. Morgan Fleming Small Cap Equity $41 $125 $212 $442 - ----------------------------------------------------------------------------------------- Janus Growth and Income $41 $124 $209 $438 - ----------------------------------------------------------------------------------------- Liquid Asset $35 $107 $182 $386 - ----------------------------------------------------------------------------------------- Research $38 $117 $199 $418 - ----------------------------------------------------------------------------------------- Total Return $38 $117 $199 $418 - ----------------------------------------------------------------------------------------- Value Equity $39 $119 $202 $424 - ----------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent Demographic Trends $44 $134 $225 $467 - ----------------------------------------------------------------------------------------- AIM V.I. Growth $41 $124 $210 $440 - ----------------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein Value $54 $163 $272 $549 - ----------------------------------------------------------------------------------------- Alliance Growth and Income $39 $118 $200 $421 - ----------------------------------------------------------------------------------------- Alliance Premier Growth $42 $129 $218 $454 FIDELITY VARIABLE INSURANCE PRODUCTS - ----------------------------------------------------------------------------------------- Fidelity VIP Growth $39 $118 $201 $422 - ----------------------------------------------------------------------------------------- Fidelity VIP Equity-Income $38 $116 $196 $414 - ----------------------------------------------------------------------------------------- Fidelity VIP Contrafund $39 $119 $201 $423 - ----------------------------------------------------------------------------------------- ING GET FUND ING GET Fund $44 $131 $221 N/A ING PARTNERS, INC. - ----------------------------------------------------------------------------------------- ING JP Morgan Mid Cap Value $43 $131 $221 $459 - ----------------------------------------------------------------------------------------- ING MFS Capital Opportunities $38 $117 $199 $419 - ----------------------------------------------------------------------------------------- ING MFS Global Growth $44 $134 $225 $467 - ----------------------------------------------------------------------------------------- ING Van Kampen Comstock $41 $126 $214 $446 ING VARIABLE INSURANCE TRUST - ----------------------------------------------------------------------------------------- ING VP Worldwide Growth $42 $127 $215 $448 - ----------------------------------------------------------------------------------------- ING VARIABLE PORTFOLIOS, INC. ING VP Index Plus LargeCap $36 $111 $189 $400 - ----------------------------------------------------------------------------------------- ING VP Index Plus MidCap $37 $114 $194 $410 - ----------------------------------------------------------------------------------------- ING VP Index Plus SmallCap $38 $116 $197 $414 - ----------------------------------------------------------------------------------------- ING VP Value Opportunity $39 $119 $202 $424 - ----------------------------------------------------------------------------------------- ING VARIABLE PRODUCTS TRUST ING VP Convertible $40 $123 $209 $437 - ----------------------------------------------------------------------------------------- ING VP Large Company Value $40 $123 $209 $437 - ----------------------------------------------------------------------------------------- ING VP LargeCap Growth $40 $123 $209 $437 - ----------------------------------------------------------------------------------------- ING VP MagnaCap $40 $123 $209 $437 - ----------------------------------------------------------------------------------------- 8 - ----------------------------------------------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------- INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF-Financial Services $40 $122 $207 $434 - ----------------------------------------------------------------------------------------- INVESCO VIF-Health Sciences $40 $122 $207 $433 - ----------------------------------------------------------------------------------------- INVESCO VIF-Leisure $43 $132 $223 $462 - ----------------------------------------------------------------------------------------- INVESCO VIF-Utilities $43 $131 $222 $461 - ----------------------------------------------------------------------------------------- JANUS ASPEN SERIES Janus Aspen Series Worldwide Growth $39 $119 $201 $423 PIMCO VARIABLE INSURANCE TRUST - ----------------------------------------------------------------------------------------- PIMCO High Yield $37 $113 $192 $405 - ----------------------------------------------------------------------------------------- PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT $40 $122 $206 $432 - ----------------------------------------------------------------------------------------- Pioneer Small Company VCT $46 $140 $236 $487 - ----------------------------------------------------------------------------------------- PRUDENTIAL SERIES FUND, INC. Jennison $40 $122 $206 $432 - ----------------------------------------------------------------------------------------- SP Jennison International Growth $52 $157 $263 $533 - ----------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST Putnam VT Growth and Income $37 $113 $192 $406 - ----------------------------------------------------------------------------------------- Putnam VT International Growth and Income $42 $127 $215 $448 - ----------------------------------------------------------------------------------------- Putnam VT Voyager II $48 $146 $245 $502 UBS SERIES TRUST - ----------------------------------------------------------------------------------------- UBS Tactical Allocation $39 $118 $200 $421 - -----------------------------------------------------------------------------------------
9 Example 3: If you surrender your Contract at the end of the applicable time period and did not elect the premium credit and the earnings multiplier benefit rider, you would pay the following expenses for each $1,000 invested:
- ----------------------------------------------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------- GCG TRUST Core Bond $90 $133 $158 $332 - ----------------------------------------------------------------------------------------- International Enhanced EAFE $93 $140 $170 $355 - ----------------------------------------------------------------------------------------- J.P. Morgan Fleming Small Cap Equity $92 $137 $165 $346 - ----------------------------------------------------------------------------------------- Janus Growth and Income $91 $136 $163 $341 - ----------------------------------------------------------------------------------------- Liquid Asset $86 $119 $135 $287 - ----------------------------------------------------------------------------------------- Research $89 $129 $152 $320 - ----------------------------------------------------------------------------------------- Total Return $89 $129 $152 $320 - ----------------------------------------------------------------------------------------- Value Equity $90 $131 $155 $326 - ----------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent Demographic Trends $95 $146 $179 $372 - ----------------------------------------------------------------------------------------- AIM V.I. Growth $91 $136 $163 $343 - ----------------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein Value $105 $175 $226 $458 - ----------------------------------------------------------------------------------------- Alliance Growth and Income $89 $130 $153 $323 - ----------------------------------------------------------------------------------------- Alliance Premier Growth $93 $141 $171 $358 FIDELITY VARIABLE INSURANCE PRODUCTS - ----------------------------------------------------------------------------------------- Fidelity VIP Growth $90 $130 $154 $324 - ----------------------------------------------------------------------------------------- Fidelity VIP Equity-Income $89 $128 $149 $316 - ----------------------------------------------------------------------------------------- Fidelity VIP Contrafund $90 $131 $154 $325 - ----------------------------------------------------------------------------------------- ING GET FUND ING GET Fund $95 $147 $181 N/A ING PARTNERS, INC. - ----------------------------------------------------------------------------------------- ING JP Morgan Mid Cap Value $94 $143 $174 $363 - ----------------------------------------------------------------------------------------- ING MFS Capital Opportunities $89 $129 $152 $321 - ----------------------------------------------------------------------------------------- ING MFS Global Growth $95 $146 $179 $372 - ----------------------------------------------------------------------------------------- ING Van Kampen Comstock $92 $138 $167 $349 ING VARIABLE INSURANCE TRUST - ----------------------------------------------------------------------------------------- ING VP Worldwide Growth $92 $139 $168 $352 - ----------------------------------------------------------------------------------------- ING VARIABLE PORTFOLIOS, INC. ING VP Index Plus LargeCap $87 $123 $142 $301 - ----------------------------------------------------------------------------------------- ING VP Index Plus MidCap $88 $127 $147 $312 - ----------------------------------------------------------------------------------------- ING VP Index Plus SmallCap $89 $128 $150 $317 - ----------------------------------------------------------------------------------------- ING VP Value Opportunity $90 $131 $155 $327 - ----------------------------------------------------------------------------------------- ING VARIABLE PRODUCTS TRUST ING VP Convertible $91 $135 $162 $340 - ----------------------------------------------------------------------------------------- ING VP Large Company Value $91 $135 $162 $340 - ----------------------------------------------------------------------------------------- ING VP LargeCap Growth $91 $135 $162 $340 - ----------------------------------------------------------------------------------------- ING VP MagnaCap $91 $135 $162 $340 - ----------------------------------------------------------------------------------------- 10 - ----------------------------------------------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------- INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF-Financial Services $91 $135 $161 $337 - ----------------------------------------------------------------------------------------- INVESCO VIF-Health Sciences $91 $134 $160 $336 - ----------------------------------------------------------------------------------------- INVESCO VIF-Leisure $94 $144 $176 $367 - ----------------------------------------------------------------------------------------- INVESCO VIF-Utilities $94 $143 $175 $365 - ----------------------------------------------------------------------------------------- JANUS ASPEN SERIES Janus Aspen Series Worldwide Growth $90 $131 $154 $325 PIMCO VARIABLE INSURANCE TRUST - ----------------------------------------------------------------------------------------- PIMCO High Yield $88 $125 $145 $307 - ----------------------------------------------------------------------------------------- PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT $91 $134 $159 $335 - ----------------------------------------------------------------------------------------- Pioneer Small Company VCT $97 $152 $190 $392 - ----------------------------------------------------------------------------------------- PRUDENTIAL SERIES FUND, INC. Jennison $91 $134 $159 $335 - ----------------------------------------------------------------------------------------- SP Jennison International Growth $103 $169 $217 $441 - ----------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST Putnam VT Growth and Income $88 $125 $145 $308 - ----------------------------------------------------------------------------------------- Putnam VT International Growth and $92 $139 $168 $352 Income - ----------------------------------------------------------------------------------------- Putnam VT Voyager II $99 $158 $199 $409 UBS SERIES TRUST - ----------------------------------------------------------------------------------------- UBS Tactical Allocation $89 $130 $153 $323 - -----------------------------------------------------------------------------------------
11 Example 4: If you do not surrender your Contract at the end of the applicable time period and did not elect the premium credit and the earnings multiplier benefit rider, you would pay the following expenses for each $1,000 invested:
- ----------------------------------------------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------- GCG TRUST Core Bond $30 $ 93 $158 $332 - ----------------------------------------------------------------------------------------- International Enhanced EAFE $33 $100 $170 $355 - ----------------------------------------------------------------------------------------- J.P. Morgan Fleming Small Cap Equity $32 $ 97 $165 $346 - ----------------------------------------------------------------------------------------- Janus Growth and Income $31 $ 96 $163 $341 - ----------------------------------------------------------------------------------------- Liquid Asset $26 $ 79 $135 $287 - ----------------------------------------------------------------------------------------- Research $29 $ 89 $152 $320 - ----------------------------------------------------------------------------------------- Total Return $29 $ 89 $152 $320 - ----------------------------------------------------------------------------------------- Value Equity $30 $ 91 $155 $326 - ----------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent Demographic Trends $35 $106 $179 $372 - ----------------------------------------------------------------------------------------- AIM V.I. Growth $31 $ 96 $163 $343 - ----------------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. AllianceBernstein Value $45 $135 $226 $458 - ----------------------------------------------------------------------------------------- Alliance Growth and Income $29 $ 90 $153 $323 - ----------------------------------------------------------------------------------------- Alliance Premier Growth $33 $101 $171 $358 FIDELITY VARIABLE INSURANCE PRODUCTS - ----------------------------------------------------------------------------------------- Fidelity VIP Growth $30 $ 90 $154 $324 - ----------------------------------------------------------------------------------------- Fidelity VIP Equity-Income $29 $ 88 $149 $316 - ----------------------------------------------------------------------------------------- Fidelity VIP Contrafund $30 $ 91 $154 $325 - ----------------------------------------------------------------------------------------- ING GET FUND ING GET Fund $35 $107 $181 N/A ING PARTNERS, INC. - ----------------------------------------------------------------------------------------- ING JP Morgan Mid Cap Value $34 $103 $174 $363 - ----------------------------------------------------------------------------------------- ING MFS Capital Opportunities $29 $ 89 $152 $321 - ----------------------------------------------------------------------------------------- ING MFS Global Growth $35 $106 $179 $372 - ----------------------------------------------------------------------------------------- ING Van Kampen Comstock $32 $ 98 $167 $349 ING VARIABLE INSURANCE TRUST - ----------------------------------------------------------------------------------------- ING VP Worldwide Growth $32 $ 99 $168 $352 - ----------------------------------------------------------------------------------------- ING VARIABLE PORTFOLIOS, INC. ING VP Index Plus LargeCap $27 $ 83 $142 $301 - ----------------------------------------------------------------------------------------- ING VP Index Plus MidCap $28 $ 87 $147 $312 - ----------------------------------------------------------------------------------------- ING VP Index Plus SmallCap $29 $ 88 $150 $317 - ----------------------------------------------------------------------------------------- ING VP Value Opportunity $30 $ 91 $155 $327 - ----------------------------------------------------------------------------------------- ING VARIABLE PRODUCTS TRUST ING VP Convertible $31 $ 95 $162 $340 - ----------------------------------------------------------------------------------------- ING VP Large Company Value $31 $ 95 $162 $340 - ----------------------------------------------------------------------------------------- ING VP LargeCap Growth $31 $ 95 $162 $340 - ----------------------------------------------------------------------------------------- ING VP MagnaCap $31 $ 95 $162 $340 - ----------------------------------------------------------------------------------------- 12 - ----------------------------------------------------------------------------------------- 1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------------------------------------------------- INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF-Financial Services $31 $ 95 $161 $337 - ----------------------------------------------------------------------------------------- INVESCO VIF-Health Sciences $31 $ 94 $160 $336 - ----------------------------------------------------------------------------------------- INVESCO VIF-Leisure $34 $104 $176 $367 - ----------------------------------------------------------------------------------------- INVESCO VIF-Utilities $34 $103 $175 $365 - ----------------------------------------------------------------------------------------- JANUS ASPEN SERIES Janus Aspen Series Worldwide Growth $30 $ 91 $154 $325 PIMCO VARIABLE INSURANCE TRUST - ----------------------------------------------------------------------------------------- PIMCO High Yield $28 $ 85 $145 $307 - ----------------------------------------------------------------------------------------- PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT $31 $ 94 $159 $335 - ----------------------------------------------------------------------------------------- Pioneer Small Company VCT $37 $112 $190 $392 - ----------------------------------------------------------------------------------------- PRUDENTIAL SERIES FUND, INC. Jennison $31 $ 94 $159 $335 - ----------------------------------------------------------------------------------------- SP Jennison International Growth $43 $129 $217 $441 - ----------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST Putnam VT Growth and Income $28 $ 85 $145 $308 - ----------------------------------------------------------------------------------------- Putnam VT International Growth and $32 $ 99 $168 $352 Income - ----------------------------------------------------------------------------------------- Putnam VT Voyager II $39 $118 $199 $409 UBS SERIES TRUST - ----------------------------------------------------------------------------------------- UBS Tactical Allocation $29 $ 90 $153 $323 - -----------------------------------------------------------------------------------------
THESE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN SUBJECT TO THE TERMS OF YOUR CONTRACT. Compensation is paid for the sale of the Contracts. For information about this compensation, see "Selling the Contract." - -------------------------------------------------------------------------------- PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- ACCUMULATION UNIT We use accumulation units to calculate the value of a Contract. Each subaccount of Separate Account B has its own accumulation unit value. The accumulation units are valued each business day that the New York Stock Exchange is open for trading. Their values may increase or decrease from day to day according to a Net Investment Factor, which is primarily based on the investment performance of the applicable investment portfolio. Shares in the investment portfolios are valued at their net asset value. THE NET INVESTMENT FACTOR The Net Investment Factor is an index number which reflects certain charges under the Contract and the investment performance of the subaccount. The Net Investment Factor is calculated for each subaccount as follows: 13 1) We take the net asset value of the subaccount at the end of each business day. 2) We add to (1) the amount of any dividend or capital gains distribution declared for the subaccount and reinvested in such subaccount. We subtract from that amount a charge for our taxes, if any. 3) We divide (2) by the net asset value of the subaccount at the end of the preceding business day. 4) We then subtract the applicable daily mortality and expense risk charge, the daily asset-based administrative charge and the daily premium credit option charge, if applicable, from the subaccount and, for the GET Fund subaccount only, the daily GET Fund guarantee charge. Calculations for the subaccounts are made on a per share basis. CONDENSED FINANCIAL INFORMATION Tables containing (i) the Accumulation Unit Value history of each subaccount of Golden American Separate Account B offered in this prospectus and (ii) the total investment value history of each such subaccount are presented in Appendix G - Condensed Financial Information. We present sets of tables for each category for which contracts have been issued to reflect the varying death benefit and mortality and expense risk charges which affect accumulation value. FINANCIAL STATEMENTS The audited financial statements of Separate Account B for the year ended December 31, 2001 are included in the Statement of Additional Information. The audited consolidated financial statements of Golden American for the years ended December 31, 2001, 2000 and 1999 are included in the Statement of Additional Information. PERFORMANCE INFORMATION From time to time, we may advertise or include in reports to contract owners performance information for the subaccounts of Separate Account B, including the average annual total return performance, yields and other nonstandard measures of performance. Such performance data will be computed, or accompanied by performance data computed, in accordance with standards defined by the SEC. Except for the Liquid Asset subaccount, quotations of yield for the subaccounts will be based on all investment income per unit (contract value divided by the accumulation unit) earned during a given 30-day period, less expenses accrued during such period. Information on standard total average annual return performance will include average annual rates of total return for 1, 5 and 10 year periods, or lesser periods depending on how long Separate Account B has been investing in the portfolio. We may show other total returns for periods of less than one year. Total return figures will be based on the actual historic performance of the subaccounts of Separate Account B, assuming an investment at the beginning of the period when the separate account first invested in the portfolio and withdrawal of the investment at the end of the period, adjusted to reflect the deduction of all applicable portfolio and current contract charges. We may also show rates of total return on amounts invested at the beginning of the period with no withdrawal at the end of the period. Total return figures which assume no withdrawals at the end of the period will reflect all recurring charges, but will not reflect the surrender charge. In addition, we may present historic performance data for the investment portfolios since their inception reduced by some or all of the fees and charges under the Contract. Such adjusted historic performance includes data that precedes the inception dates of the subaccounts of Separate Account B. This data is designed to show the performance that would have resulted if the Contract had been in existence before the separate account began investing in the portfolios. Current yield for the Liquid Asset subaccount is based on income received by a hypothetical investment over a given 7-day period, less expenses accrued, and then "annualized" (i.e., assuming that the 7-day yield would be received for 52 weeks). We calculate "effective yield" for the Liquid Asset subaccount in a manner similar to that used to calculate yield, but when annualized, the income earned by the investment is assumed to be reinvested. The "effective yield" will thus be slightly higher than the "yield" because of the compounding effect of earnings. We calculate quotations of yield for the remaining subaccounts on all investment income per accumulation unit earned during a given 30-day period, after subtracting fees and expenses accrued during the period, assuming no surrender. YOU SHOULD BE AWARE THAT THERE IS NO GUARANTEE THAT THE LIQUID ASSET SUBACCOUNT WILL HAVE A POSITIVE OR LEVEL RETURN. 14 We may compare performance information for a subaccount to: (i) the Standard & Poor's 500 Stock Index, Dow Jones Industrial Average, Donoghue Money Market Institutional Averages, or any other applicable market indices, (ii) other variable annuity separate accounts or other investment products tracked by Lipper Analytical Services (a widely used independent research firm which ranks mutual funds and other investment companies), or any other rating service, and (iii) the Consumer Price Index (measure for inflation) to determine the real rate of return of an investment in the Contract. Our reports and promotional literature may also contain other information including the ranking of any subaccount based on rankings of variable annuity separate accounts or other investment products tracked by Lipper Analytical Services or by similar rating services. Performance information reflects only the performance of a hypothetical contract and should be considered in light of other factors, including the investment objective of the investment portfolio and market conditions. Please keep in mind that past performance is not a guarantee of future results. - -------------------------------------------------------------------------------- GOLDEN AMERICAN LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- Golden American Life Insurance Company is a Delaware stock life insurance company, which was originally incorporated in Minnesota on January 2, 1973. Golden American is a wholly owned subsidiary of Equitable Life Insurance Company of Iowa ("Equitable Life"). Equitable Life is a wholly owned subsidiary of Equitable of Iowa Companies, Inc. ("Equitable of Iowa") which in turn is a wholly owned subsidiary of ING Groep N.V. ("ING"), a global financial services holding company based in The Netherlands. Golden American is authorized to sell insurance and annuities in all states, except New York, and the District of Columbia. In May 1996, Golden American established a subsidiary, First Golden American Life Insurance Company of New York, which is authorized to sell annuities in New York and Delaware. First Golden was merged into ReliaStar Life Insurance Company of New York, another wholly owned subsidiary of ING and an affiliate, on April 1, 2002. Golden American's consolidated financial statements appear in the Statement of Additional Information. Equitable of Iowa is the holding company for Equitable Life, Directed Services, Inc., the investment manager of the GCG Trust and the distributor of the Contracts, and other interests. ING also owns ING Investments, LLC and ING Investment Management, LLC, portfolio managers of the GCG Trust, and the investment managers of the ING Variable Insurance Trust and ING Variable Products Trust and ING VP Bond Portfolio, respectively. ING also owns Baring International Investment Limited, another portfolio manager of the GCG Trust. Our principal office is located at 1475 Dunwoody Drive, West Chester, Pennsylvania 19380. - -------------------------------------------------------------------------------- THE TRUSTS AND FUNDS - -------------------------------------------------------------------------------- ING GET Fund is an open-end investment company authorized to issue multiple series of shares. Shares of the series are offered to insurance company separate accounts, including Golden American Separate Account B, that fund variable annuity contracts. The address of ING GET Fund is 1475 Dunwoody Drive, West Chester, PA 19380. ING Variable Portfolios, Inc. is a mutual fund whose shares are offered to insurance company separate accounts, including Golden American Separate Account B, that fund both annuity and life insurance contracts and to certain tax-qualified retirement plans. The address of ING Variable Portfolios, Inc. is 151 Farmington Avenue, Hartford, Connecticut 06156-8962. AIM Variable Insurance Funds is a mutual fund whose shares are currently offered only to insurance company separate accounts. The address of AIM Variable Insurance Funds is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. 15 Alliance Variable Products Series Fund, Inc. is also a mutual fund whose shares are available to separate accounts of insurance companies, including Golden American Separate Account B, for both variable annuity contracts and variable life insurance policies. The address of Alliance Variable Products Series Fund, Inc. is P.O. Box 1520, Secausus, NJ 07096-1520. UBS Series Trust is a mutual fund which offers shares only to insurance company separate accounts, including Golden American Separate Account B, that fund certain variable annuity and variable life insurance contracts. The address of Brinson Series Trust is 51 West 52nd Street, New York, New York 10019-6114. Fidelity Variable Insurance Products Fund and is also a mutual fund which offers its shares only to separate accounts of insurance companies that offer variable annuity and variable life insurance products. Fidelity Variable Insurance Products Fund is located at 82 Devonshire Street, Boston, MA 02109. The GCG Trust is a mutual fund whose shares are offered to separate accounts funding variable annuity and variable life insurance policies offered by Golden American and other affiliated insurance companies. The GCG Trust may also sell its shares to separate accounts of insurance companies not affiliated with Golden American. Pending SEC approval, shares of the GCG Trust may also be sold to certain qualified pension and retirement plans. The address of the GCG Trust is 1475 Dunwoody Drive, West Chester, PA 19380. INVESCO Variable Investment Funds, Inc. is a mutual fund sold exclusively to insurance company separate accounts for variable annuity and variable life insurance contracts. The address of INVESCO Variable Investment Funds, Inc. is P.O. Box 173706, Denver, Colorado 80217-3706. Janus Aspen Series is a mutual fund whose shares are offered in connection with investment in and payments under variable annuity contracts and variable life insurance contracts, as well as certain qualified retirement plans. The address of Janus Aspen Series is 100 Fillmore Street, Denver, Colorado 80206-4928. The ING Variable Insurance Trust (formerly the ING Variable Insurance Trust) is also a mutual fund whose shares are offered to separate accounts funding variable annuity contracts offered by Golden American and other insurance companies, both affiliated and unaffiliated with Golden American. The address of ING Variable Insurance Trust is 40 North Central Avenue, Suite 1200, Phoenix, AZ 85004. The ING Variable Products Trust is also a mutual fund whose shares are offered to separate accounts funding variable annuity contracts offered by Golden American and other insurance companies, both affiliated and unaffiliated with Golden American. The address of ING Variable Products Trust is 40 North Central Avenue, Suite 1200, Phoenix, AZ 85004. The PIMCO Variable Insurance Trust is also a mutual fund whose shares are available to separate accounts of insurance companies, including Golden American, for both variable annuity contracts and variable life insurance policies and to qualified pension and retirement plans. The address of the PIMCO Variable Insurance Trust is 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660. Pioneer Variable Contracts Trust is an open-end management investment company. Shares of the portfolios are offered primarily to insurance companies to fund the benefits under variable annuity and variable life insurance contracts issued by their companies. The address of Pioneer Variable Contracts Trust is 60 State Street, Boston, Massachusetts 02109. ING Partners, Inc. is a mutual fund whose shares are offered only to insurance companies to fund benefits under their variable annuity and variable life insurance contracts. The address of Portfolio Partners, Inc. is 151 Farmington Avenue, Hartford, Connecticut 06156-8962. The Prudential Series Fund, Inc. is also a mutual fund whose shares are available to separate accounts funding variable annuity and variable life insurance polices offered by The Prudential Insurance Company of America, its affiliated insurers and other life insurance companies not affiliated with Prudential, including Golden American. The address of the Prudential Series Fund is 751 Broad Street, Newark, NJ 07102. 16 Putnam Variable Trust is a mutual fund whose shares are available for purchase by separate accounts of insurance companies. The address of Putnam Variable Trust is One Post Office Square, Boston, Massachusetts 02109. YOU WILL FIND MORE DETAILED INFORMATION ABOUT THE TRUSTS AND FUNDS IN APPENDIX A - -- THE INVESTMENT PORTFOLIOS. In the event that, due to differences in tax treatment or other considerations, the interests of contract owners of various contracts participating in the Trusts conflict, we, the Boards of Trustees or Directors of Trusts or Funds, of the Trusts or Funds and any insurance companies participating in the Trusts will monitor events to identify and resolve any material conflicts that may arise. GET FUND A GET Fund series may be available during the accumulation phase of the Contract. We make a guarantee, as described below, when you allocate money into a GET Fund series. Each GET Fund series has an offering period of three months which precedes the guarantee period. The GET Fund investment option may not be available under your Contract or in your state. Various series of the GET Fund may be offered from time to time, and additional charges will apply if you elect to invest in one of these series. Please see Appendix F for a projected schedule of GET Fund Series Offerings. The Company makes a guarantee when you direct money into a GET Fund series. We guarantee that the value of an accumulation unit of the GET Fund subaccount for that series under the Contract on the maturity date will not be less than its value as determined after the close of business on the last day of the offering period for that GET Fund series. If the value on the maturity date is lower than it was on the last day of the offering period, we will add funds to the GET Fund subaccount for that series to make up the difference. This means that if you remain invested in the GET Fund series until the maturity date, at the maturity date, you will receive no less than the value of your separate account investment directed to the GET Fund series as of the last day of the offering period, less any maintenance fees or any amounts you transfer or withdraw from the GET Fund subaccount for that series. The value of dividends and distributions made by the GET Fund series throughout the guarantee period is taken into account in determining whether, for purposes of the guarantee, the value of your GET Fund investment on the maturity date is no less than its value as of the last day of the offering period. The guarantee does not promise that you will earn the fund's minimum targeted return referred to in the investment objective. If you withdraw or transfer funds from a GET Fund series prior to the maturity date, we will process the transactions at the actual unit value next determined after we receive your request. The guarantee will not apply to these amounts or to amounts deducted as a maintenance fee, if applicable. Before the maturity date, we will send a notice to each contract owner who has allocated amounts to the GET Fund series. This notice will remind you that the maturity date is approaching and that you must choose other investment options for your GET Fund series amounts. If you do not make a choice, on the maturity date we will transfer your GET Fund series amounts to another available series of the GET Fund that is then accepting deposits. If no GET Fund series is then available, we will transfer your GET Fund series amounts to the fund or funds that we designate. Please see the GET Fund prospectus for a complete description of the GET Fund investment option, including charges and expenses. RESTRICTED FUNDS We may designate any investment option as a Restricted Fund and limit the amount you may allocate or transfer to a Restricted Fund. We may establish any such limitation, at our discretion, as a percentage of premium or contract value or as a specified dollar amount and change the limitation at any time. Currently, we have not designated any investment option as a Restricted Fund. We may, with 30 days notice to you, designate any investment portfolio as a Restricted Fund or change the limitations on existing contracts with respect to new premiums added to such investment portfolio and also with respect to new transfers to such investment portfolio. If a change is made with regard to designation as a Restricted Fund or applicable limitations, such change will apply only to transactions effected after such change. 17 We limit your investment in the Restricted Funds on both an aggregate basis for all Restricted Funds and for each individual Restricted Fund. The aggregate limits for investment in all Restricted Funds are expressed as a percentage of contract value, percentage of premium and maximum dollar amount. Currently, your investment in two or more Restricted Funds would be subject to each of the following three limitations: no more than 30 percent of contract value, up to 100 percent of each premium and no more than $999,999,999. We may change these limits, in our discretion, for new contracts, premiums, transfers or withdrawals. We also limit your investment in each individual Restricted Fund. The limits for investment in each Restricted Fund are expressed as a percentage of contract value, percentage of premium and maximum dollar amount. Currently, the limits for investment in an individual Restricted Fund are the same as the aggregate limits set forth above. We may change these limits, in our discretion, for new contracts, premiums, transfers or withdrawals. We monitor the aggregate and individual limits on investments in Restricted Funds for each transaction (e.g. premium payments, reallocations, withdrawals, dollar cost averaging). If the contract value in the Restricted Fund has increased beyond the applicable limit due to market growth, we will not require the reallocation or withdrawal of contract value from the Restricted Fund. However, if an aggregate limit has been exceeded, withdrawals must be taken either from the Restricted Funds or taken pro rata from all investment options in which contract value is allocated, so that the percentage of contract value in the Restricted Funds following the withdrawal is less than or equal to the percentage of contract value in the Restricted Funds prior to the withdrawal. We will not permit a transfer to the Restricted Funds to the extent that it would increase the contract value in the Restricted Fund or in all Restricted Funds to more than the applicable limits set forth above. We will not limit transfers from Restricted Funds. If the result of multiple reallocations is to lower the percentage of total contract value in Restricted Funds, the reallocation will be permitted even if the percentage of contract value in a Restricted Fund is greater than its limit. Please see "Withdrawals" and "Transfers Among Your Investments" in this prospectus for more information on the effect of Restricted Funds. - -------------------------------------------------------------------------------- SPECIAL FUNDS - -------------------------------------------------------------------------------- We use the term Special Funds in the discussion of the death benefit options. Currently, no subaccounts have been designated as Special Funds. The Company may, at any time, designate new and/or existing subaccounts as a Special Fund with 30 days notice with respect to new premiums added or transfers to such subaccounts. Such subaccounts will include those that, due to their volatility, are excluded from the death benefit guarantees that may otherwise be provided. Allocations to Special Funds will not affect the death benefit that may be available under the earnings multiplier benefit rider. Designation of a subaccount as a Special Fund may vary by benefit. For example, a subaccount may be designated a Special Fund for purposes of calculating one death benefit and not another. - -------------------------------------------------------------------------------- GOLDEN AMERICAN SEPARATE ACCOUNT B - -------------------------------------------------------------------------------- Golden American Separate Account B ("Separate Account B") was established as a separate account of the Company on July 14, 1988. It is registered with the SEC as a unit investment trust under the Investment Company Act of 1940 as amended (the "1940 Act"). Separate Account B is a separate investment account used for our variable annuity contracts. We own all the assets in Separate Account B but such assets are kept separate from our other accounts. Separate Account B is divided into subaccounts. Each subaccount invests exclusively in shares of one investment portfolio of a Trust or Fund. Each investment portfolio has its own distinct investment objectives and policies. Income, gains and losses, realized or unrealized, of a portfolio are credited to or charged against 18 the corresponding subaccount of Separate Account B without regard to any other income, gains or losses of the Company. Assets equal to the reserves and other contract liabilities with respect to each are not chargeable with liabilities arising out of any other business of the Company. They may, however, be subject to liabilities arising from subaccounts whose assets we attribute to other variable annuity contracts supported by Separate Account B. If the assets in Separate Account B exceed the required reserves and other liabilities, we may transfer the excess to our general account. We are obligated to pay all benefits and make all payments provided under the Contracts. NOTE: We currently offer other variable annuity contracts that invest in Separate Account B but are not discussed in this prospectus. Separate Account B may also invest in other investment portfolios which are not available under your Contract. Under certain circumstances, we may make certain changes to the subaccounts. For more information, see "The Annuity Contract -- Addition, Deletion, or Substitution of Subaccounts and Other Changes." - -------------------------------------------------------------------------------- THE ANNUITY CONTRACT - -------------------------------------------------------------------------------- The Contract described in this prospectus is a deferred combination variable and fixed annuity contract. The Contract provides a means for you to invest in one or more of the available mutual fund portfolios of the Trusts and Funds through Separate Account B. It also provides a means for you to invest in a Fixed Interest Allocation through the Fixed Account. See Appendix C and the Fixed Account II prospectus for more information on the Fixed Interest Allocation and Fixed Account. CONTRACT DATE AND CONTRACT YEAR The date the Contract became effective is the contract date. Each 12-month period following the contract date is a contract year. ANNUITY START DATE The annuity start date is the date you start receiving annuity payments under your Contract. The Contract, like all deferred variable annuity contracts, has two phases: the accumulation phase and the income phase. The accumulation phase is the period between the contract date and the annuity start date. The income phase begins when you start receiving regular annuity payments from your Contract on the annuity start date. CONTRACT OWNER You are the contract owner. You are also the annuitant unless another annuitant is named in the application. You have the rights and options described in the Contract. One or more persons may own the Contract. If there are multiple owners named, the age of the oldest owner will determine the applicable death benefit if such death benefit is available for multiple owners. The death benefit becomes payable when you die. In the case of a sole contract owner who dies before the income phase begins, we will pay the beneficiary the death benefit then due. The sole contract owner's estate will be the beneficiary if no beneficiary has been designated or the beneficiary has predeceased the contract owner. In the case of a joint owner of the Contract dying before the income phase begins, we will designate the surviving contract owner as the beneficiary. This will override any previous beneficiary designation. If the contract owner is a trust and a beneficial owner of the trust has been designated, the beneficial owner will be treated as the contract owner for determining the death benefit. If a beneficial owner is changed or added after the contract date, this will be treated as a change of contract owner for determining the death benefit (likely a taxable event). If no beneficial owner of the Trust has been designated, the availability of enhanced death benefit will be based on the age of the annuitant at the time you purchase the Contract. JOINT OWNER. For non-qualified Contracts only, joint owners may be named in a written request before the Contract is in effect. Joint owners may independently exercise transfers and other transactions allowed under the Contract. All other rights of ownership must be exercised by both owners. Joint owners own equal 19 shares of any benefits accruing or payments made to them. All rights of a joint owner end at death of that owner if the other joint owner survives. The entire interest of the deceased joint owner in the Contract will pass to the surviving joint owner and the death benefit will be payable. Joint owners may only select Option Package I. Any addition or deletion of a joint owner is treated as a change of owner which may affect the amount of the death benefit. See "Change of Contract Owner or Beneficiary" below. If you have elected Option Package II or III, and you add a joint owner, if the older joint owner is attained age 85 or under, the death benefit from the date of change will be the Option Package I death benefit. If the older joint owner's attained age is 86 or over on the date of the ownership change, the death benefit will be the cash surrender value. The mortality and expense risk charge going forward will reflect the change in death benefit. If you elected the earnings multiplier benefit rider, it will terminate if a joint owner is added. Note that returning a Contract to single owner status will not restore any death benefit or the earnings multiplier benefit. Unless otherwise specified, the term "age" when used for joint owners shall mean the age of the oldest owner. ANNUITANT The annuitant is the person designated by you to be the measuring life in determining annuity payments. The annuitant's age determines when the income phase must begin and the amount of the annuity payments to be paid. You are the annuitant unless you choose to name another person. The annuitant may not be changed after the Contract is in effect. The contract owner will receive the annuity benefits of the Contract if the annuitant is living on the annuity start date. If the annuitant dies before the annuity start date and a contingent annuitant has been named, the contingent annuitant becomes the annuitant (unless the contract owner is not an individual, in which case the death benefit becomes payable). If there is no contingent annuitant when the annuitant dies before the annuity start date, the contract owner will become the annuitant. The contract owner may designate a new annuitant within 60 days of the death of the annuitant. When the annuitant dies before the annuity start date and the contract owner is not an individual, we will pay the designated beneficiary the death benefit then due. If a beneficiary has not been designated, or if there is no designated beneficiary living, the contract owner will be the beneficiary. If the annuitant was the sole contract owner and there is no beneficiary designation, the annuitant's estate will be the beneficiary. Regardless of whether a death benefit is payable, if the annuitant dies and any contract owner is not an individual, distribution rules under federal tax law will apply. You should consult your tax advisor for more information if you are not an individual. BENEFICIARY The beneficiary is named by you in a written request. The beneficiary is the person who receives any death benefit proceeds and who may become the successor contract owner if the contract owner who is a spouse (or the annuitant if the contract owner is other than an individual) dies before the annuity start date. We pay death benefits to the primary beneficiary (unless there are joint owners, in which case death proceeds are payable to the surviving owner(s)). If the beneficiary dies before the annuitant or the contract owner, the death benefit proceeds are paid to the contingent beneficiary, if any. If there is no surviving beneficiary, we pay the death benefit proceeds to the contract owner's estate. One or more persons may be a beneficiary or contingent beneficiary. In the case of more than one beneficiary, we will assume any death benefit proceeds are to be paid in equal shares to the surviving beneficiaries. You have the right to change beneficiaries during the annuitant's lifetime unless you have designated an irrevocable beneficiary. You may also restrict a beneficiary's right to elect an income phase payment option or receive a lump-sum payment. If so, such rights or options will not be available to the beneficiary. When an 20 irrevocable beneficiary has been designated, you and the irrevocable beneficiary may have to act together to exercise some of the rights and options under the Contract. CHANGE OF CONTRACT OWNER OR BENEFICIARY. During the annuitant's lifetime, you may transfer ownership of a non-qualified Contract. A change in ownership may affect the amount of the death benefit, the guaranteed minimum death benefit and/or the death benefit option applied to the Contract, and the amount of the earnings multiplier benefit, if applicable. The new owner's age, as of the date of the change, will be used as the basis for determining the applicable benefits and charges. The new owner's death will determine when a death benefit is payable. If you have elected Option Package I, the death benefit will continue if the new owner is age 85 or under on the date of the ownership change. For Option Package II or III, if the new owner is age 79 or under on the date that ownership changes, the death benefit will continue. If the new owner is age 80 to 85, under Option Package II or III, the death benefit will end, and the death benefit will become the Option Package I death benefit. For all death benefit options, if the new owner's attained age is 86 or over on the date of the ownership change, the death benefit will be the cash surrender value. The mortality and expense risk charge going forward will reflect the change in death benefit. Please note that once a death benefit has been changed due to a change in owner, it will not be restored by a subsequent change to a younger owner. If you have elected the earnings multiplier benefit rider, and the new owner is under age 76, the rider will continue. The benefit and charge will be adjusted to reflect the attained age of the new owner as the issue age. The Maximum Base percentage in effect on the rider effective date will apply in calculating the benefit. If the new owner is age 76 or over, the rider will terminate. If you have not elected the earnings multiplier benefit rider, the new owner may not add the rider upon the change of ownership. You may also change the beneficiary. All requests for changes must be in writing and submitted to our Customer Service Center in good order. The change will be effective as of the day you sign the request. The change will not affect any payment made or action taken by us before recording the change. A change of owner likely has tax consequences. See "Federal Tax Considerations in this prospectus. PURCHASE AND AVAILABILITY OF THE CONTRACT There are three option packages available under the Contract. You select an option package at the time of application. Each option package is unique. The minimum initial payment to purchase the Contract and the maximum age at which you may purchase the Contract depend on the option package that you elect.
------------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III ------------------------------------------------------------------------------------------------- Minimum Initial $15,000 (non-qualified) $5,000 (non-qualified) $5,000 (non-qualified) Payment $1,500 (qualified) $1,500 (qualified) $1,500 (qualified) ------------------------------------------------------------------------------------------------- Maximum Age to Purchase 85 80 80 -------------------------------------------------------------------------------------------------
You may make additional premium payments up to the contract anniversary after your 86th birthday. The minimum additional premium payment we will accept is $50 regardless of the option package you select. Under certain circumstances, we may waive the minimum premium payment requirement. We may also change the minimum initial or additional premium requirements for certain group or sponsored arrangements. Any initial or additional premium payment that would cause the contract value of all annuities that you maintain with us to exceed $1,000,000 requires our prior approval. The Contract is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes. The tax-deferred feature is more attractive to people in high federal and state tax brackets. YOU SHOULD NOT BUY THIS CONTRACT: (1) IF YOU ARE LOOKING FOR A SHORT-TERM 21 INVESTMENT; (2) IF YOU CANNOT RISK GETTING BACK LESS MONEY THAN YOU PUT IN; OR (3) IF YOUR ASSETS ARE IN A PLAN WHICH PROVIDES FOR TAX-DEFERRAL AND YOU SEE NO OTHER REASON TO PURCHASE THIS CONTRACT. IRAs and other qualified plans already have the tax-deferral feature found in this Contract. For an additional cost, the Contract provides other features and benefits including death benefits and the ability to receive a lifetime income. You should not purchase a qualified Contract unless you want these other features and benefits, taking into account their cost. See "Fees and Expenses" in this prospectus. IF YOU ARE CONSIDERING AN ENHANCED DEATH BENEFIT OPTION AND/OR THE EARNINGS MULTIPLIER BENEFIT RIDER AND YOUR CONTRACT WILL BE AN IRA, SEE "TAXATION OF QUALIFIED CONTRACTS - INDIVIDUAL RETIREMENT ANNUITIES" AND "TAX CONSEQUENCES OF ENHANCED DEATH BENEFIT" IN THIS PROSPECTUS. We and our affiliates offer other variable products that may offer some of the same investment portfolios. These products have different benefits and charges, and may or may not better match your needs. CREDITING OF PREMIUM PAYMENTS We will process your initial premium and credits, if applicable, within 2 business days after receipt, if the application and all information necessary for processing the Contract are complete. Subsequent premium payments will be processed within 1 business day if we receive all information necessary. In certain states we also accept initial and additional premium payments by wire order. Wire transmittals must be accompanied by sufficient electronically transmitted data. We may retain your initial premium payment for up to 5 business days while attempting to complete an incomplete application. If the application cannot be completed within this period, we will inform you of the reasons for the delay. We will also return the premium payment immediately unless you direct us to hold the premium payment until the application is completed. We will allocate your initial payment according to the instructions you specified. If a subaccount is not available or requested in error, we will make inquiry about a replacement subaccount. If we are unable to reach you or your representative, we will consider the application incomplete. For initial premium payments designated for a subaccount of Separate Account B, the payment will be credited at the accumulation unit value next determined after we receive your premium payment and the completed application. Once the completed application is received, we will allocate the payment to the subaccounts of Separate Account B specified by you within 2 business days. We will make inquiry to discover any missing information related to subsequent payments. We will allocate the subsequent payment(s) pro rata according to the current variable subaccount allocation unless you specify otherwise. Any fixed allocation(s) will not be considered in the pro rata calculations. If a subaccount is no longer available or requested in error, we will allocate the subsequent payment(s) proportionally among the other subaccount(s) in your current allocation or your allocation instructions. For any subsequent premium payments, the payment and credit designated for a subaccount for Separate Account B will be credited at the accumulation unit value next determined after receipt of your premium payment and instructions. Once we allocate your premium payment and credit, if applicable, to the subaccounts selected by you, we convert the premium payment into accumulation units. We divide the amount of the premium payment allocated to a particular subaccount by the value of an accumulation unit for the subaccount to determine the number of accumulation units of the subaccount to be held in Separate Account B with respect to your Contract. The net investment results of each subaccount vary with its investment performance. If your premium payment was transmitted by wire order from your broker- dealer, we will follow one of the following two procedures after we receive and accept the wire order and investment instructions. The procedure we follow depends on state availability and the procedures of your broker-dealer. (1) If either your state or broker-dealer do not permit us to issue a Contract without an application, we reserve the right to rescind the Contract if we do not receive and accept a properly completed application or enrollment form within 5 days of the premium payment. If we do not receive the application or form within 5 days of the premium payment, we will refund the contract value plus 22 any charges we deducted, and the Contract will be voided. Some states require that we return the premium paid, in which case we will comply. (2) If your state and broker-dealer allow us to issue a Contract without an application, we will issue and mail the Contract to you or your representative, together with an Application Acknowledgement Statement for your execution. Until our Customer Service Center receives the executed Application Acknowledgement Statement, neither you nor the broker-dealer may execute any financial transactions on your Contract unless they are requested in writing by you. We may require additional information before complying with your request (e.g., signature guarantee). In some states, we may require that an initial premium designated for a subaccount of Separate Account B or the Fixed Account be allocated with the added credit, if applicable, to a subaccount specially designated by the Company (currently, the Liquid Asset subaccount) during the free look period. After the free look period, we will convert your contract value (your initial premium plus any earnings less any expenses) into accumulation units of the subaccounts you previously selected. The accumulation units will be allocated based on the accumulation unit value next computed for each subaccount. Initial premiums designated for Fixed Interest Allocations will be allocated to a Fixed Interest Allocation with the guaranteed interest period you have chosen; however, in the future we may allocate the premiums to the specially designated subaccount during the free look period. ADDITIONAL CREDIT TO PREMIUM At the time of application, you may elect the premium credit option. If you so elect, a credit will be added to your Contract based on all premium payments received within 60 days of the contract date ("initial premium"). The credit will be a minimum of 2% of the initial premium and will be allocated among each subaccount and fixed interest allocation you have selected in proportion to your initial premium in each investment option. If available in your state at that time, prior to the third contract anniversary and prior to every third contract anniversary thereafter, you may elect to have a new credit added to your Contract. Each three year period beginning with the addition of a premium credit is known as a "renewal period". The credit will be a minimum of 2% of your contract value on the applicable contract anniversary. At least 30 days prior to the start of each renewal period, we will send you a letter and election form containing information allowing you to make an informed decision with regard to the election of the credit, including the amount of the proposed credit, the cost of the credit and the benefits and detriments of electing the credit. You may elect a new premium credit by forwarding a completed election form to our Customer Service Center or by calling us at (800) 366-0066. We will implement reasonable procedures to ensure that the election is made by the owner. If you so elect, a new premium credit will be allocated among your variable investment options in proportion to your contract value in the variable investment options. If no contract value is then allocated to the variable investment options, the new premium credit will be allocated to a specially designated subaccount, currently the Liquid Asset Subaccount. If you do not elect the premium credit option, we will discontinue the option on the contract anniversary at the start of the next renewal period. Once you discontinue the premium credit option, it cannot be subsequently resumed. Currently, the premium credit option is available only if elected at the time of application prior to issuance of the Contract. However, we reserve the right to make the premium credit option available to inforce contract owners. We may increase, decrease or discontinue the credit at the end of any renewal period at our discretion. We will give you at least 45 days notice of any planned change to the premium credit option. There is a separate charge for the credit which is an asset-based charge deducted daily from your contract value. Please see "Fees and Charges" for a description of this charge. The credit constitutes earnings (and not premiums paid by you) for federal tax purposes. 23 In any of the following circumstances, we deduct a credit from the amount we pay to you or your beneficiary: (1) If you return your Contract within the free look period, we will deduct the credit from the refund amount; (2) If a death benefit becomes payable, we will deduct any credits added to your Contract since or within 12 months prior to death; and (3) If you surrender your Contract, we will deduct any credit added to your contract value within 3 years prior to surrender. If we deduct a credit from any amount we pay to you, we will deduct the full dollar amount of the credit. You will retain any gains, and you will also bear any losses, that are attributable to the credit we deduct. THERE MAY BE CIRCUMSTANCES UNDER WHICH THE CONTRACT OWNER MAY BE WORSE OFF FROM HAVING RECEIVED A PREMIUM CREDIT. FOR EXAMPLE, THIS COULD OCCUR IF THE CONTRACT OWNER RETURNS THE CONTRACT DURING THE APPLICABLE FREE LOOK PERIOD. UPON A FREE LOOK, WE RECAPTURE THE PREMIUM CREDIT THAT HAD BEEN CREDITED. IF THE STATE LAW PROVIDES THAT CONTRACT VALUE IS RETURNED ON A FREE LOOK, AND IF THE PERFORMANCE OF THE APPLICABLE SUBACCOUNTS HAS BEEN NEGATIVE DURING THAT PERIOD, WE WILL RETURN THE CONTRACT VALUE LESS THE PREMIUM CREDIT. THE NEGATIVE PERFORMANCE ASSOCIATED WITH THE PREMIUM CREDIT WILL REDUCE THE CONTRACT VALUE MORE THAN IF THE PREMIUM CREDIT HAD NOT BEEN APPLIED. ADMINISTRATIVE PROCEDURES We may accept a request for Contract service in writing, by telephone, or other approved electronic means, subject to our administrative procedures, which vary depending on the type of service requested and may include proper completion of certain forms, providing appropriate identifying information, and/or other administrative requirements. We will process your request at the contract value next determined only after you have met all administrative requirements. CONTRACT VALUE We determine your contract value on a daily basis beginning on the contract date. Your contract value is the sum of (a) the contract value in the Fixed Interest Allocations, and (b) the contract value in each subaccount in which you are invested. CONTRACT VALUE IN THE SUBACCOUNTS. On the contract date, the contract value in the subaccount in which you are invested is equal to the initial premium paid and added credit, if applicable, that was designated to be allocated to the subaccount. On the contract date, we allocate your contract value to each subaccount and/or a Fixed Interest Allocation specified by you, unless the Contract is issued in a state that requires the return of premium payments during the free look period, in which case, the portion of your initial premium and added credit, if applicable, not allocated to a Fixed Interest Allocation may be allocated to a subaccount specially designated by the Company during the free look period for this purpose (currently, the Liquid Asset subaccount). On each business day after the contract date, we calculate the amount of contract value in each subaccount as follows: (1) We take the contract value in the subaccount at the end of the preceding business day. (2) We multiply (1) by the subaccount's Net Investment Factor since the preceding business day. (3) We add (1) and (2). (4) We add to (3) any additional premium payments and credits, if applicable, and then add or subtract any transfers to or from that subaccount. (5) We subtract from (4) any withdrawals and any related charges, and then subtract any contract fees and premium taxes. 24 CASH SURRENDER VALUE The cash surrender value is the amount you receive when you surrender the Contract. The cash surrender value will fluctuate daily based on the investment results of the subaccounts in which you are invested and interest credited to Fixed Interest Allocations and any Market Value Adjustment. See the Fixed Account II prospectus for a description of the calculation of values under any Fixed Interest Allocation. We do not guarantee any minimum cash surrender value. On any date during the accumulation phase, we calculate the cash surrender value as follows: we start with your contract value, then we adjust for any Market Value Adjustment, then we deduct any surrender charge, any charge for premium taxes, the annual contract administrative fee, and any other charges incurred but not yet deducted. SURRENDERING TO RECEIVE THE CASH SURRENDER VALUE You may surrender the Contract at any time while the annuitant is living and before the annuity start date. A surrender will be effective on the date your written request and the Contract are received at our Customer Service Center. We will determine and pay the cash surrender value at the price next determined after receipt of all paperwork required in order for us to process your surrender. Once paid, all benefits under the Contract will be terminated. For administrative purposes, we will transfer your money to a specially designated subaccount (currently the Liquid Asset subaccount) prior to processing the surrender. This transfer will have no effect on your cash surrender value. You may receive the cash surrender value in a single sum payment or apply it under one or more annuity options. We will usually pay the cash surrender value within 7 days. Consult your tax advisor regarding the tax consequences associated with surrendering your Contract. A surrender made before you reach age 59 1/2 may result in a 10% tax penalty. See "Federal Tax Considerations" for more details. THE SUBACCOUNTS Each of the subaccounts of Separate Account B offered under this prospectus invests in an investment portfolio with its own distinct investment objectives and policies. Each subaccount of Separate Account B invests in a corresponding portfolio of a Trust or Fund. ADDITION, DELETION OR SUBSTITUTION OF SUBACCOUNTS AND OTHER CHANGES We may make additional subaccounts available to you under the Contract. These subaccounts will invest in investment portfolios we find suitable for your Contract. We may also withdraw or substitute investment portfolios, subject to the conditions in your Contract and compliance with regulatory requirements. We may amend the Contract to conform to applicable laws or governmental regulations. If we feel that investment in any of the investment portfolios has become inappropriate to the purposes of the Contract, we may, with approval of the SEC (and any other regulatory agency, if required) substitute another portfolio for existing and future investments. If you have elected the dollar cost averaging, systematic withdrawals, or automatic rebalancing programs or if you have other outstanding instructions, and we substitute or otherwise eliminate a portfolio which is subject to those instructions, we will execute your instructions using the substitute or proposed replacement portfolio unless you request otherwise. The substitute or proposed replacement portfolio may have higher fees and charges than any portfolio it replaces. We also reserve the right to: (i) deregister Separate Account B under the 1940 Act; (ii) operate Separate Account B as a management company under the 1940 Act if it is operating as a unit investment trust; (iii) operate Separate Account B as a unit investment trust under the 1940 Act if it is operating as a managed separate account; (iv) restrict or eliminate any voting rights as to Separate Account B; and (v) combine Separate Account B with other accounts. We will, of course, provide you with written notice before any of these changes are effected. THE FIXED ACCOUNT The Fixed Account is a segregated asset account which contains the assets that support a contract owner's Fixed Interest Allocations. See the Fixed Account II prospectus for more information. 25 OTHER CONTRACTS We offer other variable annuity contracts that also invest in the same investment portfolios of the Trusts. These contracts have different charges that could affect their performance, and may offer different benefits more suitable to your needs. To obtain more information about these other contracts, contact our Customer Service Center or your registered representative. OTHER IMPORTANT PROVISIONS See "Withdrawals," "Transfers Among Your Investments," "Death Benefit," "Charges and Fees," "The Annuity Options" and "Other Contract Provisions" in this prospectus for information on other important provisions in your Contract. - -------------------------------------------------------------------------------- WITHDRAWALS - -------------------------------------------------------------------------------- Any time during the accumulation phase and before the death of the contract owner, except under certain qualified contracts, you may withdraw all or part of your money. Keep in mind that if you request a withdrawal for more than 90% of the cash surrender value, we will treat it as a request to surrender the Contract. If any single withdrawal or the sum of withdrawals exceeds the Free Withdrawal Amount, you may incur a surrender charge. There is no surrender charge if, during each contract year, the amount withdrawn is 10% or less of your contract value on the date of the withdrawal, less prior withdrawals during that contract year. Under Option Package III, any unused percentage of the 10% Free Withdrawal Amount from a contract year will carry forward into successive contract years, based on the percentage remaining at the time of the last withdrawal in that contract year. In no event will the Free Withdrawal Amount at any time exceed 30% of contract value. You need to submit to us a written request specifying the Fixed Interest Allocations or subaccounts from which amounts are to be withdrawn, otherwise the withdrawal will be made on a pro rata basis from all of the subaccounts in which you are invested. If there is not enough contract value in the subaccounts, we will deduct the balance of the withdrawal from your Fixed Interest Allocations starting with the guaranteed interest periods nearest their maturity dates until we have honored your request. We will determine the contract value as of the close of business on the day we receive your withdrawal request at our Customer Service Center. The contract value may be more or less than the premium payments made. We will apply a Market Value Adjustment to any withdrawal from your Fixed Interest Allocation taken more than 30 days before its maturity date. Definitive guidance on the proper federal tax treatment of the Market Value Adjustment has not been issued. You may want to discuss the potential tax consequences of a Market Value Adjustment with your tax adviser. If the aggregate percentage cap on allocations to the Restricted Funds has been exceeded, any subsequent withdrawals must be taken so that the percentage of contract value in the Restricted Funds following the withdrawal would not be greater than the percentage of contract value in the Restricted Funds prior to the withdrawal. If a requested withdrawal would cause the percentage cap to be exceeded, the amount of the withdrawal in excess of the cap would be taken pro rata from all variable subaccounts. For administrative purposes, we will transfer your money to a specially designated subaccount (currently, the Liquid Asset subaccount) prior to processing the withdrawal. This transfer will not affect the withdrawal amount you receive. We offer the following three withdrawal options: REGULAR WITHDRAWALS After the free look period, you may make regular withdrawals. Each withdrawal must be a minimum of $100. We will apply a Market Value Adjustment to any regular withdrawal from a Fixed Interest Allocation that is taken more than 30 days before its maturity date. See the Fixed Account II prospectus for more information on the application of Market Value Adjustment. 26 SYSTEMATIC WITHDRAWALS You may choose to receive automatic systematic withdrawal payments (1) from the contract value in the subaccounts in which you are invested, or (2) from the interest earned in your Fixed Interest Allocations. Systematic withdrawals may be taken monthly, quarterly or annually. If you have contract value allocated to one or more Restricted Funds, and you elect to receive systematic withdrawals from the subaccounts in which you are invested, the systematic withdrawals must be taken pro rata from all subaccounts in which contract value is invested. If you do not have contract value allocated to a Restricted Fund and choose systematic withdrawals on a non pro rata basis, we will monitor the withdrawals annually. If you subsequently allocate contract value to one or more Restricted Funds, we will require you to take your systematic withdrawals on a pro rata basis from all subaccounts in which contract value is invested. You decide when you would like systematic payments to start as long as it starts at least 28 days after your contract date. You also select the date on which the systematic withdrawals will be made, but this date cannot be later than the 28th day of the month. If you have elected to receive systematic withdrawals but have not chosen a date, we will make the withdrawals on the same calendar day of each month as your contract date. If your contract date is after the 28th day of the month, your systematic withdrawal will be made on the 28th day of each month. Each systematic withdrawal amount must be a minimum of $100. The amount of your systematic withdrawal can either be (1) a fixed dollar amount, or (2) an amount based on a percentage of the contract value. Both forms of systematic withdrawals are subject to the following maximum, which is calculated on each withdrawal date: FREQUENCY MAXIMUM PERCENTAGE Monthly 0.833% Quarterly 2.50% Annually 10.00% If your systematic withdrawal is a fixed dollar amount and the amount to be withdrawn would exceed the applicable maximum percentage of your premium payments not previously withdrawn on any withdrawal date, we will automatically reduce the amount withdrawn so that it equals such percentage. Thus, your fixed dollar systematic withdrawals will never exceed the maximum percentage. If you want fixed dollar systematic withdrawals to exceed the maximum percentage and are willing to incur associated surrender charges, consider the Fixed Dollar Systematic Withdrawal Feature which you may add to your regular systematic withdrawal program. If your systematic withdrawal is based on a percentage of contract value and the amount to be withdrawn based on that percentage would be less than $100, we will automatically increase the amount to $100 as long as it does not exceed the maximum percentage. If the systematic withdrawal would exceed the maximum percentage, we will send the amount, and then automatically cancel your systematic withdrawal option. Systematic withdrawals from Fixed Interest Allocations are limited to interest earnings during the prior month, quarter, or year, depending on the frequency you chose. Systematic withdrawals are not subject to a Market Value Adjustment, unless you have added the Fixed Dollar Systematic Withdrawal Feature discussed below and the payments exceed interest earnings. Systematic withdrawals from Fixed Interest Allocations under the Fixed Dollar Systematic Withdrawal Feature are available only in connection with Section 72(q) or 72(t) distributions. A Fixed Interest Allocation may not participate in both the systematic withdrawal option and the dollar cost averaging program at the same time. You may change the amount or percentage of your systematic withdrawal once each contract year or cancel this option at any time by sending satisfactory notice to our Customer Service Center at least 7 days before the next scheduled withdrawal date. If you submit a subsequent premium payment after you have applied for systematic withdrawals, we will not adjust future withdrawals under the systematic withdrawal program unless you specifically request that we do so. 27 The systematic withdrawal option may commence in a contract year where a regular withdrawal has been taken but you may not change the amount or percentage of your withdrawals in any contract year during which you have previously taken a regular withdrawal. You may not elect the systematic withdrawal option if you are taking IRA withdrawals. Subject to availability, a spousal or non-spousal beneficiary may elect to receive death benefits as payments over the beneficiary's lifetime ("stretch"). "Stretch" payments will be subject to the same limitations as systematic withdrawals, and non-qualified "stretch" payments will be reported on the same basis as other systematic withdrawals. FIXED DOLLAR SYSTEMATIC WITHDRAWAL FEATURE. You may add the Fixed Dollar Systematic Withdrawal Feature to your regular fixed dollar systematic withdrawal program. This feature allows you to receive a systematic withdrawal in a fixed dollar amount regardless of any surrender charges or Market Value Adjustments. Systematic withdrawals from Fixed Interest Allocations under the Fixed Dollar Systematic Withdrawal Feature are available only in connection with Section 72(q) or 72(t) distributions. You choose the amount of the fixed systematic withdrawals, which may total up to an annual maximum of 10% of your contract value as determined on the day we receive your election of this feature. The maximum limit will not be recalculated when you make additional premium payments, unless you instruct us to do so. We will assess a surrender charge on the withdrawal date if the withdrawal exceeds the maximum limit as calculated on the withdrawal date. We will assess a Market Value Adjustment on the withdrawal date if the withdrawal from a Fixed Interest Allocation exceeds your interest earnings on the withdrawal date. We will apply the surrender charge and any Market Value Adjustment directly to your contract value (rather than to the systematic withdrawal) so that the amount of each systematic withdrawal remains fixed. Flat dollar systematic withdrawals which are intended to satisfy the requirements of Section 72(q) or 72(t) of the Tax Code may exceed the maximum. Such withdrawals are subject to surrender charges and Market Value Adjustment when they exceed the applicable maximum percentage. IRA WITHDRAWALS If you have a non-Roth IRA Contract and will be at least age 70 1/2 during the current calendar year, you may elect to have distributions made to you to satisfy requirements imposed by federal tax law. IRA withdrawals provide payout of amounts required to be distributed by the Internal Revenue Service ("IRS") rules governing mandatory distributions under qualified plans. We will send you a notice before your distributions commence. You may elect to take IRA withdrawals at that time, or at a later date. You may not elect IRA withdrawals and participate in systematic withdrawals at the same time. If you do not elect to take IRA withdrawals, and distributions are required by federal tax law, distributions adequate to satisfy the requirements imposed by federal tax law may be made. Thus, if you are participating in systematic withdrawals, distributions under that option must be adequate to satisfy the mandatory distribution rules imposed by federal tax law. You may choose to receive IRA withdrawals on a monthly, quarterly or annual basis. Under this option, you may elect payments to start as early as 28 days after the contract date. You select the day of the month when the withdrawals will be made, but it cannot be later than the 28th day of the month. If no date is selected, we will make the withdrawals on the same calendar day of the month as the contract date. You may request that we calculate for you the amount that is required to be withdrawn from your Contract each year based on the information you give us and various choices you make. For information regarding the calculation and choices you have to make, see the SAI. Or, we will accept your written instructions regarding the calculated amount required to be withdrawn from your Contract each year. The minimum dollar amount you can withdraw is $100. When we determine the required IRA withdrawal amount for a taxable year based on the frequency you select, if that amount is less than $100, we will pay $100. At any time where the IRA withdrawal amount is greater than the contract value, we will cancel the Contract and send you the amount of the cash surrender value. You may change the payment frequency of your IRA withdrawals once each contract year or cancel this option at any time by sending satisfactory notice to our Customer Service Center at least 7 days before the next scheduled withdrawal date. 28 An IRA withdrawal from a Fixed Interest Allocation in excess of the amount allowed under systematic withdrawals will be subject to a Market Value Adjustment. CONSULT YOUR TAX ADVISER REGARDING THE TAX CONSEQUENCES ASSOCIATED WITH TAKING WITHDRAWALS. You are responsible for determining that withdrawals comply with applicable law. A withdrawal made before the taxpayer reaches age 59 1/2 may result in a 10% penalty tax. See "Federal Tax Considerations" for more details. - -------------------------------------------------------------------------------- TRANSFERS AMONG YOUR INVESTMENTS - -------------------------------------------------------------------------------- You may transfer your contract value among the subaccounts in which you are invested and your Fixed Interest Allocations at the end of the free look period until the annuity start date. Transfers to a GET Fund series may only be made during the offering period for that GET Fund series. We currently do not charge you for transfers made during a contract year, but reserve the right to charge $25 for each transfer after the twelfth transfer in a contract year. We also reserve the right to limit the number of transfers you may make and may otherwise modify or terminate transfer privileges if required by our business judgment or in accordance with applicable law. We will apply a Market Value Adjustment to transfers from a Fixed Interest Allocation taken more than 30 days before its maturity date, unless the transfer is made under the dollar cost averaging program. Keep in mind that transfers between Special Funds and other investment portfolios may negatively impact your death benefit or rider benefits. If you allocate contract value to an investment option that has been designated as a Restricted Fund, your ability to transfer contract value to the Restricted Fund may be limited. A transfer to the Restricted Funds will not be permitted to the extent that it would increase the contract value in the Restricted Fund to more than the applicable limits following the transfer. We do not limit transfers from Restricted Funds. If the result of multiple reallocations is to lower the percentage of total contract value in the Restricted Fund, the reallocation will be permitted even if the percentage of contract value in the Restricted Fund is greater than the limit. Transfers will be based on values at the end of the business day in which the transfer request is received at our Customer Service Center. The minimum amount that you may transfer is $100 or, if less, your entire contract value held in a subaccount or a Fixed Interest Allocation. To make a transfer, you must notify our Customer Service Center and all other administrative requirements must be met. Any transfer request received after 4:00 p.m. eastern time or the close of the New York Stock Exchange will be effected on the next business day. Separate Account B and the Company will not be liable for following instructions communicated by telephone or other approved electronic means that we reasonably believe to be genuine. We may require personal identifying information to process a request for transfer made over the telephone, over the internet or other approved electronic means. TRANSFERS BY THIRD PARTIES As a convenience to you, we currently allow you to give third parties the right to effect transfers on your behalf. However, when the third party makes transfers for many contract owners, the result can be simultaneous transfers involving large amounts of contract values. Such transfers can disrupt the orderly management of the investment portfolios available to the Contract, can result in higher costs to contract owners, and may not be compatible with the long term goals of contract owners. We require third parties making multiple, simultaneous or large volume transfers to execute a third party service agreement with us prior to executing such transfers. Therefore, we may at any time exercise our business judgment and limit or discontinue accepting transfers made by a third party. We will notify any third party whose transfers are limited or discontinued by telephone, facsimile or email according to our records, followed by a letter. These limits may be based on, among other criteria, the amount of the aggregate trade or the available investment options for which third parties may make trades on behalf of multiple contract owners. 29 We may establish additional procedures or change existing procedures at any time in the exercise of our business judgment. DOLLAR COST AVERAGING You may elect to participate in our dollar cost averaging program if you have at least $1,200 of contract value in the (i) Liquid Asset subaccount, or (ii) a Fixed Interest Allocation with either a 6-month or a 1-year guaranteed interest period. These subaccounts or Fixed Interest Allocations serve as the source accounts from which we will, on a monthly basis, automatically transfer a set dollar amount of money to other subaccounts selected by you. We also may offer DCA Fixed Interest Allocations, which are 6-month and 1-year Fixed Interest Allocations available exclusively for use with the dollar cost averaging program. The DCA Fixed Interest Allocations require a minimum premium payment of $1,200 directed into a DCA Fixed Interest Allocation. Transfers made pursuant to a dollar cost averaging program do not count toward the 12 transfer limit on free transfers. The dollar cost averaging program is designed to lessen the impact of market fluctuation on your investment. Since we transfer the same dollar amount to other subaccounts each month, more units of a subaccount are purchased if the value of its unit is low and fewer units are purchased if the value of its unit is high. Therefore, a lower than average value per unit may be achieved over the long term. However, we cannot guarantee this. When you elect the dollar cost averaging program, you are continuously investing in securities regardless of fluctuating price levels. You should consider your tolerance for investing through periods of fluctuating price levels. Unless you have a DCA Fixed Interest Allocation, you elect the dollar amount you want transferred under this program. Each monthly transfer must be at least $100. If your source account is the the Liquid Asset subaccount or a 1-year Fixed Interest Allocation, the maximum amount that can be transferred each month is your contract value in such source account divided by 12. If your source account is a 6-month Fixed Interest Allocation, the maximum amount that can be transferred each month is your contract value in such source account divided by 6. You may change the transfer amount once each contract year. If you have a DCA Fixed Interest Allocation, there is no minimum or maximum transfer amount; we will transfer all your money allocated to that source account into the subaccount(s) in equal payments over the selected 6-month or 1-year period. The last payment will include earnings accrued over the course of the selected period. If you make an additional premium payment into a Fixed Interest Allocation subject to dollar cost averaging, the amount of your transfers under the dollar cost averaging program remains the same, unless you instruct us to increase the transfer amount. Transfers from a Fixed Interest Allocation or a DCA Fixed Interest Allocation under the dollar cost averaging program are not subject to a Market Value Adjustment. However, if you terminate the dollar cost averaging program for a DCA Fixed Interest Allocation and there is money remaining in the DCA Fixed Interest Allocation, we will transfer the remaining money to the Liquid Asset subaccount. Such transfer will trigger a Market Value Adjustment if the transfer is made more than 30 days before the maturity date of the DCA Fixed Interest Allocation. If you do not specify the subaccounts to which the dollar amount of the source account is to be transferred, we will transfer the money to the subaccounts in which you are invested on a proportional basis. The transfer date is the same day each month as your contract date. If, on any transfer date, your contract value in a source account is equal to or less than the amount you have elected to have transferred, the entire amount will be transferred and the program will end. You may terminate the dollar cost averaging program at any time by sending satisfactory notice to our Customer Service Center at least 7 days before the next transfer date. A Fixed Interest Allocation or DCA Fixed Interest Allocation may not participate in the dollar cost averaging program and in systematic withdrawals at the same time. You are permitted to transfer contract value to a Restricted Fund, subject to the limitations described above in this section and in "The Investment Portfolios." Compliance with the individual and aggregate Restricted Fund limits will be reviewed when the dollar cost averaging program is established. Transfers under the dollar cost averaging program must be within those limits. We will not review again your dollar cost 30 averaging election for compliance with the individual and aggregate limits for investment in the Restricted Funds except in the case of the transactions described below. o Amount added to source account: If you add amounts to the source account which would increase the amount to be transferred under the dollar cost averaging program, we will review the amounts to be transferred to ensure that the individual and aggregate limits are not being exceeded. If such limits would be exceeded, we will require that the dollar cost averaging transfer amounts be changed to ensure that the transfers are within the limits based on the then current allocation of contract value to the Restricted Fund(s) and the then current value of the amount designated to be transferred to that Restricted Fund(s). o Additional premium paid: Up to the individual Restricted Fund percentage limit may be allocated to a Restricted Fund. If more than the individual limit has been requested to be allocated to a Restricted Fund, we will look at the aggregate limit, subtract the current allocation to Restricted Funds, and subtract the current value of amounts to be transferred under the dollar cost averaging program to Restricted Funds. The excess, if any, is the maximum that may be allocated pro rata to Restricted Funds. o Reallocation request is made while the dollar cost averaging program is active: If the reallocation would increase the amount allocated to Restricted Funds, the maximum that may be so allocated is the individual Restricted Fund percentage limit, less the current allocation to Restricted Funds and less the current value of any remaining amounts to be transferred under the dollar cost averaging program to the Restricted Funds. We may in the future offer additional subaccounts or withdraw any subaccount or Fixed Interest Allocation to or from the dollar cost averaging program, stop offering DCA Fixed Interest Allocations or otherwise modify, suspend or terminate this program. Of course, such change will not affect any dollar cost averaging programs in operation at the time. AUTOMATIC REBALANCING If you have at least $10,000 of contract value invested in the subaccounts of Separate Account B, you may elect to have your investments in the subaccounts automatically rebalanced. You are permitted to reallocate between Restricted and non-Restricted Funds, subject to the limitations described above in this section and in "The Investment Portfolios." If the reallocation would increase the amount allocated to the Restricted Funds, the maximum that may be so allocated is the individual Restricted Fund percentage limit, less the current allocation to all Restricted Funds. Transfers made pursuant to automatic rebalancing do not count toward the 12 transfer limit on free transfers. We will transfer funds under your Contract on a quarterly, semi-annual, or annual calendar basis among the subaccounts to maintain the investment blend of your selected subaccounts. The minimum size of any allocation must be in full percentage points. Rebalancing does not affect any amounts that you have allocated to the Fixed Account. The program may be used in conjunction with the systematic withdrawal option only if withdrawals are taken pro rata. Automatic rebalancing is not available if you participate in dollar cost averaging. Automatic rebalancing will not take place during the free look period. To participate in automatic rebalancing, send satisfactory notice to our Customer Service Center. We will begin the program on the last business day of the period in which we receive the notice. You may cancel the program at any time. The program will automatically terminate if you choose to reallocate your contract value among the subaccounts or if you make an additional premium payment or partial withdrawal on other than a pro rata basis. Additional premium payments and partial withdrawals effected on a pro rata basis will not cause the automatic rebalancing program to terminate. 31 - -------------------------------------------------------------------------------- DEATH BENEFIT CHOICES - -------------------------------------------------------------------------------- DEATH BENEFIT DURING THE ACCUMULATION PHASE During the accumulation phase, a death benefit, and earnings multiplier benefit, if elected, is payable when either the annuitant (when a contract owner is not an individual), the contract owner or the first of joint owners (under Option Package I only) dies. Assuming you are the contract owner, your beneficiary will receive a death benefit unless the beneficiary is your surviving spouse and elects to continue the Contract. The death benefit paid depends on the option package you have chosen. The death benefit value is calculated as of the claim date (the close of the business day on which we receive written notice and due proof of death, as well as any required paperwork, at our Customer Service Center). If your beneficiary elects to delay receipt of the death benefit until a date after the time of death, the amount of the benefit payable in the future may be affected. The proceeds may be received in a single sum, applied to any of the annuity options, or, if available, paid over the beneficiary's lifetime. (See "Systematic Withdrawals" above). A beneficiary's right to elect an income phase payment option or receive a lump-sum payment may have been restricted by the contract owner. If so, such rights or options will not be available to the beneficiary. If we do not receive a request to apply the death benefit proceeds to an annuity option, we will make a single sum distribution. We will generally pay death benefit proceeds within 7 days after our Customer Service Center has received sufficient information to make the payment. For information on required distributions under federal income tax laws, you should see "Required Distributions upon Contract Owner's Death." You may select one of the option packages described below which will determine the death benefit payable. Option Package I is available only if the contract owner and the annuitant are not more than 85 years old at the time of purchase. Option Packages II and III are available only if the contract owner and annuitant are not more than 80 years old at the time of purchase. Option Packages II and III are not available where the Contract is held by joint owners. A change in ownership of the Contract may affect the amount of the death benefit payable. The death benefit may be subject to certain mandatory distribution rules required by federal tax law. The death benefit depends upon the option package in effect on the date the contract owner dies. The differences are summarized as follows:
- ----------------------------------------------------------------------------------------------------- OPTION PACKAGE I OPTION PACKAGE II OPTION PACKAGE III - ----------------------------------------------------------------------------------------------------- DEATH BENEFIT The greater of: The greatest of: The greatest of: ON DEATH OF THE (1) the Standard (1) the Standard (1) the Standard OWNER: Death Benefit; or Death Benefit; or Death Benefit; or (2) the contract (2) the contract (2) the contract value*. value*; or value*; or (3) the Annual (3) the Annual Ratchet death Ratchet death benefit. benefit; or (4) the 5% Roll-Up death benefit. - -----------------------------------------------------------------------------------------------------
* less credits added since or within 12 months prior to death Currently, no investment portfolios are designated as "Special Funds." We may, with 30 days notice to you, designate any investment portfolio as a Special Fund on existing contracts with respect to new premiums added to such investment portfolio and also with respect to new transfers to such investment portfolio. Selecting a Special Fund may limit or reduce the death benefit. 32 For the period during which a portion of the contract value is allocated to a Special Fund, we may at our discretion reduce the mortality and expense risk charge attributable to that portion of the contract value. The reduced mortality and expense risk charge will be applicable only during that period. We use the Base Death Benefit to help determine the minimum death benefit payable under each of the death benefits described below. You do not elect the Base Death Benefit. The Base Death Benefit is equal to the greater of: 1) the contract value minus any credits added since or within 12 months prior to death; and 2) the cash surrender value. The STANDARD DEATH BENEFIT equals the GREATER of the Base Death Benefit and the SUM of 1) and 2), LESS 3): 1) the contract value allocated to Special Funds; and 2) the Standard Minimum Guaranteed Death Benefit for amounts allocated to Non-Special Funds; 3) any initial credit added since or within 12 months prior to death. The Standard Minimum Guaranteed Death Benefit equals: 1) the initial premium payment plus the initial credit, if applicable, allocated to Special and Non-Special Funds, respectively; 2) increased by premium payments, and adjusted for transfers, allocated to Special and Non-Special Funds, respectively, after issue; and 3) reduced by a pro rata adjustment for any withdrawal or transfer taken from the Special and Non-Special Funds, respectively. In the event of transfers from Special to Non-Special funds, the increase in the Minimum Guaranteed Death Benefit of the Non-Special Fund will equal the lesser of the reduction in the Minimum Guaranteed Death Benefit in the Special Fund and the contract value transferred. In the event of transfers from Non-Special to Special Funds, the increase in the Minimum Guaranteed Death Benefit of the Special Fund will equal the reduction in the Minimum Guaranteed Death Benefit in the Non-Special Fund. The 5% ROLL-UP DEATH BENEFIT, equals the GREATER of: 1) the Standard Death Benefit; and 2) the sum of the contract value allocated to Special Funds and the 5% Roll-Up Minimum Guaranteed Death Benefit for Non-Special Funds less any initial credit added since or within 12 months prior to death. The 5% Roll-Up Minimum Guaranteed Death Benefit for Special and Non-Special Funds equals the lesser of: 1) premiums, plus the initial credit, if applicable, adjusted for withdrawals and transfers, accumulated at 5% until the earlier of attainment of age 90 or reaching the cap (equal to 3 times all premium payments and the initial credit, if applicable, as reduced by adjustments for withdrawals) and thereafter at 0%, and 2) the cap. A pro rata adjustment to the 5% Roll-Up Minimum Guaranteed Death Benefit is made for any withdrawals. The amount of the pro rata adjustment for withdrawals from Non-Special Funds will equal (a) times (b) divided by (c): where (a) is the 5% Roll-Up Minimum Guaranteed Death Benefit for Non-Special Funds prior to the withdrawal; (b) is the contract value of the withdrawal; and (c) is the contract value allocated to Non-Special Funds before the withdrawal. The amount of the pro rata adjustment for withdrawals from Special Funds will equal (a) times (b) divided by (c): where (a) is the 5% Roll-Up Minimum Guaranteed Death 33 Benefit for Special Funds prior to the withdrawal; (b) is the contract value of the withdrawal; and (c) is the contract value allocated to Special Funds before the withdrawal. Please see Appendix C for examples of the pro rata withdrawal adjustment for withdrawals other than special withdrawals. Transfers from Special to Non-Special Funds will reduce the 5% Roll-Up Minimum Guaranteed Death Benefit and the cap for Special Funds on a pro rata basis. The resulting increase in the 5% Roll-Up Minimum Guaranteed Death Benefit in the Non-Special Funds will equal the lesser of the reduction in the 5% Roll-Up Minimum Guaranteed Death Benefit in the Special Funds and the contract value transferred. The increase in the cap for Non-Special Funds will equal the reduction in the cap for Special Funds. Transfers from Non-Special to Special Funds will reduce the 5% Roll-Up Minimum Guaranteed Death Benefit and the cap in the Non-Special Funds on a pro rata basis. The resulting increase in the 5% Roll-Up Minimum Guaranteed Death Benefit and the cap for the Special Funds will equal the reduction in the 5% Roll-Up Minimum Guaranteed Death Benefit and the cap for the Non-Special Funds, respectively. The ANNUAL RATCHET ENHANCED DEATH BENEFIT equals the GREATER of: 1) the Standard Death Benefit; and 2) the sum of the contract value allocated to Special Funds and the Annual Ratchet Minimum Guaranteed Death Benefit allocated to Non-Special Funds, less any initial credit added since or within 12 months prior to death. The Annual Ratchet Minimum Guaranteed Death Benefit equals: 1) the initial premium plus the initial credit, if applicable, allocated at issue to Special and Non-Special Funds, respectively; 2) increased dollar for dollar by any premium, allocated after issue to Special and Non-Special Funds, respectively; 3) for Non-Special Funds, adjusted on each anniversary that occurs on or prior to attainment of age 90 to the greater of the Annual Ratchet Minimum Guaranteed Death Benefit for Non-Special Funds from the prior anniversary (adjusted for new premiums, partial withdrawals allocated to Non-Special Funds, and transfers between Special and Non-Special Funds) and the current contract value allocated to Non-Special Funds before crediting of any applicable renewal credit; 4) for Special Funds, adjusted on each anniversary that occurs on or prior to attainment of age 90 to the greater of the Annual Ratchet Minimum Guaranteed Death Benefit for Special Funds from the prior anniversary (adjusted for new premiums, partial withdrawals allocated to Special Funds, and transfers between Special and Non-Special Funds) and the current contract value allocated to Special Funds before crediting of any applicable renewal credit. Withdrawals reduce the Annual Ratchet Minimum Guaranteed Death Benefit on a pro rata basis, based on the amount withdrawn from the Special and Non-Special Funds, respectively. The amount of the pro rata adjustment for withdrawals from Non-Special Funds will equal (a) times (b) divided by (c): where (a) is the Annual Ratchet Minimum Guaranteed Death Benefit for Non-Special Funds prior to the withdrawal; (b) is the contract value of the withdrawal; and (c) is the contract value allocated to Non-Special Funds before withdrawal. The amount of the pro rata adjustment for Special Funds will equal (a) times (b) divided by (c): where (a) is the Annual Ratchet Minimum Guaranteed Death Benefit for Special Funds prior to the withdrawal; (b) is the contract value of the withdrawal; and (c) is the contract value allocated to Special Funds before the withdrawal. Transfers from Special to Non-Special Funds will reduce the Annual Ratchet Minimum Guaranteed Death Benefit for Special Funds on a pro rata basis. The resulting increase in the Annual Ratchet Minimum Guaranteed Death Benefit in the Non-Special Funds will equal the lesser of the reduction in the Annual Ratchet Minimum Guaranteed Death Benefit in the Special Funds and the contract value transferred. 34 Transfers from Non-Special to Special Funds will reduce the Annual Ratchet Minimum Guaranteed Death Benefit for Non-Special Funds on a pro rata basis. The resulting increase in the Annual Ratchet Minimum Guaranteed Death Benefit for the Special Funds will equal the reduction in the Annual Ratchet Minimum Guaranteed Death Benefit for the Non-Special Funds. Note: In all cases described above, the amount of the death benefit could be reduced by premium taxes owed and withdrawals not previously deducted. The enhanced death benefits may not be available in all states. TRANSFERS BETWEEN OPTION PACKAGES. You may transfer from one option package to another on each contract anniversary. A written request for such transfer must be received at our Customer Service Center within 60 days prior to the contract anniversary. No transfers between option packages are permitted: 1) after you attain age 80; or 2) if the Contract is owned by joint owners. The following minimum contract values must be met: --------------------------------------------------------------------------- TRANSFERS TO OPTION TRANSFERS TO OPTION PACKAGE I PACKAGES II OR III --------------------------------------------------------------------------- MINIMUM CONTRACT VALUE Non- Non- Qualified: Qualified: Qualified: Qualified: $15,000 $1,500 $5,000 $1,500 --------------------------------------------------------------------------- If you transfer from Option I to Option II or Option III, the minimum guaranteed death benefit for Special and Non-Special Funds will equal the contract value for Special and Non-Special Funds, respectively, on the effective date of the transfer. On a transfer to Option Package III, the then current roll-up cap will be allocated to Special and Non-Special Funds in the same percentage as the allocation of contract value on the effective date of the transfer. A change of owner may cause an option package transfer on other than a contract anniversary. EARNINGS MULTIPLIER BENEFIT RIDER. The earnings multiplier benefit rider is an optional rider that provides a separate death benefit in addition to the death benefit provided under the death benefit options available under the option packages. The rider is subject to state availability and is available only for issues ages 75 or under. It may be added at issue of the Contract or on the next contract anniversary following introduction of the rider in a state, if later. The date on which the rider is added is referred to as the "rider effective date." The rider provides a benefit equal to a percentage of the gain under the Contract, up to a gain equal to 300% of premiums adjusted for withdrawals ("Maximum Base"). Currently, where the rider is added at issue, the earnings multiplier benefit is equal to 40% (25% for issue ages 70 and above) of the lesser of: 1) the Maximum Base; and 2) the contract value on the date we receive written notice and due proof of death, as well as required claims forms, minus premiums adjusted for withdrawals. If the rider is added to a Contract after issue, the earnings multiplier benefit is equal to 40% (25% for issue ages 70 and above) of the lesser of: 1) 300% of the contract value on the rider effective date, plus subsequent premiums adjusted for subsequent withdrawals; and 2) the contract value on the date we receive written notice and due proof of death, as well as required claims forms, minus the sum of the contract value on the rider effective date plus subsequent premiums adjusted for subsequent withdrawals. The adjustment to the benefit for withdrawals is pro rata, meaning that the benefit will be reduced by the proportion that the withdrawal bears to the contract value at the time of the withdrawal. There is an extra charge for this feature and once selected, it may not be revoked. The earnings enhancement benefit rider does not provide a benefit if there is no gain under the Contract. As such, the Company would continue to assess a charge for the rider, even though no benefit would be payable at death under the rider if there are no gains under the Contract. Please see page 3 for a description of the earnings multiplier benefit rider charge. 35 The rider is available for both non-qualified and qualified contracts. Please see the discussions of possible tax consequences in sections titled "Individual Retirement Annuities," "Taxation of Non-Qualified Contracts," and "Taxation of Qualified Contracts," in this prospectus. DEATH BENEFIT DURING THE INCOME PHASE If any contract owner or the annuitant dies after the annuity start date, we will pay the beneficiary any certain benefit remaining under the annuity in effect at the time. CONTINUATION AFTER DEATH -- SPOUSE If at the contract owner's death, the surviving spouse of the deceased contract owner is the beneficiary and such surviving spouse elects to continue the contract as his or her own the following will apply: If the guaranteed death benefit as of the date we receive due proof of death, minus the contract value also on that date, is greater than zero, we will add such difference to the contract value. Such addition will be allocated to the variable subaccounts in proportion to the contract value in the subaccounts, unless we are directed otherwise. If there is no contract value in any subaccount, the addition will be allocated to the Liquid Asset subaccount, or its successor. Such addition to contract value will not affect the guaranteed death benefit. The death benefits under each of the available options will continue based on the surviving spouse's age on the date that ownership changes. If death occurs within 12 months of a credit being applied, the credit will not be forfeited upon spousal continuation, and the premium credit option charge will continue. The credit will be subject to recapture upon surrender of the Contract, unless forfeited previously. If death occurs more than 12 months after the last credit was applied, any premium credit option charge will be waived for the remainder of the current three year period. The credit will not be subject to recapture upon surrender of the Contract. At subsequent surrender, any surrender charge applicable to premiums paid prior to the date we receive due proof of death of the contract owner will be waived. Any premiums paid later will be subject to any applicable surrender charge. Any addition to contract value, as described above, is available only to the spouse of the owner as of the date of death of the owner if such spouse under the provisions of the contract elects to continue the contract as his or her own. If you elected the earnings multiplier benefit rider, and the benefit would otherwise be payable, the benefit will be added to the contract value and allocated among the variable subaccounts in proportion to the contract value in the subaccounts, unless we are directed otherwise. If there is no contract value in any subaccount, the benefit will be allocated to the Liquid Asset subaccount, or its successor. The crediting of the earnings multiplier benefit will not be included in either the minimum guaranteed death benefit or guaranteed living benefit calculations. The earnings multiplier benefit rider will continue, if the surviving spouse is eligible based on his or her attained age. If the surviving spouse is older than the maximum rider issue age, the rider will terminate. The Maximum Base and the percentages will be reset based on the adjusted contract value. The calculation of the benefit going forward will be: 1) based on the attained age of the spouse at the time of the ownership change using current values as of that date; 2) computed as if the rider was added to the Contract after issue and after the increase; and 3) based on the Maximum Base and percentages in effect on the rider effective date. However, we may in the future permit the surviving spouse to elect to use the then current Maximum Base and percentages in the benefit calculation. CONTINUATION AFTER DEATH -- NON SPOUSE If the beneficiary or surviving joint owner is not the spouse of the owner, the contract may continue in force subject to the required distribution rules of the Internal Revenue Code (the "Code"). See next section, "Required Distributions upon Contract Owner's Death." 36 If you elected the earnings multiplier benefit rider, and the benefit would otherwise be payable, the benefit will be added to the contract value and allocated among the variable subaccounts in proportion to the contract value in the subaccounts, unless we are directed otherwise. If there is no contract value in any subaccount, the benefit will be allocated to the Liquid Asset subaccount, or its successor. The earnings multiplier benefit rider then terminates, whether or not a benefit was payable under the terms of the rider. REQUIRED DISTRIBUTIONS UPON CONTRACT OWNER'S DEATH We will not allow any payment of benefits provided under a non-qualified Contract which do not satisfy the requirements of Section 72(s) of the Code. If any owner of a non-qualified contract dies before the annuity start date, the death benefit payable to the beneficiary (calculated as described under "Death Benefit Choices" in this prospectus) will be distributed as follows: (a) the death benefit must be completely distributed within 5 years of the contract owner's date of death; or (b) the beneficiary may elect, within the 1-year period after the contract owner's date of death, to receive the death benefit in the form of an annuity from us, provided that (i) such annuity is distributed in substantially equal installments over the life of such beneficiary or over a period not extending beyond the life expectancy of such beneficiary; and (ii) such distributions begin not later than 1 year after the contract owner's date of death. Notwithstanding (a) and (b) above, if the sole contract owner's beneficiary is the deceased owner's surviving spouse, then such spouse may elect to continue the Contract under the same terms as before the contract owner's death. Upon receipt of such election from the spouse at our Customer Service Center: (1) all rights of the spouse as contract owner's beneficiary under the Contract in effect prior to such election will cease; (2) the spouse will become the owner of the Contract and will also be treated as the contingent annuitant, if none has been named and only if the deceased owner was the annuitant; and (3) all rights and privileges granted by the Contract or allowed by Golden American will belong to the spouse as contract owner of the Contract. This election will be deemed to have been made by the spouse if such spouse makes a premium payment to the Contract or fails to make a timely election as described in this paragraph. If the owner's beneficiary is a nonspouse, the distribution provisions described in subparagraphs (a) and (b) above, will apply even if the annuitant and/or contingent annuitant are alive at the time of the contract owner's death. If we do not receive an election from a nonspouse owner's beneficiary within the 1-year period after the contract owner's date of death, then we will pay the death benefit to the owner's beneficiary in a cash payment within five years from date of death. We will determine the death benefit as of the date we receive proof of death. We will make payment of the proceeds on or before the end of the 5-year period starting on the owner's date of death. Such cash payment will be in full settlement of all our liability under the Contract. If a contract owner dies after the annuity start date, we will continue to distribute any benefit payable at least as rapidly as under the annuity option then in effect. All of the contract owner's rights granted under the Contract or allowed by us will pass to the contract owner's beneficiary. If a Contract has joint owners we will consider the date of death of the first joint owner as the death of the contract owner and the surviving joint owner will become the beneficiary of the Contract. If any contract owner is not an individual, the death of an annuitant shall be treated as the death of the owner. - -------------------------------------------------------------------------------- CHARGES AND FEES - -------------------------------------------------------------------------------- We deduct the Contract charges described below to compensate us for our cost and expenses, services provided and risks assumed under the Contracts. We incur certain costs and expenses for distributing and administering the Contracts, including compensation and expenses paid in connection with sales of the Contracts, for paying the benefits payable under the Contracts and for bearing various risks associated with the Contracts. The amount of a Contract charge will not always correspond to the actual costs associated with the charge. For example, the surrender charge collected may not fully cover all of the distribution expenses incurred by us with the service or benefits provided. In the event there are any profits from fees 37 and charges deducted under the Contract, including the mortality and expense risk charge and rider and benefit charges, we may use such profits to finance the distribution of Contracts. CHARGE DEDUCTION SUBACCOUNT You may elect to have all charges against your contract value deducted directly from a single subaccount designated by the Company. Currently we use the Liquid Asset subaccount for this purpose. If you do not elect this option, or if the amount of the charges is greater than the amount in the designated subaccount, the charges will be deducted as discussed below. You may cancel this option at any time by sending satisfactory notice to our Customer Service Center. CHARGES DEDUCTED FROM THE CONTRACT VALUE We deduct the following charges from your contract value: SURRENDER CHARGE. We will deduct a contingent deferred sales charge (a "surrender charge") if you surrender your Contract or if you take a withdrawal in excess of the Free Withdrawal Amount during the 3-year period from the date we receive and accept a premium payment. The surrender charge is based on a percentage of each premium payment withdrawn. This charge is intended to cover sales expenses that we have incurred. The surrender charge is deducted from the remaining contract value, not from the amount you requested as a withdrawal. We may in the future reduce or waive the surrender charge in certain situations and will never charge more than the maximum surrender charges. The percentage of premium payments deducted at the time of surrender or excess withdrawal depends on the number of complete years that have elapsed since that premium payment was made. We determine the surrender charge as a percentage of each premium payment withdrawn as follows: COMPLETE YEARS ELAPSED 0 1 2 3+ SINCE PREMIUM PAYMENT SURRENDER CHARGE 6% 5% 4% 0% NURSING HOME WAIVER. You may withdraw all or a portion of your contract value without a surrender charge if: (1) more than one contract year has elapsed since the contract date; (2) the withdrawal is requested within three years of your admission to a licensed nursing care facility; and (3) you have spent at least 45 consecutive days in such nursing care facility. We will not waive the early withdrawal charge if you were in a nursing care facility for at least one day during the two week period immediately preceding or following the contract date. It will also not apply to Contracts where prohibited by state law. FREE WITHDRAWAL AMOUNT. The Free Withdrawal Amount is 10% of contract value, based on the contract value on the date of the withdrawal. Under Option Package III, any unused percentage of the 10% Free Withdrawal Amount from a contract year will carry forward into successive contract years, based on the percentage remaining at the time of the last withdrawal in that contract year. In no event will the free withdrawal amount at any time exceed 30% of contract value. SURRENDER CHARGE FOR EXCESS WITHDRAWALS. We will deduct a surrender charge for excess withdrawals, which may include a withdrawal you make to satisfy required minimum distribution requirements under the code. We consider a withdrawal to be an "excess withdrawal" when the amount you withdraw in any contract year exceeds the Free Withdrawal Amount. Where you are receiving systematic withdrawals, any combination of regular withdrawals taken and any systematic withdrawals expected to be received in a contract year will be included in determining the amount of the excess withdrawal. Such a withdrawal will be considered a partial surrender of the Contract and we will impose a surrender charge and 38 any associated premium tax. We will deduct such charges from the contract value in proportion to the contract value in each subaccount or Fixed Interest Allocation from which the excess withdrawal was taken. In instances where the excess withdrawal equals the entire contract value in such subaccounts or Fixed Interest Allocations, we will deduct charges proportionately from all other subaccounts and Fixed Interest Allocations in which you are invested. ANY WITHDRAWAL FROM A FIXED INTEREST ALLOCATION MORE THAN 30 DAYS BEFORE ITS MATURITY DATE WILL TRIGGER A MARKET VALUE ADJUSTMENT. For the purpose of calculating the surrender charge for an excess withdrawal: a) we treat premiums as being withdrawn on a first-in, first-out basis; and b) amounts withdrawn which are not considered an excess withdrawal are not considered a withdrawal of any premium payments. We have included an example of how this works in Appendix B. Earnings for purposes of calculating the surrender charge for excess withdrawals may not be the same as earnings under federal tax law. PREMIUM TAXES. We may make a charge for state and local premium taxes depending on your state of residence. The tax can range from 0% to 3.5% of the premium payment. We have the right to change this amount to conform with changes in the law or if you change your state of residence. We deduct the premium tax from your contract value on the annuity start date. However, some jurisdictions impose a premium tax at the time that initial and additional premiums are paid, regardless of when the annuity payments begin. In those states we may defer collection of the premium taxes from your contract value and deduct it when you surrender the Contract, when you take an excess withdrawal, or on the annuity start date. ADMINISTRATIVE CHARGE. We deduct an annual administrative charge on each Contract anniversary, or if you surrender your Contract prior to a Contract anniversary, at the time we determine the cash surrender value payable to you. The amount deducted is $30 per Contract unless waived under conditions established by Golden American. We deduct the charge proportionately from all subaccounts in which you are invested. If there is no contract value in those subaccounts, we will deduct the charge from your Fixed Interest Allocations starting with the guaranteed interest periods nearest their maturity dates until the charge has been paid. TRANSFER CHARGE. We currently do not deduct any charges for transfers made during a contract year. We have the right, however, to assess up to $25 for each transfer after the twelfth transfer in a contract year. If such a charge is assessed, we would deduct the charge from the subaccounts and the Fixed Interest Allocations from which each such transfer is made in proportion to the amount being transferred from each such subaccount and Fixed Interest Allocation unless you have chosen to have all charges deducted from a single subaccount. The charge will not apply to any transfers due to the election of dollar cost averaging, automatic rebalancing and transfers we make to and from any subaccount specially designated by the Company for such purpose. CHARGES DEDUCTED FROM THE SUBACCOUNTS MORTALITY AND EXPENSE RISK CHARGE. The mortality and expense risk charge is deducted each business day. The amount of the mortality and expense risk charge depends on the option package you have elected. The charge is deducted on each business day based on the assets you have in each subaccount. The charge for each option package, on an annual basis, is equal to 1.45% for Option Package I, 1.65% for Option Package II, and 1.80% for Option Package III, of the assets you have in each subaccount. The charge is deducted each business day at the daily rate of .004002% (Option Package I),.004558% (Option Package II), or .004976% (Option Package III), respectively. In the event there are any profits from the mortality and expense risk charge, we may use such profits to finance the distribution of contracts. ASSET-BASED ADMINISTRATIVE CHARGE. The amount of the asset-based administrative charge, on an annual basis, is equal to 0.15% of the assets you have in each subaccount. The charge is deducted on each business day at the rate of .000411%from your assets in each subaccount. This charge is deducted daily from your assets in each subaccount. PREMIUM CREDIT OPTION CHARGE. The amount of the asset-based premium credit option charge, on an annual basis, is equal to 0.60% of the assets you have in each subaccount. The charge is deducted on each 39 business day at the rate of .0001649% for 3 years following each credit from your assets in each subaccount. This charge will also be deducted from amounts allocated to the Fixed Account, resulting in a 0.60% reduction in the interest which would otherwise have been credited to your contract during the three contract years following each credit if you had not elected the premium credit option. EARNINGS MULTIPLIER BENEFIT CHARGE. So long as the rider is in effect, we will deduct a separate quarterly charge for the rider through a pro rata reduction of the contract value of the subaccounts in which you are invested. The quarterly charge for the earnings multiplier benefit rider is 0.0625% (0.25% annually). If there is insufficient contract value in the subaccounts, we will deduct the charges from your Fixed Interest Allocations, starting with the allocation nearest its maturity date. If that is insufficient, we will deduct the charge from the allocation next nearest its maturity date, and so on. We deduct the rider charge on each quarterly contract anniversary in arrears, meaning the first charge will be deducted on the first quarterly anniversary following the rider effective date. If you surrender or annuitize your Contract, we will deduct a pro rata portion of the charge for the current quarter based on the current contract value immediately prior to the surrender or annuitization. For a description of the rider, see "The Earnings Multiplier Benefit Rider." TRUST AND FUND EXPENSES Each portfolio deducts portfolio management fees and charges from the amounts you have invested in the portfolios. In addition, each portfolios deduct a service fee, which is used to compensate service providers for administrative and contract holder services provided on behalf of the portfolios, and each portfolios deduct a distribution or 12b-1 fee, which is used to finance any activity that is primarily intended to result in the sale of shares of the applicable portfolio. Based on actual portfolio experience in 2000, together with estimated costs for new portfolios, total estimated portfolio fees and charges for 2001 range from 0.54% to 1.86%. - -------------------------------------------------------------------------------- THE INCOME PHASE - -------------------------------------------------------------------------------- During the income phase, you stop contributing dollars to your contract and start receiving payments from your accumulated contract value. INITIATING PAYMENTS. At least 30 days prior to the date you want to start receiving payments, you must notify us in writing of all of the following: o Payment start date; o Income phase payment option (see the income phase payment options table in this section); o Payment frequency (i.e., monthly, quarterly, semi-annually or annually); o Choice of fixed, and, if available at the time an income phase payment option is selected, variable or a combination of both fixed and variable payments; and o Selection of an assumed net investment rate (only if variable payments are elected). Your Contract will continue in the accumulation phase until you properly start income phase payments. Once an income phase payment option is selected, it may not be changed. Our current annuity options provide only for fixed payments. WHAT AFFECTS PAYMENT AMOUNTS? Some of the factors that may affect the amount of your income phase payments include: your age; gender; contract value; the income phase payment option selected; the number of guaranteed payments (if any) selected; whether you select fixed, variable or a combination of both fixed and variable payments; and, for variable payments, the assumed net investment rate selected. Variable payments are not currently available. FIXED PAYMENTS. Amounts funding fixed income phase payments will be held in the Company's general account. The amount of fixed payments does not vary with investment performance over time. 40 VARIABLE PAYMENTS. Amounts funding your variable income phase payments will be held in the subaccount(s) you select. Not all subaccounts available during the accumulation phase may be available during the income phase. Payment amounts will vary depending upon the performance of the subaccounts you select. For variable income phase payments, you must select an assumed net investment rate. Variable payments are not currently available. ASSUMED NET INVESTMENT RATE. If you select variable income phase payments, you must also select an assumed net investment rate of either 5% or 3 1/2%. If you select a 5% rate, your first income phase payment will be higher, but subsequent payments will increase only if the investment performance of the subaccounts you selected is greater than 5% annually, after deduction of fees. Payment amounts will decline if the investment performance is less than 5%, after deduction of fees. If you select a 3 1/2% rate, your first income phase payment will be lower and subsequent payments will increase more rapidly or decline more slowly depending upon changes to the net investment rate of the subaccounts you selected. For more information about selecting an assumed net investment rate, call us for a copy of the SAI. MINIMUM PAYMENT AMOUNTS. The income phase payment option you select must result in: o A first income phase payment of at least $50; and o Total yearly income phase payments of at least $250. If your contract value is too low to meet these minimum payment amounts, you will receive one lump-sum payment. Unless prohibited by law, we reserve the right to increase the minimum payment amount based on increases reflected in the Consumer Price Index-Urban (CPI-U) since July 1, 1993. RESTRICTIONS ON START DATES AND THE DURATION OF PAYMENTS. Income phase payments may not begin during the first contract year, or, unless we consent, later than the later of: o The first day of the month following the annuitant's 85th birthday; or o The tenth anniversary of the last premium payment made to your Contract. Income phase payments will not begin until you have selected an income phase payment option. If income phase payments begin within the first contract year, it will be treated as a surrender, and surrender charges may apply. Failure to select an income phase payment option by the later of the annuitant's 85th birthday or the tenth anniversary of your last premium payment may have adverse tax consequences. You should consult with a qualified tax adviser if you are considering delaying the selection of an income phase payment option before the later of these dates. For qualified contracts only, income phase payments may not extend beyond: (a) The life of the annuitant; (b) The joint lives of the annuitant and beneficiary; (c) A guaranteed period greater than the annuitant's life expectancy; or (d) A guaranteed period greater than the joint life expectancies of the annuitant and beneficiary. When income phase payments start, the age of the annuitant plus the number of years for which payments are guaranteed may not exceed 100. If income phase payments start when the annuitant is at an advanced age, such as over 85, it is possible that the Contract will not be considered an annuity for federal tax purposes. See "FEDERAL TAX CONSIDERATIONS" for further discussion of rules relating to income phase payments. 41 CHARGES DEDUCTED. o If variable income phase payments are selected, we make a daily deduction for mortality and expense risks from amounts held in the subaccounts. Therefore, if you choose variable income phase payments and a nonlifetime income phase payment option, we still make this deduction from the subaccounts you select, even though we no longer assume any mortality risks. The amount of this charge, on an annual basis, is equal to 1.25% of amounts invested in the subaccounts. See "Fees and Expenses." o There is currently no administrative expense charge during the income phase. We reserve the right, however, to charge an administrative expense charge of up to 0.25% during the income phase. If imposed, we deduct this charge daily from the subaccounts corresponding to the funds you select. If we are imposing this charge when you enter the income phase, the charge will apply to you during the entire income phase. See "Fees and Expenses." o If you elected the premium credit option and variable income phase payments, we may also deduct the premium credit option charge. We deduct this charge daily during the first seven contract years from the subaccounts corresponding to the funds you select. If fixed income phase payments are selected, this charge may be reflected in the income phase payment rates. See "Fees and Expenses." DEATH BENEFIT DURING THE INCOME PHASE. The death benefits that may be available to a beneficiary are outlined in the income phase payment options table below. If a lump-sum payment is due as a death benefit, we will make payment within seven calendar days after we receive proof of death acceptable to us and the request for the payment in good order at our Customer Service Center. If continuing income phase payments are elected, the beneficiary may not elect to receive a lump sum at a future date unless the income phase payment option specifically allows a withdrawal right. We will calculate the value of any death benefit at the next valuation after we receive proof of death and a request for payment. Such value will be reduced by any payments made after the date of death. BENEFICIARY RIGHTS. A beneficiary's right to elect an income phase payment option or receive a lump-sum payment may have been restricted by the contract owner. If so, such rights or options will not be available to the beneficiary. PARTIAL ENTRY INTO THE INCOME PHASE. You may elect an income phase payment option for a portion of your contract value, while leaving the remaining portion invested in the accumulation phase. Whether the Tax Code considers such payments taxable as income phase payments or as withdrawals is currently unclear; therefore, you should consult with a qualified tax adviser before electing this option. The same or different income phase payment option may be selected for the portion left invested in the accumulation phase. TAXATION. To avoid certain tax penalties, you or your beneficiary must meet the distribution rules imposed by the Tax Code. Additionally, when selecting an income phase payment option, the Tax Code requires that your expected payments will not exceed certain durations. See "FEDERAL TAX CONSIDERATIONS". PAYMENT OPTIONS. The following table lists the income phase payment options and accompanying death benefits available during the income phase. We may offer additional income phase payment options under the Contract from time to time. Once income phase payments begin, the income phase payment option selected may not be changed. TERMS TO UNDERSTAND: ANNUITANT(S): The person(s) on whose life expectancy(ies) the income phase payments are based. BENEFICIARY(IES): The person(s) or entity(ies) entitled to receive a death benefit, if any, under the income phase payment option selected. 42
----------------------------------------------------------------------------------------------------------------------- LIFETIME INCOME PHASE PAYMENT OPTIONS ----------------------------------------------------------------------------------------------------------------------- Life Income LENGTH OF PAYMENTS: For as long as the annuitant lives. It is possible that only one payment will be made if the annuitant dies prior to the second payment's due date. DEATH BENEFIT--NONE: All payments end upon the annuitant's death. ----------------------------------------------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as the annuitant lives, with payments guaranteed for your Guaranteed choice of 5 to 30 years or as otherwise specified in the contract. Payments DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If the annuitant dies before we have made all the guaranteed payments, we will continue to pay the beneficiary the remaining payments. ----------------------------------------------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as either annuitant lives. It is possible that only one Two Lives payment will be made if both annuitants die before the second payment's due date. CONTINUING PAYMENTS: When you select this option you choose for: a) 100%, 66 2/3% or 50% of the payment to continue to the surviving annuitant after the first death; or b) 100% of the payment to continue to the annuitant on the second annuitant's death, and 50% of the payment to continue to the second annuitant on the annuitant's death. DEATH BENEFIT--NONE: All payments end upon the death of both annuitants. ----------------------------------------------------------------------------------------------------------------------- Life Income-- LENGTH OF PAYMENTS: For as long as either annuitant lives, with payments guaranteed from 5 Two Lives-- to 30 years or as otherwise specified in the contract. Guaranteed Payments CONTINUING PAYMENTS: 100% of the payment to continue to the surviving annuitant after the first death. DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If both annuitants die before we have made all the guaranteed payments, we will continue to pay the beneficiary the remaining payments. ----------------------------------------------------------------------------------------------------------------------- Life Income--Cash LENGTH OF PAYMENTS: For as long as the annuitant lives. Refund Option (limited availability--fixed DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: Following the annuitant's death, we will pay a payments only) lump sum payment equal to the amount originally applied to the income phase payment option (less any applicable premium tax) and less the total amount of income payments paid. ----------------------------------------------------------------------------------------------------------------------- Life Income--Two LENGTH OF PAYMENTS: For as long as either annuitant lives. Lives--Cash Refund Option (limited CONTINUING PAYMENTS: 100% of the payment to continue after the first death. availability--fixed payments only) DEATH BENEFIT--PAYMENT TOTHE BENEFICIARY: When both annuitants die we will pay a lump-sum payment equal to the amount applied to the income phase payment option (less any applicable premium tax) and less the total amount of income payments paid. ----------------------------------------------------------------------------------------------------------------------- 43 ----------------------------------------------------------------------------------------------------------------------- NONLIFETIME INCOME PHASE PAYMENT OPTION ----------------------------------------------------------------------------------------------------------------------- Nonlifetime-- LENGTH OF PAYMENTS: You may select payments for 5 to 30 years (15 to 30 years if you elected Guaranteed the premium bonus option). In certain cases a lump-sum payment may be requested at any time Payments (see below). DEATH BENEFIT--PAYMENT TO THE BENEFICIARY: If the annuitant dies before we make all the guaranteed payments, we will continue to pay the beneficiary the remaining payments. ----------------------------------------------------------------------------------------------------------------------- LUMP-SUM PAYMENT: If the "Nonlifetime--Guaranteed Payments" option is elected with variable payments, you may request at any time that all or a portion of the present value of the remaining payments be paid in one lump sum. Any such lump-sum payments will be treated as a withdrawal during the accumulation phase and we will charge any applicable surrender charge. Lump-sum payments will be sent within seven calendar days after we receive the request for payment in good order at our Customer Service Center. -----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------- OTHER CONTRACT PROVISIONS - -------------------------------------------------------------------------------- REPORTS TO CONTRACT OWNERS We will send you a quarterly report within 31 days after the end of each calendar quarter. The report will show the contract value, cash surrender value, and the death benefit as of the end of the calendar quarter. The report will also show the allocation of your contract value and reflects the amounts deducted from or added to the contract value since the last report. You have 30 days to notify our Customer Service Center of any errors or discrepancies contained in the report or in any confirmation notices. We will also send you copies of any shareholder reports of the investment portfolios in which Separate Account B invests, as well as any other reports, notices or documents we are required by law to furnish to you. SUSPENSION OF PAYMENTS The Company reserves the right to suspend or postpone the date of any payment or determination of values on any business day (1) when the New York Stock Exchange is closed; (2) when trading on the New York Stock Exchange is restricted; (3) when an emergency exists as determined by the SEC so that the sale of securities held in Separate Account B may not reasonably occur or so that the Company may not reasonably determine the value of Separate Account B's net assets; or (4) during any other period when the SEC so permits for the protection of security holders. We have the right to delay payment of amounts from a Fixed Interest Allocation for up to 6 months. IN CASE OF ERRORS IN YOUR APPLICATION If an age or gender given in the application or enrollment form is misstated, the amounts payable or benefits provided by the Contract shall be those that the premium payment would have bought at the correct age or sex. ASSIGNING THE CONTRACT AS COLLATERAL You may assign a non-qualified Contract as collateral security for a loan but you should understand that your rights and any beneficiary's rights may be subject to the terms of the assignment. An assignment likely has federal tax consequences. You must give us satisfactory written notice at our Customer Service Center in order to make or release an assignment. We are not responsible for the validity of any assignment. CONTRACT CHANGES -- APPLICABLE TAX LAW We have the right to make changes in the Contract to continue to qualify the Contract as an annuity under applicable federal tax law. You will be given advance notice of such changes. 44 FREE LOOK You may cancel your Contract within your 10-day free look period. We deem the free look period to expire 15 days after we mail the Contract to you. Some states may require a longer free look period. To cancel, you need to send your Contract to our Customer Service Center or to the agent from whom you purchased it. We will refund the contract value. For purposes of the refund during the free look period, (i) we adjust your contract value for any Market Value Adjustment (if you have invested in the Fixed Account), (ii) then, if applicable, we exclude any credit initially applied, and (iii) then we include a refund of any charges deducted from your contract value. Because of the market risks associated with investing in the portfolios and the potential positive or negative effect of the market value adjustment, the contract value returned may be greater or less than the premium payment you paid. Some states require us to return to you the amount of the paid premium (rather than the contract value) in which case you will not be subject to investment risk during the free look period. In these states, your premiums designated for investment in the subaccounts may be allocated during the free look period to a subaccount specially designated by the Company for this purpose (currently, the Liquid Asset subaccount). We may, in our discretion, require that premiums designated for investment in the subaccounts from all other states as well as premiums designated for a Fixed Interest Allocation be allocated to the specially designated subaccount during the free look period. Your Contract is void as of the day we receive your Contract and cancellation request. We determine your contract value at the close of business on the day we receive your written request. If you keep your Contract after the free look period and the investment is allocated to a subaccount specially designated by the Company, we will put your money in the subaccount(s) chosen by you, based on the accumulation unit value next computed for each subaccount, and/or in the Fixed Interest Allocation chosen by you. SPECIAL ARRANGEMENTS We may reduce or waive any Contract, rider, or benefit fees or charges for certain group or sponsored arrangements, under special programs, and for certain employees, agents, and related persons of our parent corporation and its affiliates. We reduce or waive these items based on expected economies, and the variations are based on differences in costs or services. SELLING THE CONTRACT Our affiliate Directed Services, Inc. ("DSI"), 1475 Dunwoody Dr., West Chester, PA 19380 is the principal underwriter and distributor of the Contract as well as for other Golden American contracts. DSI, a New York corporation, is registered with the SEC as a broker-dealer under the Securities Exchange Act of 1934, and is a member of the National Association of Securities Dealers, Inc. ("NASD"). DSI does not retain any commissions or compensation paid to it by Golden American for Contract sales. DSI enters into selling agreements with affiliated and unaffiliated broker-dealers to sell the Contracts through their registered representatives who are licensed to sell securities and variable insurance products. Selling firms are also registered with the SEC and NASD member firms. DSI pays selling firms for Contract sales according to one or more schedules. This compensation is generally based on a percentage of premium payments. Selling firms may receive commissions of up to 6.0% of premium payments. In addition, selling firms may receive ongoing annual compensation of up to 1.10% of all, or a portion, of values of Contracts sold through the firm. Individual representatives may receive all or a portion of compensation paid to their selling firm, depending on their firm's practices. Commissions and annual compensation, when combined, could exceed 6.0% of total premium payments. DSI may also compensate wholesalers/distributors, and their sales management personnel, for Contract sales within the wholesale/distribution channel. This compensation may be based on a percentage of premium payments, and/or a percentage of Contract values. Affiliated selling firms may include Aeltus Capital, Inc., ING Investment Services, LLC, BancWest Investment Services, Inc., Baring Investment Services, Inc., Compulife Investor Services, Inc., Financial Network Investment Corporation, Financial Northeastern Corporation, Granite Investment Services, Inc. Guaranty Brokerage Services, Inc., IFG Network Securities, Inc., ING America Equities, Inc., ING Barings Corp., ING Brokers Network, LLC, ING Direct Funds Limited, ING DIRECT Securities, Inc., ING Furman Selz Financial Services LLC, ING Funds Distributor, Inc., ING TT&S (U.S.) Securities, Inc., Investors 45 Financial Group, Inc., Locust Street Securities, Inc., Multi-Financial Securities Corporation, PrimeVest Financial Services, Inc., Systematized Benefits Administrators, Inc., United Variable Services, Inc., VESTAX Securities Corporation, and Washington Square Securities, Inc. We may also make additional payments to broker dealers for marketing and educational expenses and to reimburse certain expenses of registered representatives relating to sales of Contracts. We do not pay any additional compensation on the sale or exercise of any of the Contract's optional benefit riders offered in this prospectus. - -------------------------------------------------------------------------------- OTHER INFORMATION - -------------------------------------------------------------------------------- VOTING RIGHTS We will vote the shares of a Trust owned by Separate Account B according to your instructions. However, if the 1940 Act or any related regulations should change, or if interpretations of it or related regulations should change, and we decide that we are permitted to vote the shares of a Trust in our own right, we may decide to do so. We determine the number of shares that you have in a subaccount by dividing the Contract's contract value in that subaccount by the net asset value of one share of the portfolio in which a subaccount invests. We count fractional votes. We will determine the number of shares you can instruct us to vote 180 days or less before a Trust shareholder meeting. We will ask you for voting instructions by mail at least 10 days before the meeting. If we do not receive your instructions in time, we will vote the shares in the same proportion as the instructions received from all contracts in that subaccount. We will also vote shares we hold in Separate Account B which are not attributable to contract owners in the same proportion. STATE REGULATION We are regulated by the Insurance Department of the State of Delaware. We are also subject to the insurance laws and regulations of all jurisdictions where we do business. The variable Contract offered by this prospectus has been approved where required by those jurisdictions. We are required to submit annual statements of our operations, including financial statements, to the Insurance Departments of the various jurisdictions in which we do business to determine solvency and compliance with state insurance laws and regulations. LEGAL PROCEEDINGS The Company, like other insurance companies, may be involved in lawsuits, including class action lawsuits. In some class action and other lawsuits involving insurers, substantial damages have been sought and/or material settlement payments have been made. We believe that currently there are no pending or threatened lawsuits that are reasonably likely to have a materially adverse impact on the Company or Separate Account B. LEGAL MATTERS The legal validity of the Contracts was passed on by Kimberly J. Smith, Executive Vice President, General Counsel and Assistant Secretary of Golden American. EXPERTS The audited consolidated financial statements of Golden American at December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001, and the statement of assets and liabilities of Separate Account B at December 31, 2001 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 then ended, appearing in the SAI and Registration Statement have been audited by Ernst & Young, LLP, independent auditors, as set forth in their reports thereon appearing in the SAI and in the Registration Statement, and are included or incorporated herein by reference in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. 46 - -------------------------------------------------------------------------------- FEDERAL TAX CONSIDERATIONS - -------------------------------------------------------------------------------- The following summary provides a general description of the federal income tax considerations associated with this Contract and does not purport to be complete or to cover all tax situations. This discussion is not intended as tax advice. You should consult your counsel or other competent tax advisers for more complete information. This discussion is based upon our understanding of the present federal income tax laws. We do not make any representations as to the likelihood of continuation of the present federal income tax laws or as to how they may be interpreted by the IRS. THIS SUMMARY REFERENCES ENHANCED DEATH BENEFITS AND EARNINGS MULTIPLIER BENEFITS THAT MAY NOT BE AVAILABLE UNDER YOUR CONTRACT. PLEASE SEE YOUR CONTRACT, AND "THE ANNUITY CONTRACT -- OPTIONAL RIDERS" AND "DEATH BENEFIT CHOICES" IN THIS PROSPECTUS. TYPES OF CONTRACTS: NON-QUALIFIED OR QUALIFIED The Contract may be purchased on a non-tax-qualified basis or purchased on a tax-qualified basis. Qualified Contracts are designed for use by individuals whose premium payments are comprised solely of proceeds from and/or contributions under retirement plans that are intended to qualify as plans entitled to special income tax treatment under Sections 401(a), 403(b), 408, or 408A of the Code. The ultimate effect of federal income taxes on the amounts held under a Contract, or annuity payments, depends on the type of retirement plan, on the tax and employment status of the individual concerned, and on our tax status. In addition, certain requirements must be satisfied in purchasing a qualified Contract with proceeds from a tax-qualified plan and receiving distributions from a qualified Contract in order to continue receiving favorable tax treatment. Some retirement plans are subject to distribution and other requirements that are not incorporated into our Contract administration procedures. Contract owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions with respect to the Contract comply with applicable law. Therefore, you should seek competent legal and tax advice regarding the suitability of a Contract for your particular situation. The following discussion assumes that qualified Contracts are purchased with proceeds from and/or contributions under retirement plans that qualify for the intended special federal income tax treatment. TAX STATUS OF THE CONTRACTS DIVERSIFICATION REQUIREMENTS. The Code requires that the investments of a variable account be "adequately diversified" in order for non-qualified Contracts to be treated as annuity contracts for federal income tax purposes. It is intended that Separate Account B, through the subaccounts, will satisfy these diversification requirements. INVESTOR CONTROL. In certain circumstances, owners of variable annuity contracts have been considered for federal income tax purposes to be the owners of the assets of the separate account supporting their contracts due to their ability to exercise investment control over those assets. When this is the case, the contract owners have been currently taxed on income and gains attributable to the separate account assets. There is little guidance in this area, and some features of the Contracts, such as the flexibility of a contract owner to allocate premium payments and transfer contract values, have not been explicitly addressed in published rulings. While we believe that the Contracts do not give contract owners investment control over Separate Account B assets, we reserve the right to modify the Contracts as necessary to prevent a contract owner from being treated as the owner of the Separate Account B assets supporting the Contract. REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for federal income tax purposes, the Code requires any non-qualified Contract to contain certain provisions specifying how your interest in the Contract will be distributed in the event of your death. The non-qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise. See "Death Benefit Choices" for additional information on required distributions from non-qualified contracts. Qualified Contracts are subject to special rules -- see below. 47 The following discussion assumes that the Contracts will qualify as annuity contracts for federal income tax purposes. IN GENERAL. We believe that if you are a natural person you will generally not be taxed on increases in the value of a Contract until a distribution occurs or until annuity payments begin. For these purposes, the agreement to assign or pledge any portion of the contract value, and, in the case of a qualified Contract, any portion of an interest in the qualified plan, generally will be treated as a distribution. TAXATION OF NON-QUALIFIED CONTRACTS NON-NATURAL PERSON. The owner of any annuity contract who is not a natural person generally must include in income any increase in the excess of the contract value over the "investment in the contract" (generally, the premiums or other consideration you paid for the contract less any nontaxable withdrawals) during the taxable year. There are some exceptions to this rule and a prospective contract owner that is not a natural person may wish to discuss these with a tax adviser. The following discussion generally applies to Contracts owned by natural persons. WITHDRAWALS. When a withdrawal from a non-qualified Contract occurs (including amounts paid to you under the MGWB rider), the amount received will be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of the contract value (unreduced by the amount of any surrender charge) immediately before the distribution over the contract owner's investment in the Contract at that time. Credits constitute earnings (not premiums) for federal tax purposes and are not included in the owner's investment in the Contract. The tax treatment of market value adjustments is uncertain. You should consult a tax adviser if you are considering taking a withdrawal from your Contract in circumstances where a market value adjustment would apply. In the case of a surrender under a non-qualified Contract, the amount received generally will be taxable only to the extent it exceeds the contract owner's investment in the Contract. SEPARATE ACCOUNT CHARGES. It is possible that the Internal Revenue Service may take a position that charges for certain optional benefits and riders are deemed to be taxable distributions to you. In particular, the Internal Revenue Service may treat the quarterly charges deducted for an earnings multiplier benefit rider as taxable withdrawals, which might also be subject to a tax penalty if the withdrawal occurs before you reach age 59 1/2. You should consult your tax advisor prior to selecting any optional benefit or rider under the Contract. PENALTY TAX ON CERTAIN WITHDRAWALS. A distribution from a non-qualified Contract may be subject to a federal tax penalty equal to 10% of the amount treated as income. In general, however, there is no penalty on distributions: o made on or after the taxpayer reaches age 59 1/2; o made on or after the death of a contract owner; o attributable to the taxpayer's becoming disabled; or o made as part of a series of substantially equal periodic payments for the life (or life expectancy) of the taxpayer. Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. A tax adviser should be consulted with regard to exceptions from the penalty tax. ANNUITY PAYMENTS. Although tax consequences may vary depending on the payment option elected under an annuity contract, a portion of each annuity payment is generally not taxed and the remainder is taxed as ordinary income. The non-taxable portion of an annuity payment is generally determined in a manner that is designed to allow you to recover your investment in the Contract ratably on a tax-free basis over the expected stream of annuity payments, as determined when annuity payments start. Once your 48 investment in the Contract has been fully recovered, however, the full amount of each annuity payment is subject to tax as ordinary income. TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from a Contract because of your death or the death of the annuitant. Generally, such amounts are includible in the income of recipient as follows: (i) if distributed in a lump sum, they are taxed in the same manner as a surrender of the Contract, or (ii) if distributed under a payment option, they are taxed in the same way as annuity payments. Special rules may apply to amounts distributed after a Beneficiary has elected to maintain Contract value and receive payments. TRANSFERS, ASSIGNMENTS, EXCHANGES AND ANNUITY DATES OF A CONTRACT. A transfer or assignment of ownership of a Contract, the designation of an annuitant or payee other than an owner, the selection of certain dates for commencement of the annuity phase, or the exchange of a Contract may result in certain tax consequences to you that are not discussed herein. A contract owner contemplating any such transfer, assignment, designation or exchange, should consult a tax adviser as to the tax consequences. WITHHOLDING. Annuity distributions are generally subject to withholding for the recipient's federal income tax liability, and we will report taxable amounts as required by law. Recipients can generally elect, however, not to have tax withheld from distributions. MULTIPLE CONTRACTS. All non-qualified deferred annuity contracts that are issued by us (or our affiliates) to the same contract owner during any calendar year are treated as one non-qualified deferred annuity contract for purposes of determining the amount includible in such contract owner's income when a taxable distribution occurs. TAXATION OF QUALIFIED CONTRACTS The Contracts are designed for use with several types of qualified plans. The tax rules applicable to participants in these qualified plans vary according to the type of plan and the terms and conditions of the plan itself. Special favorable tax treatment may be available for certain types of contributions and distributions. Adverse tax consequences may result from: contributions in excess of specified limits; distributions before age 59 1/2 (subject to certain exceptions); distributions that do not conform to specified commencement and minimum distribution rules; and in other specified circumstances. Therefore, no attempt is made to provide more than general information about the use of the Contracts with the various types of qualified retirement plans. Contract owners, annuitants, and beneficiaries are cautioned that the rights of any person to any benefits under these qualified retirement plans may be subject to the terms and conditions of the plans themselves, regardless of the terms and conditions of the Contract, but we shall not be bound by the terms and conditions of such plans to the extent such terms contradict the Contract, unless the Company consents. For qualified plans under Section 401(a) and 403(b), the Code requires that distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the contract owner (or plan participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a specified form or manner. If the plan participant is a "5 percent owner" (as defined in the Code), distributions generally must begin no later than April 1 of the calendar year following the calendar year in which the contract owner (or plan participant) reaches age 70 1/2. For IRAs described in Section 408, distributions generally must commence no later than the later of April 1 of the calendar year following the calendar year in which the contract owner (or plan participant) reaches age 70 1/2. Roth IRAs under Section 408A do not require distributions at any time before the contract owner's death. PLEASE NOTE THAT REQUIRED MINIMUM DISTRIBUTIONS UNDER QUALIFIED CONTRACTS MAY BE SUBJECT TO SURRENDER CHARGE AND/OR MARKET VALUE ADJUSTMENT, IN ACCORDANCE WITH THE TERMS OF THE CONTRACT. WITHHOLDING. Distributions from certain qualified plans generally are subject to withholding for the contract owner's federal income tax liability. The withholding rates vary according to the type of distribution and the contract owner's tax status. The contract owner may be provided the opportunity to elect not to have tax withheld from distributions. "Eligible rollover distributions" from section 401(a) plans and section 403(b) tax-sheltered annuities are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is the taxable portion of any distribution from such a plan, except certain distributions 49 that are required by the Code, distributions in a specified annuity form or hardship distributions. The 20% withholding does not apply, however, if the contract owner chooses a "direct rollover" from the plan to another tax-qualified plan or IRA. CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS. Section 401(a) of the Code permits corporate employers to establish various types of retirement plans for employees, and permits self-employed individuals to establish these plans for themselves and their employees. These retirement plans may permit the purchase of the Contracts to accumulate retirement savings under the plans. Adverse tax or other legal consequences to the plan, to the participant, or to both may result if this Contract is assigned or transferred to any individual as a means to provide benefit payments, unless the plan complies with all legal requirements applicable to such benefits before transfer of the Contract. Employers intending to use the Contract with such plans should seek competent advice. INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an "Individual Retirement Annuity" or "IRA." These IRAs are subject to limits on the amount that can be contributed, the deductible amount of the contribution, the persons who may be eligible, and the time when distributions commence. Also, distributions from certain other types of qualified retirement plans may be "rolled over" or transferred on a tax-deferred basis into an IRA. There are significant restrictions on rollover or transfer contributions from Savings Incentive Match Plans for Employees (SIMPLE), under which certain employers may provide contributions to IRAs on behalf of their employees, subject to special restrictions. Employers may establish Simplified Employee Pension (SEP) Plans to provide IRA contributions on behalf of their employees. Sales of the Contract for use with IRAs may be subject to special requirements of the IRS. IRAs generally may not invest in life insurance contracts. We do not believe a death benefit under an annuity contract that is equal to the greater of premiums paid (less withdrawals) or contract value will be treated as life insurance. However, the enhanced death benefits and earnings enhancement benefit under this Contract may exceed the greater of premiums paid (less withdrawals) and contract value. We have previously received IRS approval of the form of the Contract, including the enhanced death benefit feature, for use as an IRA. THE CONTRACT WITH BOTH ENHANCED DEATH BENEFITS AND THE EARNINGS MULTIPLIER BENEFIT HAS BEEN FILED WITH THE IRS FOR APPROVAL FOR USE AS AN IRA. HOWEVER, THERE IS NO ASSURANCE THAT THE IRS WILL GIVE THIS APPROVAL OR THAT THE CONTRACT MEETS THE QUALIFICATION REQUIREMENTS FOR AN IRA. Although we regard the enhanced death benefit options and earnings multiplier benefit as investment protection features that should not have an adverse tax effect, it is possible that the IRS could take a contrary position regarding tax qualification, which could result in the immediate taxation of amounts held in the Contract and the imposition of penalty taxes. YOU SHOULD CONSULT YOUR TAX ADVISOR IF YOU ARE CONSIDERING ADDING AN ENHANCED DEATH BENEFIT OR EARNINGS MULTIPLIER BENEFIT TO YOUR CONTRACT IF IT IS AN IRA. DISTRIBUTIONS - IRAS. All distributions from a traditional IRA are taxed as received unless either one of the following is true: o The distribution is rolled over to a plan eligible to receive rollovers or to another traditional IRA in accordance with the Tax Code; or o You made after-tax contributions to the IRA. In this case, the distribution will be taxed according to rules detailed in the Tax Code. To avoid certain tax penalties, you and any designated beneficiary must also meet the minimum distribution requirements imposed by the Tax Code. The requirements do not apply to Roth IRA contracts except with regard to death benefits. These rules may dictate one or more of the following: o Start date for distributions; o The time period in which all amounts in your account(s) must be distributed; or o Distribution amounts. 50 Generally, you must begin receiving distributions from a traditional IRA by April 1 of the calendar year following the calendar year in which you attain age 70 1/2. We must pay out distributions from the contract over one of the following time periods: o Over your life or the joint lives of you and your designated beneficiary; or o Over a period not greater than your life expectancy or the joint life expectancies of you and your designated beneficiary. The amount of each periodic distribution must be calculated in accordance with IRS regulations. If you fail to receive the minimum required distribution for any tax year, a 50% excise tax is imposed on the required amount that was not distributed. The following applies to the distribution of death proceeds under 408(b) and 408A (Roth IRA - See below) plans. Different distribution requirements apply if your death occurs: o After you begin receiving minimum distributions under the contract; or o Before you begin receiving such distributions. If your death occurs after you begin receiving minimum distributions under the contract, distributions must be made at least as rapidly as under the method in effect at the time of your death. Code section 401(a)(9) provides specific rules for calculating the minimum required distributions at your death. If your death occurs before you begin receiving minimum distributions under the contract, your entire balance must be distributed by December 31 of the calendar year containing the fifth anniversary of the date of your death. For example, if you die on September 1, 2002, your entire balance must be distributed to the designated beneficiary by December 31, 2007. However, if the distributions begin by December 31 of the calendar year following the calendar year of your death, and you have named a designated beneficiary, then payments may be made over either of the following time-frames: o Over the life of the designated beneficiary; or o Over a period not extending beyond the life expectancy of the designated beneficiary. If the designated beneficiary is your spouse, distributions must begin on or before the later of the following: o December 31 of the calendar year following the calendar year of your death; or o December 31 of the calendar year in which you would have attained age 70 1/2. In lieu of taking a distribution under these rules, a spousal beneficiary may elect to treat the account as his or her own IRA. In such case, the surviving spouse will be able to make contributions to the account, make rollovers from the account, and defer taking a distribution until his or her age 70 1/2. The surviving spouse is deemed to have made such an election if the surviving spouse makes a rollover to or from the account, makes additional contributions to the account, or fails to take a distribution within the required time period. ROTH IRA. Section 408A of the Code permits certain eligible individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which are subject to limits on the amount of the contributions and the persons who may be eligible to contribute, are not deductible, and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA may be subject to tax, and other special rules may apply. A 10% penalty may apply to amounts attributable to a conversion from an IRA to a Roth IRA if the amounts are distributed during the five taxable years beginning with the year in which the conversion was made. DISTRIBUTIONS -- ROTH IRAS. A qualified distribution from a Roth IRA is not taxed when it is received. A qualified distribution is a distribution: o Made after the five-taxable year period beginning with the first taxable year for which a contribution was made; and 51 o Made after you attain age 59 1/2, die, become disabled as defined in the Tax Code, or for a qualified first-time home purchase. If a distribution is not qualified, it will be taxable to the extent of the accumulated earnings. A partial distribution will first be treated as a return of contributions which is not taxable and then as taxable accumulated earnings. TAX SHELTERED ANNUITIES. Section 403(b) of the Code allows employees of certain Section 501(c)(3) organizations and public schools to exclude from their gross income the premium payments made, within certain limits, on a Contract that will provide an annuity for the employee's retirement. These premium payments may be subject to FICA (Social Security) tax. Distributions of (1) salary reduction contributions made in years beginning after December 31, 1988; (2) earnings on those contributions; and (3) earnings on amounts held as of the last year beginning before January 1, 1989, are not allowed prior to age 59 1/2, separation from service, death or disability. Salary reduction contributions, but not earnings on such distributions, may also be distributed upon hardship, but would generally be subject to penalties. TSAS -- LOANS. Loans may be available if you are under age 70 1/2 and purchased your contract in connection with a non-ERISA plan qualified under Section 403(b) of the Code ("TSA"). If your contract was issued in connection with a TSA and the terms of your plan permit, you may take a loan from us, using your surrender value as collateral for the loan. Loans are subject to the terms of the Contract, your 403(b) plan, and the Code. You are responsible for monitoring the amount and number of loans outstanding at any one time under your TSA, whether under our contracts or those of other carriers. We may modify the terms of a loan to comply with changes in applicable law. We urge you to consult with a qualified tax advisor prior to effecting a loan transaction under your Contract. We may apply additional restrictions or limitations on loans, and you must make loan requests in accordance with our administrative practices and loan request procedures in effect at the time you submit your request. Read the terms of the loan agreement before submitting any request. Any outstanding loan balance impacts the following: 1) Withdrawals and Charges: We determine amounts available for maximum withdrawal amounts, free partial withdrawals, systematic withdrawals and waiver of administrative charges by reducing the otherwise applicable amounts by the amount of any outstanding loan balance. 2) Death Benefits, Annuitization and Surrenders: We deduct the outstanding loan balance from any amounts otherwise payable and in determining the amount available for annuitization. 3) Riders: a) Minimum Guaranteed Income Benefit ("MGIB") Rider. If you exercise the MGIB rider, we reduce the MGIB Base by an amount equal to the ratio of the outstanding loan balance to the contract value multiplied by the MGIB Base. b) Minimum Guaranteed Withdrawal Benefit ("MGWB") Rider. The portion of the contract value used to pay off the outstanding loan balance will reduce the MGWB Withdrawal Account. We do not recommend the MGWB rider if loans are contemplated. c) Minimum Guaranteed Accumulation Benefit ("MGAB") Rider. Generally, loan repayment periods should not extend into the 3-year period preceding the end of the Waiting Period, because transfers made within such 3-year period reduce the MGAB Base and the MGAB Charge Base pro rata based on the percentage of contract value transferred. Transfers between the TSA Special Fixed Account and the variable accounts will not be excluded from this treatment. TSAS -- DISTRIBUTIONS. All distributions from Section 403(b) plans are taxed as received unless either of the following are true: o The distribution is rolled over to another plan eligible to receive rollovers or to a traditional individual retirement annuity/account (IRA) in accordance with the Tax Code; or 52 o You made after-tax contributions to the plan. In this case, the amount will be taxed according to rules detailed in the Tax Code. Generally, you must begin receiving distributions by April 1 of the calendar year following the calendar year in which you attain age 70 1/2 or retire, whichever occurs later, unless: o You are a 5% owner, in which case such distributions must begin by April 1 of the calendar year following the calendar year in which you attain age 70 1/2;or o You had amounts under the contract as of December 31, 1986. In this case, distribution of these amounts generally must begin by the end of the calendar year in which you attain age 75 or retire, if later. However, if you take any distributions in excess of the minimum required amount, then special rules require that some or all of the December 31, 1986 balance be distributed earlier. TAX CONSEQUENCES OF ENHANCED DEATH BENEFIT THE CONTRACT INCLUDES AN ENHANCED DEATH BENEFIT THAT IN SOME CASES MAY EXCEED THE GREATER OF THE PREMIUM PAYMENTS OR THE CONTRACT VALUE. THE IRS HAS NOT RULED WHETHER AN ENHANCED DEATH BENEFIT COULD BE CHARACTERIZED AS AN INCIDENTAL BENEFIT, THE AMOUNT OF WHICH IS LIMITED IN ANY CODE SECTION 401(A) PENSION OR PROFIT-SHARING PLAN OR CODE SECTION 403(B) TAX-SHELTERED ANNUITY. EMPLOYERS USING THE CONTRACT MAY WANT TO CONSULT THEIR TAX ADVISER REGARDING SUCH LIMITATION. FURTHER, THE INTERNAL REVENUE SERVICE HAS NOT ADDRESSED IN A RULING OF GENERAL APPLICABILITY WHETHER A DEATH BENEFIT PROVISION SUCH AS THE ENHANCED DEATH BENEFIT PROVISION IN THE CONTRACT COMPORTS WITH IRA OR ROTH IRA QUALIFICATION REQUIREMENTS. A TAX ADVISOR SHOULD BE CONSULTED. OTHER TAX CONSEQUENCES As noted above, the foregoing comments about the federal tax consequences under the Contracts are not exhaustive, and special rules are provided with respect to other tax situations not discussed in this prospectus. Further, the federal income tax consequences discussed herein reflect our understanding of current law, and the law may change. Federal estate and state and local estate, inheritance and other tax consequences of ownership or receipt of distributions under a Contract depend on the individual circumstances of each contract owner or recipient of the distribution. A competent tax adviser should be consulted for further information. POSSIBLE CHANGES IN TAXATION Although the likelihood of legislative change is uncertain, there is always the possibility that the tax treatment of the Contracts could change by legislation or other means. It is also possible that any change could be retroactive (that is, effective before the date of the change). You should consult a tax adviser with respect to legislative developments and their effect on the Contract. 53 This page intentionally left blank. - -------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- TABLE OF CONTENTS ITEM Introduction Description of Golden American Life Insurance Company Safekeeping of Assets The Administrator Independent Auditors Distribution of Contracts Performance Information IRA Partial Withdrawal Option Other Information Financial Statements of Golden American Life Insurance Company Financial Statements of Separate Account B - -------------------------------------------------------------------------------- PLEASE TEAR OFF, COMPLETE AND RETURN THE FORM BELOW TO ORDER A FREE STATEMENT OF ADDITIONAL INFORMATION FOR THE CONTRACTS OFFERED UNDER THE PROSPECTUS. ADDRESS THE FORM TO OUR CUSTOMER SERVICE CENTER; THE ADDRESS IS SHOWN ON THE PROSPECTUS COVER. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - PLEASE SEND ME A FREE COPY OF THE STATEMENT OF ADDITIONAL INFORMATION FOR SEPARATE ACCOUNT B. Please Print or Type: -------------------------------------------------- NAME -------------------------------------------------- SOCIAL SECURITY NUMBER -------------------------------------------------- STREET ADDRESS -------------------------------------------------- CITY, STATE, ZIP SmartDesign Advantage-121820 05/01/2002 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 131 This page intentionally left blank. - -------------------------------------------------------------------------------- APPENDIX A - -------------------------------------------------------------------------------- DESCRIPTION OF UNDERLYING INVESTMENT OPTIONS - -------------------------------------------------------------------------------- THE INVESTMENT PORTFOLIOS - -------------------------------------------------------------------------------- During the accumulation phase, you may allocate your premium payments and contract value to any of the investment portfolios available under this Contract. They are listed in this Appendix. YOU BEAR THE ENTIRE INVESTMENT RISK FOR AMOUNTS YOU ALLOCATE TO ANY INVESTMENT PORTFOLIO, AND YOU MAY LOSE YOUR PRINCIPAL. PLEASE KEEP IN MIND THE INVESTMENT RESULTS OF THE INVESTMENT PORTFOLIOS ARE LIKELY TO DIFFER SIGNIFICANTLY AND THERE IS NO ASSURANCE THAT ANY PORTFOLIO WILL ACHIEVE ITS RESPECTIVE INVESTMENT OBJECTIVE. SHARES OF THE PORTFOLIOS WILL RISE AND FALL IN VALUE AND YOU COULD LOSE MONEY BY INVESTING IN THE PORTFOLIOS. SHARES OF THE PORTFOLIOS ARE NOT BANK DEPOSITS AND ARE NOT GUARANTEED, ENDORSED OR INSURED BY ANY FINANCIAL INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. EXCEPT AS NOTED, ALL FUNDS ARE DIVERSIFIED, AS DEFINED UNDER THE INVESTMENT COMPANY ACT OF 1940. CERTAIN FUNDS OFFERED UNDER THE CONTRACTS HAVE INVESTMENT OBJECTIVES AND POLICIES SIMILAR TO OTHER FUNDS MANAGED BY THE FUND'S INVESTMENT ADVISER. THE INVESTMENT RESULTS OF A FUND MAY BE HIGHER OR LOWER THAN THOSE OF OTHER FUNDS MANAGED BY THE SAME ADVISER. THERE IS NO ASSURANCE AND NO REPRESENTATION IS MADE THAT THE INVESTMENT RESULTS OF ANY FUND WILL BE COMPARABLE TO THOSE OF ANOTHER FUND MANAGED BY THE SAME INVESTMENT ADVISER. LIST OF FUND NAME CHANGES
- ---------------------------------------------------------------------------------------------------- CURRENT FUND NAME FORMER FUND NAME - ---------------------------------------------------------------------------------------------------- ING Variable Portfolios, Inc. - ING VP Index Plus Aetna Variable Portfolios, Inc. - Aetna Index Large Cap Portfolio (Class S Shares) Plus Large Cap VP (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Variable Portfolios, Inc. - ING VP Index Plus Aetna Variable Portfolios, Inc. - Aetna Index Mid Cap Portfolio (Class S Shares) Plus Mid Cap VP (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Variable Portfolios, Inc. - ING VP Index Plus Aetna Variable Portfolios, Inc. - Aetna Index Small Cap Portfolio (Class S Shares) Plus Small Cap VP (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Variable Portfolios, Inc. - ING VP Value Aetna Variable Portfolios, Inc. - Aetna Value Opportunity Portfolio (Class S Shares) Opportunity VP (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Variable Insurance Trust- ING VP Worldwide Pilgrim Variable Insurance Trust- Pilgrim VIT Growth Portfolio Worldwide Growth Portfolio - ---------------------------------------------------------------------------------------------------- ING Variable Products Trust- ING VP Convertible Pilgrim Variable Products Trust- Pilgrim VP Portfolio (Class S Shares) Convertible Portfolio (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Variable Products Trust- ING VP Large Company Pilgrim Variable Products Trust- Pilgrim VP Value Portfolio (Class S Shares) Growth and Income Portfolio (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Variable Products Trust- ING VP LargeCap Growth Pilgrim Variable Products Trust- Pilgrim VP Portfolio (Class S Shares) LargeCap Growth Portfolio (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Variable Products Trust- ING VP MagnaCap Pilgrim Variable Products Trust- Pilgrim VP Portfolio (Class S Shares) MagnaCap Portfolio (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Partners, Inc. - ING JP Morgan Mid Cap Value Portfolio Partners, Inc. - PPI JP Morgan Mid Portfolio (Class S Shares) Cap Value Portfolio (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Partners, Inc. - ING MFS Capital Opportunities Portfolio Partners, Inc. - PPI MFS Capital Portfolio Opportunities Portfolio - ---------------------------------------------------------------------------------------------------- ING Partners, Inc. - ING MFS Global Growth Portfolio Partners, Inc. - PPI MFS Global Portfolio (Class S Shares) Growth Portfolio (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING Partners, Inc. - ING Van Kampen Comstock Portfolio Partners, Inc. - PPI Van Kampen Portfolio (Class S Shares) Comstock Portfolio (Class S Shares) - ---------------------------------------------------------------------------------------------------- ING GET Fund (Class S) Aetna GET Fund (Class S) - ---------------------------------------------------------------------------------------------------- UBS Series Trust - UBS Tactical Allocation Portfolio Brinson Series Trust - Brinson Tactical Allocation Portfolio - ----------------------------------------------------------------------------------------------------
A1 - -------------------------------------------------------------------------------- INVESTMENT PORTFOLIO DESCRIPTION - -------------------------------------------------------------------------------- GCG TRUST Core Bond INVESTMENT OBJECTIVE Series Maximum total return, consistent with preservation of capital and prudent investment management PRINCIPAL STRATEGIES Under normal circumstances, invests at least 80% of its net assets (plus borrowings for investment purposes) in a diversified portfolio of fixed income instruments of varying maturities. The average portfolio duration of the Portfolio normally varies within a three- to six-year time frame based on the Portfolio Manager's forecast for interest rates. Invests primarily in investment-grade debt securities, but may invest up to 10% of its assets in high yield securities ("junk bonds") rated B or higher by Moody's or S&P or, if unrated, determined by the Portfolio Manager to be of comparable quality. May invest up to 20% of its assets in securities denominated in foreign currencies, and beyond this limit in U.S. dollar-denominated securities of foreign issuers, including Yankees and Euros. The Portfolio may also use foreign currency options and foreign currency forward contracts to increase exposure to foreign currency fluctuations. Normally hedges at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates. The Portfolio may engage in derivative transactions on securities in which it is permitted to invest, on securities indexes, interest rates and foreign currencies; may lend its portfolio securities to brokers, dealers and other financial institutions to earn income; and may seek without limitation to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls). The "total return" sought by the Portfolio consists of income earned on the Portfolio's investments, plus capital appreciation, if any, which generally arises from decreases in interest rates or improving credit fundamentals for a particular sector or security. PRINCIPAL RISKS Principal risks include Manager Risk, Market and Company Risk, Interest Rate Risk, Issuer Risk, Credit Risk, Foreign Investment Risk, Currency Risk, Derivative Risk, Liquidity Risk, Mortgage Risk, and Leveraging Risk. MANAGER RISK refers to the risk that a portfolio manager of a portfolio may do a mediocre or poor job in selecting securities. MARKET AND COMPANY RISK refers to the risk that the price of a security held by a portfolio may fall due to changing economic, political or market conditions or disappointing earnings results. INTEREST RATE RISK refers to the risk that fixed income securities could lose value because of interest rate changes. ISSUER RISK refers to the risk that the value of a security may decline for a number of reasons which are directly related to the issuer, such as management performance, financial leverage and reduced demand for the issuer's goods and services. CREDIT RISK refers to the risk that the issuer of debt obligations may be unable to make principal and interest payments when they become due. FOREIGN INVESTMENT RISK refers to the risk that foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, possible security illiquidity, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositaries than those in the United States, foreign controls on investments, and higher transaction costs. CURRENCY RISK refers to the risk that changes in currency exchange rates may affect foreign securities held by the portfolio and may reduce the returns of the portfolio. DERIVATIVE RISK refers to the risk that derivative instruments involve risks different from direct investments in underlying securities, including imperfect correlation between the value of the instruments and the underlying assets; risks of default by the other party to certain transactions; risks that the transactions may result in losses that partially or completely offset gains in portfolio positions; and risks that the transactions may not be liquid. LIQUIDITY RISK refers to the risk that investments in illiquid securities may reduce the portfolio's returns because it may be unable to sell the illiquid securities at an advantageous time or price. MORTGAGE RISK refers to the risk that rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. In addition, mortgage-related securities are subject to prepayment risk, which may require a A2 portfolio to reinvest that money at lower prevailing interest rates, thus reducing the portfolio's returns. LEVERAGING RISK refers to the risk that that the use of leverage may cause a portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. INVESTMENT MANAGER: Directed Services, Inc. PORTFOLIO MANAGER: Pacific Investment Management Company LLC International INVESTMENT OBJECTIVE Enhanced Total return from long-term capital growth and income EAFE Series PRINCIPAL STRATEGIES Under normal conditions, invests at least 80% of its total assets in a broad portfolio of equity securities of established foreign companies of various sizes, including foreign subsidiaries of U.S. companies, based in countries represented in the Morgan Stanley Capital International, Europe, Australia and Far East Index (the "EAFE Index"). The EAFE Index is a widely recognized benchmark of the world's stock markets (excluding the United States). Equity securities include common stocks, preferred stocks, securities that are convertible into common stocks and warrants to purchase common stocks. These investments may take the form of depositary receipts. Investment process emphasizes stock selection as the primary source of returns. Emphasis is on `bottom-up' security selection driven by fundamental research and analysis and extensive direct contact with company management. The Portfolio Manager, completes the process by using disciplined portfolio construction and formal risk control techniques to build a portfolio that reflects its stock selection ideas, while also seeking to manage risk relative to the EAFE Index. The Portfolio Manager will seek to diversify the Portfolio by investing in at least three issuers in several countries other than the United States, but may invest a substantial part of its assets in just one country. The Portfolio may invest in securities denominated in U.S. dollars, major reserve currencies and currencies of other countries in which it can invest. Although the Portfolio invests primarily in equities of companies based in countries that are represented in the EAFE Index, it may also invest up to 20% of its assets in other types of securities, including companies or governments in developing countries; investment grade debt securities rated of Baa or higher by Moody's Investors Service, Inc.("Moody's"), BBB or higher by Standard & Poor's Corporation ("S&P") or the equivalent by another national rating organization or unrated securities of comparable quality; debt securities denominated in currencies other than U.S. dollar or issued by a single foreign government or international organization, such as the World Bank; high-quality money market instruments and repurchase agreements. To temporarily defend its assets, the Portfolio may invest any amount of its assets in high-quality money market instruments and repurchase agreements. Where capital markets in certain countries are either less developed or not easy to access, the Portfolio may invest in these countries by investing in closed-end investment companies that are authorized to invest in those countries. The Portfolio may invest in derivatives to hedge various market risks or to increase the Portfolio's income or gain. The Portfolio is not diversified and may invest a greater percentage of its assets in a particular issuer or group of issuers than a diversified fund would. The Portfolio may change any of these investment policies (including its investment objective) without shareholder approval. PRINCIPAL RISKS Principal risks include Manager Risk, Market and Company Risk, Foreign Investment Risk, Emerging Market Risk, Small Company Risk, Unsponsored Depositary Receipts Risk, Convertible and Fixed Income Securities Risk, Closed-End Investment Company Risk, Derivative Risk, Defensive Investing Risk and Diversification Risk. MANAGER RISK refers to the risk that a portfolio manager of a portfolio may do a mediocre or poor job in selecting securities. MARKET AND COMPANY RISK refers to the risk that the price of a security held by a portfolio may fall due to changing economic, political or market conditions or disappointing earnings results. FOREIGN INVESTMENT RISK refers to the risk that foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, possible security illiquidity, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositaries than those in the United States, foreign controls on investments, and higher transaction costs. EMERGING MARKET RISK refers to the risk that investing in emerging market countries present risks in a greater degree than, and in addition to A3 investing in foreign issuers in general. SMALL COMPANY RISK refers to the risk that small companies may be more susceptible to price swings than larger companies because they have fewer financial resources, and limited product and market diversification. UNSPONSORED DEPOSITARY RECEIPTS RISK refers to the risk that unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. CONVERTIBLE AND FIXED INCOME SECURITIES RISK refers to the risk that the market value of convertible securities and fixed income securities tends to decline as interest rates increase and increase as interest rates decline. Such a drop could be worse if the portfolio invests a larger portion of its assets in debt securities with longer maturities. The value of convertible securities also tends to change whenever the market value of the underlying common or preferred stock fluctuates. Securities that are rated Baa by Moody's or BBB by S&P may have fewer protective provisions than higher rated securities. The issuer may have trouble making principal and interest payments when difficult economic conditions exist. CLOSED-END INVESTMENT COMPANY RISK refers to the risk that investments in closed-end investment companies may entail added expenses such as additional management fees and trading costs. DERIVATIVE RISK refers to the risk that derivative instruments involve risks different from direct investments in underlying securities, including imperfect correlation between the value of the instruments and the underlying assets; risks of default by the other party to certain transactions; risks that the transactions may result in losses that partially or completely offset gains in portfolio positions; and risks that the transactions may not be liquid. DEFENSIVE INVESTING RISK refers to the risk that investing a substantial portion of its assets in money market instruments, repurchase agreements and U.S. government debt, including where the portfolio is investing for temporary defensive purposes, could reduce the portfolio's potential returns. DIVERSIFICATION RISK refers to the risk that a non-diversified portfolio will be more volatile than a diversified portfolio because it invests its assets in a smaller number of issuers, and the gains or losses on a single security or issuer will have a greater impact on the non-diversified fund's net asset value. INVESTMENT MANAGER: Directed Services, Inc. PORTFOLIO MANAGER: J.P. Morgan Fleming Asset Management (London) Limited J.P. Morgan INVESTMENT OBJECTIVE Fleming Small Capital growth over the long term Cap Equity Series PRINCIPAL STRATEGIES Under normal market conditions, invests at least 80% of its total assets in equity securities of small-cap companies with market capitalization equal to those within a universe of Standard & Poor's SmallCap 600 Index stocks. Focuses on companies with high quality management; a leading or dominant position in a major product line, new or innovative products, services or processes; a strong financial position; and a relatively high rate of return of invested capital available for financing future growth without borrowing extensively from outside sources. The Portfolio Manager uses a disciplined stock selection process, which focuses on identifying attractively valued companies with positive business fundamentals. The Portfolio combines growth and value investing. The Portfolio may invest up to 20% of its total assets in: foreign securities, including depositary receipts; convertible securities, which generally pay interest or dividends and which can be converted into common or preferred stock; and high-quality money market instruments and repurchase agreements. The Portfolio may invest in real estate investment trusts ("REITs"), which are pools of investments consisting primarily of income-producing real estate or loans related to real estate; and in derivatives to hedge various market risks or to increase the Portfolio's income or gain. The Portfolio may change any of these investment policies (including its investment objective) without shareholder approval. PRINCIPAL RISKS Principal risks include Manager Risk, Market and Company Risk, Small Company Risk, Foreign Investment Risk, Unsponsored Depository Risk, Convertible Securities Risk, REIT Risk, Derivative Risk, and Defensive Investing Risk. MANAGER RISK refers to the risk that a portfolio manager of a portfolio may do a mediocre or poor job in selecting securities. MARKET AND COMPANY RISK refers to the risk that the price of a security held by a portfolio may fall due to changing economic, political or market conditions or A4 disappointing earnings results. SMALL COMPANY RISK refers to the risk that small companies may be more susceptible to price swings than larger companies because they have fewer financial resources, and limited product and market diversification. FOREIGN INVESTMENT RISK refers to the risk that foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, possible security illiquidity, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositaries than those in the United States, foreign controls on investments, and higher transaction costs. These risks increase when investing in issuers located in developing countries. UNSPONSORED DEPOSITARY RECEIPTS RISK refers to the risk that unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. CONVERTIBLE SECURITIES RISK refers to the risk that the market value of convertible securities tends to decline as interest rates increase and increase as interest rates decline, and their value also tends to change whenever the market value of the underlying common or preferred stock fluctuates. REIT RISK refers to the risk that the value of REITs will depend on the value of the underlying properties or underlying loans; REITS may decline when interest rates rise; the value of a REIT will also be affected by the real estate market and by management of the REIT's underlying properties; and REITs may be more volatile or illliquid than other types of securities. DERIVATIVE RISK refers to the risk that derivative instruments involve risks different from direct investments in underlying securities, including imperfect correlation between the value of the instruments and the underlying assets; risks of default by the other party to certain transactions; risks that the transactions may result in losses that partially or completely offset gains in portfolio positions; and risks that the transactions may not be liquid. DEFENSIVE INVESTING RISK refers to the risk that investing a substantial portion of its assets in money market instruments, repurchase agreements and U.S. government debt, including when investing for temporary defensive purposes, could reduce the portfolio's returns. INVESTMENT MANAGER: Directed Services, Inc. PORTFOLIO MANAGER: J.P. Morgan Fleming Asset Management (USA) Inc. Janus Growth INVESTMENT OBJECTIVE and Income Long-term capital growth and current income Series PRINCIPAL STRATEGIES Normally emphasizes investments in common stocks. Normally invests up to 75% of its assets in equity securities selected primarily for their growth potential, and at least 25% of its assets in securities believed to have income potential. Because of this investment strategy, the Portfolio is not designed for investors who need consistent income. The Portfolio Manager shifts assets between the growth and income components of the Portfolio based on the its analysis of relevant market, financial and economic conditions. If the Portfolio Manager believes that growth securities will provide better returns than the yields available or expected on income-producing securities, the Portfolio will place a greater emphasis on the growth component. The growth component of the Portfolio is expected to consist primarily of common stocks, but may also include warrants, preferred stocks or convertible securities selected primarily for their growth potential. The income component of the Portfolio will consist of securities that the Portfolio Manager believes have income potential, including equity securities, convertible securities and all types of debt securities. Equity securities may be included in the income component of the Portfolio if they currently pay dividends or the Portfolio Manager believes they have the potential for either increasing their dividends or commencing dividends, if none are currently paid. The Portfolio may also invest in debt securities; without limit in foreign equity and debt securities (either indirectly through depositary receipts or directly in foreign markets); high-yield bonds (up to 35%) of any quality; index/structured securities; options, futures, forwards, swaps and other types of derivatives for hedging purposes or for non-hedging purposes such as seeking to enhance return; securities purchased on a when-issued, delayed delivery or forward commitment basis; illiquid investments (up to 15%); special situation companies; and in cash or similar investments when market conditions are unfavorable. Portfolio turnover rates are generally not a factor in making buy and sell decisions. PRINCIPAL RISKS Principal risks include Manager Risk, Market and Company Risk, Income Risk, Interest Rate A5 Risk, Credit Risk, Maturity Risk, Growth Investing Risk, Foreign Investment Risk, High Yield Bond Risk, and Special Situations Risk. MANAGER RISK refers to the risk that a portfolio manager of a portfolio may do a mediocre or poor job in selecting securities. MARKET AND COMPANY RISK refers to the risk that the price of a security held by a portfolio may fall due to changing economic, political or market conditions or disappointing earnings results. INCOME RISK relates to the risk that a portfolio's income may fall due to falling interest rates. Income risk is greatest for short-term bonds and the least for long-term bonds. INTEREST RATE RISK refers to the risk that fixed income securities could lose value because of interest rate changes. CREDIT RISK refers to the risk that the issuer of debt obligations may be unable to make principal and interest payments when they become due. MATURITY RISK refers to the risk that the average maturity of a portfolio's fixed income investments will affect the volatility of the portfolio's share price. Fixed income securities with longer maturities will be more volatile than fixed income securities with shorter maturities. GROWTH INVESTING RISK refers to the risk that growth stocks may be more volatile than other stocks because they are more sensitive to investor perceptions of the issuing company's growth potential. FOREIGN INVESTMENT RISK refers to the risk that foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, possible security illiquidity, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositaries than those in the United States, foreign controls on investments, and higher transaction costs. To the extent that the portfolio invests more than 25% of its total assets in one geographic region or country, the portfolio may be more sensitive to economic and other factors in that geographic region or country than a more diversified fund. HIGH YIELD BOND RISK refers to the risk that high yield bonds (commonly referred to as "junk bonds") generally provide greater income and increased opportunity for capital appreciation than investments in higher quality debt securities, but they also typically have greater potential volatility and principal and income risk. SPECIAL SITUATIONS RISK refers to the risk that investments in special situations companies may not appreciate if an anticipated development does not occur or does not attract anticipated attention. An investment in the Portfolio may also be subject to the following additional non-principal risks which are described in detail in the prospectus: Derivative Risk, Sector Risk, Small Company Risk, and Call Risk. INVESTMENT MANAGER: Directed Services, Inc. PORTFOLIO MANAGER: Janus Capital Management LLC A6 Liquid Asset INVESTMENT OBJECTIVE Series High level of current income consistent with the preservation of capital and liquidity PRINCIPAL STRATEGIES The Portfolio Manager strives to maintain a stable $1 per share net asset value and its investment strategy focuses on safety of principal, liquidity and yield, in order of importance, to achieve this goal. At least 95% of the Portfolio's investments must be rated in the highest short-term ratings category (or determined to be of comparable quality by the Portfolio Manager) and the Portfolio Manager must make an independent determination that each investment represents minimal credit risk to the Portfolio. The average maturity of the Portfolio's securities may not exceed 90 days and the maturity of any individual security may not exceed 397 days. At the time of purchase, no more than 5% of total assets may be invested in the securities of a single issuer. In addition, no more than 10% of total assets may be subject to demand features or guarantees from a single institution. The 10% demand feature and guarantee restriction is applicable to 75% of total assets subject to certain exceptions. The Portfolio may invest in U.S. dollar-denominated money market instruments. PRINCIPAL RISKS Principal risks include Manager Risk, Income Risk, Interest Rate Risk, and Credit Risk. MANAGER RISK refers to the risk that a portfolio manager of a portfolio may do a mediocre or poor job in selecting securities. INCOME RISK relates to the risk that a portfolio's income may fall due to falling interest rates. Income risk is greatest for short-term bonds and the least for long-term bonds. INTEREST RATE RISK refers to the risk that fixed income securities could lose value because of interest rate changes. CREDIT RISK refers to the risk that the issuer of debt obligations may be unable to make principal and interest payments when they become due. AN INVESTMENT IN THE LIQUID ASSET PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE PORTFOLIO SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIO, AND THE PORTFOLIO MANAGER CANNOT ASSURE THAT THE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE. INVESTMENT MANAGER Directed Services, Inc. PORTFOLIO MANAGER ING Investment Management LLC Research INVESTMENT OBJECTIVE Series Long-term growth of capital and future income PRINCIPAL STRATEGIES Normally invests at least 80% of its net assets in common stocks and related securities (such as preferred stocks, convertible securities and depositary receipts). Focus is on companies believed to have favorable prospects for long-term growth, attractive valuations based on current and expected earnings or cash flow, dominant or growing market share and superior management. The Portfolio may invest in companies of any size, and its investments may include securities traded on securities exchanges or in the over-the-counter markets. The Portfolio may invest in foreign equity securities (including emerging market securities), and may have exposure to foreign currencies through its investment in these securities, its direct holdings of foreign currencies or through its use of foreign currency exchange contracts for the purchase or sale of a fixed quantity of foreign currency at a future date. The Portfolio may engage in active and frequent trading to achieve its principal investment stategies, which increases transaction costs and could detract from the Portfolio's performance. PRINCIPAL RISKS Principal risks include Manager Risk, Market and Company Risk, OTC Investment Risk and Foreign Investment Risk, High Yield Bond Risk and Frequent Trading Risk. MANAGER RISK refers to the risk that a portfolio manager of a portfolio may do a mediocre or poor job in selecting securities. MARKET AND COMPANY RISK refers to the risk that the price of a security held by a portfolio may fall due to changing economic, political or market conditions or A7 disappointing earnings results. OTC INVESTMENT RISK refers to the risk that over-the-counter ("OTC") securities are generally securities of companies that are smaller or newer than securities listed on the New York Stock or American Stock Exchanges and may involve greater risk. FOREIGN INVESTMENT RISK refers to the risk that foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, possible security illiquidity, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositaries than those in the United States, foreign controls on investments, and higher transaction costs. HIGH YIELD BOND RISK refers to the risk that high yield bonds (commonly referred to as "junk bonds") generally provide greater income and increased opportunity for capital appreciation than investments in higher quality debt securities, but they also typically have greater potential volatility and principal and income risk. FREQUENT TRADING RISK refers to the risk that active and frequent trading increases transactions costs, which detract from performance. INVESTMENT MANAGER: Directed Services, Inc. PORTFOLIO MANAGER: Massachusetts Financial Services Company Total Return INVESTMENT OBJECTIVE Series Above-average income (compared to a portfolio entirely invested in equity securities) consistent with the prudent employment of capital. A secondary objective is the reasonable opportunity for growth of capital and income. PRINCIPAL STRATEGIES The Portfolio is a "balanced fund" that invests in a combination of equity and fixed income securities. Under normal market conditions, the Portfolio invests at least 40%, but not more than 75%, of its assets in common stocks and related securities (referred to as equity securities), such as preferred stock, bonds, warrants or rights convertible into stock, and depositary receipts for those securities; and at least 25%, but not more than 60%, of its net assets in non-convertible fixed income securities. The Portfolio may vary the percentage of its assets invested in any one type of security (within the limits described above) based on the Portfolio Manager's interpretation of economic and money market conditions, fiscal and monetary policy and underlying security values. Portfolio Manager uses fundamental analysis to select equity securities believed to be undervalued. The Portfolio may invest up to 20% of its assets in foreign securities, including securities of companies in emerging or developing markets, up to 20% of its assets in lower rated nonconvertible fixed income securities and comparable unrated securities; and may invest with no limitation in mortgage pass-through securities and American Depositary Receipts. The Portfolio may engage in active and frequent trading to achieve its principal investment strategies, which increases transaction costs and could detract from the Portfolio's performance. PRINCIPAL RISKS Principal risks include Manager Risk, Market and Company Risk, Income Risk, Interest Rate Risk, Credit Risk, Call Risk, Allocation Risk, Convertible Securities Risk, , Undervalued Securities Risk, High Yield Bond Risk, Foreign Investment Risk, Maturity Risk and Liquidity Risk. MANAGER RISK refers to the risk that a portfolio manager of a portfolio may do a mediocre or poor job in selecting securities. MARKET AND COMPANY RISK refers to the risk that the price of a security held by a portfolio may fall due to changing economic, political or market conditions or disappointing earnings results. INCOME RISK relates to the risk that a portfolio's income may fall due to falling interest rates. Income risk is greatest for short-term bonds and the least for long-term bonds. INTEREST RATE RISK refers to the risk that fixed income securities could lose value because of interest rate changes. CREDIT RISK refers to the risk that the issuer of debt obligations may be unable to make principal and interest payments when they become due. CALL RISK refers to the risk that, during periods of falling interest rates, a bond issuer may "call" or repay, its high yielding bond before the bond's maturity date. Forced to invest the proceeds at lower interest rates, a portfolio would experience a decline in income. ALLOCATION RISK refers to the risk that a portfolio could miss attractive investment opportunities by underweighting markets where there are significant returns, and could lose value by overweighting markets where there are significant declines. CONVERTIBLE SECURITIES RISK refers to the risk that the market value of convertible securities tends to decline as interest rates increase and increase as interest rates decline, and their value also tends to change whenever the market value of the underlying common or preferred stock fluctuates. UNDERVALUED SECURITIES RISK refers to the A8 risk that the market value of an undervalued security may not rise, or may fall, if certain anticipated events do not occur or if investor perceptions about the security do not improve. HIGH YIELD BOND RISK refers to the risk that high yield bonds (commonly referred to as "junk bonds") generally provide greater income and increased opportunity for capital appreciation than investments in higher quality debt securities, but also typically have greater potential volatility and principal and income risk. FOREIGN INVESTMENT RISK refers to the risk that foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, possible security illiquidity, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositaries than those in the United States, foreign controls on investments, and higher transaction costs. MATURITY RISK refers to the risk that the average maturity of a portfolio's fixed income investments will affect the volatility of the portfolio's share price. LIQUIDITY RISK refers to the risk that investments in illiquid securities may reduce the portfolio's returns because it may be unable to sell the illiquid securities at an advantageous time or price. INVESTMENT MANAGER: Directed Services, Inc. PORTFOLIO MANAGER: Massachusetts Financial Services Company Value Equity INVESTMENT OBJECTIVE Series Seeks capital appreciation. Dividend income is a secondary objective. PRINCIPAL STRATEGIES Normally invests at least 80% of its assets in equity securities of domestic and foreign issuers that meet quantitative standards relating to financial soundness and high intrinsic value relative to price. The Portfolio Manager screens equity securities for key variables and performs in-depth fundamental research to identify possible value opportunities and securities that are trading at significant discounts to intrinsic value. PRINCIPAL RISKS Principal risks include Manager Risk, Market and Company Risk, Value Investing Risk, and Foreign Investment Risk. MANAGER RISK refers to the risk that a portfolio manager of a portfolio may do a mediocre or poor job in selecting securities. MARKET AND COMPANY RISK refers to the risk that the price of a security held by a portfolio may fall due to changing economic, political or market conditions or disappointing earnings results. VALUE INVESTING RISK refers to the risk that undervalued stocks may not realize their perceived value for extended periods of time. Value stocks may respond differently to market and other developments than other types of stocks, and typically underperform when other investing styles, such as growth investing, are in favor. FOREIGN INVESTMENT RISK refers to the risk that foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, possible security illiquidity, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositaries than those in the United States, foreign controls on investments, and higher transaction costs. INVESTMENT MANAGER: Directed Services, Inc. PORTFOLIO MANAGER: Eagle Asset Management, Inc. AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent INVESTMENT OBJECTIVE Demographic Seeks long-term growth of capital. Trends Fund PRINCIPAL STRATEGIES (Series II Seeks to meet its objective by investing in securities of Shares) companies that are likely to benefit from changing demographic, economic and lifestyle trends. These securities may include common stocks, convertible bonds, convertible preferred stocks and warrants of companies within a broad range of market capitalizations. May also invest up to 25% of its total assets in foreign securities. Portfolio managers purchase securities of companies that have experienced, or that they believe A9 have the potential for, above-average, long-term growth in revenues and earnings and consider whether to sell a particular security when they believe the security no longer has that potential. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. PRINCIPAL RISKS Prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more-established companies, it may be difficult or impossible for the fund to sell securities at a desirable price. Values of the convertible securities in which the fund may invest also will be affected by market interest rates, the risk that the issuer may default on interest or principal payments and the value of the underlying common stock into which these securities may be converted. Specifically, since these types of convertible securities pay fixed interest and dividends, their values may fall if market interest rates rise and rise if market interest rates fall. Additionally, an issuer may have the right to buy back certain of the convertible securities at a time and at a price that is unfavorable to the fund. Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, the relative lack of information about these companies, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. INVESTMENT ADVISER: A I M Advisors, Inc. SUBADVISER: H.S. Dent Advisors, Inc. AIM V.I. INVESTMENT OBJECTIVE Growth Fund Seeks growth of capital. (Series II PRINCIPAL STRATEGIES Shares) Seeks to meet its investment objective by investing principally in seasoned and better capitalized companies considered to have strong earnings momentum. May invest up to 25% of its assets in foreign securities. Portfolio managers focus on companies that have experienced above-average growth in earnings and have excellent prospects for future growth and consider whether to sell a particular security when any of those factors materially changes. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. May engage in active and frequent trading of portfolio securities to achieve its investment objective which may result in increased transaction costs and brokerage commissions, both of which can lower the actual return on investment. PRINCIPAL RISKS Prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Prices of foreign securities may be further affected by other factors, including currency exchange rates, political and economic conditions, regulations, and markets. These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. Transaction costs are often higher in developing countries and there may be delays in settlement procedures. INVESTMENT ADVISER: A I M Advisors, Inc. A10 ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. Alliance- INVESTMENT OBJECTIVE Bernstein Seeks long-term growth of capital. Value Portfolio PRINCIPAL STRATEGIES Invests primarily in a diversified portfolio of equity securities (Class B of companies with relatively large market capitalizations that Shares) Alliance (the Portfolio's investment adviser) believes are undervalued. Investment policies emphasize investment in companies that are determined by Alliance to be undervalued, using the fundamental value approach of Alliance's Bernstein unit. In selecting securities for the Portfolio's portfolio, Bernstein uses its fundamental research to identify companies whose long term earnings power and dividend paying capability are not reflected in the current market price of their securities. The Portfolio may also invest up to 15% of total assets in foreign securities. PRINCIPAL RISKS Among the principal risks of investing in the Portfolio is market risk. To the extent the Portfolio invests in foreign securities, it may have foreign risk and currency risk. Market risk is the risk that the value of the Portfolio's investments will fluctuate as the stock or bond markets fluctuate and that prices overall will decline over shorter or longer-term periods. Foreign risk is the risk of investments in issuers located in foreign countries. Investments in foreign securities may experience more rapid and extreme changes in value than investments in securities of U.S. companies. This is because securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Additionally foreign securities issuers are not usually subject to the same degree of regulation as U.S. issuers. Reporting, accounting, and auditing standards of foreign countries differ, in some cases significantly, from U.S. standards. Also, nationalization, expropriation or confiscatory taxation, currency blockage, political changes, or diplomatic developments could adversely affect the Portfolio's investments in a foreign country. In the event of nationalization, expropriation, or other confiscation, the Portfolio could lose its entire investment. Currency risk is the risk that fluctuations in the exchange rates between the U.S. Dollar and foreign currencies may negatively affect the value of the Portfolio's investments. INVESTMENT ADVISER: Alliance Capital Management L.P. Alliance INVESTMENT OBJECTIVE Growth and Portfolio Seeks reasonable current income and reasonable Income opportunity for appreciation through investments primarily in dividend-paying common stocks of good quality. (Class B Shares) PRINCIPAL STRATEGIES Invests primarily in dividend-paying common stocks of large, well-established "blue chip" companies. Also may invest in fixed-income and convertible securities and in securities of foreign issuers. Restricts its investments in foreign securities to issues of high quality. PRINCIPAL RISKS Principal risks include market risk, interest rate risk, and credit risk. Market risk is the risk that the value of the portfolio's investments will fluctuate as the stock or bond markets fluctuate and that prices overall will decline over shorter or longer-term periods. Interest rate risk is the risk that changes in interest rates will affect the value of the portfolio's investments in debt securities, such as bonds, notes and asset-backed securities, or other income-producing securities. Increases in interest rates may cause the value of a portfolio's investments to decline. Credit risk is the risk that the issuer or the guarantor of a debt security, or the counterparty to a derivatives contract, will be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. Investment in foreign securities are subject to increased credit risk because of the difficulties of requiring foreign entities to honor their contractual commitments, and because a number of foreign governments and other issuers are already in default. Investments in foreign securities have foreign risk and currency risk. Foreign risk includes the risk that investments in foreign securities may experience more rapid and extreme changes in value than if they invested A11 solely in securities of U.S. companies. Foreign companies usually are not subject to the same degree of regulation as U.S. companies due to different standards; and the risk that political changes or diplomatic developments could adversely affect the portfolio's investments in a foreign country. Currency risk is the risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the portfolio's investments. INVESTMENT ADVISER: Alliance Capital Management L.P. Alliance INVESTMENT OBJECTIVE Premier Seeks growth of capital by pursuing aggressive investment Growth policies. Portfolio PRINCIPAL STRATEGIES (Class B Invests primarily in equity securities of a limited number of Shares) large, carefully selected, high-quality U.S. companies that are judged likely to achieve superior earnings growth. Normally invests at least 80% of total assets in equity securities of U.S. companies and up to 20% of assets in non-U.S. companies. Normally, about 40-60 companies will be represented in the Portfolio, with the 25 most highly regarded of these companies usually constituting approximately 70% of the Portfolio's net assets. Focuses on a relatively small number of intensively researched companies. The Portfolio's investments are selected from a research universe of more than 500 companies that have strong management, superior industry positions, excellent balance sheets, and superior earnings growth prospects. May invest up to 20% of its net assets in convertible securities. PRINCIPAL RISKS Among the principal risks of investing in the portfolio are market risk and focused portfolio risk. Market risk is the risk that the value of the portfolio's investments will fluctuate as the stock or bond markets fluctuate and that prices overall will decline over short or long term periods. Focused portfolio risk is the risk that because the portfolio invests in a smaller number of issuers than many other equity funds, factors affecting those issuers can have a more significant effect on the portfolio's net asset value. The Portfolio's investments in foreign securities have foreign risk and currency risk. Foreign risk includes the risk that investments in foreign securities may experience more rapid and extreme changes in value than if they invested solely in securities of U.S. companies. Foreign companies usually are not subject to the same degree of regulation as U.S. companies due to differing reporting, accounting, and auditing standards; and the risk that political changes or diplomatic developments could adversely affect the Portfolio's investments in a foreign country. Currency risk is the risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the Portfolio's investments. INVESTMENT ADVISER: Alliance Capital Management L.P. FIDELITY VARIABLE INSURANCE PRODUCTS FUND Fidelity VIP PRINCIPAL STRATEGIES Contrafund(R) Portfolio INVESTMENT OBJECTIVE Seeks long-term capital appreciation. (Service Class 2) PRINCIPAL STRATEGIES Normally invests primarily in common stocks of companies whose value the Portfolio's investment adviser believes is not fully recognized by the public. May invest in securities of both domestic and foreign issuers. Invests in either "growth" stocks or "value" stocks or both. Uses fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. PRINCIPAL RISKS Subject to the following principal investment risks: stock market volatility, foreign exposure, and issuer-specific changes. Stock market volatility refers to the risk that stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments. Different parts of the market can react differently to these developments. Foreign exposure refers to the risk that foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market or economic developments A12 and can perform differently from the U.S. market. Issuer-specific changes refer to the risk that the value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. INVESTMENT ADVISER: Fidelity Management & Research Company SUBADVISERS: Fidelity Management & Research (U.K.) Inc.; Fidelity Management & Research (Far East) Inc.; Fidelity Investments Japan Limited; FMR Co., Inc. Fidelity VIP INVESTMENT OBJECTIVE Equity-Income Seeks reasonable income. Also considers the potential for capital Portfolio appreciation. Seeks to achieve a yield which exceeds the composite yield on the securities comprising the Standard & (Service Poor's 500 Index. Class 2) PRINCIPAL STRATEGIES Normally invests at least 80% of total assets in income-producing equity securities, which tends to lead to investments in large cap "value" stocks. May also invest in other types of equity securities and debt securities, including lower-quality debt securities. May invest in securities of both domestic and foreign issuers. Uses fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. PRINCIPAL RISKS Subject to the following principal investment risks: stock market volatility, interest rate changes, foreign exposure, issuer-specific changes, and "value" investing. Stock market volatility refers to the risk that stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments. Different parts of the market can react differently to these developments. Interest rate changes refers to the risk that interest rate increases can cause the price of a debt security to decrease. Foreign exposure refers to the risk that foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market or economic developments and can perform differently from the U.S. market. Issuer-specific changes refers to the risk that the value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. Lower-quality debt securities (those of less than investment-grade quality) can be more volatile due to increased sensitivity to adverse issuer, political, regulatory, market or economic developments. "Value" investing refers to the risk that "value" stocks can perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time. INVESTMENT ADVISER: Fidelity Management & Research Company SUBADVISER: FMR Co., Inc. Fidelity VIP INVESTMENT OBJECTIVE Growth Seeks to achieve capital appreciation. Portfolio PRINCIPAL STRATEGIES (Service Normally invests primarily in common stocks of companies the Class 2) investment adviser believes have above-average growth potential (often called "growth" stocks). May invest in securities of both domestic and foreign issuers. Uses fundamental analysis of each issuer's financial condition and industry position and market and economic conditions to select investments. PRINCIPAL RISKS Subject to the following principal investment risks: stock market volatility, foreign exposure, issuer-specific changes, and "growth" investing. Stock market volatility refers to the risk that stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments. Different parts of the market can react differently to these developments. Foreign exposure refers to the risk that foreign markets can be more volatile than the U.S. market due to increased risks of adverse issuer, political, regulatory, market or economic developments and can perform differently from the U.S. market. Issuer-specific changes refers to the risk that the value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. "Growth" investing refers to the risk that "growth" stocks can perform differently from the market as a whole and other types of stocks and can be more volatile than A13 other types of stocks. INVESTMENT ADVISER: Fidelity Management & Research Company SUBADVISER: FMR Co., Inc. ING GET FUND ING GET Fund INVESTMENT OBJECTIVE The Series seeks to achieve maximum total return without compromising a minimum targeted return (Targeted Return) by participating in favorable equity market performance during the Guarantee Period. PRINCIPAL STRATEGIES The Series allocates its assets among the following asset classes: o During the Offering Period, the Series' assets will be invested in short-term instruments. o During the Guarantee Period, the Series' assets will be allocated between the: o EQUITY COMPONENT - consisting of common stocks included in the Standard and Poor's 500 Index (S&P 500) and futures contracts on the S&P 500; and the o FIXED COMPONENT - consisting primarily of short- to intermediate-duration U.S. Government securities. The minimum TARGETED RETURN is 1.5% per year over the Guarantee Period. The minimum Targeted Return is set by the Fund's Board of Trustees (Board) and takes into consideration the Series' total annual expenses as well as insurance company separate account expenses assessed to contract holders and participants acquiring interests in the Fund through separate accounts. There is no assurance that the Fund will achieve the Targeted Return. THE GUARANTEE PROMISES INVESTORS ONLY A RETURN OF THE AMOUNT INVESTED IN THE SERIES THROUGH THE SEPARATE ACCOUNT (LESS CERTAIN CHARGES). THE GUARANTEE DOES NOT PROMISE THAT INVESTORS WILL EARN THE TARGETED RETURN. PRINCIPAL RISKS The principal risks of investing in the Series are those generally attributable to stock and bond investing. The success of the Series' strategy depends on Aeltus' skill in allocating assets between the Equity Component and the Fixed Component and in selecting investments within each Component. Because the Series invests in both stocks and bonds, the Series may underperform stock funds when stocks are in favor and underperform bond funds when bonds are in favor. The risks associated with investing in STOCKS include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. The performance of the Equity Component also depends significantly on Aeltus' skill in determining which securities to overweight, underweight or avoid altogether. The principal risk associated with investing in BONDS is that interest rates may rise, which generally causes bond prices to fall. The market prices of STRIPS generally are more volatile than the market prices of other fixed income securities with similar maturities that pay interest periodically. With corporate bonds, there is a risk that the issuer will default on the payment of principal or interest. The asset allocation process results in additional transaction costs such as brokerage commissions. This process can have an adverse effect on the performance of the Series during periods of increased equity market volatility. If at the inception of, or any time during, the Guarantee Period interest rates are low, the Series' assets may be largely invested in the Fixed Component in order to increase the likelihood of achieving the Targeted Return at the Maturity Date. The effect of low interest rates on the Series would likely be more pronounced at the inception of the Guarantee Period, as the initial allocation A14 of assets would include more fixed income securities. In addition, if during the Guarantee Period the equity markets experienced a major decline, the Series' assets may become largely invested in the Fixed Component in order to increase the likelihood of achieving the Targeted Return at the Maturity Date. In fact, if the value of the Equity Component were to decline by 30% in a single day, a complete reallocation to the Fixed Component would likely occur to ensure that the Targeted Return would be achieved at the end of the Guarantee Period. USE OF THE FIXED COMPONENT REDUCES THE SERIES' ABILITY TO PARTICIPATE AS FULLY IN UPWARD EQUITY MARKET MOVEMENTS, AND THEREFORE REPRESENTS SOME LOSS OF OPPORTUNITY, OR OPPORTUNITY COST, COMPARED TO A PORTFOLIO THAT IS FULLY INVESTED IN EQUITIES. Because the Series is new, it does not have return information an investor might find useful in evaluating the risks of investing in the Fund. A15 ING PARTNERS, INC. ING MFS INVESTMENT OBJECTIVE Capital Seeks capital appreciation. Opportunities Portfolio PRINCIPAL STRATEGIES Invests primarily (at least 65% of net assets) in common stocks (Initial and related securities, such as preferred stocks, convertible Class) securities and depositary receipts. Focuses on companies that the Portfolio's subadviser believes have favorable growth prospects and attractive valuations based on current and expected earnings or cash flows. Investments may include securities listed on a securities exchange or traded in the over the counter markets. MFS selects securities based upon fundamental analysis (such as an analysis of earnings, cash flows, competitive position and management's abilities) performed by the Portfolio's manager and MFS' large group of equity research analysts. May invest in foreign securities (including emerging market securities) and may have exposure to foreign currencies through its investment in these securities, its direct holdings of foreign currencies or through its use of foreign currency exchange contracts for the purchase or sale of a fixed quantity of a foreign currency at a future date. May engage in active and frequent trading to achieve its principal investment strategy. PRINCIPAL RISKS Subject to the following principal risks: MARKET AND COMPANY RISK: The value of the securities in which the Portfolio invests may decline due to changing economic, political or market conditions, or due to the financial condition of the company which issued the security. OVER THE COUNTER RISK: Equity securities that are traded over the counter may be more volatile than exchange-listed securities and the Portfolio may experience difficulty in purchasing or selling these securities at a fair price. FOREIGN MARKETS RISK AND CURRENCY RISK: Investment in foreign securities involves additional risks relating to political, social and economic developments abroad. Other risks result from the differences between the regulations to which U.S. and foreign issuers and markets are subject. Exposure to foreign currencies may cause the value of the Portfolio to decline in the event that the U.S. dollar strengthens against these currencies, or in the event that foreign governments intervene in the currency markets. EMERGING MARKETS RISK: Emerging markets are generally defined as countries in the initial stages of their industrialization cycles with low per capita income. Investments in emerging markets securities involve all of the risks of investment in foreign securities, and also have additional risks. DEPOSITARY RECEIPT RISK: Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. Unsponsored depositary receipts are issued by one or more depositaries in response to market demand, but without a formal agreement with the company that issues the underlying securities. ACTIVE OR FREQUENT TRADING RISK: Engaging in active and frequent trading may result in the realization and distribution to shareholders of higher capital gains as compared to a fund with less active trading policies. Frequent trading also increases transaction costs, which could detract from the Portfolio's performance. INVESTMENT ADVISER: ING Life Insurance and Annuity Company (formerly Aetna Life Insurance and Annuity Company) SUBADVISER: Massachusetts Financial Services Company (MFS) ING MFS INVESTMENT OBJECTIVE Global Growth Nondiversified Portfolio that seeks capital appreciation. Portfolio PRINCIPAL STRATEGIES (Service Invests primarily (at least 65% of net assets under normal Class) circumstances) in common stocks and related equity securities such as preferred stock, convertible securities and depositary receipts. Seeks to achieve its investment objective by investing in securities of companies worldwide growing at rates expected to be well above the growth rate of the overall U.S. economy. Invests in equity securities which are derived from companies in three distinct market sectors: (1) U.S. emerging growth companies, which are domestic companies that MFS, the Portfolio's subadviser, A16 believes are either early in their life cycle but which have the potential to become major enterprises, or are major enterprises whose rates of earnings growth are expected to accelerate due to special factors; (2) foreign growth companies, which are foreign companies located in more developed securities markets that MFS believes have favorable growth prospects and attractive valuations based on current and expected earnings and cash flow; and, (3) emerging market securities, which are securities of issuers whose principal activities are located in emerging market countries. Under normal circumstances, invests in at least three different countries, one of which may be the United States. Investments may include securities listed on a securities exchange or traded in the over the counter markets. Also may engage in active and frequent trading to achieve its principal investment strategies. PRINCIPAL RISKS Subject to the following principal risks: MARKET AND COMPANY RISK: The value of the securities in which the Portfolio invests may decline due to changing economic, political or market conditions, or due to the financial condition of the company which issued the security. ASSET ALLOCATION RISK: The Tactical Allocation Model may not correctly predict the times to shift the Portfolio's assets from one type of investment to another. FOREIGN MARKETS RISK AND CURRENCY RISK: Investment in foreign securities involves additional risks relating to political, social and economic developments abroad. Other risks result from the differences between the regulations to which U.S. and foreign issuers and markets are subject. Exposure to foreign currencies may cause the value of the Portfolio to decline in the event that the U.S. dollar strengthens against these currencies, or in the event that foreign governments intervene in the currency markets. EMERGING GROWTH RISK: The Portfolio's performance is particularly sensitive to changes in the value of emerging growth companies. Investments in emerging growth companies may be subject to more abrupt or erratic market movements and may involve greater risks than investments in other companies. GEOGRAPHIC FOCUS RISK: If the Portfolio focuses its investments by investing a substantial amount of its assets in issuers located in a single country or a limited number of countries, it assumes the risk that economic, political and social conditions in those countries will have a significant impact on its investment performance. EMERGING MARKETS RISK: Emerging markets are generally defined as countries in the initial stages of their industrialization cycles with low per capita income. Investments in emerging markets securities involve all of the risks of investment in foreign securities, and also have additional risks. OVER THE COUNTER RISK: Equity securities that are traded over the counter may be more volatile than exchange-listed securities and the Portfolio may experience difficulty in purchasing or selling these securities at a fair price. ACTIVE OR FREQUENT TRADING RISK: Engaging in active and frequent trading may result in the realization and distribution to shareholders of higher capital gains as compared to a fund with less active trading policies. Frequent trading also increases transaction costs, which could detract from the Portfolio's performance. DEPOSITARY RECEIPT RISK: Unsponsored depositary receipts may not provide as much information about the underlying issuer and may not carry the same voting privileges as sponsored depositary receipts. Unsponsored depositary receipts are issued by one or more depositaries in response to market demand, but without a formal agreement with the company that issues the underlying securities. INVESTMENT ADVISER: ING Life Insurance and Annuity Company (formerly Aetna Life Insurance and Annuity Company) SUBADVISER: Massachusetts Financial Services Company (MFS) ING Van INVESTMENT OBJECTIVE Kampen Seeks capital growth and income. Comstock Portfolio PRINCIPAL STRATEGIES Invests in a portfolio of equity securities, including common (Service stocks, preferred stocks and securities convertible into common Class) and preferred stocks consisting principally of common stocks. Emphasizes a value style of investing seeking well-established, undervalued companies believed to posses the A17 potential for capital growth and income. Portfolio securities are typically sold when the assessments of the Portfolio's subadviser of the capital growth and income potential for such securities materially change. May invest up to 25% of total assets in securities of foreign issuers and may purchase and sell certain derivative instruments, such as options, futures and options on futures, for various portfolio management purposes. Also may invest up to 10% of total assets in high quality short-term debt securities and investment grade corporate debt securities in order to provide liquidity. PRINCIPAL RISKS Subject to the following principal risks: MARKET AND COMPANY RISK: The value of the securities in which the Portfolio invests may decline due to changing economic, political or market conditions, or due to the financial condition of the company which issued the security. SMALL AND MID-CAPITALIZATION COMPANY RISK: Investment in small and mid-capitalization companies involves a substantial risk of loss. Small and mid cap companies and the market for their equity securities are more likely to be more sensitive to changes in earnings results and investor expectations. These companies are also likely to have more limited product lines, capital resources and management depth than larger companies. FOREIGN MARKETS RISK AND CURRENCY RISK: Investment in foreign securities involves additional risks relating to political, social and economic developments abroad. Other risks result from the differences between the regulations to which U.S. and foreign issuers and markets are subject. Exposure to foreign currencies may cause the value of the Portfolio to decline in the event that the U.S. dollar strengthens against these currencies, or in the event that foreign governments intervene in the currency markets. DERIVATIVES RISK: Loss may result from the Portfolio's investments in options, futures, swaps, structured securities and other derivative instruments. These instruments may be leveraged so that small changes may produce disproportionate losses to the Portfolio. A Portfolio investing in a derivative instrument could lose more than the principal amount invested. MANAGEMENT RISK: The risk that a strategy used by the Portfolio's subadviser may fail to produce intended results. INTEREST RATE RISK: The Portfolio's investment in debt securities involves risks relating to interest rate movement. If interest rates go up, the value of any debt securities held by the Portfolio will decline. Securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. ACTIVE OR FREQUENT TRADING RISK: Engaging in active and frequent trading may result in the realization and distribution to shareholders of higher capital gains as compared to a fund with less active trading policies. Frequent trading also increases transaction costs, which could detract from the Portfolio's performance. INVESTMENT ADVISER: ING Life Insurance and Annuity Company (formerly Aetna Life Insurance and Annuity Company) SUBADVISER: Morgan Stanley Investment Management Inc. d/b/a Van Kampen ING VARIABLE INSURANCE TRUST ING VP INVESTMENT OBJECTIVE Worldwide Seeks to provide investors with long-term capital appreciation. Growth Portfolio PRINCIPAL STRATEGIES (formerly Under normal conditions, invests at least 65% of net assets in Pilgrim equity securities of issuers located in at least three countries, VIT Worldwide one of which may be the U.S. Generally invests at least 75% of Growth) total assets in common and preferred stocks, warrants and convertible securities. May invest in companies located in (Initial countries with emerging securities markets when the portfolio Class) mangers believe they present attractive investment opportunities. Portfolio managers emphasize a growth approach by searching for companies that they believe are managing change advantageously and may be poised to exceed growth expectations. Portfolio managers focus on both a "bottom-up" analysis that evaluates the financial condition and competitiveness of individual companies and a "top-down" thematic approach and a sell discipline. Portfolio managers seek to identify themes that reflect the major social, economic and technological trends that they believe are likely to shape the future of business and commerce over the next three to five years, and seek to provide a framework for identifying the industries and companies they believe may benefit most. This "top- A18 down" approach is combined with rigorous fundamental research (a "bottom-up" approach) to guide stock selection and portfolio structure. From time to time, the Fund's adviser reviews the allocation between U.S. stocks and non-U.S. stocks in the portfolio, and may rebalance the portfolio using factors that the adviser deems appropriate. PRINCIPAL RISKS The Fund may be affected by the following risks, among others: price volatility, market trends, risks of foreign investing, and lack of diversification. Price volatility refers to the risk that the value of the Fund will decrease if the value of the Fund's underlying investments decrease. Equity securities face market, issuer and other risks, and their values may go down, sometimes rapidly and unpredictably. Equities generally have higher volatility than debt securities. Market trends refers to the risk that from time to time, the stock market may not favor the securities in which the Fund invests. Rather, the market could favor value stocks or small company stocks, or may not favor equities at all. Foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, possible security illiquidity, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositories than those in the U.S., and foreign controls on investment. The Fund is classified as a NON-DIVERSIFIED investment company, which means that, compared with other funds, the Fund may invest a greater percentage of its assets in a particular issuer. The investment of a large percentage of the Fund's assets in the securities of a small number of issuers may cause the Fund's share price to fluctuate more than that of a diversified investment company. INVESTMENT ADVISOR: ING Investments, LLC ING VARIABLE PORTFOLIOS, INC. ING VP INVESTMENT OBJECTIVE Index Plus Seeks to outperform the total return performance of the Standard LargeCap & Poor's 500 Composite Index (S&P 500), while maintaining a Portfolio market level of risk. (Class S PRINCIPAL STRATEGIES Shares) Invests at least 80% of net assets in stocks included in the S&P 500. The S&P 500 is a stock market index comprised of common stocks of 500 of the largest companies traded in the U.S. and selected by Standard & Poor's Corporation. In managing the Portfolio, Aeltus (the Portfolio's subadviser) attempts to achieve the Portfolio's objective by overweighting those stocks in the S&P 500 that Aeltus believes will outperform the index, and underweighting (or avoiding altogether) those stocks that Aeltus believes will underperform the index. In determining stock weightings, Aeltus uses internally developed quantitative computer models to evaluate various criteria, such as the financial strength of each company and its potential for strong, sustained earnings growth. At any one time, Aeltus generally includes in the portfolio between 400 and 450 of the stocks included in the S&P 500. Although the Portfolio will not hold all of the stocks in the S&P 500, Aeltus expects that there will be a close correlation between the performance of the Portfolio and that of the S&P 500 in both rising and falling markets. PRINCIPAL RISKS Principal risks are those generally attributable to stock investing. These risks include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. The success of the Portfolio's strategy depends significantly on Aeltus' skill in determining which securities to overweight, underweight or avoid altogether. INVESTMENT ADVISER: ING Investments, LLC SUBADVISER: Aeltus Investment Management, Inc. (Aeltus) ING VP INVESTMENT OBJECTIVE Index Plus Seeks to outperform the total return performance of the Standard MidCap & Poor's MidCap 400 Index (S&P 400), while maintaining a market Portfolio level of risk. (Class S PRINCIPAL STRATEGIES Shares) Invests at least 80% of net assets in stocks included in the S&P 400. The S&P 400 is a stock market index comprised of common stocks of 400 mid-capitalization companies traded in the U.S. A19 and selected by Standard & Poor's Corporation. In managing the Portfolio, Aeltus (the Portfolio's subadviser) attempts to achieve the Portfolio's objective by overweighting those stocks in the S&P 400 that Aeltus believes will outperform the index, and underweighting (or avoiding altogether) those stocks that Aeltus believes will underperform the index. In determining stock weightings, Aeltus uses internally developed quantitative computer models to evaluate various criteria, such as the financial strength of each issuer and its potential for strong, sustained earnings growth. Although the Portfolio will not hold all of the stocks in the S&P 400, Aeltus expects that there will be a close correlation between the performance of the Portfolio and that of the S&P 400 in both rising and falling markets. PRINCIPAL RISKS Principal risks are those generally attributable to stock investing. These risks include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. In addition, stocks of medium sized companies tend to be more volatile and less liquid than stocks of larger companies. The success of the Portfolio's strategy depends significantly on Aeltus' skill in determining which securities to overweight, underweight or avoid altogether. INVESTMENT ADVISER: ING Investments, LLC SUBADVISER: Aeltus Investment Management, Inc. (Aeltus) ING VP Index INVESTMENT OBJECTIVE Plus SmallCap Seeks to outperform the total return performance of the Standard Portfolio and Poor's SmallCap 600 Index (S&P 600), while maintaining a market level of risk. (Class S Shares) PRINCIPAL STRATEGIES Invests at least 80% of net assets in stocks included in the S&P 600. The S&P 600 is a stock market index comprised of common stocks of 600 small-capitalization companies traded in the U.S. and selected by Standard & Poor's Corporation. In managing the Portfolio, Aeltus (the Portfolio's subadviser) attempts to achieve the Portfolio's objective by overweighting those stocks in the S&P 600 that Aeltus believes will outperform the index, and underweighting (or avoiding altogether) those stocks that Aeltus believes will underperform the index. In determining stock weightings, Aeltus uses internally developed quantitative computer models to evaluate various criteria, such as the financial strength of each issuer and its potential for strong, sustained earnings growth. Although the Portfolio will not hold all of the stocks in the S&P 600, Aeltus expects that there will be a close correlation between the performance of the Portfolio and that of the S&P 600 in both rising and falling markets. PRINCIPAL RISKS Principal risks are those generally attributable to stock investing which include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. Stocks of smaller companies carry higher risks than stocks of larger companies because smaller companies may lack the management experience, financial resources, product diversification, and competitive strengths of larger companies. In many instances, the frequency and volume of trading in small cap stocks are substantially less than stocks of larger companies which may result in wider price fluctuations. When selling a large quantity of a particular stock, the Portfolio may have to sell at a discount from quoted prices or may have to make a series of small sales over an extended period of time due to the more limited trading volume of smaller company stocks. Stocks of smaller companies tend to be more volatile than stocks of larger companies and can be particularly sensitive to expected changes in interest rates, borrowing costs and earnings. The success of the Portfolio's strategy depends significantly on Aeltus' skill in determining which securities to overweight, underweight or avoid altogether. INVESTMENT ADVISER: ING Investments, LLC SUBADVISER: Aeltus Investment Management, Inc. (Aeltus) ING VP Value INVESTMENT OBJECTIVE Opportunity Seeks growth of capital primarily through investment in a Portfolio diversified portfolio of common stocks and securities convertible into common stock. (Class S Shares) PRINCIPAL STRATEGIES Under normal market conditions, invests at least 65% of total assets in common stocks and A20 securities convertible into common stock. In managing the Portfolio, Aeltus (the Portfolio's subadviser) tends to invest in larger companies that it believes are trading below their perceived value, although may invest in companies of any size. Aeltus believes that the Portfolio's investment objective can best be achieved by investing in companies whose stock price has been excessively discounted due to perceived problems or for other reasons. In searching for investments, Aeltus evaluates financial and other characteristics of companies, attempting to find those companies that appear to possess a catalyst for positive change, such as strong management, solid assets, or market position, rather than those companies whose stocks are simply inexpensive. Aeltus looks to sell a security when company business fundamentals deteriorate or when price objectives are reached. PRINCIPAL RISKS Principal risks are those generally attributable to stock investing which include sudden and unpredictable drops in the value of the market as a whole and periods of lackluster or negative performance. Stocks that appear to be undervalued may never appreciate to the extent expected. Further, because the prices of value-oriented stocks tend to correlate more closely with economic cycles than growth-oriented stocks, they generally are more sensitive to changing economic conditions, such as changes in interest rates, corporate earnings and industrial production. INVESTMENT ADVISER: ING Investments, LLC SUBADVISER: Aeltus Investment Management, Inc. (Aeltus) ING VARIABLE PRODUCTS TRUST ING VP INVESTMENT OBJECTIVE Convertible Seeks maximum total return, consisting of capital appreciation and current income. (Class S Shares) PRINCIPAL STRATEGIES Under normal conditions, invests at least 80% of assets in convertible securities. Convertible securities are generally preferred stock or other securities, including debt securities, that are convertible into common stock. Emphasizes companies with market capitalizations above $500 million. The convertible debt securities in which the Portfolio invests may be rated below investment grade (high-risk instruments), or, if not rated, may be of comparable quality. There is no minimum credit rating for securities in which the Portfolio may invest. Through investments in convertible securities, the Portfolio seeks to capture the upside potential of the underlying equities with less downside exposure. May also invest in securities issued by the U.S. government and its agencies and instrumentalities. May also invest up to 20% of total assets in common and nonconvertible preferred stocks, and in nonconvertible debt securities, which may include high yield debt securities (commonly known as junk bonds) rated below investment grade, or of comparable quality if unrated. Most but not all of the bonds in which the Portfolio invests have a remaining maturity of 10 years or less, or, in the case of convertible debt securities, have a remaining maturity or may be put back to the issuer in 10 years or less. In analyzing specific companies for possible investment, the adviser ordinarily looks for several of the following characteristics: above-average per share earnings growth; high return on invested capital; a healthy balance sheet; sound financial and accounting policies and overall financial strength; strong competitive advantages; effective research and product development and marketing; development of new technologies; efficient service; pricing flexibility; strong management; and general operating characteristics that will enable the companies to compete successfully in their respective markets. The Adviser usually considers whether to sell a particular security when any of those factors materially changes. May also lend portfolio securities on a short-term or long-term basis, up to 30% of total assets. PRINCIPAL RISKS You could lose money on an investment in the Portfolio. The Portfolio may be affected by the following risks, among others: price volatility, changes in interest rates, credit risk, inability to sell securities and securities lending. The credit standing of the issuer and other factors may affect the investment value of a convertible security. The market value of convertible debt securities tends to vary inversely with the level of interest rates. Lower-rated securities may be less liquid than higher quality investments. High yields reflect the higher credit risks associated with certain lower-rated securities and in some cases, the lower market prices for those instruments. The Portfolio may invest in small- and medium-sized companies, which may entail greater price volatility than investing in stocks of larger companies. Investing in Portfolios that are A21 concentrated in a smaller number of holdings poses greater risk than those with a larger number of holdings; each investment has a greater effect on the Portfolio's performance. INVESTMENT ADVISER: ING Investments, LLC (ING Investments) (formerly ING Pilgrim Investments, LLC) ING VP Large INVESTMENT OBJECTIVE Company Value Seeks long-term capital appreciation. Income is a secondary objective. (Class S Shares) PRINCIPAL STRATEGIES Normally invests at least 80% of assets in common stock of large companies, which may include dividend paying securities and securities convertible into shares of common stock. Seeks to invest in large, ably managed and well financed companies. The investment approach is to identify high quality companies with good earnings and price momentum which sell at attractive valuations. May invest remaining 20% of assets in foreign securities and smaller capitalization companies. PRINCIPAL RISKS You could lose money on an investment in the Portfolio. The Portfolio may be affected by the following risks, among others: price volatility, market trends, inability to sell securities, risks of foreign investing, credit risk, and interest rates. The Portfolio has exposure to financial and market risks that accompany investments in equities. International investing does pose special risks, including currency fluctuation, economic and political risks not found in investments that are solely domestic. The credit standing of the issuer and other factors may affect the investment value of a convertible security. The market value of convertible debt securities tends to vary inversely with the level of interest rates. INVESTMENT ADVISER: ING Investments, LLC (ING Investments) (formerly ING Pilgrim Investments, LLC) ING VP INVESTMENT OBJECTIVE LargeCap Seeks long-term capital appreciation. Growth PRINCIPAL STRATEGIES (Class S Normally invests at least 80% of assets in equity securities of Shares) large U.S. companies that the portfolio managers believe have above average prospects for growth. Equity securities in which the Portfolio may invest include common and preferred stocks, warrants and convertible securities. Portfolio considers a company to be large it its market capitalization corresponds at the time of purchase to the upper 90% of the Standard & Poor's 500 Composite Index (S&P 500 Index). Capitalization of companies in the S&P 500 Index will change with market conditions. Portfolio managers emphasize a growth approach by searching for companies that they believe are managing change advantageously and may be poised to exceed growth expectation. Portfolio managers focus on both a "bottom-up" analysis that evaluates the financial condition and competitiveness of individual companies and a "top-down" thematic approach and a sell discipline. Portfolio managers seek to identify themes that reflect the major social, economic and technological trends that they believe are likely to shape the future of business and commerce over the next three to five years, and seek to provide a framework for identifying such industries and companies they believe may benefit most. This top-down approach is combined with rigorous fundamental research (a bottom-up approach) to guide stock selection and portfolio structure. May also lend portfolio securities on a short term or long term basis, up to 30% of total assets. PRINCIPAL RISKS You could lose money on an investment in the Portfolio. The Portfolio may be affected by the following risks, among others: price volatility and market trends. The Portfolio has exposure to financial and market risks that accompany investments in equities. Investing in Portfolios that are concentrated in a smaller number of holdings poses greater risk than those with a larger number of holdings because each investment has a greater effect on the Portfolio's performance. INVESTMENT ADVISER: ING Investments, LLC (ING Investments) (formerly ING Pilgrim Investments, LLC) A22 ING VP INVESTMENT OBJECTIVE MagnaCap Seeks growth of capital, with dividend income as a secondary (formerly consideration. Pilgrim VP MagnaCap) PRINCIPAL STRATEGIES Managed with the philosophy that companies that can best meet the (Service Portfolio's objectives have paid increasing dividends or have had Shares) the capability to pay rising dividends from their operations. Normally invests at least 65% of its assets in equity securities of companies that meet the following disciplined criteria: consistent dividends, substantial dividend increases, reinvested earnings, strong balance sheet, and attractive price. Equity securities may include common stocks, convertible securities, and rights or warrants. Normally investments are primarily in larger companies that are included in the largest 500 U.S. companies. Remainder of its assets may be invested in equity securities that the portfolio managers believe have growth potential because they represent an attractive value. In selecting securities, preservation of capital is also an important consideration. Assets that are not invested in equity securities may be invested in high quality debt securities. PRINCIPAL RISKS The Portfolio may be affected by the following risks, among others: price volatility, market trends, debt securities, credit risk, and risks of foreign investing. Price volatility refers to the risk that the value of the Portfolio changes as the prices of its investments go up or down. Equity securities face market, issuer and other risks, and their values may go up or down, sometimes rapidly and unpredictably. Equity securities generally have higher volatility than most debt securities. Market trends refers to the risk that from time to time the stock market may not favor the value securities that meet the Portfolio's disciplined investment criteria. Debt securities carry the risk that their value may fall when interest rates rise. Debt securities with longer maturities tend to be more sensitive to changes in interest rates. Credit risk refers to the risk that the Portfolio could lose money if the issuer of a debt security is unable to meet its financial obligations or goes bankrupt. Foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, a lack of adequate company information, differences in the way securities markets operate, less secure foreign banks or securities depositories than those in the U.S., and foreign controls on investment. INVESTMENT ADVISOR: ING Investments, LLC INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - INVESTMENT OBJECTIVE Financial Seeks to make an investment grow. The Fund is aggressively Services managed. Fund PRINCIPAL STRATEGIES Invests primarily in equity securities that INVESCO (the Fund's investment adviser) believes will rise in price faster than other securities, as well as in options and other investments whose values are based upon the values of equity securities. The Fund normally invests at least 80% of its assets in equity securities and equity-related instruments of companies involved in the financial services sector. A portion of the Fund's assets is not required to be invested in the sector. INVESCO uses a "bottom up" investment approach to create the Fund's investment portfolio, focusing on company fundamentals and growth prospects when selecting securities. In general, the Fund emphasizes strongly managed companies that INVESCO believes will generate above-average growth rates for the next three to five years. INVESCO places a greater emphasis on companies that are increasing their revenue streams along with their earnings. INVESCO attempts to keep the portfolio holdings well diversified across the entire financial services sector and portfolio weightings are adjusted depending on current economic conditions and relative valuations of securities. PRINCIPAL RISKS Growth investing may be more volatile than other investment styles because growth stocks are more sensitive to investor perceptions of an issuing company's growth potential. Growth-oriented funds typically will underperform value-oriented funds when investor sentiment favors the value investing style. While the Fund's investments are diversified across the financial services sector, the Fund's investments are not as diversified as investments of most mutual funds and far less diversified than the broad securities markets because the Fund's portfolio is limited to a comparatively narrow segment of the economy. This means the Fund tends to be more volatile than other mutual funds, and the value of its portfolio investments tends to go up and down more rapidly. As a result, the value of an investment in the Fund may rise or fall rapidly. This sector generally is subject to extensive government regulation, which may change frequently. In addition, the profitability of businesses in these industries depends heavily upon the availability and cost of A23 money, and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. From time to time, severe competition may also affect the profitability of these industries. The Fund is subject to other principal risks such as potential conflicts, market, foreign securities, liquidity, counterparty, lack of timely information and portfolio turnover risks. INVESTMENT ADVISER: INVESCO Funds Group, Inc. INVESCO VIF - INVESTMENT OBJECTIVE Health Fund Seeks to make an investment grow. The Fund is aggressively Sciences managed. PRINCIPAL STRATEGIES Invests primarily in equity securities that INVESCO (the Fund's investment adviser) believes will rise in price faster than other securities, as well as in options and other investments whose values are based upon the values of equity securities. The Fund normally invests at least 80% of its assets in equity securities and equity-related instruments of companies that develop, produce or distribute products or services related to health care. A portion of the Fund's assets is not required to be invested in the sector. INVESCO uses a "bottom up" investment approach to create the Fund's investment portfolio, focusing on company fundamentals and growth prospects when selecting securities. In general, the Fund emphasizes strongly managed companies that INVESCO believes will generate above-average growth rates for the next three to five years. INVESCO targets strongly manage, innovative companies with new products. INVESCO attempts to blend well-established health care firms with faster-growing, more dynamic entities. PRINCIPAL RISKS Many faster-growing health care companies have limited operating histories and their potential profitability may be dependent on regulatory approval of their products, which increases the volatility of these companies' securities prices and could have an adverse impact upon the companies' future growth and profitability. Changes in government regulation could also have an adverse impact. Continuing technological advances may mean rapid obsolescence of products and services. Growth investing may be more volatile than other investment styles because growth stocks are more sensitive to investor perceptions of an issuing company's growth potential. Growth-oriented funds typically will underperform value-oriented funds when investor sentiment favors the value investing style. While the Fund's investments are diversified across the health sciences sector, the Fund's investments are not as diversified as investments of most mutual funds and far less diversified than the broad securities markets because the Fund's portfolio is limited to a comparatively narrow segment of the economy. This means the Fund tends to be more volatile than other mutual funds, and the value of its portfolio investments tends to go up and down more rapidly. As a result, the value of an investment in the Fund may rise or fall rapidly. The Fund is subject to other principal risks such as potential conflicts, market, foreign securities, liquidity, counterparty, lack of timely information and portfolio turnover risks. INVESTMENT ADVISER: INVESCO Funds Group, Inc. INVESCO VIF - INVESTMENT OBJECTIVE Leisure Fund The Fund seeks to make an investment grow. PRINCIPAL STRATEGIES Seeks to meet its objective by investing primarily in equity securities that INVESCO believes will rise in price faster than other securities, as well as in options and other investments whose values are based upon the values of equity securities. The Fund invests primarily in equity securities of companies engaged in the design, production and distribution of products related to the leisure activities of individuals. These companies include, but are not limited to, advertising, communications/cable TV, cruise lines, entertainment, recreational equipment, lodging, publishers, restaurants and selected retailers. A portion of the Fund's assets is not required to be invested in the sector. PRINCIPAL RISKS Potential Conflicts - Although it is unlikely, there potentially may be differing interests involving the Fund among owners of variable annuity and variable life insurance contracts issued by different insurance companies, or even the same insurance company. INVESCO will monitor events for any potential conflicts. Market Risk - Equity stock prices vary and may fall, thus reducing the value of the Fund's A24 investments. Certain stocks selected for the Fund's portfolio may decline in value more than the overall stock market. Foreign Securities Risks - Investments in foreign and emerging markets carry special risks, including currency, political, regulatory and diplomatic risks. The Fund may invest up to 25% of its assets in securities of non-U.S. issuers. Securities of Canadian issuers and American Depository Receipts are not subject to this 25% limitation. CURRENCY RISK. A change in the exchange rate between U.S. dollars and a foreign currency may reduce the value of the Fund's investment in a security valued in the foreign currency, or based on that currency value. POLITICAL RISK. Political actions, events or instability may result in unfavorable changes in the value of a security. REGULATORY RISK. Government regulations may affect the value of a security. In foreign countries, securities markets that are less regulated than those in the U.S. may permit trading practices that are not allowed in the U.S. DIPLOMATIC RISK. A change in diplomatic relations between the U.S. and a foreign country could affect the value or liquidity of investments. EUROPEAN ECONOMIC AND MONETARY UNION. Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain are presently members of the European Economic and Monetary Union (the "EMU"), which has adopted the euro as a common currency. The national currencies will be sub-currencies of the euro until July 1, 2002, at which time these currencies will disappear entirely. Other European countries may adopt the euro in the future. As the euro is implemented, there may be changes in the relative strength and value of the U.S. dollar and other major currencies, as well as possible adverse tax consequences. The euro transition by EMU countries may affect the fiscal and monetary levels of those participating countries. The outcome of these and other uncertainties could have unpredictable effects on trade and commerce and result in increased volatility for all financial markets. INVESTMENT ADVISER: INVESCO Funds Group, Inc. INVESCO VIF - INVESTMENT OBJECTIVE Utilities Seeks to make an investment grow and seeks current income. The Fund Fund is aggressively managed. PRINCIPAL STRATEGIES Invests primarily in equity securities that INVESCO (the Fund's investment adviser) believes will rise in price faster than other securities, as well as in options and other instruments whose values are based upon the values of equity securities. The Fund normally invests at least 80% of its assets in equity securities and equity-related instruments of companies that produce, generate, transmit or distribute natural gas or electricity, as well as in companies that provide telecommunications services, including local, long distance and wireless, and excluding broadcasting, among others. A portion of the Fund's assets is not required to be invested in the sector. INVESCO uses a "bottom up" investment approach to create the Fund's investment portfolio, focusing on company fundamentals and growth prospects when selecting securities. In general, the Fund emphasizes strongly managed companies that INVESCO believes will generate above-average growth rates for the next three to five years. INVESCO prefers markets and industries where leadership is in a few hands, and tends to avoid slower-growing markets or industries. PRINCIPAL RISKS Growth investing may be more volatile than other investment styles because growth stocks are more sensitive to investor perceptions of an issuing company's growth potential. Growth-oriented funds typically will underperform value-oriented funds when investor sentiment favors the value investing style. While the Fund's investments are diversified across the health utilities sector, the Fund's investments are not as diversified as investments of most mutual funds and far less diversified than the broad securities markets because the Fund's portfolio is limited to a comparatively narrow segment of the economy. This means the Fund tends to be more volatile than other mutual funds, and the value of its portfolio investments tends to go up and down more rapidly. As a result, the value of an investment in the Fund may rise or fall rapidly. Governmental regulation, difficulties in obtaining adequate financing and investment return, environmental issues, prices of fuel for generation of electricity, availability of natural gas and risks associated with nuclear power facilities may adversely affect the market value of the Fund's holdings. The recent trend towards deregulation in the utility industries presents special risks. Some companies may be faced with increased competition and may become less profitable. INVESCO seeks to keep the portfolio diversified across the electric utilities, natural gas and telecommunications A25 industries. Weightings within the various industry segments are continually monitored and INVESCO adjusts the portfolio weightings depending on the prevailing economic conditions. The Fund is subject to other principal risks such as potential conflicts, market, foreign securities, liquidity, counterparty, and lack of timely information risks. INVESTMENT ADVISER: INVESCO Funds Group, Inc. JANUS ASPEN SERIES Janus Aspen INVESTMENT OBJECTIVE Series - Seeks long-term growth of capital in a manner consistent with the Worldwide preservation of capital. Growth Portfolio PRINCIPAL STRATEGIES (Service Invests primarily in common stocks of companies of any size Shares) located throughout the world. Normally invests in issuers from at least five different countries, including the United States. May at times invest in fewer than five countries or even in a single country. Portfolio managers apply a "bottom up" approach in choosing investments. This approach identifies individual companies with earnings growth potential that may not be recognized by the market at large. Assessment is made by looking at companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. Foreign securities are generally selected on a stock-by-stock basis without regard to any defined allocation among countries or geographic regions. However, certain factors such as expected levels of inflation, government policies influencing business conditions, the outlook for currency relationships, and prospects for economic growth among countries, regions or geographic areas may warrant greater consideration in selecting foreign securities. PRINCIPAL RISKS Because the Portfolio may invest substantially all of its assets in common stocks, the main risk is that the value of the stocks it holds might decrease in response to the activities of an individual company or in response to general market and/or economic conditions. Performance may also be affected by risks specific to certain types of investments, such as foreign securities, derivative investments, non-investment grade debt securities (high-yield/high-risk bonds or "junk" bonds) or companies with relatively small market capitalizations. Smaller or newer companies may suffer more significant losses as well as realize more substantial growth than larger or more established issuers. Investments in such companies tend to be more volatile and somewhat more speculative. Issues associated with investing in foreign securities include currency risk, political and economic risk, regulatory risk, market risk and transaction costs. The Portfolio may have significant exposure to foreign markets and may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. High-yield/high-risk bonds present greater risk of default (the failure to make timely interest and principal payments) than higher quality bonds. INVESTMENT ADVISER: Janus Capital Management LLC THE PIMCO VARIABLE INSURANCE TRUST PIMCO High INVESTMENT OBJECTIVE Yield Seeks maximum total return, consistent with preservation of capital and prudent investment management. PRINCIPAL STRATEGIES The portfolio seeks to achieve its investment objectives by investing under normal circumstances at least 65% of its assets in a diversified portfolio of high yield securities ("junk bonds") rated below investment grade but rated at least B by Moody's or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The average portfolio duration of this Portfolio normally varies within a two- to six-year time frame based on PIMCO's forecast for interest rates. The Portfolio may invest up to 15% of its assets in euro-denominated securities and may invest without limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio normally will hedge at least 75% of its exposure to the euro to reduce the risk of loss due to fluctuations in currency exchange rates. The Portfolio may invest up to 15% of its assets in derivative instruments, such as options, futures contracts or swap agreements A26 PRINCIPAL RISKS Principal risks include Manager Risk, High Yield Risk, Interest Rate Risk, Credit Risk, Market Risk, Issuer Risk, Liquidity Risk, Derivatives Risk, Mortgage Risk, Foreign(non-US) Investment Risk, Currency Risk, and Leveraging Risk. MANAGER RISK- Each Portfolio is subject to manager risk because it is an actively managed investment portfolio. PIMCO and each individual portfolio manager will apply investment techniques and risk analyses in making investment decisions for the Portfolio, but there can be no guarantee that these will produce the desired results. HIGH YIELD RISK- Portfolios that invest in high yield securities and unrated securities of similar credit quality (commonly known as "junk bonds") may be subject to greater levels of interest rate, credit and liquidity risk than Portfolios that do not invest in such securities. High yield securities are considered predominately speculative with respect to the issuer's continuing ability to make principal and interest payments. INTEREST RATE RISK- As interest rates rise, the value of fixed income securities held by a Portfolio are likely to decrease. CREDIT RISK- A Portfolio could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivatives contract, repurchase agreement or a loan of portfolio securities, is unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. MARKET RISK- The market price of securities owned by a Portfolio may go up or down, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. ISSUER- The value of a security may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer's goods or services. LIQUIDITY RISK- Liquidity risk exists when particular investments are difficult to purchase or sell. A Portfolio's investments in illiquid securities may reduce the returns of the Portfolio because it may be unable to sell the illiquid securities at an advantageous time or price. DERIVATIVES RISK- Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. The various derivative instruments that the Portfolios may use are referenced under "Characteristics and Risks of Securities and Investment Techniques--Derivatives" in this Prospectus. Typically use derivatives as a substitute for taking a position in the underlying asset and/or part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk management risk. MORTGAGE RISK- A Portfolio that purchases mortgage-related securities is subject to certain additional risks. Rising rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. FOREIGN (NON-U.S.) INVESTMENT RISK- A Portfolio that invests in foreign securities may experience more rapid and extreme changes in value than a Portfolio that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of industries. Additionally, issuers of foreign securities are usually not subject to the same degree of regulation as U.S. issuers. CURRENCY RISK- Portfolios that invest directly in foreign currencies or in securities that trade in, and receive revenues in, U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged. LEVERAGING RISK- Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward commitment transactions. PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. INVESTMENT ADVISOR: Pacific Investment Management Company A27 PIMCO INVESTMENT OBJECTIVE StocksPLUS Seeks total return which exceeds that of the S&P 500. Growth and Income PRINCIPAL STRATEGIES Portfolio The Portfolio seeks to exceed the total return of the S&P 500 by investing under normal circumstances substantially all of its assets in S&P 500 derivatives, backed by a portfolio of Fixed Income Instruments. The Portfolio uses S&P 500 derivatives in addition to or in the place of S&P 500 stocks to attempt to equal or exceed the performance of the S&P 500. The value of S&P 500 derivatives closely track changes in the value of the index. However, S&P 500 derivatives may be purchased with a fraction of the assets that would be needed to purchase the equity securities directly, so that the remainder of the assets may be invested in Fixed Income Instruments. PIMCO actively manages the fixed income assets held by the Portfolio with a view toward enhancing the Portfolio's total return, subject to an overall portfolio duration which is normally not expected to exceed one year. Assets not invested in equity securities or derivatives may be invested in Fixed Income Instruments. The Portfolio may invest up to 10% of its assets in high yield securities ("junk bonds") rated B or higher by Moody's or S&P, or, if unrated, determined by PIMCO to be comparable quality. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies and may invest beyond this limit in U.S. dollar denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rate. In addition, the Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn income. SUMMARY OF PRINCIPAL RISKS Principal risks include Manager Risk, Interest Rate Risk, Credit Risk, Market Risk, Issuer Risk, Liquidity Risk, Derivatives Risk, Mortgage Risk, Foreign(non-US) Investment Risk, Currency Risk, and Leveraging Risk. MANAGER RISK- Each Portfolio is subject to manager risk because it is an actively managed investment portfolio. PIMCO and each individual portfolio manager will apply investment techniques and risk analyses in making investment decisions for the Portfolio, but there can be no guarantee that these will produce the desired results. INTEREST RATE RISK- As interest rates rise, the value of fixed income securities held by a Portfolio are likely to decrease. CREDIT RISK- A Portfolio could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivatives contract, repurchase agreement or a loan of portfolio securities, is unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. MARKET RISK- The market price of securities owned by a Portfolio may go up or down, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. ISSUER- The value of a security may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer's goods or services. LIQUIDITY RISK- Liquidity risk exists when particular investments are difficult to purchase or sell. A Portfolio's investments in illiquid securities may reduce the returns of the Portfolio because it may be unable to sell the illiquid securities at an advantageous time or price. DERIVATIVES RISK- Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. The various derivative instruments that the Portfolios may use are referenced under "Characteristics and Risks of Securities and Investment Techniques--Derivatives" in this Prospectus. Typically use derivatives as a substitute for taking a position in the underlying asset and/or part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk management risk. MORTGAGE RISK- A Portfolio that purchases mortgage-related securities is subject to certain additional risks. Rising rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. FOREIGN (NON-U.S.) INVESTMENT RISK- A Portfolio that invests in foreign securities may experience more rapid and extreme changes in value than a Portfolio that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of industries. Additionally, issuers of foreign securities are usually not subject to the same degree of regulation as U.S. issuers. CURRENCY RISK- Portfolios that invest directly in foreign currencies or in securities that trade in, and receive revenues in, U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in A28 value relative to the currency being hedged. LEVERAGING RISK- Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolio securities, and the use of when-issued, delayed delivery or forward commitment transactions. PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. INVESTMENT ADVISER: Pacific Investment Management Company PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund INVESTMENT OBJECTIVE VCT Portfolio Seeks reasonable income and capital growth. (Class II PRINCIPAL STRATEGIES Shares) Invests in a broad list of carefully selected, reasonably priced securities rather than in securities whose prices reflect a premium resulting from their current market popularity. Invests the major portion of its assets in equity securities, primarily of U.S. issuers. Equity securities include common stocks and other equity instruments, such as convertible debt, depositary receipts, warrants, rights, interest in real estate investment trusts and preferred stocks. Although the Portfolio focuses on securities that have paid dividends in the preceding 12 months, it may purchase or hold securities that do not provide income if the Portfolio expects them to increase in value. Pioneer, the Portfolio's investment adviser, uses a value approach to select the Portfolio's investments. Using this investment style, Pioneer seeks securities selling at reasonable prices or substantial discounts to their underlying values and holds these securities until the market values reflect their intrinsic values. Pioneer evaluates a security's potential value, including the attractiveness of its market valuation, based on the company's assets and prospects for earnings growth. In making that assessment, Pioneer employs due diligence and fundamental research, and an evaluation of the issuer based on its financial statements and operations. Pioneer focuses on the quality and price of individual issuers, not on economic sector or market-timing strategies. Factors Pioneer looks for in selecting investments include: favorable expected returns relative to perceived risk; above average potential for earnings and revenue growth; low market valuations relative to earnings forecast, book value, cash flow and sales; and a sustainable competitive advantage, such as a brand name, customer base, proprietary technology or economies of scale. PRINCIPAL RISKS Even though the Portfolio seeks reasonable income and capital growth, you could lose money on your investment or not make as much as if you invested elsewhere if the stock market goes down (this risk may be greater in the short term) or if value stocks fall out of favor with investors. The Portfolio's assets may also remain undervalued or not realize the potential value originally expected or the stocks selected for income may not achieve the same return as securities selected for capital growth. INVESTMENT ADVISER: Pioneer Investment Management, Inc. Pioneer Mid- INVESTMENT OBJECTIVE Cap Value VCT Seeks capital appreciation by investing in a diversified Portfolio portfolio of securities consisting primarily of common stocks. (Class II PRINCIPAL STRATEGIES Shares) Normally, invests at least 80% of total assets in equity securities of mid-size companies, that is, companies with market values within the range of market values of companies included in Standard & Poor's MidCap 400 Index. Equity securities include common stocks and other equity instruments, such as convertible debt, depositary receipts, warrants, rights, interests in real estate investment trusts and preferred stocks. Pioneer, the Portfolio's investment adviser, uses a value approach to select the Portfolio's investments. Using this investment style, Pioneer seeks securities selling at substantial discounts to their underlying values and holds these securities until the market values reflect their intrinsic values. Pioneer evaluates a security's potential value, including the attractiveness of its market valuation, based on the company's assets and prospects for earnings growth. In making that assessment, Pioneer employs due diligence and fundamental research, an evaluation of the issuer based on its financial statements and operations, employing a bottom-up analytic style. Pioneer focuses on the quality and price of individual issuers, not on economic sector A29 or market-timing strategies. Factors Pioneer looks for in selecting investments include: favorable expected returns relative to perceived risk; management with demonstrated ability and commitment to the company; low market valuations relative to earnings forecast, book value, cash flow and sales; turnaround potential for companies that have been through difficult periods; estimated private market value in excess of current stock price; and issuers in industries with strong fundamentals such as increasing or sustainable demand and barriers to entry. PRINCIPAL RISKS Even though the Portfolio seeks capital appreciation, you could lose money on your investment or not make as much as if you invested elsewhere if the stock market goes down (this risk may be greater in the short term), if mid-size or value stocks fall out of favor with investors, or if the Portfolio's assets remain undervalued or do not have the potential value originally expected. The Portfolio also has risks associated with investing in mid-size companies. Compared to large companies, mid-size companies and the market for their equity securities, are likely to be more sensitive to changes in earnings results and investor expectations, have more limited product lines and capital resources, and experience sharper swings in the market values. It also might be harder to sell at the times and prices Pioneer thinks is appropriate and there may be a greater potential for gain and loss. INVESTMENT ADVISER: Pioneer Investment Management, Inc. THE PRUDENTIAL SERIES FUND, INC. Jennison INVESTMENT OBJECTIVE Portfolio Seeks to achieve long-term growth of capital. (formerly Prudential PRINCIPAL STRATEGIES Jennison Invests primarily in equity securities of major, established Portfolio) corporations that the investment adviser believes offer above-average growth prospects. May invest up to 30% of total (Class II assets in foreign securities. Stocks are selected on a Shares) company-by-company basis using fundamental analysis. Investment adviser looks for companies that have had growth in earnings and sales, high returns on equity and assets or other strong financial characteristics. Normally invests 65% of total assets in common stocks and preferred stocks of companies with capitalization in excess of $1 billion. PRINCIPAL RISKS Principal risks of investing in the Portfolio are: company risk, derivatives risk, foreign investment risk, management risk, and market risk. Company risk refers to the risk that the price of the stock of a particular company can vary based on a variety of factors, such as the company's financial performance, changes in management and product trends, and the potential for takeover and acquisition. Investing in foreign securities generally involves more risk than investing in securities of U.S. issuers. Derivatives are subject to a number of risks, including liquidity risk, interest rate risk, market risk, credit risk and management risk. A portfolio investing in a derivative instrument could lose more than the principal amount invested. Foreign investment risk includes: foreign market risk, currency risk and political developments. Foreign markets, especially those in developing countries, tend to be more volatile than U.S. markets and are generally not subject to regulatory requirements comparable to those in the U.S. Because of differences in accounting standards and custody and settlement practices, investing in foreign securities generally involves more risk than investing in securities of U.S. issuers. Currency risk refers to the risk that changes in currency exchange rates may affect the value of foreign securities held by the Portfolio and the amount of income available for distribution. Political developments may adversely affect the value of the Portfolio's foreign securities. Actively managed portfolios are subject to management risk, because there is no guarantee that the investment decisions made by the subadvisers for the portfolios will be successful. Common stocks are subject to market risk stemming from factors independent of any particular security. Factors affecting market risk include political events, broad economic and social changes, and the mood of the investing public. Stocks issued by smaller companies may fluctuate in value more than the stocks of larger, more established companies. INVESTMENT ADVISER: Prudential Investments LLC SUB-ADVISOR: Jennison Associates LLC A30 SP Jennison INVESTMENT OBJECTIVE International Seeks long-term growth of capital. Growth PRINCIPAL STRATEGIES (Class II Invests in equity-related securities of foreign issuers that the Shares) subadviser thinks will increase in value over a period of years. Invests primarily in the common stock of large and medium-sized foreign companies. Under normal circumstances, invests at least 65% of total assets in common stock of foreign companies operating or based in at least five different countries. Looks primarily for stocks of companies whose earnings are growing at a faster rate than other companies. These companies typically have characteristics such as above average growth in earnings and cash flow, improving profitability, strong balance sheets, management strength and strong market share for its products. Also tries to buy such stocks at attractive prices in relation to their growth prospects. PRINCIPAL RISKS Significant risks of investing in the Portfolio are: company risk, credit risk, derivatives risk, foreign investment risk, interest rate risk, and market risk. Company risk refers to the risk that the price of the stock of a particular company can vary based on a variety of factors, such as the company's financial performance, changes in management and product trends, and the potential for takeover and acquisition. Credit risk refers to the risk that the issuer of debt obligations may be unable to make principal and interest payments when they are due. Derivatives are subject to interest rate risk, market risk and credit risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. Investing in foreign securities generally involves more risk than investing in securities of U.S. issuers such as: foreign market risk, currency risk and political developments. Foreign markets, especially those in developing countries, tend to be more volatile than U.S. markets and are generally not subject to regulatory requirements comparable to those in the U.S. Differences in accounting standards and custody and settlement practices of foreign securities generally involve more risk than investing in securities of U.S. issuers. Currency risk refers to the risk that changes in currency exchange rates may affect the value of foreign securities held by the Portfolio and the amount of income available for distribution. Political developments may adversely affect the value of the Portfolio's foreign securities. Interest rate risk refers to the risk that fixed income securities could lose value because of interest rate changes. For example, bonds tend to decrease in value if interest rates rise. Common stocks are subject to market risk stemming from factors independent of any particular security. Factors affecting market risk include political events, broad economic and social changes, and the mood of the investing public. Stocks issued by smaller companies may fluctuate in value more than the stocks of larger, more established companies. INVESTMENT ADVISER: Prudential Investments LLC SUB-ADVISOR: Jennison Associates LLC PUTNAM VARIABLE TRUST Putnam VT INVESTMENT OBJECTIVE Growth and Seeks capital growth and current income. Income Fund PRINCIPAL STRATEGIES (Class IB Invests mainly in common stocks of U.S. companies with a focus on Shares) value stocks that offer the potential for capital growth, current income, or both. Value stocks are those Putnam Management believes are currently undervalued by the market. The fund looks for companies undergoing positive change. If correct and other investors recognize the value of the company, the price of the stock may rise. Invests mainly in large companies. PRINCIPAL RISKS Among the main risks are the following: The risk that the stock price of one or more of the companies in the fund's portfolio will fall, or will fail to rise. Many factors can adversely affect a stock's performance, including both general financial market conditions and factors related to a specific company or industry. The risk that movements in financial markets will adversely affect the price of the fund's investments, regardless of how well the companies in which we invest perform. The market as a whole may not favor the types of investments we make. A31 INVESTMENT ADVISER: Putnam Investment Management, LLC Putnam VT INVESTMENT OBJECTIVE International Seeks capital growth. Current income is a secondary objective. Growth and Income Fund PRINCIPAL STRATEGIES Invests mainly in common stocks of companies outside the United (Class IB States. The fund invests mainly in value stocks that offer the Shares) potential for income. Value stocks are those that Putnam Management believes are currently undervalued by the market. The fund looks for companies undergoing positive change. If correct and other investors recognize the value of the company, the price of its stock may rise. The fund invests mainly in midsized and large companies, although it can invest in companies of any size. Although the fund emphasizes investments in developed countries, we may also invest in companies located in developing (also known as emerging) markets. To determine whether a company is located outside of the United States, the fund looks at the following factors: where the company's securities trade, where the company is located or organized, or where the company derives its revenues or profits. PRINCIPAL RISKS Among the main risks are the following: The risks of investing outside the United States, such as currency fluctuations, economic or financial instability, lack of timely or reliable financial information, or unfavorable political or legal developments. These risks are increased for investments in emerging markets. The risk that the stock price of one or more of the companies in the fund's portfolio will fall, or will fail to rise. Many factors can adversely affect a stock's performance, including both general financial market conditions and factors related to a specific company or industry. This risk is generally greater for small and midsized companies, which tend to be more vulnerable to adverse developments. The risk that movements in financial markets will adversely affect the price of the fund's investments, regardless of how well the companies in which we invest perform. The market as a whole may not favor the types of investments we make. INVESTMENT ADVISER: Putnam Investment Management, LLC Putnam VT INVESTMENT OBJECTIVE Voyager Seeks long-term growth of capital. Fund II PRINCIPAL STRATEGIES (Class IB Invests mainly in common stocks of U.S. companies, with a focus Shares) on growth stocks. Growth stocks are issued by companies that Putnam Management believes are fast-growing and whose earnings the fund believes are likely to increase over time. Growth in earnings may lead to an increase in the price of the stock. May invest in companies of any size. PRINCIPAL RISKS Among the main risks are the following: The risk that the stock price of one or more of the companies in the fund's portfolio will fall, or will fail to rise. Many factors can adversely affect a stock's performance, including both general financial market conditions and factors related to a specific company or industry. This risk is generally greater for small and midsized companies, which tend to be more vulnerable to adverse developments. The risk that movements in financial markets will adversely affect the price of the fund's investments, regardless of how well the companies in which we invest perform. The market as a whole may not favor the types of investments we make. INVESTMENT ADVISER: Putnam Investment Management, LLC UBS SERIES TRUST Tactical INVESTMENT OBJECTIVE Allocation Seeks total return, consisting of long-term capital appreciation Portfolio and current income. (formerly A32 Brinson PRINCIPAL STRATEGIES Series Trust Allocates assets between a stock portion that is designed to - - Tactical track the performance of the S&P 500 Composite Stock Index and a Allocation fixed income portion that consists of either five-year U.S. Portfolio) Treasury notes or U.S. Treasury bills with remaining maturities of 30 days. The Portfolio's investment adviser reallocates assets (Class I) in accordance with the recommendations of its own Tactical Allocation Model (the "Model") on the first business day of each month. The Model attempts to track the performance of the S&P 500 Index in periods of strong market performance. The Model attempts to take a more defensive posture by reallocating assets to bonds or cash when the Model signals a potential bear market, prolonged downturn in stock prices or significant loss in value. The Model can recommend stock allocations of 100%, 75%, 50%, 25%, or 0%. If the Model recommends a stock allocation of less than 100%, the Model also recommends a fixed-income allocation for the remainder of the Portfolio's assets. When the Model recommends a fixed-income allocation of more than 50%, the Portfolio must invest in other high-quality bonds or money market instruments to the extent needed to limit the Portfolio's investments in U.S. Treasury obligations to no more than 55% of its assets. This limit is imposed by Internal Revenue Code diversification requirements for segregated asset accounts used to fund variable annuity or variable life contracts. The Portfolio may use derivatives to adjust its exposure to different asset classes or to maintain exposure to stocks or bonds while maintaining a cash balance for fund management purposes. These instruments may also be used to reduce the risk of adverse price movements while investing cash received when investors buy fund shares, to facilitate trading and to reduce transaction costs. PRINCIPAL RISKS The Portfolio is subject to the following principal risks: asset allocation risk, equity risk, index tracking risk, interest rate risk, derivatives risk, and foreign investing risk. Asset allocation risk refers to the risk that the Tactical Allocation Model may not correctly predict the appropriate time to shift the fund's assets from one asset class to another. Equity risk refers to the risk that stocks and other equity securities generally fluctuate in value more than bonds. The fund could lose all of its investment in a company's stock. Index tracking risk refers to the risk that the performance of the fund's stock investments generally will not be identical to that of the S&P 500 Index because of the fees and expenses borne by the fund and investor purchases and sales of fund shares, which can occur daily. Interest rate risk refers to the risk that the value of the fund's bond investments generally will fall when interest rates rise. Derivatives risk refers to the risk that the fund's investments in derivatives may rise or fall more rapidly than other investments. The S&P 500 Index includes some U.S. dollar denominated foreign securities. Foreign investing risk refers to the risk that the value of the fund's investments in foreign securities may fall due to adverse political, social and economic developments abroad. However, because the fund's foreign investments must be denominated in U.S. dollars, it generally is not subject to the risk of changes in currency valuations. INVESTMENT ADVISER: UBS Global Asset Management (US) Inc. A33 - -------------------------------------------------------------------------------- APPENDIX B - -------------------------------------------------------------------------------- SURRENDER CHARGE FOR EXCESS WITHDRAWALS EXAMPLE The following assumes you made an initial premium payment of $10,000 and additional premium payments of $10,000 in each of the second and third contract years, for total premium payments under the Contract of $30,000. It also assumes a withdrawal at the end of the third contract year of 30% of the contract value of $35,000, and that Option Package I was selected. In this example, $3,500 (10% of contract value) is the maximum free withdrawal amount that you may withdraw without a surrender charge. The total amount withdrawn from the contract would be $10,500 ($35,000 x .30). Therefore, $7,000 (10,500 - 3,500) is considered an excess withdrawal of a part of the initial premium payment of $10,000 and would be subject to a 4% surrender charge of $280 ($7,000 x .04). The amount of the withdrawal paid to you will be $10,220 ($10,500 - $280). This example does not take into account any Market Value Adjustment or deduction of any premium taxes. B1 - -------------------------------------------------------------------------------- APPENDIX C - -------------------------------------------------------------------------------- FIXED ACCOUNT II Fixed Account II ("Fixed Account") is an optional fixed interest allocation offered during the accumulation phase of your variable annuity contract between you and Golden American Life Insurance Company ("Golden American," the "Company," "we" or "our"). The Fixed Account, which is a segregated asset account of Golden American, provides a means for you to invest on a tax-deferred basis and earn a guaranteed interest for guaranteed interest periods (Fixed Interest Allocation(s)). We will credit your Fixed Interest Allocation(s) with a fixed rate of interest. We currently offer Fixed Interest Allocations with guaranteed interest periods of 6 months, 1, 3, 5, 7 and 10 years. In addition, we may offer DCA Fixed Interest Allocations, which are 6-month and 1-year Fixed Interest Allocations available exclusively in connection with our dollar cost averaging program. We may not offer all guaranteed interest periods on all contracts and the rates for a given guaranteed interest period may vary among contracts. We set the interest rates periodically. We may credit a different interest rate for each interest period. The interest you earn in the Fixed Account as well as your principal is guaranteed by Golden American, as long as you do not take your money out before the maturity date for the applicable interest period. If you take your money out from a Fixed Interest Allocation more than 30 days before the applicable maturity date, we will apply a market value adjustment ("Market Value Adjustment"). A Market Value Adjustment could increase or decrease your contract value and/or the amount you take out. A surrender charge may also apply to withdrawals from your contract. You bear the risk that you may receive less than your principal because of the Market Value Adjustment. For contracts sold in some states, not all Fixed Interest Allocations are available. You have a right to return a contract for a refund as described in the prospectus. THE FIXED ACCOUNT You may allocate premium payments and transfer your Contract value to the guaranteed interest periods of the Fixed Account during the accumulation period as described in the prospectus. Every time you allocate money to the Fixed Account, we set up a Fixed Interest Allocation for the guaranteed interest period you select. We will credit your Fixed Interest Allocation with a guaranteed interest rate for the interest period you select, so long as you do not withdraw money from that Fixed Interest Allocation before the end of the guaranteed interest period. Each guaranteed interest period ends on its maturity date which is the last day of the month in which the interest period is scheduled to expire. Your Contract value in the Fixed Account is the sum of your Fixed Interest Allocations and the interest credited as adjusted for any withdrawals, transfers or other charges we may impose, including any Market Value Adjustment. Your Fixed Interest Allocation will be credited with the guaranteed interest rate in effect for the guaranteed interest period you selected when we receive and accept your premium or reallocation of Contract value. We will credit interest daily at a rate that yields the quoted guaranteed interest rate. If you surrender, withdraw, transfer or annuitize your investment in a Fixed Interest Allocation more than 30 days before the end of the guaranteed interest period, we will apply a Market Value Adjustment to the transaction. A Market Value Adjustment could increase or decrease the amount you surrender, withdraw, transfer or annuitize, depending on current interest rates at the time of the transaction. You bear the risk that you may receive less than your principal because of the Market Value Adjustment. GUARANTEED INTEREST RATES Each Fixed Interest Allocation will have an interest rate that is guaranteed as long as you do not take your money out until its maturity date. We do not have a specific formula for establishing the guaranteed interest rates for the different guaranteed interest periods. We determine guaranteed interest rates at our sole discretion. We cannot predict the level of future interest rates but no Fixed Interest Allocation will ever C1 have a guaranteed interest rate declared of less than 3% per year. For more information see the prospectus for the Fixed Account. TRANSFERS FROM A FIXED INTEREST ALLOCATION You may transfer your Contract value in a Fixed Interest Allocation to one or more new Fixed Interest Allocations with new guaranteed interest periods, or to any of the subaccounts of Golden American's Separate Account B as described in the prospectus on the maturity date of a guaranteed interest period. The minimum amount that you can transfer to or from any Fixed Interest Allocation is $100. Transfers from a Fixed Interest Allocation may be subject to a Market Value Adjustment. If you have a special Fixed Interest Allocation that was offered exclusively with our dollar cost averaging program, cancelling dollar cost averaging will cause a transfer of the entire Contract value in such Fixed Interest Allocation to the Liquid Asset subaccount, and such a transfer will be subject to a Market Value Adjustment. Please be aware that the benefit we pay under certain optional benefit riders will be adjusted by any transfers you make to and from the Fixed Interest Allocations during specified periods while the rider is in effect. See "Optional Riders" in the prospectus. WITHDRAWALS FROM A FIXED INTEREST ALLOCATION During the accumulation phase, you may withdraw a portion of your Contract value in any Fixed Interest Allocation. You may make systematic withdrawals of only the interest earned during the prior month, quarter or year, depending on the frequency chosen, from a Fixed Interest Allocation under our systematic withdrawal option. A withdrawal from a Fixed Interest Allocation may be subject to a Market Value Adjustment and a contract surrender charge. Be aware that withdrawals may have federal income tax consequences, including a 10% penalty tax, as well as state income tax consequences. Please be aware that the benefit we pay under any of the optional benefit riders will be reduced by any withdrawals you made from the Fixed Interest Allocations during the period while the rider is in effect. See "Optional Riders" in the prospectus. MARKET VALUE ADJUSTMENT A Market Value Adjustment may decrease, increase or have no effect on your Contract value. We will apply a Market Value Adjustment (i) whenever you withdraw or transfer money from a Fixed Interest Allocation (unless made within 30 days before the maturity date of the applicable guaranteed interest period, or under the systematic withdrawal or dollar cost averaging program) and (ii) if on the annuity start date a guaranteed interest period for any Fixed Interest Allocation does not end on or within 30 days of the annuity start date. A Market Value Adjustment may be positive, negative or result in no change. In general, if interest rates are rising, you bear the risk that any Market Value Adjustment will likely be negative and reduce your Contract value. On the other hand, if interest rates are falling, it is more likely that you will receive a positive Market Value Adjustment that increases your Contract value. In the event of a full surrender, transfer or annuitization from a Fixed Interest Allocation, we will add or subtract any Market Value Adjustment from the amount surrendered, transferred or annuitized. In the event of a partial withdrawal, transfer or annuitization, we will add or subtract any Market Value Adjustment from the total amount withdrawn, transferred or annuitized in order to provide the amount requested. If a negative Market Value Adjustment exceeds your Contract value in the Fixed Interest Allocation, we will consider your request to be a full surrender, transfer or annuitization of the Fixed Interest Allocation. CONTRACT VALUE IN THE FIXED INTEREST ALLOCATIONS On the contract date, the Contract value in any Fixed Interest Allocation in which you are invested is equal to the portion of the initial premium paid and designated for allocation to the Fixed Interest Allocation. On each business day after the contract date, we calculate the amount of Contract value in each Fixed Interest Allocation as follows: (1) We take the Contract value in the Fixed Interest Allocation at the end of the preceding business day. C2 (2) We credit a daily rate of interest on (1) at the guaranteed rate since the preceding business day. (3) We add (1) and (4) We subtract from (3) any transfers from that Fixed Interest Allocation. (5) We subtract from (4) any withdrawals, and then subtract any contract fees (including any rider charges) and premium taxes. Additional premium payments and transfers allocated to the Fixed Account will be placed in a new Fixed Interest Allocation. The Contract value on the date of allocation will be the amount allocated. Several examples which illustrate how the Market Value Adjustment works are included in the prospectus for the Fixed Account CASH SURRENDER VALUE The cash surrender value is the amount you receive when you surrender the Contract. The cash surrender value of amounts allocated to the Fixed Account will fluctuate daily based on the interest credited to Fixed Interest Allocations, any Market Value Adjustment, and any surrender charge. We do not guarantee any minimum cash surrender value. On any date during the accumulation phase, we calculate the cash surrender value as follows: we start with your Contract value, then we adjust for any Market Value Adjustment, and then we deduct any surrender charge, any charge for premium taxes, the annual contract administrative fee (unless waived), and any optional benefit rider charge, and any other charges incurred but not yet deducted. DOLLAR COST AVERAGING FROM FIXED INTEREST ALLOCATIONS You may elect to participate in our dollar cost averaging program if you have at least $1,200 of Contract value in Fixed Account Interest Allocations with a guaranteed interest period of 1 year or less. The Fixed Interest Allocations serve as the source accounts from which we will, on a monthly basis, automatically transfer a set dollar amount of money to other Fixed Interest Allocations or contract investment portfolio subaccounts selected by you. The dollar cost averaging program is designed to lessen the impact of market fluctuation on your investment. Since we transfer the same dollar amount to subaccounts each month, more units of a subaccount are purchased if the value of its unit is low and fewer units are purchased if the value of its unit is high. Therefore, a lower than average value per unit may be achieved over the long term. However, we cannot guarantee this. When you elect the dollar cost averaging program, you are continuously investing in securities regardless of fluctuating price levels. You should consider your tolerance for investing through periods of fluctuating price levels. You elect the dollar amount you want transferred under this program. Each monthly transfer must be at least $100. You may change the transfer amount once each contract year. Transfers from a Fixed Interest Allocation under the dollar cost averaging program are not subject to a Market Value Adjustment. We may in the future offer additional subaccounts or withdraw any subaccount or Fixed Interest Allocation to or from the dollar cost averaging program or otherwise modify, suspend or terminate this program. Of course, such change will not affect any dollar cost averaging programs in operation at the time. SUSPENSION OF PAYMENTS We have the right to delay payment of amounts from a Fixed Interest Allocation for up to 6 months. MORE INFORMATION See the prospectus for Fixed Account II. C3 - -------------------------------------------------------------------------------- APPENDIX D - -------------------------------------------------------------------------------- FIXED INTEREST DIVISION A Fixed Interest Division option is available through the group and individual deferred variable annuity contracts offered by Golden American Life Insurance Company. The Fixed Interest Division is part of the Golden American General Account. Interests in the Fixed Interest Division have not been registered under the Securities Act of 1933, and neither the Fixed Interest Division nor the General Account are registered under the Investment Company Act of 1940. Interests in the Fixed Interest Division are offered in certain states through an Offering Brochure, dated May 1, 1999. The Fixed Interest Division is different from the Fixed Account which is described in the prospectus but which is not available in your state. If you are unsure whether the Fixed Account is available in your state, please contact our Customer Service Center at (800) 366-0066. When reading through the Prospectus, the Fixed Interest Division should be counted among the various investment options available for the allocation of your premiums, in lieu of the Fixed Account. The Fixed Interest Division may not be available in some states. Some restrictions may apply. You will find more complete information relating to the Fixed Interest Division in the Offering Brochure. Please read the Offering Brochure carefully before you invest in the Fixed Interest Division. D1 - -------------------------------------------------------------------------------- APPENDIX E - -------------------------------------------------------------------------------- WITHDRAWAL ADJUSTMENT FOR 5% ROLL-UP DEATH BENEFIT EXAMPLES EXAMPLE #1: THE CONTRACT VALUE (AV) IS LOWER THAN THE DEATH BENEFIT Assume a premium payment of $100,000, AV at the time of withdrawal of $80,000 and a 5% Roll-Up minimum guarantee death benefit ("MGDB") at the time of withdrawal of $120,000. A total withdrawal of $20,000 is made. Calculate the Effect of the Withdrawal Pro rata Withdrawal Adjustment to MGDB = $30,000 ($120,000 * ($20,000 / $80,000)) MGDB after Pro rata Withdrawal = $90,000 ($120,000 - $30,000) AV after Pro rata Withdrawal = $60,000 ($80,000 - $20,000) EXAMPLE #2: THE CONTRACT VALUE (AV) IS GREATER THAN THE DEATH BENEFIT Assume a premium payment of $100,000, AV at the time of withdrawal of $160,000 and a 5% Roll-Up minimum guarantee death benefit ("MGDB") at the time of withdrawal of $120,000. A total withdrawal of $20,000 is made. Calculate the Effect of the Withdrawal Pro rata Withdrawal Adjustment to MGDB = $15,000 ($120,000 * ($20,000 / $160,000)) MGDB after Pro rata Withdrawal = $105,000 ($120,000 - $15,000) AV after Pro rata Withdrawal = $140,000 ($160,000 - $20,000) E1 EXAMPLE #3: THE CONTRACT VALUE (AV) IS EQUAL TO THE DEATH BENEFIT Assume a premium payment of $100,000, AV at the time of withdrawal of $120,000 and a 5% Roll-Up minimum guarantee death benefit ("MGDB") at the time of withdrawal of $120,000. A total withdrawal of $27,000 is made. Calculate the Effect of the Withdrawal Pro rata Withdrawal Adjustment to MGDB = $20,000 ($120,000 * ($20,000 / $120,000)) MGDB after Pro rata Withdrawal = $100,000 ($120,000 - $20,000) AV after Pro rata Withdrawal = $100,000 ($120,000 - $20,000) E2 - -------------------------------------------------------------------------------- APPENDIX F - -------------------------------------------------------------------------------- PROJECTED SCHEDULE OF ING GET FUND OFFERINGS OFFERING DATES GUARANTEE DATES --------------------------------------------------------------------- GET R SERIES 03/15/02-06/13/02 06/14/02-06/15/07 GET S SERIES 06/14/02-09/11/02 09/12/02-09/14/07 GET T SERIES 09/12/02-12/11/02 12/12/02-12/14/07 GET U SERIES 12/12/02-03/12/03 03/13/03-03/14/08 GET V SERIES 03/13/03-06/12/03 06/13/03-06/13/08 F1 - -------------------------------------------------------------------------------- APPENDIX G - -------------------------------------------------------------------------------- Separate Account Annual Charges of 1.60%: Aetna GET Fund P AUV at beginning of period 10.00 AUV at end of period 10.02 Number of units outstanding at end of period 71,533 Total AUV at end of period (in thousands) 717 AIM V.I. Dent Demographic Trends Fund AUV at beginning of period 10.00 AUV at end of period 10.99 Number of units outstanding at end of period 1,822 Total AUV at end of period (in thousands) 20 Alliance Bernstein Value AUV at beginning of period 10.00 AUV at end of period 10.01 Number of units outstanding at end of period 508 Total AUV at end of period (in thousands) 5 Alliance Premier Growth AUV at beginning of period 10.00 AUV at end of period 9.55 Number of units outstanding at end of period 321 Total AUV at end of period (in thousands) 3 Brinson Tactical Allocation AUV at beginning of period 10.00 AUV at end of period 9.39 Number of units outstanding at end of period 536 Total AUV at end of period (in thousands) 5 Core Bond AUV at beginning of period 11.59 AUV at end of period 11.68 Number of units outstanding at end of period 227,468 Total AUV at end of period (in thousands) 2,658 Janus Growth and Income AUV at beginning of period 9.94 AUV at end of period 8.85 Number of units outstanding at end of period 295,863 Total AUV at end of period (in thousands) 2,618 ING VP Growth Opportunities AUV at beginning of period 10.00 AUV at end of period 7.78 Number of units outstanding at end of period 17,748 Total AUV at end of period (in thousands) 138 PIMCO High Yield Bond AUV at beginning of period 9.96 AUV at end of period 10.03 Number of units outstanding at end of period 673,993 Total AUV at end of period (in thousands) 6,758 INVESCO VIFFinancial Services Fund AUV at beginning of period 10.00 AUV at end of period 9.36 Number of units outstanding at end of period 8,703 Total AUV at end of period (in thousands) 81 INVESCO VIFHealth Sciences Fund AUV at beginning of period 10.00 AUV at end of period 10.26 Number of units outstanding at end of period 3,132 Total AUV at end of period (in thousands) 32 INVESCO VIFUtilities Fund AUV at beginning of period 10.00 AUV at end of period 8.10 Number of units outstanding at end of period 960 Total AUV at end of period (in thousands) 8 SP Jennison International Growth AUV at beginning of period 8.56 AUV at end of period 5.40 Number of units outstanding at end of period 42,845 Total AUV at end of period (in thousands) 231 Liquid Asset AUV at beginning of period 15.03 AUV at end of period 15.36 Number of units outstanding at end of period 2,858,557 Total AUV at end of period (in thousands) 43,915 ING VP MagnaCap AUV at beginning of period 10.00 AUV at end of period 9.34 Number of units outstanding at end of period 4,693 Total AUV at end of period (in thousands) 44 ING VP Worldwide Growth AUV at beginning of period 8.74 AUV at end of period 7.00 Number of units outstanding at end of period 135,471 Total AUV at end of period (in thousands) 948 Pioneer Fund VCT AUV at beginning of period 10.00 AUV at end of period 9.38 Number of units outstanding at end of period 4,756 Total AUV at end of period (in thousands) 45 Pioneer Small Company VCT AUV at beginning of period 10.00 AUV at end of period 9.58 Number of units outstanding at end of period 536 Total AUV at end of period (in thousands) 5 Jennison AUV at beginning of period 7.84 AUV at end of period 6.27 Number of units outstanding at end of period 244,934 Total AUV at end of period (in thousands) 1,537 Research AUV at beginning of period 26.05 AUV at end of period 20.13 Number of units outstanding at end of period 1,029,430 Total AUV at end of period (in thousands) 20,724 Total Return AUV at beginning of period 20.48 AUV at end of period 20.25 Number of units outstanding at end of period 856,471 Total AUV at end of period (in thousands) 17,344 Value Equity AUV at beginning of period 19.20 AUV at end of period 18.06 Number of units outstanding at end of period 252,946 Total AUV at end of period (in thousands) 4,567 Separate Account Annual Charges of 1.80%: Aetna GET Fund P AUV at beginning of period AUV at end of period 10.01 Number of units outstanding at end of period 10,501 Total AUV at end of period (in thousands) 105 AIM V.I. Dent Demographic Trends Fund AUV at beginning of period 10.00 AUV at end of period 10.98 Number of units outstanding at end of period 7,111 Total AUV at end of period (in thousands) 78 Core Bond AUV at beginning of period 11.44 AUV at end of period 11.51 Number of units outstanding at end of period 957,821 Total AUV at end of period (in thousands) 11,028 Fidelity VIP Growth AUV at beginning of period 10.00 AUV at end of period 9.25 Number of units outstanding at end of period 652 Total AUV at end of period (in thousands) 6 Janus Growth and Income AUV at beginning of period 9.93 AUV at end of period 8.83 Number of units outstanding at end of period 1,282,148 Total AUV at end of period (in thousands) 11,318 PIMCO High Yield Bond AUV at beginning of period 9.90 AUV at end of period 9.95 Number of units outstanding at end of period 1,847,565 Total AUV at end of period (in thousands) 18,386 INVESCO VIFFinancial Services Fund AUV at beginning of period 10.00 AUV at end of period 9.35 Number of units outstanding at end of period 18,560 Total AUV at end of period (in thousands) 173 INVESCO VIFHealth Sciences Fund AUV at beginning of period 10.00 AUV at end of period 10.25 Number of units outstanding at end of period 25,836 Total AUV at end of period (in thousands) 265 INVESCO VIFUtilities Fund AUV at beginning of period 10.00 AUV at end of period 8.09 Number of units outstanding at end of period 16,134 Total AUV at end of period (in thousands) 131 Janus Aspen Worldwide Growth AUV at beginning of period 10.00 AUV at end of period 9.35 Number of units outstanding at end of period 661 Total AUV at end of period (in thousands) 6 SP Jennison International Growth AUV at beginning of period 8.55 AUV at end of period 5.38 Number of units outstanding at end of period 212,147 Total AUV at end of period (in thousands) 1,142 Liquid Asset AUV at beginning of period 14.67 AUV at end of period 14.96 Number of units outstanding at end of period 9,752,616 Total AUV at end of period (in thousands) 145,943 ING VP MagnaCap AUV at beginning of period 10.00 AUV at end of period 9.33 Number of units outstanding at end of period 102,247 Total AUV at end of period (in thousands) 954 ING VP Worldwide Growth AUV at beginning of period 8.73 AUV at end of period 6.98 Number of units outstanding at end of period 468,772 Total AUV at end of period (in thousands) 3,270 Pioneer Fund VCT AUV at beginning of period 10.00 AUV at end of period 9.37 Number of units outstanding at end of period 22,142 Total AUV at end of period (in thousands) 207 Pioneer Small Company VCT AUV at beginning of period 10.00 AUV at end of period 9.57 Number of units outstanding at end of period 655 Total AUV at end of period (in thousands) 6 Prudential Jennison AUV at beginning of period 7.82 AUV at end of period 6.25 Number of units outstanding at end of period 1,102,268 Total AUV at end of period (in thousands) 6,893 Putnam VT Voyager Fund II AUV at beginning of period 10.00 AUV at end of period 8.74 Number of units outstanding at end of period 686 Total AUV at end of period (in thousands) 6 Research AUV at beginning of period 25.72 AUV at end of period 19.84 Number of units outstanding at end of period 1,666,295 Total AUV at end of period (in thousands) 33,056 Total Return AUV at beginning of period 20.22 AUV at end of period 19.96 Number of units outstanding at end of period 2,673,135 Total AUV at end of period (in thousands) 53,344 Value Equity AUV at beginning of period 18.97 AUV at end of period 17.80 Number of units outstanding at end of period 706,804 Total AUV at end of period (in thousands) 12,582 Separate Account Annual Charges of 1.95%: Aetna GET Fund P AUV at beginning of period 10.00 AUV at end of period 10.01 Number of units outstanding at end of period 3,705 Total AUV at end of period (in thousands) 37 Liquid Asset AUV at beginning of period 14.45 AUV at end of period 14.72 Number of units outstanding at end of period 92 Total AUV at end of period (in thousands) 1 Research AUV at beginning of period 25.48 AUV at end of period 19.62 Number of units outstanding at end of period 23 Total AUV at end of period (in thousands) 0 Total Return AUV at beginning of period 20.03 AUV at end of period 19.74 Number of units outstanding at end of period 470 Total AUV at end of period (in thousands) 9 Separate Account Annual Charges of 2.20%: Aetna GET Fund P AUV at beginning of period 10.00 AUV at end of period 10.00 Number of units outstanding at end of period 114,881 Total AUV at end of period (in thousands) 1,149 Alliance Bernstein Value AUV at beginning of period 10.00 AUV at end of period 9.99 Number of units outstanding at end of period 669 Total AUV at end of period (in thousands) 7 Alliance Premier Growth AUV at beginning of period 10.00 AUV at end of period 9.53 Number of units outstanding at end of period 773 Total AUV at end of period (in thousands) 7 Brinson Tactical Allocation AUV at beginning of period 10.00 AUV at end of period 9.37 Number of units outstanding at end of period 713 Total AUV at end of period (in thousands) 7 Fidelity VIP EquityIncome AUV at beginning of period 10.00 AUV at end of period 9.55 Number of units outstanding at end of period 681 Total AUV at end of period (in thousands) 7 PIMCO High Yield Bond AUV at beginning of period 9.80 AUV at end of period 9.81 Number of units outstanding at end of period 263 Total AUV at end of period (in thousands) 3 INVESCO VIFFinancial Services Fund AUV at beginning of period 10.00 AUV at end of period 9.33 Number of units outstanding at end of period 277 Total AUV at end of period (in thousands) 3 INVESCO VIFHealth Sciences Fund AUV at beginning of period 10.00 AUV at end of period 10.23 Number of units outstanding at end of period 252 Total AUV at end of period (in thousands) 3 Janus Aspen Worldwide Growth AUV at beginning of period 10.00 AUV at end of period 9.33 Number of units outstanding at end of period 281 Total AUV at end of period (in thousands) 3 Liquid Asset AUV at beginning of period 14.04 AUV at end of period 14.26 Number of units outstanding at end of period 47,932 Total AUV at end of period (in thousands) 683 ING VP Convertible AUV at beginning of period 10.00 AUV at end of period 10.46 Number of units outstanding at end of period 246 Total AUV at end of period (in thousands) 3 Pioneer Small Company VCT AUV at beginning of period 10.00 AUV at end of period 9.56 Number of units outstanding at end of period 4,125 Total AUV at end of period (in thousands) 39 Prudential Jennison AUV at beginning of period 7.80 AUV at end of period 6.21 Number of units outstanding at end of period 1,081 Total AUV at end of period (in thousands) 7 Putnam VT Growth and Income AUV at beginning of period 10.00 AUV at end of period 9.25 Number of units outstanding at end of period 5,022 Total AUV at end of period (in thousands) 46 Total Return AUV at beginning of period 19.73 AUV at end of period 19.39 Number of units outstanding at end of period 335 Total AUV at end of period (in thousands) 6 Separate Account Annual Charges of 2.40%: Aetna GET Fund P AUV at beginning of period 10.00 AUV at end of period 9.99 Number of units outstanding at end of period 35,943 Total AUV at end of period (in thousands) 359 Alliance Bernstein Value AUV at beginning of period 10.00 AUV at end of period 9.98 Number of units outstanding at end of period 4,856 Total AUV at end of period (in thousands) 48 Alliance Premier Growth AUV at beginning of period 10.00 AUV at end of period 9.52 Number of units outstanding at end of period 5,078 Total AUV at end of period (in thousands) 48 Janus Aspen Worldwide Growth AUV at beginning of period 10.00 AUV at end of period 9.32 Number of units outstanding at end of period 275 Total AUV at end of period (in thousands) 3 Liquid Asset AUV at beginning of period 13.70 AUV at end of period 13.89 Number of units outstanding at end of period 16,519 Total AUV at end of period (in thousands) 229 Putnam VT Voyager Fund II AUV at beginning of period 10.00 AUV at end of period 8.71 Number of units outstanding at end of period 884 Total AUV at end of period (in thousands) 8 Total Return AUV at beginning of period 19.48 AUV at end of period 19.11 Number of units outstanding at end of period 529 Total AUV at end of period (in thousands) 10 Separate Account Annual Charges of 2.55%: Aetna GET Fund P AUV at beginning of period 10.00 AUV at end of period 9.99 Number of units outstanding at end of period 27,231 Total AUV at end of period (in thousands) 272 INVESCO VIFHealth Sciences Fund AUV at beginning of period 10.00 AUV at end of period 10.22 Number of units outstanding at end of period 173 Total AUV at end of period (in thousands) 2 Liquid Asset AUV at beginning of period 13.45 AUV at end of period 13.62 Number of units outstanding at end of period 18,352 Total AUV at end of period (in thousands) 250 ING VP Growth and Income AUV at beginning of period 10.00 AUV at end of period 10.37 Number of units outstanding at end of period 172 Total AUV at end of period (in thousands) 2 Pioneer Small Company VCT AUV at beginning of period 10.00 AUV at end of period 9.54 Number of units outstanding at end of period 186 Total AUV at end of period (in thousands) 2 Total Return AUV at beginning of period 19.29 AUV at end of period 18.90 Number of units outstanding at end of period 190 Total AUV at end of period (in thousands) 4 ING VARIABLE ANNUITIES GOLDEN AMERICAN LIFE INSURANCE COMPANY Golden American Life Insurance Company is a stock company domiciled in Delaware. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SmartDesign Advantage-121820 05/01/2002 PART B STATEMENT OF ADDITIONAL INFORMATION Statement of Additional Information SMARTDESIGN ADVANTAGE VARIABLE ANNUITY DEFERRED COMBINATION VARIABLE AND FIXED ANNUITY CONTRACT ISSUED BY SEPARATE ACCOUNT B OF GOLDEN AMERICAN LIFE INSURANCE COMPANY This Statement of Additional Information is not a prospectus. The information contained herein should be read in conjunction with the Prospectus for the Golden American Life Insurance Company Deferred Variable Annuity Contract, which is referred to herein. The Prospectus sets forth information that a prospective investor ought to know before investing. For a copy of the Prospectus, send a written request to Golden American Life Insurance Company, Customer Service Center, P.O. Box 2700, West Chester, Pennsylvania 19380-1478 or telephone1-800-366-0066. DATE OF PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION: May 1, 2002 TABLE OF CONTENTS ITEM PAGE Introduction 1 Description of Golden American Life Insurance Company 1 Safekeeping of Assets 1 The Administrator 1 Independent Auditors 1 Distribution of Contracts 1 Performance Information 2 IRA Partial Withdrawal Option 5 Other Information 6 Financial Statement of Golden American Life Insurance Company Financial Statements of Separate Account B INTRODUCTION This Statement of Additional Information provides background information regarding Separate Account B. DESCRIPTION OF GOLDEN AMERICAN LIFE INSURANCE COMPANY Golden American Life Insurance Company ("Golden American") is a stock life insurance company organized under the laws of the State of Delaware. Golden American is a wholly owned subsidiary of Equitable Life Insurance Company of Iowa ("Equitable Life"). Equitable Life is a wholly owned subsidiary of Equitable of Iowa Companies, Inc. ("Equitable of Iowa") which in turn is a wholly owned subsidiary of ING Groep N.V. ("ING") a global financial services holding company based in the Netherlands. ING had approximately $624 billion in assets as of December 31, 2001. As of December 31, 2001, Golden American had approximately $808.1 million in stockholder's equity and approximately $14.3 billion in total assets, including approximately $10.9 billion of separate account assets. Golden American is authorized to do business in all jurisdictions except New York. Golden American offers variable insurance products. Golden American formed a subsidiary, First Golden American Life Insurance Company of New York ("First Golden"), which was licensed to do variable annuity business in the states of New York and Delaware. First Golden was merged into ReliaStar Life Insurance Company of New York, another wholly owned subsidiary of ING and an affiliate, on April 1, 2002. SAFEKEEPING OF ASSETS Golden American acts as its own custodian for Separate Account B. THE ADMINISTRATOR Effective January 1, 1997, Equitable and Golden American became parties to a service agreement pursuant to which Equitable Life agreed to provide certain accounting, actuarial, tax, underwriting, sales, management and other services to Golden American. Expenses incurred by Equitable Life in relation to this service agreement were reimbursed by Golden American on an allocated cost basis. No charges were billed to Golden American by Equitable Life pursuant to the service agreement in 1997. Equitable Life billed Golden American $309,000 and $930,000 pursuant to the service agreement in 2001 and 2000, respectively. INDEPENDENT AUDITORS Ernst & Young LLP, independent auditors, performs annual audits of Golden American and Separate Account B. DISTRIBUTION OF CONTRACTS The offering of contracts under the prospectus associated with this Statement of Additional Information is continuous. Directed Services, Inc., an affiliate of Golden American, acts as the principal underwriter (as defined in the Securities Act of 1933 and the Investment Company Act of 1940, as amended) of the variable insurance products (the "variable insurance products") issued by Golden American. The variable insurance products were sold primarily through two broker/dealer institutions during the year ended December 31, 1999. For the year ended December 31, 2000 and December 31, 2001 only a single broker/dealer institution sold more than 10% of Golden American's variable insurance products. For the years ended 2001, 2000 and 1999 commissions paid by Golden American, including amounts paid by its subsidiary, First Golden American Life Insurance Company of New York, to Directed Services, Inc. aggregated $223,321,000, $208,883,000 and $181,536,000, respectively. All commissions received by the distributor were passed through to the broker-dealers who sold the contracts. Directed Services, Inc. is located at 1475 Dunwoody Drive, West Chester, Pennsylvania 19380-1478. Under a management services agreement, last amended in 1995, Golden American provides to Directed Services, Inc. certain of its personnel to perform management, administrative and clerical services and the use of certain facilities. Golden American charges Directed Services, Inc. for such expenses and all other general and administrative costs, first on the basis of direct charges when identifiable, and the remainder allocated based on the estimated amount of time spent by Golden American's employees on behalf of Directed Services, Inc. In the opinion of management, this method of cost allocation is reasonable. This fee, calculated as a percentage of average assets in the variable separate accounts, was $23,138,000, $21,296,000, and $10,136,000 for the years ended 2001, 2000, and 1999, respectively. PERFORMANCE INFORMATION Performance information for the subaccounts of Separate Account B, including yields, standard annual returns and other non-standard measures of performance of all subaccounts, may appear in reports or promotional literature to current or prospective owners. Such non-standard measures of performance will be computed, or accompanied by performance data computed, in accordance with standards defined by the SEC. Negative values are denoted by minus signs ("-"). Performance information for measures other than total return do not reflect any applicable premium tax that can range from 0% to 3.5%. As described in the prospectus, three death benefit options are available. The following performance values reflect the election at issue of Option Package III, thus providing values reflecting the highest aggregate contract charges. In addition, the performance values reflect the selection of the earnings multiplier benefit rider. If one of the other death benefit options had been elected, or if the earnings multiplier benefit rider had not been elected, the historical performance values would be higher than those represented in the examples. SEC STANDARD MONEY MARKET SUBACCOUNT YIELDS Current yield for the Liquid Asset Subaccount will be based on the change in thevalue of a hypothetical investment (exclusive of capital changes or income other than investment income) over a particular 7-day period, less a pro rata share of subaccount expenses which includes deductions for the mortality and expense risk charge and the administrative charge accrued over that period (the "base period"), and stated as a percentage of the investment at the start of the base period (the "base period return"). The base period return is then annualized by multiplying by 365/7, with the resulting yield figure carried to at least the nearest hundredth of one percent. Calculation of "effective yield" begins with the same "base period return" used in the calculation of yield, which is then annualized to reflect weekly compounding pursuant to the following formula: Effective Yield = [(Base Period Return) +1)^365/7] - 1 The current yield and effective yield of the Liquid Asset Subaccount for the 7-day period December 25, 2001 to December 31, 2001 were -0.08% and -0.08% respectively. SEC STANDARD 30-DAY YIELD FOR NON-MONEY MARKET SUBACCOUNTS Quotations of yield for the remaining subaccounts will be based on all investment income per subaccount earned during a particular 30-day period, less expenses accrued during the period ("net investment income"), 2 and will be computed by dividing net investment income by the value of an accumulation unit on the last day of the period, according to the following formula: Yield = 2 x [((a - b)/(c x d) + 1)^6 - 1] Where: [a] equals the net investment income earned during the period by the investment portfolio attributable to shares owned by a subaccount [b] equals the expenses accrued for the period (net of reimbursements) [c] equals the average daily number of units outstanding during the period based on the accumulation unit value [d] equals the value (maximum offering price) per accumulation unit value on the last day of the period Yield on subaccounts of Separate Account B is earned from the increase in net asset value of shares of the investment portfolio in which the subaccount invests and from dividends declared and paid by the investment portfolio, which are automatically reinvested in shares of the investment portfolio. SEC STANDARD AVERAGE ANNUAL TOTAL RETURN FOR ALL SUBACCOUNTS Quotations of average annual total return for any subaccount will be expressed in terms of the average annual compounded rate of return of a hypothetical investment in a contract over a period of one, five and 10 years (or, if less, up to the life of the subaccount), calculated pursuant to the formula: P(1+T)^(n)=ERV Where: (1) [P] equals a hypothetical initial premium payment of $1,000 (2) [T] equals an average annual total return (3) [n] equals the number of years (4) [ERV] equals the ending redeemable value of a hypothetical $1,000 initial premium payment made at the beginning of the period (or fractional portion thereof) All total return figures reflect the deduction of the maximum sales load, the administrative charges, the mortality and expense risk charges and earnings multiplier benefit rider charge. The Securities and Exchange Commission (the "SEC") requires that an assumption be made that the contract owner surrenders the entire contract at the end of the one, five and 10 year periods (or, if less, up to the life of the security) for which performance is required to be calculated. This assumption may not be consistent with the typical contract owner's intentions in purchasing a contract and may adversely affect returns. Quotations of total return may simultaneously be shown for other periods, as well as quotations of total return that do not take into account certain contractual charges such as sales load. The subaccounts which are not shown had not commenced operations as of December 31, 2001. Average Annual Total Return for the Subaccounts presented on a standardized basis, which includes deductions for the maximum mortality and expense risk charge for Option III Death Benefit of1.80%, the administrative charge of 0.15%, the annual contract fee, the applicable surrender charge and shown with and without the earnings multiplier benefit rider charge annualized at 0.25%, for the year ending December 31, 2001 were as follows: 3 AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDING 12/31/01-STANDARDIZED WITH - ------------------------------------------------------------------------- SURRENDER CHARGES AND WITH EEB RIDER - ------------------------------------
FROM INCEPTION 1 YEAR 5 YEARS 10 YEAR INCEPTION DATE THE GCG TRUST Core Bond Series -5.79% -1.01% N/A 1.52% 10/07/94 Value Equity Series -12.48% 3.83% N/A 8.13% 1/03/95 Liquid Asset Series -4.43% 2.61% 2.14% 2.74% 1/25/89 Research Series -29.03% 4.23% N/A 9.46% 10/07/94 Total Return Series -7.70% 7.84% N/A 9.55% 10/07/94 Janus Growth and Income -17.42% N/A N/A -14.04% 10/02/00 AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent Demographic Trends Fund (Series II) N/A N/A N/A 3.73% 10/12/01 AIM V.I. Growth Fund (Series II) N/A N/A N/A -2.84% 10/12/01 ALLIANCE VARIABLE INSURANCE FUNDS AllianceBernstein Value Portfolio (Class B) N/A N/A N/A -6.15% 7/13/01 Alliance Growth and Income Portfolio (Class B) N/A N/A N/A -10.43% 7/13/01 Alliance Premier Growth Portfolio (Class B) N/A N/A N/A -10.74% 7/13/01 FIDELITY VARIABLE INSURANCE PRODUCTS FUND Fidelity Contrafund(R)Portfolio (Service Class 2) N/A N/A N/A -9.31% 7/13/01 Fidelity Equity-Income Portfolio (Service Class 2) N/A N/A N/A -10.47% 7/13/01 Fidelity Growth Portfolio (Service Class 2) N/A N/A N/A -13.64% 7/13/01 ING VARIABLE INSURANCE TRUST ING VP Worldwide Growth Portfolio -26.27% N/A N/A -23.26% 5/01/00 ING PARTNERS, INC ING MFS Capital Opportunities Portfolio N/A N/A N/A -17.25% 7/13/01 ING VARIABLE PORTFOLIOS, INC. ING VP Convertible Portfolio (Class S) N/A N/A N/A -1.43% 7/13/01 ING VP Large Company Value Portfolio (Class S) N/A N/A N/A -2.17% 7/13/01 ING VP LargeCap Growth Portfolio (Class S) N/A N/A N/A -10.41% 7/13/01 ING VP MagnaCap Portfolio (Class S) N/A N/A N/A -12.99% 5/01/01 ING VARIABLE PRODUCTS TRUST ING VP Index Plus LargeCap Portfolio (Class S) N/A N/A N/A -12.59% 7/13/01 ING VP Index Plus MidCap Portfolio (Class S) N/A N/A N/A -7.48% 7/13/01 ING VP Index Plus SmallCap Portfolio (Class S) N/A N/A N/A -5.48% 7/13/01 ING VP Value Opportunity Portfolio (Class S) N/A N/A N/A -16.14% 7/13/01 INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - Financial Services Fund N/A N/A N/A -12.71% 7/13/01 INVESCO VIF - Health Sciences Fund N/A N/A N/A -3.68% 7/13/01 INVESCO VIF - Utilities Fund N/A N/A N/A -25.23% 7/13/01 JANUS ASPEN SERIES Janus Aspen Series - Worldwide Growth Portfolio N/A N/A N/A -12.69% 12/31/99 (Service Shares) PIMCO VARIABLE INSURANCE TRUST PIMCO High Yield Portfolio -5.90% N/A N/A -0.57% 5/01/98 PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT Portfolio (Class II) N/A N/A N/A -12.51% 7/13/01 Pioneer Small Company VCT Portfolio (Class II) N/A N/A N/A -10.45% 7/13/01 PRUDENTIAL SERIES FUND, INC. Prudential Series - Jennison Portfolio (Class II) -26.26% N/A N/A -28.51% 5/01/00 Prudential Series - SP Jennison International -43.12% N/A N/A -43.96% 10/02/00 Growth Portfolio (Class II) PUTNAM VARIABLE TRUST Putnam VT - Growth and Income Fund (Class 1B) N/A N/A N/A -13.54% 4/30/01 Putnam VT - International Growth and Income Fund N/A N/A N/A -11.70% 7/13/01 (Class 1B) Putnam VT Voyager Fund II (Class 1B) N/A N/A N/A -18.80% 7/13/01 UBS SERIES TRUST UBS Tactical Allocation Portfolio (Class 1) N/A N/A N/A -12.36% 7/13/01
Average Annual Total Return for Periods Ending 12/31/01-Standardized with - ------------------------------------------------------------------------- Surrender Charges and without EEB Riders - ----------------------------------------
FROM INCEPTION 1 YEAR 5 YEARS 10 YEAR INCEPTION DATE THE GCG TRUST Core Bond Series -5.54% -0.76% N/A 1.77% 10/07/94 Value Equity Series -12.25% 4.09% N/A 8.40% 1/03/95 Liquid Asset Series -4.18% 2.87% 2.39% 3.00% 1/25/89 Research Series -28.84% 4.49% N/A 9.74% 10/07/94 Total Return Series -7.46% 8.11% N/A 9.82% 10/07/94 Janus Growth and Income Series -17.20% N/A N/A -13.81% 10/02/00 AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent Demographic Trends Fund (Series II) N/A N/A N/A 3.80% 10/12/01 AIM V.I. Growth Fund (Series II) N/A N/A N/A -2.78% 10/12/01 ALLIANCE VARIABLE INSURANCE FUNDS AllianceBernstein Value Portfolio (Class B) N/A N/A N/A -6.02% 7/13/01 Alliance Growth and Income Portfolio (Class B) N/A N/A N/A -10.31% 7/13/01 Alliance Premier Growth Portfolio (Class B) N/A N/A N/A -10.62% 7/13/01 FIDELITY VARIABLE INSURANCE PRODUCTS FUND Fidelity Contrafund(R)Portfolio (Service Class 2) N/A N/A N/A -9.19% 7/13/01 Fidelity Equity-Income Portfolio (Service Class 2) N/A N/A N/A -10.35% 7/13/01 Fidelity Growth Portfolio (Service Class 2) N/A N/A N/A -13.52% 7/13/01 ING VARIABLE INSURANCE TRUST ING VP Worldwide Growth Portfolio -26.07% N/A N/A -23.04% 5/01/00 ING PARTNERS, INC ING MFS Capital Opportunities Portfolio N/A N/A N/A -17.14% 7/13/01 ING VARIABLE PORTFOLIOS, INC. ING VP Convertible Portfolio (Class S) N/A N/A N/A -1.30% 7/13/01 ING VP Large Company Value Portfolio (Class S) N/A N/A N/A -2.04% 7/13/01 ING VP LargeCap Growth Portfolio (Class S) N/A N/A N/A -10.29% 7/13/01 ING VP MagnaCap Portfolio (Class S) N/A N/A N/A -12.81% 5/01/01 ING VARIABLE PRODUCTS TRUST ING VP Index Plus LargeCap Portfolio (Class S) N/A N/A N/A -12.47% 7/13/01 ING VP Index Plus MidCap Portfolio (Class S) N/A N/A N/A -7.36% 7/13/01 ING VP Index Plus SmallCap Portfolio (Class S) N/A N/A N/A -5.35% 7/13/01 ING VP Value Opportunity Portfolio (Class S) N/A N/A N/A -16.03% 7/13/01 INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - Financial Services Fund N/A N/A N/A -12.59% 7/13/01 INVESCO VIF - Health Sciences Fund N/A N/A N/A -3.55% 7/13/01 INVESCO VIF - Utilities Fund N/A N/A N/A -25.13% 7/13/01 JANUS ASPEN SERIES Janus Aspen Series - Worldwide Growth Portfolio N/A N/A N/A -12.58% 7/13/01 (Service Shares) PIMCO VARIABLE INSURANCE TRUST PIMCO High Yield Portfolio -5.65% N/A N/A -0.32% 5/01/98 PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT Portfolio (Class II) N/A N/A N/A -12.39% 7/13/01 Pioneer Small Company VCT Portfolio (Class II) N/A N/A N/A -10.33% 7/13/01 PRUDENTIAL SERIES FUND, INC. Prudential Series - Jennison Portfolio (Class II) -26.06% N/A N/A -28.31% 5/01/00 Prudential Series - SP Jennison International -42.96% N/A N/A -43.81% 10/02/00 Growth Portfolio (Class II) PUTNAM VARIABLE TRUST Putnam VT - Growth and Income Fund (Class 1B) N/A N/A N/A -13.36% 4/30/01 Putnam VT - International Growth and Income Fund N/A N/A N/A -11.58% 7/13/01 (Class 1B) Putnam VT Voyager Fund II (Class 1B) N/A N/A N/A -18.69% 7/13/01 UBS SERIES TRUST UBS Tactical Allocation Portfolio (Class 1) N/A N/A N/A -12.24% 7/13/01
4 P(1+T)^(n)]=ERV Where: (1) [P] equals a hypothetical initial premium payment of $1,000 (2) [T] equals an average annual total return (3) [n] equals the number of years (4) [ERV] equals the ending redeemable value of a hypothetical $1,000 initial premium payment made at the beginning of the period (or fractional portion thereof) assuming certain loading and charges are zero. The subaccounts which are not shown had not commenced operations as of December 31, 2001. Average Annual Total Return for the Subaccounts presented on a non-standardized basis, which includes deductions for the maximum mortality and expense risk charge for Option III Death Benefit of1.80%, the administrative charge of 0.15%, and shown with and without the earnings multiplier benefit rider charge annualized at 0.25%, but not the surrender charge or annual contract fee for the year ending December 31, 2001 were as follows: 5 Average Annual Total Return for Periods Ending 12/31/01-Non-standardized with - ----------------------------------------------------------------------------- out Surrender Charges, with EEB Riders, without contract charges - ----------------------------------------------------------------
FROM INCEPTION 1 YEAR 5 YEARS 10 YEAR INCEPTION DATE THE GCG TRUST Core Bond Series 0.20% -0.97% N/A 1.56% 10/07/94 Value Equity Series -6.48% 3.87% N/A 8.16% 1/03/95 Liquid Asset Series 1.56% 2.65% 2.18% 2.78% 1/25/89 Research Series -23.02% 4.27% N/A 9.49% 10/07/94 Total Return Series -1.71% 7.88% N/A 9.58% 10/07/94 Janus Growth and Income Series -11.41% N/A N/A -9.87% 10/02/00 AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent Demographic Trends Fund (Series II) N/A N/A N/A 0.14% 9/01/01 AIM V.I. Growth Fund (Series II) N/A N/A N/A 12.69% 9/20/01 ALLIANCE VARIABLE INSURANCE FUNDS AllianceBernstein Value Portfolio (Class B) N/A N/A N/A -1.43% 5/01/01 Alliance Growth and Income Portfolio (Class B) -2.05% N/A N/A 3.54% 6/01/99 Alliance Premier Growth Portfolio (Class B) -19.23% N/A N/A -11.68% 7/14/99 FIDELITY VARIABLE INSURANCE PRODUCTS FUND Fidelity Contrafund(R)Portfolio (Service Class 2) -14.40% N/A N/A -10.39% 1/12/00 Fidelity Equity-Income Portfolio (Service Class 2) -7.31% N/A N/A 0.00% 1/12/00 Fidelity Growth Portfolio (Service Class 2) -19.68% N/A N/A -15.52% 1/12/00 ING VARIABLE INSURANCE TRUST ING VP Worldwide Growth Portfolio -20.26% N/A N/A -19.72% 5/01/00 ING PARTNERS, INC ING MFS Capital Opportunities Portfolio -26.42% N/A N/A 5.42% 11/28/97 ING VARIABLE PORTFOLIOS, INC. ING VP Convertible Portfolio (Class S) N/A N/A N/A 4.57% 7/13/01 ING VP Large Company Value Portfolio (Class S) N/A N/A N/A 3.83% 7/13/01 ING VP LargeCap Growth Portfolio (Class S) N/A N/A N/A -4.41% 7/13/01 ING VP MagnaCap Portfolio (Class S) N/A N/A N/A -6.99% 5/01/01 ING VARIABLE PRODUCTS TRUST ING VP Index Plus LargeCap Portfolio (Class S) N/A N/A N/A -6.59% 7/13/01 ING VP Index Plus MidCap Portfolio (Class S) N/A N/A N/A -1.48% 7/13/01 ING VP Index Plus SmallCap Portfolio (Class S) N/A N/A N/A 0.52% 7/13/01 ING VP Value Opportunity Portfolio (Class S) N/A N/A N/A -10.14% 7/13/01 INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - Financial Services Fund -11.87% N/A N/A 7.81% 9/21/99 INVESCO VIF - Health Sciences Fund -14.52% N/A N/A 12.26% 5/22/97 INVESCO VIF - Utilities Fund -33.91% 3.28% N/A 4.75% 1/03/95 JANUS ASPEN SERIES Janus Aspen Series - Worldwide Growth Portfolio -24.33% N/A N/A -21.14% 12/31/99 (Service Shares) PIMCO VARIABLE INSURANCE TRUST PIMCO High Yield Portfolio 0.10% N/A N/A -0.54% 5/01/98 PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT Portfolio (Class II) -13.18% N/A N/A -9.81% 5/01/00 Pioneer Small Company VCT Portfolio (Class II) N/A N/A N/A -4.45% 7/13/01 PRUDENTIAL SERIES FUND, INC. Prudential Series - Jennison Portfolio (Class II) -20.25% N/A N/A -24.80% 5/01/00 Prudential Series - SP Jennison International -37.10% N/A N/A -39.34% 10/02/00 Growth Portfolio (Class II) PUTNAM VARIABLE TRUST Putnam VT - Growth and Income Fund (Class 1B) -8.46% N/A N/A -0.86% 4/06/98 Putnam VT - International Growth and Income Fund -22.56% N/A N/A -3.69% 4/06/98 (Class 1B) Putnam VT Voyager Fund II (Class 1B) -32.32% N/A N/A -44.22% 9/29/00 UBS SERIES TRUST UBS Tactical Allocation Portfolio (Class 1) -14.48% N/A N/A -1.73% 1/04/99
6 Average Annual Total Return for Periods Ending 12/31/01-Non-standardized with - ------------------------------------------------------------------------------ out Surrender Charges, without EEB Riders, without Contract charges - -------------------------------------------------------------------
FROM INCEPTION 1 YEAR 5 YEARS 10 YEAR INCEPTION DATE THE GCG TRUST Core Bond Series 0.45% -0.72% N/A 1.81% 10/07/94 Value Equity Series -6.25% 4.13% N/A 8.43% 1/03/95 Liquid Asset Series 1.81% 2.91% 2.43% 3.03% 1/25/89 Research Series -22.83% 4.53% N/A 9.76% 10/07/94 Total Return Series -1.46% 8.15% N/A 9.85% 10/07/94 Janus Growth and Income Series -11.19% N/A N/A -9.64% 10/02/00 AIM VARIABLE INSURANCE FUNDS AIM V.I. Dent Demographic Trends Fund (Series II) N/A N/A N/A 0.24% 9/01/01 AIM V.I. Growth Fund (Series II) N/A N/A N/A 12.81% 9/20/01 ALLIANCE VARIABLE INSURANCE FUNDS AllianceBernstein Value Portfolio (Class B) N/A N/A N/A -1.23% 5/01/01 Alliance Growth and Income Portfolio (Class B) -1.76% N/A N/A 3.83% 6/01/99 Alliance Premier Growth Portfolio (Class B) -18.98% N/A N/A -11.42% 7/14/99 FIDELITY VARIABLE INSURANCE PRODUCTS FUND Fidelity Contrafund(R)Portfolio (Service Class 2) -14.14% N/A N/A -10.14% 1/12/00 Fidelity Equity-Income Portfolio (Service Class 2) -7.04% N/A N/A -0.27% 1/12/00 Fidelity Growth Portfolio (Service Class 2) -19.44% N/A N/A -15.33% 1/12/00 ING VARIABLE INSURANCE TRUST ING VP Worldwide Growth Portfolio -20.06% N/A N/A -19.51% 5/01/00 ING PARTNERS, INC ING MFS Capital Opportunities Portfolio -26.19% N/A N/A 5.71% 11/28/97 ING VARIABLE PORTFOLIOS, INC. ING VP Convertible Portfolio (Class S) N/A N/A N/A 4.70% 7/13/01 ING VP Large Company Value Portfolio (Class S) N/A N/A N/A 3.96% 7/13/01 ING VP LargeCap Growth Portfolio (Class S) N/A N/A N/A -4.29% 7/13/01 ING VP MagnaCap Portfolio (Class S) N/A N/A N/A -6.81% 5/01/01 ING VARIABLE PRODUCTS TRUST ING VP Index Plus LargeCap Portfolio (Class S) N/A N/A N/A -6.47% 7/13/01 ING VP Index Plus MidCap Portfolio (Class S) N/A N/A N/A -1.36% 7/13/01 ING VP Index Plus SmallCap Portfolio (Class S) N/A N/A N/A 0.65% 7/13/01 ING VP Value Opportunity Portfolio (Class S) N/A N/A N/A -10.03% 7/13/01 INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF - Financial Services Fund -11.61% N/A N/A 8.11% 9/21/99 INVESCO VIF - Health Sciences Fund -14.26% N/A N/A 12.56% 5/22/97 INVESCO VIF - Utilities Fund -33.70% 3.57% N/A 5.04% 1/03/95 JANUS ASPEN SERIES Janus Aspen Series - Worldwide Growth Portfolio -24.10% N/A N/A -20.89% 12/31/99 (Service Shares) PIMCO VARIABLE INSURANCE TRUST PIMCO High Yield Portfolio 0.34% N/A N/A -0.28% 5/01/98 PIONEER VARIABLE CONTRACTS TRUST Pioneer Fund VCT Portfolio (Class II) -12.92% N/A N/A -9.55% 5/1/00 Pioneer Small Company VCT Portfolio (Class II) N/A N/A N/A -4.33% 7/13/01 PRUDENTIAL SERIES FUND, INC. Prudential Series - Jennison Portfolio (Class II) -20.05% N/A N/A -24.61% 5/01/00 Prudential Series - SP Jennison International -36.94% N/A N/A -39.19% 10/01/00 Growth Portfolio (Class II) PUTNAM VARIABLE TRUST Putnam VT - Growth and Income Fund (Class 1B) -8.18% N/A N/A -0.58% 4/06/98 Putnam VT - International Growth and Income Fund -22.32% N/A N/A -3.41% 4/06/98 (Class 1B) Putnam VT Voyager Fund II (Class 1B) -32.10% N/A N/A -44.04% 9/29/00 UBS SERIES TRUST UBS Tactical Allocation Portfolio (Class 1) -14.22% N/A N/A -1.46% 1/04/99
7 Performance information for a subaccount may be compared, in reports and promotional literature, to: (i) the Standard & Poor's 500 Stock Index ("S&P500"), Dow Jones Industrial Average ("DJIA"), Donoghue Money Market Institutional Averages, or other indices that measure performance of a pertinent group of securities so that investors may compare a subaccount's results with those of a group of securities widely regarded by investors as representative of the securities markets in general; (ii) other groups of variable annuity separate accounts or other investment products tracked by Lipper Analytical Services, a widely used independent research firm which ranks mutual funds and other investment companies by overall performance, investment objectives, and assets, or tracked by other services, companies, publications, or persons who rank such investment companies on overall performance or other criteria; and(iii) the Consumer Price Index (measure for inflation) to assess the real rate of return from an investment in the contract. Unmanaged indices may assume there investment of dividends but generally do not reflect deductions for administrative and management costs and expenses. Performance information for any subaccount reflects only the performance of a hypothetical contract under which contract value is allocated to a subaccount during a particular time period on which the calculations are based. Performance information should be considered in light of the investment objectives and policies, characteristics and quality of the investment portfolio of the Trust in which the Separate Account B subaccounts invest, and the market conditions during the given time period, and should not be considered as a representation of what may be achieved in the future. Reports and promotional literature may also contain other information including the ranking of any subaccount derived from rankings of variable annuity separate accounts or other investment products tracked by Lipper Analytical Services or by other rating services, companies, publications, or other persons who rank separate accounts or other investment products on overall performance or other criteria. PUBLISHED RATINGS From time to time, the rating of Golden American as an insurance company by A.M. Best may be referred to in advertisements or in reports to contract owners. Each year the A.M. Best Company reviews the financial status of thousands of insurers, culminating in the assignment of Best's Ratings. These ratings reflect their current opinion of the relative financial strength and operating performance of an insurance company in comparison to the norms of the life/health insurance industry. Best's ratings range from A+ + to F. An A++ and A+ ratings mean, in the opinion of A.M. Best, that the insurer has demonstrated the strongest ability to meet its respective policyholder and other contractual obligations. 8 ACCUMULATION UNIT VALUE The calculation of the Accumulation Unit Value ("AUV") is discussed in the prospectus for the Contracts under Performance Information. Note that in your Contract, accumulation unit value is referred to as the Index of Investment Experience. The following illustrations show a calculation of a new AUV and the purchase of Units (using hypothetical examples). Note that the examples below are calculated for a Contract issued with the Option III Death Benefit, the death benefit option with the highest mortality and expense risk charge. The mortality and expense risk charge associated with the Options I and II Death Benefits are lower than that used in the examples and would result in higher AUV's or contract values. ILLUSTRATION OF CALCULATION OF AUV EXAMPLE 1. 1. AUV, beginning of period 2. Value of securities, beginning of period 3. Change in value of securities 4. Gross investment return (3) divided by (2) 5. Less daily mortality and expense charge 6. Less asset based administrative charge 7. Net investment return (4) minus (5) minus (6) 8. Net investment factor (1.000000) plus (7) 9. AUV, end of period (1) multiplied by (8) 9 ILLUSTRATION OF PURCHASE UNITS (ASSUMING NO STATE PREMIUM TAX) EXAMPLE 2. 1. Initial Premium Payment 2. AUV on effective date of purchase (see Example 1) 3. Number of Units purchased [(1) divided by (2)] 4. AUV for valuation date following purchase (see Example 1) 5. Accumulation Value in account for valuation date following purchase [(3) multiplied by (4)] IRA PARTIAL WITHDRAWAL OPTION If the contract owner has an IRA contract and will attain age 70 1/2 in the current calendar year, distributions will be made in accordance with the requirements of Federal tax law. This option is available to assure that the required minimum distributions from qualified plans under the Internal Revenue Code (the "Code") are made. Under the Code, distributions must begin no later than April 1st of the calendar year following the calendar year in which the contract owner attains age 70 1/2. If the required minimum distribution is not withdrawn, there may be a penalty tax in an amount equal to 50% of the difference between the amount required to be withdrawn and the amount actually withdrawn. Even if the IRA Partial Withdrawal Option is not elected, distributions must nonetheless be made in accordance with the requirements of Federal tax law. Golden American notifies the contract owner of these regulations with a letter mailed in the calendar year in which the contract owner reaches age 70 1/2 which explains the IRA Partial Withdrawal Option and supplies an election form. If electing this option, the owner specifies whether the withdrawal amount will be based on a life expectancy calculated on a single life basis (contract owner's life only) or, if the contract owner is married, on a joint life basis (contract owner's and spouse's lives combined). The contract owner selects the payment mode on a monthly, quarterly or annual basis. If the payment mode selected on the election form is more frequent than annually, the payments in the first calendar year in which the option is in effect will be based on the amount of payment modes remaining when Golden American receives the completed election form. Golden American calculates the IRA Partial Withdrawal amount each year based on the minimum distribution rules. We do this by dividing the contract value by the life expectancy. In the first year withdrawals begin, we use the contract value as of the date of the first payment. Thereafter, we use the contract value on December 31st of each year. The life expectancy is recalculated each year. Certain minimum distribution rules govern payouts if the designated beneficiary is other than the contract owner's spouse and the beneficiary is more than ten years younger than the contract owner. OTHER INFORMATION Registration statements have been filed with the SEC under the Securities Act of1933, as amended, with respect to the Contracts discussed in this Statement of Additional Information. Not all of the information set forth in the registration statements, amendments and exhibits thereto has been included in this Statement of Additional Information. Statements contained in this Statement of Additional Information concerning the content of the Contracts and other legal instruments are intended to be summaries. For a complete statement of the terms of these documents, reference should be made to the instruments filed with the SEC. 10 Consolidated Financial Statements of Golden American Life Insurance Company The consolidated audited financial statements of Golden American Life Insurance Company are listed below and are included in this Statement of Additional Information: Report of Independent Auditors Audited Consolidated Financial Statements of Golden American Life Insurance Company Consolidated Balance Sheets as of December 31, 2001 and 2000 Consolidated Statements of Operations for the years ended December 31, 2001, 2000 and 1999 Consolidated Statements of Changes in Stockholders Equity for the years ended December 31, 2001, 2000 and 1999 Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999 Notes to Consolidated Financial Statements Financial Statements of Separate Account B The audited financial statements of Separate Account B are listed below and are included in this Statement of Additional Information: Report of Independent Auditors Audited Financial Statements of Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities as of December 31, 2001 Statement of Operations for the year ended December 31, 2001 Statements of Changes in Net Assets for the years ended December 31, 2001 and 2000 Notes to Financial Statements - -------------------------------------------------------------------------------- FINANCIAL STATEMENTS OF GOLDEN AMERICAN LIFE INSURANCE COMPANY - -------------------------------------------------------------------------------- REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholder Golden American Life Insurance Company We have audited the accompanying consolidated balance sheets of Golden American Life Insurance Company as of December 31, 2001 and 2000, and the related consolidated statements of operations, changes in stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements and schedules are the responsibility of the Companies' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. 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, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Golden American Life Insurance Company at December 31, 2001 and 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP Atlanta, Georgia March 15, 2002 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share date)
DECEMBER 31, DECEMBER 31, 2001 2000 ------------------------- ASSETS Investments: Fixed maturities, available for sale, at fair value (cost: 2001 - $1,982,527; 2000 - $798,751) ..................... $ 1,994,913 $ 792,578 Equity securities, at fair value (cost: 2001 - $74; 2000 - $8,611) 55 6,791 Mortgage loans on real estate .................................... 213,883 99,916 Policy loans ..................................................... 14,847 13,323 Short-term investments ........................................... 10,021 5,300 ------------------------- Total investments ................................................... 2,233,719 917,908 Cash and cash equivalents ........................................... 195,726 164,682 Reinsurance recoverable ............................................. 27,151 19,331 Reinsurance recoverable from affiliates ............................. 28,800 14,642 Due from affiliates ................................................. 20 38,786 Accrued investment income ........................................... 22,771 9,606 Deferred policy acquisition costs ................................... 709,042 635,147 Value of purchased insurance in force ............................... 20,203 25,942 Current income taxes recoverable .................................... 400 511 Property and equipment, less allowances for depreciation of $10,624 in 2001 and $5,638 in 2000 ............................ 10,468 14,404 Goodwill, less accumulated amortization of $17,600 in 2001 and $13,376 in 2000 .............................................. 151,363 155,587 Other assets ........................................................ 12,788 32,019 Separate account assets ............................................. 10,958,191 9,831,489 ------------------------- Total assets ........................................................ $14,370,642 $11,860,054 =========================
See accompanying notes. 2 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED BALANCE SHEETS-(Continued) (Dollars in thousands, except per share data)
DECEMBER 31, DECEMBER 31, 2001 2000 --------------------------- LIABILITIES AND STOCKHOLDER'S EQUITY Policy liabilities and accruals: Future policy benefits: Annuity and interest sensitive life products ........ $ 2,178,189 $ 1,062,891 Unearned revenue reserve ............................ 6,241 6,817 Other policy claims and benefits ...................... 836 82 --------------------------- 2,185,266 1,069,790 Surplus notes ............................................ 245,000 245,000 Revolving note payable ................................... 1,400 -- Due to affiliates ........................................ 25,080 19,887 Deferred income tax liability ............................ 12,612 7,377 Other liabilities ........................................ 125,264 69,374 Separate account liabilities ............................. 10,958,191 9,831,489 --------------------------- 13,552,813 11,242,917 Commitments and contingencies Stockholder's equity: Preferred Stock, par value $5,000 per share, authorized 50,000 shares ....................................... -- -- Common stock, par value $10 per share, authorized, issued, and outstanding 250,000 shares .............. 2,500 2,500 Additional paid-in capital ............................ 780,436 583,640 Accumulated other comprehensive gain (loss) ........... 3,804 (4,046) Retained earnings ..................................... 31,089 35,043 --------------------------- Total stockholder's equity ............................... 817,829 617,137 --------------------------- Total liabilities and stockholder's equity ............... $ 14,370,642 $ 11,860,054 ===========================
See accompanying notes. 3 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands)
YEAR ENDED DECEMBER 31 2001 2000 1999 ----------------------------------- REVENUES: Annuity and interest sensitive life product charges ....... $ 163,805 $ 144,877 $ 82,935 Management fee revenue .................................... 25,079 22,982 11,133 Net investment income ..................................... 94,396 64,140 59,169 Realized losses on investments ........................... (6,470) (6,554) (2,923) ----------------------------------- 276,810 225,445 150,314 Insurance benefits and expenses: Annuity and interest sensitive life benefits: Interest credited to account balances ................... 191,885 183,003 175,257 Guaranteed benefits reserve change ...................... 14,015 12,085 -- Benefit claims incurred in excess of account balances ... 3,182 4,943 6,370 Underwriting, acquisition, and insurance expenses: Commissions ............................................. 2,686 4,836 6,847 Commissions-- affiliates ................................ 229,726 208,883 181,536 General expenses ........................................ 113,259 84,936 60,205 Insurance taxes, state licenses, and fees ............... 6,610 4,528 3,976 Policy acquisition costs deferred ....................... (128,249) (168,444) (346,396) Amortization: Deferred policy acquisition costs ...................... 45,229 55,154 33,119 Value of purchased insurance in force .................. 4,403 4,801 6,238 Goodwill ............................................... 4,224 4,224 4,224 Expenses and charges reimbursed under modified coinsurance agreements .............................................. (1,085) (7,030) (9,247) Expenses and charges reimbursed under modified coinsurance agreements - affiliates ................................. (224,549) (218,757) -- ----------------------------------- 261,336 173,162 122,129 Interest expense ............................................. 19,252 19,867 8,894 ----------------------------------- 280,588 193,029 131,023 ----------------------------------- Income (loss) before income taxes ............................ (3,778) 32,416 19,291 Income taxes ................................................. 176 13,236 8,077 ----------------------------------- Net income (loss) ............................................ $ (3,954) $ 19,180 $ 11,214 ===================================
See accompanying notes. 4 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (Dollars in thousands)
Accumulated Additional Other Total Common Paid-in Comprehensive Retained Stockholder's Stock Capital Income (Loss) Earnings Equity ------------------------------------------------------------- Balance at December 31, 1998 .................. $ 2,500 $ 347,640 $ (895) $ 4,649 $ 353,894 Comprehensive income: Net income ............................... -- -- -- 11,214 11,214 Change in net unrealized investment losses ....................... -- -- (8,259) -- (8,259) --------- Comprehensive income ....................... 2,955 Contribution of capital .................... -- 121,000 -- -- 121,000 ------------------------------------------------------------- Balance at December 31, 1999 .................. $ 2,500 $ 468,640 $ (9,154) $ 15,863 $ 477,849 Comprehensive income: Net income ............................... -- -- -- 19,180 19,180 Change in net unrealized investment gains ........................ -- -- 5,108 -- 5,108 --------- Comprehensive income ....................... 24,288 Contribution of capital .................... -- 115,000 -- -- 115,000 ------------------------------------------------------------- Balance at December 31, 2000 .................. $ 2,500 $ 583,640 $ (4,046) $ 35,043 $ 617,137 Comprehensive income: Net loss ................................. -- -- -- (3,954) (3,954) Change in net unrealized investment gains ........................ -- -- 7,850 -- 7,850 --------- Comprehensive income ....................... 3,896 Contribution of capital .................... -- 196,796 -- -- 196,796 ------------------------------------------------------------- Balance at December 31, 2001 .................. $ 2,500 $ 780,436 $ 3,804 $ 31,089 $ 817,829 =============================================================
See accompanying notes. 5 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
YEAR ENDED DECEMBER 31 2001 2000 1999 ----------------------------------------- OPERATING ACTIVITIES Net income (loss) ...................................... $ (3,954) $ 19,180 $ 11,214 Adjustments to reconcile net income to net cash provided by (used in) operations: Adjustments related to annuity and interest sensitive life products: Interest credited and other charges on interest sensitive products ..................... 191,885 183,003 175,257 Charges for mortality and administration .......... (341) (313) 524 Change in unearned revenues ....................... (576) 517 2,460 Increase in policy liabilities and accruals ......... 754 74 8 Increase in guaranteed benefits reserve ............. 28,173 26,727 -- Decrease (increase) in accrued investment income .... (13,165) 1,592 (1,553) Policy acquisition costs deferred ................... (128,249) (168,444) (346,396) Amortization of deferred policy acquisition costs ... 45,229 55,154 33,119 Amortization of value of purchased insurance in force ................................ 4,403 4,801 6,238 Change in other assets, due to/from affiliates, other liabilities, and accrued income taxes ............. 108,578 (78,482) 24,845 Provision for depreciation and amortization ......... 1,341 9,062 9,296 Provision for deferred income taxes ................. (606) 13,282 8,077 Realized losses on investments ...................... 6,470 6,554 2,923 ----------------------------------------- Net cash provided by (used in) operating activities .... 239,942 72,707 (73,988) ----------------------------------------- INVESTING ACTIVITIES Sale, maturity, or repayment of investments: Fixed maturities - available for sale ............... 880,688 205,136 220,547 Mortgage loans on real estate ....................... 135,996 12,701 6,572 Equity securities ................................... 6,956 6,128 -- Policy loans - net .................................. -- 834 -- Short-term investments - net ........................ -- -- 980 ----------------------------------------- 1,023,640 224,799 228,099 Acquisition of investments: Fixed maturities - available for sale ............... (2,070,849) (154,028) (344,587) Equity securities ................................... (40) -- -- Mortgage loans on real estate ....................... (250,314) (12,887) (9,659) Policy loans - net .................................. (1,524) -- (2,385) Short-term investments - net ........................ (4,721) (5,300) -- ----------------------------------------- (2,327,448) (172,215) (356,631) Issuance of reciprocal loan agreement receivables ...... -- (16,900) -- Receipt of repayment of reciprocal loan agreement receivables .......................................... -- 16,900 -- Net sale (purchase) of property and equipment .......... 1,248 (3,285) (8,968) ----------------------------------------- Net cash provided by (used in) investing activities .... (1,302,560) 49,299 (137,500) See accompanying notes. 6 GOLDEN AMERICAN LIFE INSURANCE COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED) (Dollars in thousands) YEAR ENDED DECEMBER 31 2001 2000 1999 ----------------------------------------- FINANCING ACTIVITIES Proceeds from reciprocal loan agreement borrowings with affiliates .......................... $ 69,300 $ 178,900 $ 396,350 Repayment of reciprocal loan agreement borrowings with affiliates .......................... (69,300) (178,900) (396,350) Proceeds from revolving note payable ................... 3,078 67,200 220,295 Repayment of revolving note payable .................... (1,678) (68,600) (218,895) Proceeds from surplus note with affiliates ............. -- -- 160,000 Receipts from annuity and interest sensitive life policies credited to account balances .................................... 1,933,148 801,793 773,685 Return of account balances on annuity and interest sensitive life policies ................ (134,787) (141,440) (146,607) Net reallocations to separate accounts ................. (902,895) (825,848) (650,270) Contributions of capital by EIC ........................ 196,796 115,000 121,000 ----------------------------------------- Net cash provided by (used in) financing activities .... 1,093,662 (51,895) 259,208 ----------------------------------------- Increase in cash and cash equivalents .................. 31,044 70,111 47,720 Cash and cash equivalents at beginning of period ................................. 164,682 94,571 46,851 ----------------------------------------- Cash and cash equivalents at end of period ....................................... $ 195,726 $ 164,682 $ 94,571 ========================================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest ............................................ $ 14,955 $ 22,444 $ 6,392 Income taxes ........................................ -- 957 --
See accompanying notes. 7 GOLDEN AMERICAN LIFE INSURANCE COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2001 1. SIGNIFICANT ACCOUNTING POLICIES - ------------------------------------ CONSOLIDATION The consolidated financial statements include Golden American Life Insurance Company ("Golden American") and its wholly owned subsidiary, First Golden American Life Insurance Company of New York ("First Golden," and collectively with Golden American, the "Companies"). All significant intercompany accounts and transactions have been eliminated. ORGANIZATION Golden American, a wholly owned subsidiary of Equitable Life Insurance Company of Iowa ("Equitable Life" or the "Parent"), offers variable insurance products and is licensed as a life insurance company in the District of Columbia and all states except New York. Equitable Life is a wholly owned subsidiary of Equitable of Iowa Companies, Inc. (EIC). First Golden is licensed to sell insurance products in New York and Delaware. The Companies' variable and fixed insurance products are marketed by broker/dealers, financial institutions, and insurance agents. The Companies' primary customers are consumers and corporations. On December 3, 2001, the Board of Directors of EIC approved a plan to contribute its holding of 100% of the stock of its wholly owned subsidiary, Golden American to another wholly owned subsidiary, Equitable Life. The contribution of stock occurred on December 31, 2001, following approval granted by the Insurance Department of the State of Delaware. On October 24, 1997 ("the merger date"), PFHI Holding, Inc. ("PFHI"), a Delaware corporation, acquired all of the outstanding capital stock of Equitable of Iowa Companies ("Equitable") according to the terms of an Agreement and Plan of Merger ("the merger") dated July 7, 1997 among Equitable, PFHI, and ING Groep N.V. ("ING"). PFHI is a wholly owned subsidiary of ING, a global financial services holding company based in The Netherlands. As a result of this transaction, Equitable was merged into PFHI, which was simultaneously renamed Equitable of Iowa Companies, Inc., a Delaware corporation. INVESTMENTS Fixed Maturities: The Companies account for their investments under the Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires fixed maturities to be designated as either "available for sale," "held for investment," or "trading." Sales of fixed maturities designated as "available for sale" are not restricted by SFAS No. 115. Available for sale securities are reported at fair value and unrealized gains and losses on these securities are included directly in stockholder's equity, after adjustment for related changes in value of purchased insurance in force ("VPIF"), deferred policy acquisition costs ("DPAC"), and deferred income taxes. At December 31, 2001 and 2000, all of the Companies' fixed maturities are designated as available for sale, although the Companies are not precluded from designating fixed maturities as held for investment or trading at some future date. Securities determined to have a decline in value that is other than temporary are written down to estimated fair value, which becomes the new cost basis by a charge to realized losses in the Companies' Statements of Operations. Premiums and discounts are amortized/accrued utilizing a method which results in a constant yield over the securities' expected lives. Amortization/accrual of premiums and discounts on mortgage and other asset-backed securities incorporates a prepayment assumption to estimate the securities' expected lives. Equity Securities: Equity securities are reported at estimated fair value if readily marketable. The change in unrealized appreciation and depreciation of marketable equity securities (net of related deferred income 8 taxes, if any) is included directly in stockholder's equity. Equity securities determined to have a decline in value that is other than temporary are written down to estimated fair value, which becomes the new cost basis by a charge to realized losses in the Companies' Statements of Operations. Mortgage Loans on Real Estate: Mortgage loans on real estate are reported at cost adjusted for amortization of premiums and accrual of discounts. If the value of any mortgage loan is determined to be impaired (i.e., when it is probable the Companies will be unable to collect all amounts due according to the contractual terms of the loan agreement), the carrying value of the mortgage loan is reduced to the present value of expected future cash flows from the loan discounted at the loan's effective interest rate, or to the loan's observable market price, or the fair value of the underlying collateral. The carrying value of impaired loans is reduced by the establishment of a valuation allowance, which is adjusted at each reporting date for significant changes in the calculated value of the loan. Changes in this valuation allowance are charged or credited to income. Other Investments: Policy loans are reported at unpaid principal. Short-term investments are reported at cost, adjusted for amortization of premiums and accrual of discounts. Realized Gains and Losses: Realized gains and losses are determined on the basis of specific identification. Fair Values: Estimated fair values, as reported herein, of conventional mortgage-backed securities not actively traded in a liquid market are estimated using a third party pricing process. This pricing process uses a matrix calculation assuming a spread over U.S. Treasury bonds based upon the expected average lives of the securities. Estimated fair values of publicly traded fixed maturities are reported by an independent pricing service. Fair values of private placement bonds are estimated using a matrix that assumes a spread (based on interest rates and a risk assessment of the bonds) over U.S. Treasury bonds. Estimated fair values of equity securities, which consist of the Companies' investment in its registered separate accounts, are based upon the quoted fair value of the securities comprising the individual portfolios underlying the separate accounts. Accounting for Derivative Instruments and Hedging Activities: The Companies may from time to time utilize various derivative instruments to manage interest rate and price risk (collectively, market risk). The Companies have appropriate controls in place, and financial exposures are monitored and managed by the Companies as an integral part of their overall risk management program. Derivatives are recognized on the balance sheet at their fair value. The change in a derivative's fair value is generally to be recognized in current period earnings, unless the derivative is specifically designated as a hedge of an exposure. If certain conditions are met, a derivative may be specifically designated as a hedge of an exposure to changes in fair value, variability of cash flows, or certain foreign currency exposures. When designated as a hedge, the fair value should be recognized currently in earnings or other comprehensive income, depending on whether such designation is considered a fair value hedge or a cash flow hedge. With respect to fair value hedges, the fair value of the derivative, as well as changes in the fair value of the hedged item, are reported in earnings. For cash flow hedges, changes in the derivatives' fair value are reported in other comprehensive income and subsequently reclassified into earnings when the hedged item affects earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. The Companies occasionally purchase a financial instrument that contains a derivative that is "embedded" in the instrument. The Companies' insurance products are also reviewed to determine whether they contain an embedded derivative. The Companies assess whether the economic characteristics of the embedded derivative are clearly and closely related to the economic characteristics of the remaining component of the financial instrument or insurance product (i.e., the host contract) and whether a separate instrument with the same terms as the embedded instrument would meet the definition of a derivative instrument. When it is determined that the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is separated from the host contract and carried at fair value. In cases where the host contract is measured at fair value, with changes in fair value reported in current period earnings, or the Companies are unable to reliably identify and 9 measure the embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at fair value and is not designated as a hedging instrument. CASH AND CASH EQUIVALENTS For purposes of the accompanying Statements of Cash Flows, the Companies consider all demand deposits and interest-bearing accounts not related to the investment function to be cash equivalents. All interest-bearing accounts classified as cash equivalents have original maturities of three months or less. DEFERRED POLICY ACQUISITION COSTS Certain costs of acquiring new insurance business, principally first year commissions and interest bonuses, premium credit, and other expenses related to the production of new business have been deferred. Other expenses related to the production of new business that were deferred totaled $28.3 million during 2001, $16.3 million during 2000, and $29.6 million during 1999. Acquisition costs for variable insurance products are being amortized generally in proportion to the present value (using the assumed crediting rate) of expected future gross profits. This amortization is adjusted retrospectively when the Companies revise their estimate of current or future gross profits to be realized from a group of products. DPAC is adjusted to reflect the pro forma impact of unrealized gains and losses on fixed maturities the Companies have designated as "available for sale" under SFAS No. 115. VALUE OF PURCHASED INSURANCE IN FORCE As a result of the merger, a portion of the purchase price was allocated to the right to receive future cash flows from existing insurance contracts. This allocated cost represents VPIF, which reflects the value of those purchased policies calculated by discounting actuarially determined expected future cash flows at the discount rate determined by the purchaser. Amortization of VPIF is charged to expense in proportion to expected gross profits of the underlying business. This amortization is adjusted retrospectively when the Companies revise the estimate of current or future gross profits to be realized from the insurance contracts acquired. VPIF is adjusted to reflect the pro forma impact of unrealized gains and losses on available for sale fixed maturities. PROPERTY AND EQUIPMENT Property and equipment primarily represent leasehold improvements, office furniture, certain other equipment, and capitalized computer software and are not considered to be significant to the Companies' overall operations. Property and equipment are reported at cost less allowances for depreciation. Depreciation expense is computed primarily on the basis of the straight-line method over the estimated useful lives of the assets. GOODWILL Goodwill was established as a result of the merger and is being amortized over 40 years on a straight-line basis. In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations", and No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. For additional information, refer to the Pending Accounting Standards disclosure in Note 1. FUTURE POLICY BENEFITS Future policy benefits for divisions of the variable products with fixed interest guarantees are established utilizing the retrospective deposit accounting method. Policy reserves represent the premiums received plus accumulated interest, less mortality and administration charges. Interest credited to these policies ranged from 3.00% to 12.00% during 2001, 3.00% to 14.00% during 2000 and 3.00% to 11.00% during 1999. The unearned revenue reserve represents unearned distribution fees. These distribution fees have been deferred and are amortized over the life of the contracts in proportion to expected gross profits. 10 SEPARATE ACCOUNTS Assets and liabilities of the separate accounts reported in the accompanying Balance Sheets represent funds separately administered principally for variable contracts. Contractholders, rather than the Companies, bear the investment risk for variable products. At the direction of the contractholders, the separate accounts invest the premiums from the sale of variable products in shares of specified mutual funds. The assets and liabilities of the separate accounts are clearly identified and segregated from other assets and liabilities of the Companies. Under Delaware insurance law, the portion of the separate account assets equal to the reserves and other liabilities of variable contracts cannot be charged with liabilities arising out of any other business the Companies may conduct. Variable separate account assets are carried at fair value of the underlying investments and generally represent contractholder investment values maintained in the accounts. Variable separate account liabilities represent account balances for the variable contracts invested in the separate accounts; the fair value of these liabilities is equal to their carrying amount. Net investment income and realized and unrealized capital gains and losses related to separate account assets are not reflected in the accompanying Statements of Operations. Product charges recorded by the Companies from variable insurance products consist of charges applicable to each contract for mortality and expense risk, cost of insurance, contract administration, and surrender charges. In addition, some variable annuity and all variable life contracts provide for a distribution fee collected for a limited number of years after each premium deposit. Revenue recognition of collected distribution fees is amortized over the life of the contract in proportion to its expected gross profits. The balance of unrecognized revenue related to the distribution fees is reported as an unearned revenue reserve. DEFERRED INCOME TAXES Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the enacted marginal tax rate. Deferred tax assets or liabilities are adjusted to reflect the pro forma impact of unrealized gains and losses on equity securities and fixed maturities the Companies have designated as available for sale under SFAS No. 115. Changes in deferred tax assets or liabilities resulting from this SFAS No. 115 adjustment are charged or credited directly to stockholder's equity. Deferred income tax expenses or credits reflected in the Companies' Statements of Operations are based on the changes in the deferred tax asset or liability from period to period (excluding the SFAS No. 115 adjustment). DIVIDEND RESTRICTIONS Golden American's ability to pay dividends to its Parent is restricted. Prior approval of insurance regulatory authorities is required for payment of dividends to the stockholder which exceed an annual limit. During 2002, Golden American cannot pay dividends to its Parent without prior approval of statutory authorities. Under the provisions of the insurance laws of the State of New York, First Golden cannot distribute any dividends to its stockholder, Golden American, unless a notice of its intent to declare a dividend and the amount of the dividend has been filed with the New York Insurance Department at least thirty days in advance of the proposed declaration. If the Superintendent of the New York Insurance Department finds the financial condition of First Golden does not warrant the distribution, the Superintendent may disapprove the distribution by giving written notice to First Golden within thirty days after the filing. SEGMENT REPORTING The Companies manage their business as one segment, the sale of variable and fixed insurance products designed to meet customer needs for tax-advantaged saving for retirement and protection from death. Variable insurance products are sold to consumers and corporations throughout the United States. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions affecting the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 11 Management is required to utilize historical experience and assumptions about future events and circumstances in order to develop estimates of material reported amounts and disclosures. Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates and assumptions are: (1) estimates of fair values of investments in securities and other financial instruments, as well as fair values of policyholder liabilities, (2) policyholder liabilities, (3) deferred policy acquisition costs and value of purchased insurance in force, (4) fair values of assets and liabilities recorded as a result of merger, (5) asset valuation allowances, (6) guaranty fund assessment accruals, (7) deferred tax benefits (liabilities), and (8) estimates for commitments and contingencies including legal matters, if a liability is anticipated and can be reasonably estimated. Estimates and assumptions regarding all of the preceding items are inherently subject to change and are reassessed periodically. Changes in estimates and assumptions could materially impact the financial statements. NEW ACCOUNTING STANDARDS Derivatives: As of January 1, 2001, the Companies adopted FAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended and interpreted by FAS No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, FAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities - an Amendment of FASB Statement No. 133, and certain FAS No. 133 implementation issues. This standard, as amended, requires companies to record all derivatives on the balance sheet as either assets or liabilities and measure those instruments at fair value. The manner in which companies are to record gains or losses resulting from changes in the fair values of those derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. Adoption of FAS No. 133 did not have a material effect on the Companies' financial position or results of operations given the Companies' limited derivative and embedded derivative holdings. The Companies chose to elect a transition date of January 1, 1999 for embedded derivatives. Therefore, only those derivatives embedded in hybrid instruments issued, acquired or substantively modified by the entity on or after January 1, 1999 are recognized as separate assets or liabilities. The cumulative effect of the accounting change upon adoption was not material. Recognition of Interest Income and Impairment on Purchased and Beneficial Interests in Securitized Financial Assets: Effective April 2001, the Companies adopted Emerging Issues Task Force Issue "EITF" 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets. EITF 99-20 states that interest income earned on retained or purchased beneficial interests in securitized financial assets should be recognized over the life of the investment based on an anticipated yield determined by periodically estimating cash flows. Interest income should be revised prospectively for changes in cash flows. Additionally, impairment should be recognized if the fair value of the beneficial interest has declined below its carrying amount and the decline is other than temporary. The impact of adoption was not significant to the Companies financial position or results of operations. Pending Accounting Standards: Goodwill: In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations", and No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Companies are required to adopt the new rules effective January 1, 2002. The Companies are evaluating the impact of the adoption of these standards and have not yet determined the effect of adoption on their financial position and results of operations. RECLASSIFICATIONS Certain amounts in the 2000 and 1999 financial statements have been reclassified to conform to the 2001 financial statement presentation. 12 2. BASIS OF FINANCIAL REPORTING - --------------------------------- The financial statements of the Companies differ from related statutory-basis financial statements principally as follows: (1) acquisition costs of acquiring new business are deferred and amortized over the life of the policies rather than charged to operations as incurred; (2) an asset representing the present value of future cash flows from insurance contracts acquired was established as a result of the merger/acquisition and is amortized and charged to expense; (3) future policy benefit reserves for divisions with fixed interest guarantees of the variable insurance products are based on full account values, rather than the greater of cash surrender value or amounts derived from discounting methodologies utilizing statutory interest rates; (4) reserves are reported before reduction for reserve credits related to reinsurance ceded and a receivable is established, net of an allowance for uncollectible amounts, for these credits rather than presented net of these credits; (5) fixed maturity investments are designated as "available for sale" and valued at fair value with unrealized appreciation/depreciation, net of adjustments to value of purchased insurance in force, deferred policy acquisition costs, and deferred income taxes (if applicable), credited/charged directly to stockholder's equity rather than valued at amortized cost; (6) the carrying value of fixed maturities is reduced to fair value by a charge to realized losses in the Statements of Operations when declines in carrying value are judged to be other than temporary, rather than through the establishment of a formula-determined statutory investment reserve (carried as a liability), changes in which are charged directly to surplus; (7) deferred income taxes are provided for the difference between the financial statement and income tax bases of assets and liabilities; (8) net realized gains or losses attributed to changes in the level of interest rates in the market are recognized when the sale is completed rather than deferred and amortized over the remaining life of the fixed maturity security; (9) a liability is established for anticipated guaranty fund assessments, net of related anticipated premium tax credits, rather than capitalized when assessed and amortized in accordance with procedures permitted by insurance regulatory authorities; (10) revenues for variable insurance products consist of policy charges applicable to each contract for the cost of insurance, policy administration charges, amortization of policy initiation fees, and surrender charges assessed rather than premiums received; (11) the financial statements of Golden American's wholly owned subsidiary are consolidated rather than recorded at the equity in net assets; (12) surplus notes are reported as liabilities rather than as surplus; and (13) assets and liabilities are restated to fair values when a change in ownership occurs, with provisions for goodwill and other intangible assets, rather than continuing to be presented at historical cost. The net loss for Golden American as determined in accordance with statutory accounting practices was $156.4 million in 2001, $71.1 million in 2000, and $85.6 million in 1999. Total statutory capital and surplus was $451.6 million and $406.9 million at December 31, 2001 and 2000, respectively. The National Association of Insurance Commissioners has revised the Accounting Practices and Procedures Manual, the guidance that defines statutory accounting principles. The revised manual was effective January 1, 2001, and has been adopted, at least in part, by the States of Delaware and New York, which are the states of domicile for Golden American and First Golden, respectively. The revised manual resulted in changes to the accounting practices that the Companies use to prepare their statutory-basis financial statements. The impact of these changes to the Companies' statutory-basis capital and surplus as of January 1, 2001 was not significant. 13 3. INVESTMENT OPERATIONS - -------------------------- INVESTMENT RESULTS Major categories of net investment income are summarized below: YEAR ENDED DECEMBER 31, 2001 2000 1999 -------------------------------- (Dollars in thousands) Fixed maturities ...................... $ 83,654 $ 55,302 $ 50,352 Equity securities ..................... -- 248 515 Mortgage loans on real estate ......... 11,205 7,832 7,074 Policy loans .......................... 793 516 485 Short-term investments and cash and cash equivalents ................... 2,605 2,253 2,583 Other, net ............................ 598 543 388 -------------------------------- Gross investment income ............... 98,855 66,694 61,397 Less investment expenses .............. (4,459) (2,554) (2,228) -------------------------------- Net investment income ................. $ 94,396 $ 64,140 $ 59,169 ================================ Realized losses on investments follows: YEAR ENDED DECEMBER 31, 2001 2000 1999 -------------------------------- (Dollars in thousands) Fixed maturities, available for sale .. $ (4,848) $ (6,289) $ (2,910) Equity securities ..................... (1,622) (213) -- Mortgage loans on real estate ......... -- (52) (13) -------------------------------- Realized losses on investments ........ $ (6,470) $ (6,554) $ (2,923) ================================ The change in unrealized appreciation (depreciation) of securities at fair value follows: YEAR ENDED DECEMBER 31, 2001 2000 1999 -------------------------------- (Dollars in thousands) Fixed maturities, available for sale .. $ 18,559 $ 16,558 $(24,944) Equity securities ..................... 1,801 (4,198) 5,301 -------------------------------- Change in unrealized appreciation (depreciation) of securities ....... $ 20,360 $ 12,360 $(19,643) ================================ 14 At December 31, 2001 and December 31, 2000, amortized cost, gross unrealized gains and losses, and estimated fair values of fixed maturities, all of which are designated as available for sale, follows:
Gross Gross Estimated Amortized Unrealized Unrealized Fair December 31, 2001 Cost Gains Losses Value -------------------------------------------------- (Dollars in thousands) U.S. government and governmental agencies and authorities ...... $ 132,081 $ 479 $ (3,435) $ 129,125 Public utilities ............... 39,775 345 (1,374) 38,746 Foreign government ............. 143,574 3,326 (213) 146,687 Corporate securities ........... 1,111,798 15,027 (10,037) 1,116,788 Other asset-backed securities .. 388,250 7,233 (1,647) 393,836 Mortgage-backed securities ..... 167,049 3,554 (872) 169,731 -------------------------------------------------- Total .......................... $1,982,527 $ 29,964 $ (17,578) $1,994,913 ================================================== Gross Gross Estimated Amortized Unrealized Unrealized Fair December 31, 2000 Cost Gains Losses Value ------------------------------------------------- (Dollars in thousands) U.S. government and governmental agencies and authorities ...... $ 18,607 $ 580 $ (16) $ 19,171 Public utilities ............... 54,132 294 (1,600) 52,826 Corporate securities ........... 355,890 1,318 (8,006) 349,202 Other asset-backed securities .. 223,787 2,166 (1,831) 224,122 Mortgage-backed securities ..... 146,335 1,465 (543) 147,257 ------------------------------------------------- Total .......................... $ 798,751 $ 5,823 $ (11,996) $ 792,578 =================================================
Short-term investments and cash and cash equivalents have been excluded from the above schedules. Amortized cost approximates fair value for these securities. At December 31, 2001, net unrealized investment gain on fixed maturities designated as available for sale totaled $12,386,000. Appreciation of $3,816,000 was included in stockholder's equity at December 31, 2001 (net of adjustments of $535,000 to VPIF, $5,979,000 to DPAC, and $2,056,000 to deferred income taxes). At December 31, 2000, net unrealized investment loss on fixed maturities designated as available for sale totaled $6,173,000. Depreciation of $1,447,000 was included in stockholder's equity at December 31, 2000 (net of adjustments of $801,000 to VPIF, $3,146,000 to DPAC, and $779,000 to deferred income taxes). At December 31, 2001, net unrealized depreciation on equity securities was comprised entirely of gross depreciation of $19,000. At December 31, 2000, net unrealized depreciation on equity securities was comprised entirely of gross depreciation of $1,820,000. Amortized cost and estimated fair value of fixed maturities designated as available for sale, by contractual maturity, at December 31, 2001 are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. 15 Amortized Estimated December 31, 2001 Cost Fair Value ----------------------- (Dollars in thousands) Due within one year .............................. $ 78,928 $ 79,718 Due after one year through five years ............ 369,061 377,078 Due after five years through ten years ........... 731,087 729,731 Due after ten years .............................. 248,152 244,819 ----------------------- 1,427,228 1,431,346 Other asset-backed securities .................... 388,250 393,836 Mortgage-backed securities ....................... 167,049 169,731 ----------------------- Total ............................................ $1,982,527 $1,994,913 ======================= An analysis of sales, maturities, and principal repayments of the Companies' fixed maturities portfolio follows:
Gross Gross Proceeds Amortized Realized Realized from Cost Gains Losses Sale ------------------------------------------ (Dollars in thousands) For the year ended December 31, 2001: Scheduled principal repayments, calls, and tenders ................................ $168,703 $ -- $ -- $168,703 Sales .................................... 712,443 6,569 (7,027) 711,985 ------------------------------------------ Total .................................... $881,146 $ 6,569 $ (7,027) $880,688 ========================================== For the year ended December 31, 2000: Scheduled principal repayments, calls, and tenders ................................ $ 91,158 $ 122 $ (1) $ 91,279 Sales .................................... 120,125 285 (6,553) 113,857 ------------------------------------------ Total .................................... $211,283 $ 407 $ (6,554) $205,136 ========================================== For the year ended December 31, 1999: Scheduled principal repayments, calls, and tenders ................................ $141,346 $ 216 $ (174) $141,388 Sales .................................... 80,472 141 (1,454) 79,159 ------------------------------------------ Total .................................... $221,818 $ 357 $ (1,628) $220,547 ==========================================
Investment Valuation Analysis: The Companies analyze the investment portfolio at least quarterly in order to determine if the carrying value of any investment has been impaired. The carrying value of debt and equity securities is written down to fair value by a charge to realized losses when an impairment in value appears to be other than temporary. These impairment losses are included in the realized gains and losses on investments in the consolidated statement of operations. During 2001, Golden American determined that the carrying value of eleven bonds exceeded their estimated net realizable value. As a result, as of December 31, 2001, Golden American recognized a total pre-tax loss of $4.4 million to reduce the carrying value of the bonds to their combined net realizable value of $5.5 million. 16 During the second quarter of 2000, Golden American determined that the carrying value of an impaired bond exceeded its estimated net realizable value. As a result, on June 30, 2000, Golden American recognized a total pre-tax loss of approximately $142,000 to reduce the carrying value of the bond to its net realizable value of $315,000 at December 31, 2000. During the fourth quarter of 1998, Golden American determined that the carrying value of two bonds exceeded their estimated net realizable value. As a result, at December 31, 1998, Golden American recognized a total pre-tax loss of $973,000 to reduce the carrying value of the bonds to their combined net realizable value of $2,919,000. During the second quarter of 1999, further information was received regarding these bonds and Golden American determined that the carrying value of the two bonds exceeded their estimated net realizable value. As a result, at June 30, 1999, Golden American recognized a total pre-tax loss of $1,639,000 to further reduce the carrying value of the bonds to their combined net realizable value of $1,137,000. During the years 2000 and 2001, these bonds had no further reduction in carrying value. Investments on Deposit: At December 31, 2001, bonds with a par value of $6,870,000, unchanged from December 31, 2000, were on deposit with regulatory authorities pursuant to certain statutory requirements. Investment Diversifications: The Companies' investment policies require diversification by asset type and set limits on the amount which can be invested in an individual issuer. Such policies are at least as restrictive as applicable regulatory requirements. The following percentages relate to holdings at December 31, 2001 and December 31, 2000. Fixed maturities includes investments in industrials (37% in 2001, 29% in 2000), governmental securities (18% in 2001, 3% in 2000), mortgage-backed securities (16% in 2001, 26% in 2000), other asset-backed securities (12% in 2001, 20% in 2000), and financial companies (10% in 2001, 14% in 2000). Mortgage loans on real estate have been analyzed by geographical location with concentrations by state identified as Ohio (20% in 2001 and 4% in 2000) and California (18% in 2001 and 15% in 2000). There are no other concentrations of mortgage loans on real estate in any state exceeding ten percent at December 31, 2001 and 2000. Mortgage loans on real estate have also been analyzed by collateral type with significant concentrations identified in multi-family apartments (36% in 2001 and 10% in 2000), industrial buildings (19% in 2001, 35% in 2000), retail facilities (20% in 2001, 18% in 2000), and office buildings (21% in 2001, 29% in 2000). Equity securities are not significant to the Companies' overall investment portfolio. No investment in any person or its affiliates (other than bonds issued by agencies of the United States government) exceeded ten percent of stockholder's equity at December 31, 2001. 4. DERIVATIVE INSTRUMENTS - --------------------------- The Companies may from time to time utilize various derivative instruments to manage interest rate and price risk (collectively, market risk). The Companies have appropriate controls in place, and financial exposures are monitored and managed by the Companies as an integral part of their overall risk management program. Derivatives are recognized on the balance sheet at their fair value. At December 31, 2001, the Companies did not utilize any such derivatives. The estimated fair values and carrying amounts of the Companies' embedded derivatives at December 31, 2001 were $0, net of reinsurance. The estimated fair values and carrying amounts of the embedded derivatives on a direct basis, before reinsurance, were $3.1 million. The fair value of these instruments was estimated based on quoted market prices, dealer quotations or internal estimates. 17 5. COMPREHENSIVE INCOME - ------------------------- Comprehensive income includes all changes in stockholder's equity during a period except those resulting from investments by and distributions to the stockholder. Other comprehensive income excludes net investment losses included in net income, which merely represent transfers from unrealized to realized gains and losses. These amounts total $3,213,000, $1,751,000, and $1,468,000 in the years ended December 31, 2001, 2000, and 1999, respectively. Such amounts, which have been measured through the date of sale, are net of income taxes and adjustments to VPIF and DPAC totaling $3,257,000, $4,751,000, and $1,441,000 in the years ended December 31, 2001, 2000, and 1999, respectively. 6. FAIR VALUES OF FINANCIAL INSTRUMENTS - ----------------------------------------- SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosure of estimated fair value of all financial instruments, including both assets and liabilities recognized and not recognized in a company's balance sheet, unless specifically exempted. SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," requires additional disclosures about derivative financial instruments. Most of the Companies' investments, investment contracts, and debt fall within the standards' definition of a financial instrument. Fair values for the Companies' insurance contracts other than investment contracts are not required to be disclosed. In cases where quoted market prices are not available, estimated fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accounting, actuarial, and regulatory bodies are continuing to study the methodologies to be used in developing fair value information, particularly as it relates to such things as liabilities for insurance contracts. Accordingly, care should be exercised in deriving conclusions about the Companies' business or financial condition based on the information presented herein. The Companies closely monitor the composition and yield of invested assets, the duration and interest credited on insurance liabilities, and resulting interest spreads and timing of cash flows. These amounts are taken into consideration in the Companies' overall management of interest rate risk, which attempts to minimize exposure to changing interest rates through the matching of investment cash flows with amounts expected to be due under insurance contracts. These assumptions may not result in values consistent with those obtained through an actuarial appraisal of the Companies' business or values that might arise in a negotiated transaction. 18 The following compares carrying values as shown for financial reporting purposes with estimated fair values:
DECEMBER 31 2001 2000 ---------------------------------------------------- Estimated Estimated Carrying Fair Carrying Fair Value Value Value Value ---------------------------------------------------- (Dollars in thousands) ASSETS Fixed maturities, available for sale ... $ 1,994,913 $ 1,994,913 $ 792,578 $ 792,578 Equity securities ...................... 55 55 6,791 6,791 Mortgage loans on real estate .......... 213,883 219,158 99,916 100,502 Policy loans ........................... 14,847 14,847 13,323 13,323 Short-term investments ................. 10,021 10,021 106,775 106,775 Cash and cash equivalents .............. 195,726 195,726 63,207 63,207 Separate account assets ................ 10,958,191 10,958,191 9,831,489 9,831,489 LIABILITIES Annuity products ....................... 2,162,381 1,983,833 1,047,932 962,810 Surplus notes .......................... 245,000 358,064 245,000 204,455 Revolving note payable ................. 1,400 1,400 -- -- Separate account liabilities ........... 10,958,191 10,958,191 9,831,489 9,831,489
The following methods and assumptions were used by the Companies in estimating fair values. Fixed maturities: Estimated fair values of conventional mortgage-backed securities not actively traded in a liquid market and publicly traded securities are estimated using a third party pricing process. This pricing process uses a matrix calculation assuming a spread over U.S. Treasury bonds based upon the expected average lives of the securities. Equity securities: Estimated fair values of equity securities, which consist of the Companies' investment in the portfolios underlying its separate accounts, are based upon the quoted fair value of individual securities comprising the individual portfolios. For equity securities not actively traded, estimated fair values are based upon values of issues of comparable returns and quality. Mortgage loans on real estate: Fair values are estimated by discounting expected cash flows, using interest rates currently offered for similar loans. Policy loans: Carrying values approximate the estimated fair value for policy loans. Short-term investments and cash and cash equivalents: Carrying values reported in the Companies' historical cost basis balance sheet approximate estimated fair value for these instruments due to their short-term nature. Separate account assets: Separate account assets are reported at the quoted fair values of the individual securities in the separate accounts. Annuity products: Estimated fair values of the Companies' liabilities for future policy benefits for the divisions of the variable annuity products with fixed interest guarantees and for supplemental contracts without life contingencies are stated at cash surrender value, the cost the Companies would incur to extinguish the liability. Surplus notes: Estimated fair value of the Companies' surplus notes were based upon discounted future cash flows using a discount rate approximating the current market value. 19 Revolving note payable: Carrying value reported in the Companies' historical cost basis balance sheet approximates estimated fair value for this instrument, as the agreement carries a variable interest rate provision. Separate account liabilities: Separate account liabilities are reported at full account value in the Companies' historical cost balance sheet. Estimated fair values of separate account liabilities are equal to their carrying amount. 7. VALUE OF PURCHASED INSURANCE IN FORCE - ------------------------------------------ As a result of the merger, a portion of the purchase price was allocated to the right to receive future cash flows from existing insurance contracts. This allocated cost represents VPIF, which reflects the value of those purchased policies calculated by discounting actuarially determined expected future cash flows at the discount rate determined by the purchaser. Interest was accrued at a rate of 7.37% during 2001 (7.32% during 2000, and 7.33% during 1999). A reconciliation of the change in the VPIF asset follows: YEAR ENDED DECEMBER 31, 2001 2000 1999 -------------------------------- (Dollars in thousands) Beginning balance ..................... $ 25,942 $ 31,727 $ 35,977 Accretion of interest ............... 1,617 2,016 2,372 Amortization of asset ............... (6,020) (6,817) (8,610) Adjustment for unrealized gains (losses) .................... (1,336) (984) 1,988 -------------------------------- Ending balance ........................ $ 20,203 $ 25,942 $ 31,727 ================================ Based on current conditions and assumptions as to the impact of future events on acquired policies in force, the expected approximate net amortization relating to VPIF as of December 31, 2001, is $3.1 million in 2002, $2.8 million in 2003, $2.4 million in 2004, $1.9 million in 2005, and $1.4 million in 2006. Actual amortization may vary based upon changes in assumptions and experience. 8. INCOME TAXES - ----------------- Golden American files a consolidated federal income tax return with First Golden. Golden American has a tax allocation agreement with First Golden whereby Golden American charges its subsidiary for taxes it would have incurred were it not a member of the consolidated group and credits the member for losses used in consolidation. At December 31, 2001, the Companies have net operating loss ("NOL") carryforwards for federal income tax purposes of approximately $345,859,000. Approximately $5,094,000, $3,354,000, $50,449,000, $94,078,000 $91,107,000 and $101,777,000 of these NOL carryforwards are available to offset future taxable income of the Companies through the years 2011, 2012, 2013, 2014, 2015 and 2016, respectively. 20 Income Tax Expense (Benefit) Income tax expense (benefit) included in the consolidated financial statements follows: YEAR ENDED DECEMBER 31, 2001 2000 1999 -------------------------------- (Dollars in thousands) Current ............................... $ 782 $ (46) $ -- Deferred .............................. (606) 13,282 8,077 -------------------------------- $ 176 $ 13,236 $ 8,077 ================================ The effective tax rate on income before income taxes is different from the prevailing federal income tax rate. A reconciliation of this difference follows: YEAR ENDED DECEMBER 31, 2001 2000 1999 -------------------------------- (Dollars in thousands) Income before income taxes ............ $ (3,778) $ 32,416 $ 19,291 ================================ Income tax at federal statutory rate .. $ (1,322) $ 11,346 $ 6,752 Tax effect of: Goodwill amortization ............... 1,033 1,033 1,033 Meals and entertainment ............. 480 292 199 Other items ......................... (15) 565 93 -------------------------------- Income tax expense .................... $ 176 $ 13,236 $ 8,077 ================================ 21 DEFERRED INCOME TAXES The tax effect of temporary differences giving rise to the Companies' deferred income tax assets and liabilities at December 31, 2001 and 2000 follows: DECEMBER 31 2001 2000 ---------------------------------------------------------------------------- (Dollars in thousands) Deferred tax assets: Net unrealized depreciation of securities at fair value ................................ $ 7 $ 637 Net unrealized depreciation of available for sale fixed maturities .................... -- 779 Future policy benefits ......................... 176,331 163,691 Net operating loss carryforwards ............... 121,711 66,380 ---------------------- 298,049 231,487 Deferred tax liabilities: Tax deductible goodwill ........................ (3,547) (2,696) Net unrealized appreciation of available for sale fixed maturities ................... (2,056) -- Fixed maturity securities ...................... (17,812) (17,774) Deferred policy acquisition costs .............. (222,781) (184,743) Value of purchased insurance in force .......... (6,894) (8,512) Other .......................................... (57,571) (23,723) ---------------------- (310,661) (237,448) ---------------------- Valuation allowance ............................... -- (1,416) ---------------------- Net deferred income tax liability ................. $ (12,612) $ (7,377) ====================== At December 31, 2001, the Companies reported, for financial statement purposes, net unrealized gains on certain investments that generated deferred tax liabilities which have been recognized for tax purposes. At December 31, 2000, the Companies reported, for financial statement purposes, unrealized losses on certain investments, which have not been recognized for tax purposes. Since it was uncertain as to whether these capital losses, if ever realized, could be utilized to offset capital gains, a valuation allowance was established for the tax effect of the financial statement losses. The Companies establish reserves for possible proposed adjustments by various taxing authorities. Management believes there are sufficient reserves provided for, or adequate defenses against any such adjustments. 9. RETIREMENT PLANS AND EMPLOYEE STOCK COMPENSATION - ----------------------------------------------------- DEFINED BENEFIT PLANS In 2001, 2000 and 1999, the Companies were allocated their share of the pension liability associated with their employees. During these years, the Companies' employees were covered by the employee retirement plan of Equitable Life. Further, Equitable Life sponsors a defined contribution plan that is qualified under Internal Revenue Code Section 401(k). As of December 31, 2001, the qualified pension benefit plans of certain United States subsidiaries of ING North America Insurance Corporation ("ING North America"), including Equitable Life, were merged into one plan which will be recognized in ING North America's financial statements. The Companies also transferred their pension liabilities to the Parent at that date. In exchange for these liabilities, the Companies received a capital contribution, net of taxes, from the Parent. 22 The following tables summarize the benefit obligations and the funded status for pension benefits over the two-year period ended December 31, 2001: 2001 2000 ---------------------- (Dollars in thousands) Change in benefit obligation: Benefit obligation at January 1 ............... $ 7,906 $ 4,221 Service cost .................................. 1,998 1,569 Interest cost ................................. 768 554 Actuarial (gain) loss ......................... (2,710) 1,562 Plan Amendments ............................... (171) -- Transfer of benefit obligation to the Parent .. (7,791) -- ---------------------- Benefit obligation at December 31 ............. $ -- $ 7,906 ====================== Funded status: Funded status at December 31 prior to the transfer of the benefit obligation to the Parent .................................. $ (7,791) $ (7,906) Unrecognized past service cost ................ (1,117) 141 Unrecognized net loss ......................... (8) 1,627 Transfer of the funded status to the Parent ... 8,916 -- ---------------------- Net amount recognized ......................... $ -- $ (6,138) ====================== Prior to the merger of the qualified benefit plans of ING's US subsidiaries at December 31, 2001, the Companies' plan assets were held by Equitable Life, an affiliate. During 1998, the Equitable Life Employee Pension Plan began investing in an undivided interest of the ING-NA Master Trust (the "Master Trust"). Boston Safe Deposit and Trust Company holds the Master Trust's investment assets. The weighted-average assumptions used in the measurement of the Companies' December 31, 2001 benefit obligation, prior to the merger of the qualified benefit plans of ING, follows: DECEMBER 31 2001 2000 ------------------------- Discount rate ............................... 7.50% 7.75% Expected return on plan assets .............. 9.25 9.25 Rate of compensation increase ............... 4.50 5.00 The following table provides the net periodic benefit cost for the fiscal years 2001, 2000, and 1999: YEAR ENDED DECEMBER 31, 2001 2000 1999 ----------------------------- (Dollars in thousands) Service cost ........................... $ 1,998 $ 1,569 $ 1,500 Interest cost .......................... 768 554 323 Unrecognized past service cost ......... 11 -- -- ----------------------------- Net periodic benefit cost .............. $ 2,777 $ 2,123 $ 1,823 ============================= 23 There were no gains or losses resulting from curtailments or settlements during 2001, 2000, or 1999. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $0 as of December 31, 2001 and $7,906,000, $4,701,000, and $0, respectively, as of December 31, 2000. 10. RELATED PARTY TRANSACTIONS - ------------------------------- Operating Agreements: Directed Services, Inc. ("DSI"), an affiliate, acts as the principal underwriter (as defined in the Securities Act of 1933 and the Investment Company Act of 1940, as amended) and distributor of the variable insurance products issued by the Companies. DSI is authorized to enter into agreements with broker/dealers to distribute the Companies' variable products and appoint representatives of the broker/dealers as agents. For the years ended December 31, 2001, 2000, and 1999, the Companies paid commissions to DSI totaling $229,726,000, $208,883,000, and $181,536,000, respectively. Golden American provides certain managerial and supervisory services to DSI. The fee paid by DSI for these services is calculated as a percentage of average assets in the variable separate accounts. For the years ended December 31, 2001, 2000, and 1999, the fee was $23,138,000, $21,296,000, and $10,136,000, respectively. Effective January 1, 1998, the Companies have an asset management agreement with ING Investment Management LLC ("ING IM"), an affiliate, in which ING IM provides asset management and accounting services. Under the agreement, the Companies record a fee based on the value of the assets under management. The fee is payable quarterly. For the years ended December 31, 2001, 2000, and 1999, the Companies incurred fees of $4,392,000, $2,521,000, and $2,227,000, respectively, under this agreement. Golden American has a guaranty agreement with Equitable Life. In consideration of an annual fee, payable June 30, Equitable Life guarantees to Golden American that it will make funds available, if needed, to Golden American to pay the contractual claims made under the provisions of Golden American's life insurance and annuity contracts. The agreement is not, and nothing contained therein or done pursuant thereto by Equitable Life shall be deemed to constitute, a direct or indirect guaranty by Equitable Life of the payment of any debt or other obligation, indebtedness, or liability, of any kind or character whatsoever, of Golden American. The agreement does not guarantee the value of the underlying assets held in separate accounts in which funds of variable life insurance and variable annuity policies have been invested. The calculation of the annual fee is based on risk based capital. On June 30, 2001 and 2000, Golden American incurred a fee of $12,000 and $7,000, respectively, under this agreement. No annual fee was paid in 1999. Golden American provides certain advisory, computer, and other resources and services to Equitable Life. Revenues for these services, which reduced general expenses incurred by Golden American, totaled $8,192,000, $6,193,000, and $6,107,000 for the years ended December 31, 2001, 2000, and 1999, respectively. The Companies have a service agreement with Equitable Life in which Equitable Life provides administrative and financial related services. Under this agreement, the Companies incurred expenses of $309,000, $1,270,000, and $1,251,000 for the years ended December 31, 2001, 2000, and 1999, respectively. During 2001, the State of Delaware Insurance Department approved expense sharing agreements with ING America Insurance Holdings, Inc. ("ING AIH") for administrative, management, financial, and information technology services. Under these agreements with ING AIH, Golden American incurred expenses of $23,153,000 for the year ended December 31, 2001. First Golden provided resources and services to DSI. Revenues for these services, which reduce general expenses incurred by the Companies, totaled $139,000, $223,000, and $387,000 for the years ended December 31, 2001, 2000, and 1999, respectively. 24 Golden American provides resources and services to ING Mutual Funds Management Co., LLC, an affiliate. Revenues for these services, which reduced general expenses incurred by Golden American, totaled $478,000, $455,000, and $244,000 for the years ended December 31, 2001, 2000, and 1999, respectively. Golden American provides resources and services to United Life & Annuity Insurance Company, an affiliate. Revenues for these services, which reduced general expenses incurred by Golden American, totaled $383,000, $593,000 and $460,000 for the years ended December 31, 2001, 2000, and 1999, respectively. The Companies provide resources and services to Security Life of Denver Insurance Company, an affiliate. Revenues for these services, which reduced general expenses incurred by the Companies, totaled $326,000, $261,000 and $216,000 for the years ended December 31, 2001, 2000, and 1999, respectively. The Companies provide resources and services to Southland Life Insurance Company, an affiliate. Revenues for these services, which reduce general expenses incurred by the Companies, totaled $132,000, $115,000 and $103,000 for the years ended December 31, 2001, 2000, and 1999, respectively. In 2001, 2000, and 1999, the Companies received 14.0%, 11.3%, and 10.0% of total premiums, net of reinsurance, for variable products sold through eight affiliates as noted in the following table: YEAR ENDED DECEMBER 31, 2001 2000 1999 ------------------------------- (Dollars in thousands) LSSI.................................... $ 124.4 $ 127.0 $ 168.5 Vestax Securities Corporation........... 35.3 47.2 88.1 DSI..................................... 1.1 1.4 2.5 Multi-Financial Securities Corporation.. 26.2 38.6 44.1 IFG Network Securities, Inc............. 12.8 23.1 25.8 Washington Square ...................... 99.2 44.6 -- Primevest............................... 46.0 6.2 -- Compulife............................... 6.6 2.7 -- ------------------------------- Total................................... $ 351.6 $ 290.8 $ 329.0 =============================== Modified Coinsurance Agreement: On June 30, 2000, effective January 1, 2000, Golden American entered into a modified coinsurance agreement with Equitable Life, an affiliate, covering a considerable portion of Golden American's variable annuities issued on or after January 1, 2000, excluding those with an interest rate guarantee. The financial statements are presented net of the effects of the agreement. Under this agreement, Golden American received a net reimbursement of expenses and charges of $224.5 million and $218.8 million for the years ended December 31, 2001 and 2000, respectively. This was offset by a decrease in policy acquisition costs deferred of $257.5 million and $223.7 million, respectively, for the same periods. As at December 31, 2001 and 2000, Golden American also had a payable to Equitable Life of $22.6 million and $16.3 million, respectively, due to the overpayment by Equitable Life of the cash settlement for the modified coinsurance agreement. Reinsurance Agreement Covering Minimum Guaranteed Benefits: On December 28, 2000, Golden American entered into a reinsurance agreement with Security Life of Denver International, Ltd., an affiliate, covering variable annuity minimum guaranteed death benefits and minimum guaranteed living benefits of variable annuities issued on or after January 1, 2000. Golden American also obtained an irrevocable letter of credit through Bank of New York in the amount of $25 million related to this agreement. Effective December 24, 2001, the letter of credit amount was revised to $70 million. Under this agreement, Golden American 25 recorded a reinsurance recoverable of $28.8 million and $14.6 million at December 31, 2001 and 2000, respectively. Reciprocal Loan Agreement: Golden American maintains a reciprocal loan agreement with ING AIH, a Delaware corporation and affiliate, to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Under this agreement, which became effective January 1, 1998 and expires December 31, 2007, Golden American and ING AIH can borrow up to $65,000,000 from one another. Prior to lending funds to ING AIH, Golden American must obtain the approval from the Department of Insurance of the State of Delaware. Interest on any Golden American borrowings is charged at the rate of ING AIH's cost of funds for the interest period plus 0.15%. Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest rate of U.S. commercial paper available for purchase with a similar duration. Under this agreement, Golden American incurred interest expense of $26,000, $481,000, and $815,000 for the years ended December 31, 2001, 2000, and 1999, respectively. At December 31, 2001, 2000, and 1999, Golden American did not have any borrowings or receivables from ING AIH under this agreement. Surplus Notes: On December 30, 1999, Golden American issued an 8.179% surplus note in the amount of $50,000,000 to Equitable Life. The note matures on December 29, 2029. Payment of the note and related accrued interest is subordinate to payments due to policyholders, claimant and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders, of Golden American. Any payment of principal and/or interest made is subject to the prior approval of the Delaware Insurance Commissioner. Under this agreement, Golden American incurred interest expense of $4,089,000 and $4,112,000 for the years ended December 31, 2001 and 2000, respectively. Golden American incurred no interest expense during the year ended December 31, 1999. On December 8, 1999, Golden American issued a 7.979% surplus note in the amount of $35,000,000 to First Columbine Life Insurance Company ("First Columbine"), an affiliate. The note matures on December 7, 2029. Payment of the note and related accrued interest is subordinate to payments due to policyholders, claimant and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders, of Golden American. Any payment of principal and/or interest made is subject to the prior approval of the Delaware Insurance Commissioner. Under this agreement, Golden American incurred interest expense of $2,792,000, $2,961,000, and $0 for the years ended December 31, 2001, 2000, and 1999, respectively. On September 30, 1999, Golden American issued a 7.75% surplus note in the amount of $75,000,000 to ING AIH. The note matures on September 29, 2029. Payment of the note and related accrued interest is subordinate to payments due to policyholders, claimant, and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders, of Golden American. Any payment of principal and/or interest made is subject to the prior approval of the Delaware Insurance Commissioner. Under this agreement, Golden American incurred interest expense of $5,813,000, $5,813,000, and $1,469,000 for the years ended December 31, 2001, 2000, and 1999, respectively. On December 30, 1999, ING AIH assigned the note to Equitable Life. On December 30, 1998, Golden American issued a 7.25% surplus note in the amount of $60,000,000 to Equitable Life. The note matures on December 29, 2028. Payment of the note and related accrued interest is subordinate to payments due to policyholders, claimant, and beneficiary claims, as well as debts owed to all other classes of debtors, other than surplus note holders, of Golden American. Any payment of principal and/or interest made is subject to the prior approval of the Delaware Insurance Commissioner. Under this agreement, Golden American incurred interest expense of $4,350,000 in 2001, unchanged from 2000 and 1999. On December 17, 1996, Golden American issued an 8.25% surplus note in the amount of $25,000,000 to Equitable. The note matures on December 17, 2026. Payment of the note and related accrued interest is subordinate to payments due to policyholders, claimant, and beneficiary claims, as well as debts owed to all other classes of debtors of Golden American. Any payment of principal made is subject to the prior approval of the Delaware Insurance Commissioner. Golden American incurred interest totaling $2,063,000 in 2001, unchanged from 2000 and 1999. On December 17, 1996, Golden American contributed the $25,000,000 to First Golden acquiring 200,000 shares of common stock (100% of outstanding stock). 26 As at December 31, 2000, Golden American also had a receivable of $35,000,000 from capital contributions made by EIC. Stockholder's Equity: During 2001, 2000, and 1999, Golden American received capital contributions from EIC of $196,796,000, $80,000,000, and $121,000,000, respectively. 11. COMMITMENTS AND CONTINGENCIES - ---------------------------------- Reinsurance: At December 31, 2001, the Companies had reinsurance treaties with five unaffiliated reinsurers and three affiliated reinsurers covering a significant portion of the mortality risks and guaranteed death and living benefits under its variable contracts. Golden American remains liable to the extent reinsurers do not meet their obligations under the reinsurance agreements. Reinsurance ceded in force for life mortality risks were $94,783,000, and $105,334,000 at December 31, 2001 and 2000, respectively. At December 31, 2001 and 2000, the Companies had net receivables of $55,951,000 and $33,973,000, respectively, for reinsurance claims, reserve credits, or other receivables from these reinsurers. At December 31, 2001 and 2000, respectively, these net receivables were comprised of $7,820,000 and $1,820,000, respectively, for claims recoverable from reinsurers, $3,376,000 and $4,007,000, respectively, for a payable for reinsurance premiums, $28,800,000 and $14,642,000, respectively, for reserve credits, and $22,707,000 and $21,518,000, respectively, for reinsured surrenders and allowances due from an unaffiliated reinsurer. Included in the accompanying financial statements, excluding the modified coinsurance agreements, are net considerations to reinsurers of $30,329,000, $21,655,000, and $9,883,000 and net policy benefits recoveries of $21,750,000, $8,927,000, and $3,059,000 for the years ended December 31, 2001, 2000, and 1999, respectively. On June 30, 2000, effective January 1, 2000, Golden American entered into a modified coinsurance agreement with Equitable Life, an affiliate, covering a considerable portion of Golden American's variable annuities issued on or after January 1, 2000, excluding those with an interest rate guarantee. At December 31, 2001 and 2000, Golden American had received a total settlement of $224.5 million and $218.8 million, respectively, under this agreement. The carrying value of the separate account liabilities covered under this agreement represent 31.9% and 17.6% of total separate account liabilities outstanding at December 31, 2001 and 2000, respectively. Golden American remains liable to the extent Equitable Life does not meet its obligations under the agreement. The accompanying statement of operations, statement of changes in stockholder's equity and statement of cash flows are presented net of the effects of the agreement. On December 28, 2000, Golden American entered into a reinsurance agreement with Security Life of Denver International, Ltd., an affiliate, covering variable annuity minimum guaranteed death benefits and guaranteed living benefits of variable annuities issued on or after January 1, 2000. Golden American also obtained an irrevocable letter of credit was obtained through Bank of New York in the amount of $25 million related to this agreement. Effective December 24, 2001, the letter of credit amount was revised to $70 million. Under this agreement, Golden American had reserve credits of $28,800,000 and $14,642,000 at December 31, 2001 and 2000, respectively. On December 29, 2000, First Golden entered into a reinsurance treaty with London Life Reinsurance Company of Pennsylvania, an unaffiliated reinsurer, covering the minimum guaranteed death benefits of First Golden's variable annuities issued on or after January 1, 2000. Effective June 1, 1994, Golden American entered into a modified coinsurance agreement with an unaffiliated reinsurer. The accompanying financial statements are presented net of the effects of the treaty which decreased income by $458,000 for the year ended December 31, 2001 and increased income by $736,000, and $1,729,000 for the years ended December 31, 2000 and 1999, respectively. Investment Commitments: At December 31, 2001, outstanding commitments to fund mortgage loans totaled $3,182,000 and outstanding commitments to fund fixed maturities totaled $22,000,000. There were no outstanding commitments to fund mortgage loans and fixed maturities at December 31, 2000. 27 Guaranty Fund Assessments: Assessments are levied on the Companies by life and health guaranty associations in most states in which the Companies are licensed to cover losses of policyholders of insolvent or rehabilitated insurers. In some states, these assessments can be partially recovered through a reduction in future premium taxes. The Companies cannot predict whether and to what extent legislative initiatives may affect the right to offset. The associated cost for a particular insurance company can vary significantly based upon its fixed account premium volume by line of business and state premiums as well as its potential for premium tax offset. The Companies have established an undiscounted reserve to cover such assessments, review information regarding known failures, and revise estimates of future guaranty fund assessments. Accordingly, the Companies accrued and charged to expense an additional $4,000, $3,000, and $3,000 for the years ended December 31, 2001, 2000, and 1999, respectively. At December 31, 2001, the Companies have an undiscounted reserve of $2,430,000, unchanged from December 31, 2000, to cover estimated future assessments (net of related anticipated premium tax credits) and have established an asset totaling $712,000, and $733,000, respectively, for assessments paid which may be recoverable through future premium tax offsets. The Companies believe this reserve is sufficient to cover expected future guaranty fund assessments based upon previous premiums and known insolvencies at this time. Litigation: The Companies, like other insurance companies, may be named or otherwise involved in lawsuits, including class action lawsuits and arbitrations. In some class action and other actions involving insurers, substantial damages have been sought and/or material settlement or award payments have been made. The Companies currently believe no pending or threatened lawsuits or actions exist that are reasonably likely to have a material adverse impact on the Companies. Vulnerability from Concentrations: The Companies have various concentrations in the investment portfolio (see Note 3 for further information). The Companies' asset growth, net investment income, and cash flow are primarily generated from the sale of variable insurance products and associated future policy benefits and separate account liabilities. Substantial changes in tax laws that would make these products less attractive to consumers and extreme fluctuations in interest rates or stock market returns, which may result in higher lapse experience than assumed, could cause a severe impact to the Companies' financial condition. Two broker/dealers, having at least ten percent of total net premiums, generated 21% of the Companies' variable annuity sales during 2001 (11% by one broker dealer during 2000 and 28% by two broker/dealers during 1999). Two broker dealers, having at least ten percent of total gross premiums, generated 22% of the Companies' sales during 2001 (21% and 30% by two broker/dealers during 2000 and 1999, respectively). The Premium Plus product generated 43% of the Companies' sales during 2001 (71% during 2000 and 79% during 1999). The ES II product generated 14% of the Companies' sales during 2001 (12% during 2000 and 9% during 1999). The Guarantee product, introduced in the fourth quarter of 2000, generated 22% of the Companies' sales during 2001 (4% during 2000). Leases: The Companies lease their home office space, certain other equipment, and capitalized computer software under operating leases which expire through 2020. During the years ended December 31, 2001, 2000, and 1999, rent expense totaled $4,298,000, $2,874,000, and $2,273,000, respectively. At December 31, 2001, minimum rental payments due under all non-cancelable operating leases with initial terms of one year or more are: 2002 - $3,608,000; 2003 - $2,912,000; 2004 - $2,455,000; 2005 - $2,455,000; 2006 - $2,420,000, and 2007 and thereafter - - $32,451,000. Revolving Note Payable: To enhance short-term liquidity, the Companies established a revolving note payable with SunTrust Bank, Atlanta (the "Bank"). These revolving notes payable were amended and restated in April 2001 with an expiration date of May 31, 2002. The note was approved by the Boards of Directors of Golden American and First Golden on August 5, 1998 and September 29, 1998, respectively. The total amount the Companies may have outstanding is $85,000,000, of which Golden American and First Golden have individual credit sublimits of $75,000,000 and $10,000,000, respectively. The note accrues interest at an annual rate equal to: (1) the cost of funds for the Bank for the period applicable for the advance plus 0.225% or (2) a rate quoted by the Bank to the Companies for the advance. The terms of the agreement require the Companies to maintain the minimum level of Company Action Level Risk Based Capital as established by applicable state law or regulation. During the years ended December 31, 2001, 2000, and 1999, the Companies incurred interest expense of $119,000, $87,000, and $198,000, respectively. 28 At December 31, 2001, the Companies had a $1,400,000 note payable to the Bank under this agreement. At December 31, 2000, there were no amounts outstanding under this agreement. 12. CHANGE OF OWNERSHIP OF GOLDEN AMERICAN - ------------------------------------------- On December 3, 2001, the Board of Directors of EIC approved a plan to contribute its holding of 100% of the stock of its wholly owned subsidiary, Golden American to another wholly owned subsidiary, Equitable Life. The contribution of stock occurred on December 31, 2001, following approval granted by the Insurance Department of the State of Delaware. 13. MERGER OF FIRST GOLDEN WITH RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK - ----------------------------------------------------------------------------- A filing was made on October 31, 2001 in accordance with Item 5 of Form 8-K: Other Events and Regulation FD Disclosure. The purpose of the filing was to report that on September 25, 2001, the Board of Directors of First Golden approved a plan of merger to merge First Golden into ReliaStar Life Insurance Company of New York ("RLNY"), an affiliate. The merger is currently anticipated to be effective on April 1, 2002, or shortly thereafter, subject to the approval of the Insurance Departments of the States of New York and Delaware. 14. QUARTERLY DATA (UNAUDITED) - ------------------------------- QUARTER ENDED 2001 FIRST SECOND THIRD FOURTH ------------------------------------------ (Dollars in thousands) Total revenue ................... $ 72,139 $ 65,435 $ 70,108 $ 69,128 ------------------------------------------ Income (loss) before income taxes 14,267 5,575 (14,329) (9,291) Income taxes .................... 5,334 2,373 (5,638) (1,893) ------------------------------------------ Net income (loss) ............... $ 8,933 $ 3,202 $ (8,691) $ (7,398) ========================================== QUARTER ENDED 2000 FIRST SECOND THIRD FOURTH ------------------------------------------ (Dollars in thousands) Total revenue ................... $ 55,056 $ 53,672 $ 57,194 $ 59,523 ------------------------------------------ Income before income taxes ...... 3,511 10,168 14,207 4,530 Income taxes .................... 1,621 3,981 4,200 3,434 ------------------------------------------ Net income ...................... $ 1,890 $ 6,187 $ 10,007 $ 1,096 ========================================== 29 FINANCIAL STATEMENTS Golden American Life Insurance Company Separate Account B YEAR ENDED DECEMBER 31, 2001 WITH REPORT OF INDEPENDENT AUDITORS Golden American Life Insurance Company Separate Account B Financial Statements Year ended December 31, 2001 CONTENTS Report of Independent Auditors.................................................1 Audited Financial Statements Statement of Assets and Liabilities............................................3 Statement of Operations.......................................................10 Statements of Changes in Net Assets...........................................17 Notes to Financial Statements.................................................24 Report of Independent Auditors The Board of Directors and Participants Golden American Life Insurance Company We have audited the accompanying statement of assets and liabilities of Golden American Life Insurance Company Separate Account B (comprised of the Liquid Asset, Limited Maturity Bond, Large Cap Value, Hard Assets, All-Growth, All Cap, Real Estate, Fully Managed, Equity Income, Capital Appreciation, Rising Dividends, Emerging Markets, Market Manager, Value Equity, Strategic Equity, Small Cap, Managed Global, Mid-Cap Growth, Capital Growth, Research, Total Return, Growth, Core Bond, Developing World, Growth Opportunities, Asset Allocation Growth, Diversified Mid-Cap, Investors, Growth and Income, Special Situations, Internet Tollkeeper, International Equity, Pilgrim Worldwide Growth, Pilgrim Growth Opportunities, Pilgrim MagnaCap, Pilgrim Small Cap Opportunities, Pilgrim Convertible Class, Pilgrim Growth and Income, Pilgrim LargeCap Growth, PIMCO High Yield Bond, PIMCO StocksPLUS Growth and Income, Prudential Jennison, SP Jennison International Growth, Appreciation, Smith Barney High Income, Smith Barney Large Cap Value, Smith Barney International All Cap Growth, Smith Barney Money Market, Asset Allocation, Equity, Galaxy Growth and Income, High Quality Bond, Small Company Growth, Alliance Bernstein Value, Alliance Growth and Income, Premier Growth, GET Fund - Series N, GET Fund - Series P, GET Fund - Series Q, Value Opportunity, Index Plus Large Cap, Index Plus Mid Cap, Index Plus Small Cap, AIM V.I. Dent Demographic Trends, AIM V.I. Growth Fund, Brinson Tactical Allocation, Equity-Income, Growth, Contrafund, Financial Services, Health Sciences, Utilities, Janus Aspen Worldwide Growth, PPI MFS Capital Opportunities, Pioneer Fund VCT, Pioneer Small Company VCT, Pioneer Mid-Cap Value VCT, Bull, Small-Cap, Europe 30, Putnam Growth and Income, International Growth and Income, and Voyager Divisions) as of December 31, 2001, and the related statements of operations and changes in net assets for the periods disclosed in the financial statements. These financial statements are the responsibility of the Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. 1 We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2001, by correspondence with the mutual funds' transfer agents. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Golden American Life Insurance Company Separate Account B at December 31, 2001 and the results of its operations and changes in its net assets for the periods disclosed in the financial statements, in conformity with accounting principles generally accepted in the United States. Atlanta, Georgia February 15, 2002 2
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities December 31, 2001 (DOLLARS IN THOUSANDS) LIMITED LARGE CAP HARD ALL REAL LIQUID ASSET MATURITY BOND VALUE ASSETS CAP ESTATE SERIES SERIES SERIES SERIES SERIES SERIES -------------------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 1,071,485 $ 364,062 $ 275,489 $ 33,209 $ 299,314 $ 126,169 -------------------------------------------------------------------------------------------------- Total assets 1,071,485 364,062 275,489 33,209 299,314 126,169 -------------------------------------------------------------------------------------------------- Net assets $ 1,071,485 $ 364,062 $ 275,489 $ 33,209 $ 299,314 $ 126,169 ================================================================================================== Net assets: Accumulation units $ 1,071,437 $ 363,844 $ 275,489 $ 33,165 $ 299,314 $ 126,057 Contracts in payout (annuitization) period 48 218 - 44 - 112 -------------------------------------------------------------------------------------------------- Total net assets $ 1,071,485 $ 364,062 $ 275,489 $ 33,209 $ 299,314 $ 126,169 ================================================================================================== Total number of shares: 1,071,485,356 33,035,775 27,061,741 3,392,106 25,959,582 8,067,044 ================================================================================================== Cost of shares: $ 1,071,485 $ 364,901 $ 277,825 $ 36,213 $ 302,930 $ 124,881 ================================================================================================== SEE ACCOMPANYING NOTES. 3
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) FULLY EQUITY CAPITAL RISING VALUE STRATEGIC MANAGED INCOME APPRECIATION DIVIDENDS EQUITY EQUITY SERIES SERIES SERIES SERIES SERIES SERIES ---------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 644,971 $ 416,763 $ 440,209 $ 732,049 $ 199,039 $ 259,382 ---------------------------------------------------------------------------------------- Total assets 644,971 416,763 440,209 732,049 199,039 259,382 ---------------------------------------------------------------------------------------- Net assets $ 644,971 $ 416,763 $ 440,209 $ 732,049 $ 199,039 $ 259,382 ======================================================================================== Net assets: Accumulation units $ 644,164 $ 415,835 $ 439,644 $ 731,833 $ 199,011 $ 259,005 Contracts in payout (annuitization) period 807 928 565 216 28 377 ---------------------------------------------------------------------------------------- Total net assets $ 644,971 $ 416,763 $ 440,209 $ 732,049 $ 199,039 $ 259,382 ======================================================================================== Total number of shares: 36,855,530 36,526,275 31,000,609 35,867,139 12,799,939 19,709,934 ======================================================================================== Cost of shares: $ 626,149 $ 429,510 $ 556,440 $ 809,758 $ 205,495 $ 297,335 ======================================================================================== SEE ACCOMPANYING NOTES. 4
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) SMALL MANAGED MID-CAP CAPITAL TOTAL CAP GLOBAL GROWTH GROWTH RESEARCH RETURN SERIES SERIES SERIES SERIES SERIES SERIES ------------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 480,513 $ 250,388 $ 928,290 $ 395,434 $ 637,711 $ 793,394 ------------------------------------------------------------------------------------------- Total assets 480,513 250,388 928,290 395,434 637,711 793,394 ------------------------------------------------------------------------------------------- Net assets $ 480,513 $ 250,388 $ 928,290 $ 395,434 $ 637,711 $ 793,394 =========================================================================================== Net assets: Accumulation units $ 480,417 $ 250,229 $ 928,125 $ 395,434 $ 637,711 $ 793,394 Contracts in payout (annuitization) period 96 159 165 - - - ------------------------------------------------------------------------------------------- Total net assets $ 480,513 $ 250,388 $ 928,290 $ 395,434 $ 637,711 $ 793,394 =========================================================================================== Total number of shares: 45,632,776 24,075,672 65,464,732 31,014,433 39,856,910 49,649,193 =========================================================================================== Cost of shares: $ 465,162 $ 242,498 $1,070,902 $ 491,153 $ 844,683 $ 812,437 =========================================================================================== SEE ACCOMPANYING NOTES. 5
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) CORE DEVELOPING ASSET ALLOCATION DIVERSIFIED GROWTH BOND WORLD GROWTH MID-CAP INVESTORS SERIES SERIES SERIES SERIES SERIES SERIES -------------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 1,002,892 $ 114,996 $ 71,466 $ 49,242 $ 57,814 $ 91,400 -------------------------------------------------------------------------------------------- Total assets 1,002,892 114,996 71,466 49,242 57,814 91,400 -------------------------------------------------------------------------------------------- Net assets $ 1,002,892 $ 114,996 $ 71,466 $ 49,242 $ 57,814 $ 91,400 ============================================================================================ Net assets: Accumulation units $ 1,002,892 $ 114,996 $ 71,351 $ 49,242 $ 57,814 $ 91,400 Contracts in payout (annuitization) period - - 115 - - - -------------------------------------------------------------------------------------------- Total net assets $ 1,002,892 $ 114,996 $ 71,466 $ 49,242 $ 57,814 $ 91,400 ============================================================================================ Total number of shares: 72,673,397 11,751,448 10,063,725 5,653,528 6,277,325 8,704,748 ============================================================================================ Cost of shares: $ 1,275,990 $ 113,923 $ 69,466 $ 49,901 $ 57,016 $ 94,635 ============================================================================================ SEE ACCOMPANYING NOTES. 6
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) PILGRIM GROWTH SPECIAL INTERNET INTERNATIONAL PILGRIM GROWTH PILGRIM AND SITUATIONS TOLLKEEPER EQUITY WORLDWIDE GROWTH OPPORTUNITIES MAGNACAP INCOME SERIES SERIES SERIES SERIES FUND PORTFOLIO PORTFOLIO --------------------------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 92,720 $ 24,325 $ 5,389 $ 144,061 $ 20,014 $ 5,219 $ 5,402 --------------------------------------------------------------------------------------------------------- Total assets 92,720 24,325 5,389 144,061 20,014 5,219 5,402 --------------------------------------------------------------------------------------------------------- Net assets $ 92,720 $ 24,325 $ 5,389 $ 144,061 $ 20,014 $ 5,219 $ 5,402 ========================================================================================================= Net assets: Accumulation units $ 92,720 $ 24,325 $ 5,389 $ 144,061 $ 20,014 $ 5,219 $ 5,402 Contracts in payout (annuitization) period - - - - - - - --------------------------------------------------------------------------------------------------------- Total net assets $ 92,720 $ 24,325 $ 5,389 $ 144,061 $ 20,014 $ 5,219 $ 5,402 ========================================================================================================= Total number of shares: 10,336,703 2,882,028 700,763 17,377,727 2,791,342 950,753 601,581 ========================================================================================================= Cost of shares: $ 96,519 $ 25,447 $ 5,390 $ 139,189 $ 20,696 $ 5,216 $ 5,382 ========================================================================================================= SEE ACCOMPANYING NOTES. 7
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) PIMCO PILGRIM PILGRIM PILGRIM PILGRIM PIMCO STOCKSPLUS SMALL CAP CONVERTIBLE GROWTH AND LARGECAP HIGH GROWTH AND OPPORTUNITIES CLASS INCOME GROWTH YIELD BOND INCOME PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $14,437 $ 194 $ 156 $ 533 $ 236,343 $ 241,065 --------------------------------------------------------------------------------------- Total assets 14,437 194 156 533 236,343 241,065 --------------------------------------------------------------------------------------- Net assets $14,437 $ 194 $ 156 $ 533 $ 236,343 $ 241,065 ======================================================================================= Net assets: Accumulation units $14,437 $ 194 $ 156 $ 533 $ 236,343 $ 241,065 Contracts in payout (annuitization) period - - - - - - --------------------------------------------------------------------------------------- Total net assets $14,437 $ 194 $ 156 $ 533 $ 236,343 $ 241,065 ======================================================================================= Total number of shares: 766,247 18,573 15,159 55,253 29,992,785 25,775,364 ======================================================================================= Cost of shares: $14,140 $ 192 $ 152 $ 530 $ 247,482 $ 310,538 ======================================================================================= SEE ACCOMPANYING NOTES. 8
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) SP JENNISON SMITH BARNEY SMITH BARNEY PRUDENTIAL INTERNATIONAL SMITH BARNEY LARGE INTERNATIONAL JENNISON GROWTH APPRECIATION HIGH CAP ALL CAP GROWTH PORTFOLIO PORTFOLIO PORTFOLIO INCOME PORTFOLIO VALUE PORTFOLIO PORTFOLIO -------------------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 45,991 $ 11,310 $ 723 $ 370 $ 563 $ 300 -------------------------------------------------------------------------------------------------- Total assets 45,991 11,310 723 370 563 300 -------------------------------------------------------------------------------------------------- Net assets $ 45,991 $ 11,310 $ 723 $ 370 $ 563 $ 300 ================================================================================================== Net assets: Accumulation units $ 45,991 $ 11,310 $ 723 $ 370 $ 563 $ 300 Contracts in payout (annuitization) period - - - - - - -------------------------------------------------------------------------------------------------- Total net assets $ 45,991 $ 11,310 $ 723 $ 370 $ 563 $ 300 ================================================================================================== Total number of shares: 2,492,783 2,082,469 33,424 43,180 30,305 25,049 ================================================================================================== Cost of shares: $ 45,198 $ 10,990 $ 708 $ 522 $ 622 $ 396 ================================================================================================== SEE ACCOMPANYING NOTES. 9a
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) GALAXY HIGH SMITH BARNEY ASSET GROWTH & QUALITY MONEY MARKET ALLOCATION EQUITY INCOME BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 221 $ 1,260 $ 807 $ 201 $ 152 --------------------------------------------------------------------- Total assets 221 1,260 807 201 152 --------------------------------------------------------------------- Net assets $ 221 $ 1,260 $ 807 $ 201 $ 152 ===================================================================== Net assets: Accumulation units $ 221 $ 1,260 $ 807 $ 201 $ 152 Contracts in payout (annuitization) period - - - - - --------------------------------------------------------------------- Total net assets $ 221 $ 1,260 $ 807 $ 201 $ 152 ===================================================================== Total number of shares: 220,536 85,408 51,092 18,618 14,395 ===================================================================== Cost of shares: $ 221 $ 1,465 $ 1,101 $ 208 $ 148 ===================================================================== SEE ACCOMPANYING NOTES. 9b
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) SMALL ALLIANCE ALLIANCE COMPANY BERNSTEIN GROWTH AND GET GET GROWTH VALUE INCOME PREMIER GROWTH FUND - FUND - PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SERIES N SERIES P --------------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 84 $ 595 $ 1,653 $ 1,091 $ 30,868 $ 153,045 --------------------------------------------------------------------------------------------- Total assets 84 595 1,653 1,091 30,868 153,045 --------------------------------------------------------------------------------------------- Net assets $ 84 $ 595 $ 1,653 $ 1,091 $ 30,868 $ 153,045 ============================================================================================= Net assets: Accumulation units $ 84 $ 595 $ 1,653 $ 1,091 $ 30,868 $ 153,045 Contracts in payout (annuitization) period - - - - - - --------------------------------------------------------------------------------------------- Total net assets $ 84 $ 595 $ 1,653 $ 1,091 $ 30,868 $ 153,045 ============================================================================================= Total number of shares: 7,234 59,151 75,048 43,626 2,996,904 15,213,188 ============================================================================================= Cost of shares: $ 95 $ 577 $ 1,612 $ 1,030 $ 30,207 $ 152,752 ============================================================================================= SEE ACCOMPANYING NOTES. 9c
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) INDEX INDEX INDEX AIM V.I. GET VALUE PLUS PLUS PLUS DENT FUND - OPPORTUNITY LARGE CAP MID CAP SMALL CAP DEMOGRAPHIC SERIES Q PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TRENDS FUND ---------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 1,904 $ 298 $ 812 $ 820 $ 680 $ 3,550 ---------------------------------------------------------------------------------------- Total assets 1,904 298 812 820 680 3,550 ---------------------------------------------------------------------------------------- Net assets $ 1,904 $ 298 $ 812 $ 820 $ 680 $ 3,550 ======================================================================================== Net assets: Accumulation units $ 1,904 $ 298 $ 812 $ 820 $ 680 $ 3,550 Contracts in payout (annuitization) period - - - - - - ---------------------------------------------------------------------------------------- Total net assets $ 1,904 $ 298 $ 812 $ 820 $ 680 $ 3,550 ======================================================================================== Total number of shares: 190,318 22,498 58,556 60,663 58,745 636,122 ======================================================================================== Cost of shares: $ 1,904 $ 298 $ 791 $ 785 $ 625 $ 3,562 ======================================================================================== SEE ACCOMPANYING NOTES. 9d
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) AIM BRINSON V.I. TACTICAL EQUITY- FINANCIAL GROWTH ALLOCATION INCOME GROWTH CONTRAFUND SERVICES FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO FUND ---------------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 443 $ 787 $ 1,949 $ 693 $ 1,183 $ 2,404 ---------------------------------------------------------------------------------------------- Total assets 443 787 1,949 693 1,183 2,404 ---------------------------------------------------------------------------------------------- Net assets $ 443 $ 787 $ 1,949 $ 693 $ 1,183 $ 2,404 ============================================================================================== Net assets: Accumulation units $ 443 $ 787 $ 1,949 $ 693 $ 1,183 $ 2,404 Contracts in payout (annuitization) period - - - - - - ---------------------------------------------------------------------------------------------- Total net assets $ 443 $ 787 $ 1,949 $ 693 $ 1,183 $ 2,404 ============================================================================================== Total number of shares: 27,082 62,040 86,270 20,790 59,159 193,550 ============================================================================================== Cost of shares: $ 425 $ 741 $ 1,886 $ 657 $ 1,132 $ 2,371 ============================================================================================== SEE ACCOMPANYING NOTES. 9e
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) JANUS PIONEER ASPEN PPI MFS PIONEER SMALL HEALTH WORLDWIDE CAPITAL FUND COMPANY SCIENCES UTILITIES GROWTH OPPORTUNITIES VCT VCT FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ---------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 10,790 $ 964 $ 1,298 $ 698 $ 2,275 $ 938 ---------------------------------------------------------------------------------------- Total assets 10,790 964 1,298 698 2,275 938 ---------------------------------------------------------------------------------------- Net assets $ 10,790 $ 964 $ 1,298 $ 698 $ 2,275 $ 938 ======================================================================================== Net assets: Accumulation units $ 10,790 $ 964 $ 1,298 $ 698 $ 2,275 $ 938 Contracts in payout (annuitization) period - - - - - - ---------------------------------------------------------------------------------------- Total net assets $ 10,790 $ 964 $ 1,298 $ 698 $ 2,275 $ 938 ======================================================================================== Total number of shares: 592,899 68,494 45,769 25,704 119,390 85,634 ======================================================================================== Cost of shares: $ 10,871 $ 970 $ 1,234 $ 650 $ 2,255 $ 889 ======================================================================================== SEE ACCOMPANYING NOTES. 9f
Golden American Life Insurance Company Separate Account B Statement of Assets and Liabilities (continued) December 31, 2001 (DOLLARS IN THOUSANDS) PIONEER MID-CAP PUTNAM INTERNATIONAL VALUE VCT GROWTH AND INCOME GROWTH AND VOYAGER PORTFOLIO BULL SMALL-CAP EUROPE 30 FUND INCOME FUND FUND -------------------------------------------------------------------------------------------------------- Assets Investments in mutual funds at fair value $ 5,139 $ 20,583 $ 19,968 $ 6,312 $ 455 $ 604 $ 577 -------------------------------------------------------------------------------------------------------- Total assets 5,139 20,583 19,968 6,312 455 604 577 -------------------------------------------------------------------------------------------------------- Net assets $ 5,139 $ 20,583 $ 19,968 $ 6,312 $ 455 $ 604 $ 577 ======================================================================================================== Net assets: Accumulation units $ 5,139 $ 20,583 $ 19,968 $ 6,312 $ 455 $ 604 $ 577 Contracts in payout (annuitization) period - - - - - - - -------------------------------------------------------------------------------------------------------- Total net assets $ 5,139 $ 20,583 $ 19,968 $ 6,312 $ 455 $ 604 $ 577 ======================================================================================================== Total number of shares: 297,390 764,005 699,068 260,183 19,434 62,068 116,225 ======================================================================================================== Cost of shares: $ 5,042 $ 20,369 $ 19,827 $ 6,229 $ 442 $ 588 $ 531 ======================================================================================================== SEE ACCOMPANYING NOTES. 9g
Golden American Life Insurance Company Separate Account B Statement of Operations For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) LIQUID LIMITED LARGE CAP HARD ASSET MATURITY BOND VALUE ASSETS ALL CAP REAL ESTATE DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION --------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $32,228 $13,869 $ 430 $ - $ 2,934 $ 4,453 --------------------------------------------------------------------------------------- Total investment income 32,228 13,869 430 - 2,934 4,453 Expenses: Mortality and expense risk and other charges 14,257 4,338 2,826 592 3,269 1,560 Annual administrative charges 360 81 41 15 59 41 Minimum death benefit guarantee charges 5 1 - 1 - - Contingent deferred sales charges 18,372 398 200 44 246 121 Other contract charges 351 100 175 6 177 38 Amortization of deferred charges related to: Deferred sales load 105 27 1 4 1 11 Premium taxes 31 - - - - - --------------------------------------------------------------------------------------- Total expenses 33,481 4,945 3,243 662 3,752 1,771 --------------------------------------------------------------------------------------- Net investment income (loss) (1,253) 8,924 (2,813) (662) (818) 2,682 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments - 4,818 (343) (1,681) (665) 4,537 Capital gains distributions - - - - 456 1,591 --------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions - 4,818 (343) (1,681) (209) 6,128 Net unrealized appreciation (depreciation) of investments - 3,378 (1,637) (3,365) (2,272) (3,608) --------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(1,253) $17,120 $(4,793) $(5,708) $(3,299) $ 5,202 ======================================================================================= (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 10
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) FULLY EQUITY CAPITAL RISING EMERGING MARKET MANAGED INCOME APPRECIATION DIVIDENDS MARKETS MANAGER DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION ------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $16,156 $ 6,646 $ 322 $ 2,255 $ 59 $ 19 ------------------------------------------------------------------------------------------- Total investment income 16,156 6,646 322 2,255 59 19 Expenses: Mortality and expense risk and other charges 7,400 4,990 6,949 11,729 92 545 Annual administrative charges 170 134 185 308 4 - Minimum death benefit guarantee charges 1 3 - 1 - - Contingent deferred sales charges 665 538 677 1,255 5 - Other contract charges 165 99 159 164 1 - Amortization of deferred charges related to: Deferred sales load 64 68 51 96 3 19 Premium taxes - - 1 - - - ------------------------------------------------------------------------------------------- Total expenses 8,465 5,832 8,022 13,553 105 564 ------------------------------------------------------------------------------------------- Net investment income (loss) 7,691 814 (7,700) (11,298) (46) (545) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 11,174 (9,042) (15,294) 21,717 (1,106) 60 Capital gains distributions 10,374 7,560 - 8,449 - 3,369 ------------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions 21,548 (1,482) (15,294) 30,166 (1,106) 3,429 Net unrealized appreciation (depreciation) of investments 1,318 (822) (50,801) (137,786) 898 (3,695) ------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $30,557 $(1,490) $(73,795) $(118,918) $ (254) $ (811) =========================================================================================== (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 11
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) STRATEGIC SMALL MANAGED MID-CAP CAPITAL VALUE EQUITY EQUITY CAP GLOBAL GROWTH GROWTH DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION -------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 1,616 $ - $ 557 $ 317 $ 3,740 $ - -------------------------------------------------------------------------------------- Total investment income 1,616 - 557 317 3,740 - Expenses: Mortality and expense risk and other charges 2,959 4,471 6,860 3,655 15,832 6,539 Annual administrative charges 73 125 185 80 421 180 Minimum death benefit guarantee charges - - - - 1 - Contingent deferred sales charges 277 549 626 227 1,555 884 Other contract charges 49 149 166 146 401 95 Amortization of deferred charges related to: Deferred sales load 26 7 14 41 51 10 Premium taxes - - - - 1 - -------------------------------------------------------------------------------------- Total expenses 3,384 5,301 7,851 4,149 18,262 7,708 -------------------------------------------------------------------------------------- Net investment income (loss) (1,768) (5,301) (7,294) (3,832) (14,522) (7,708) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (2,127) (127,841) (283,317) (98,932) (608,749) (21,430) Capital gains distributions 2,392 387 - - 1,273 - -------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions 265 (127,454) (283,317) (98,932) (607,476) (21,430) Net unrealized appreciation (depreciation) of investments (14,146) 52,004 276,874 72,788 312,790 (46,715) -------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(15,649) $ (80,751) $ (13,737) $(29,976) $(309,208) $(75,853) ====================================================================================== (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 12
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) ASSET TOTAL CORE DEVELOPING ALLOCATION RESEARCH RETURN GROWTH BOND WORLD GROWTH DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION --------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 815 $ 33,703 $ - $ 256 $ 854 $ 414 --------------------------------------------------------------------------------------- Total investment income 815 33,703 - 256 854 414 Expenses: Mortality and expense risk and other charges 10,789 10,888 18,456 994 1,120 383 Annual administrative charges 280 243 561 14 31 3 Minimum death benefit guarantee charges - - 1 - - - Contingent deferred sales charges 1,104 1,265 2,217 67 89 22 Other contract charges 231 220 409 37 30 33 Amortization of deferred charges related to: Deferred sales load 24 24 26 1 6 - Premium taxes - 1 1 - - - --------------------------------------------------------------------------------------- Total expenses 12,428 12,641 21,671 1,113 1,276 441 --------------------------------------------------------------------------------------- Net investment income (loss) (11,613) 21,062 (21,671) (857) (422) (27) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (13,683) 740 (652,014) (1,319) (8,830) (61) Capital gains distributions 16,451 16,488 - 262 118 - --------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions 2,768 17,228 (652,014) (1,057) (8,712) (61) Net unrealized appreciation (depreciation) of investments (178,581) (46,531) 196,709 2,969 4,320 (644) --------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(187,426) $ (8,241) $ (476,976) $ 1,055 $(4,814) $(732) ======================================================================================= (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 13
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) PILGRIM DIVERSIFIED GROWTH AND SPECIAL INTERNET INTERNATIONAL WORLDWIDE MID CAP INVESTORS INCOME SITUATIONS TOLLKEEPER EQUITY GROWTH DIVISION DIVISION DIVISION DIVISION DIVISION (a) DIVISION DIVISION ------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME (LOSS) Income: Dividends $ 139 $ 728 $ 509 $ 60 $ - $ - $ - ------------------------------------------------------------------------------------------------ Total investment income 139 728 509 60 - - - Expenses: Mortality and expense risk and other charges 479 928 828 267 25 2,751 192 Annual administrative charges 4 12 7 4 - 62 3 Minimum death benefit guarantee charges - - - - - - - Contingent deferred sales charges 26 60 34 12 - 320 26 Other contract charges 38 53 59 18 2 47 16 Amortization of deferred charges related to: Deferred sales load - - - - - - - Premium taxes - - 1 - - - - ------------------------------------------------------------------------------------------------ Total expenses 547 1,053 929 301 27 3,180 237 ------------------------------------------------------------------------------------------------ Net investment income (loss) (408) (325) (420) (241) (27) (3,180) (237) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (602) (369) (175) (359) (152) (66,811) (1,558) Capital gains distributions - 1 - - - - - ------------------------------------------------------------------------------------------------ Net realized gain (loss) on investments and capital gains distributions (602) (368) (175) (359) (152) (66,811) (1,558) Net unrealized appreciation (depreciation) of investments 668 (3,000) (3,724) (769) (1) 30,006 (466) ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $(342) $(3,693) $(4,319) $(1,369) $(180) $(39,985) $(2,261) ================================================================================================ (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 14
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) PILGRIM PILGRIM SMALL PILGRIM PILGRIM PILGRIM GROWTH PILGRIM CAP CONVERTIBLE GROWTH AND LARGECAP OPPORTUNITIES MAGNACAP OPPORTUNITIES CLASS INCOME GROWTH DIVISION (a) DIVISION (a) DIVISION (a) DIVISION (c) DIVISION (c) DIVISION (c) ---------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $23 $ - $(4) $ - $ - ---------------------------------------------------------------------------------------- Total investment income - 23 - (4) - - Expenses: Mortality and expense risk and other charges 23 28 67 - 1 2 Annual administrative charges - - 1 - - - Minimum death benefit guarantee charges - - - - - - Contingent deferred sales charges 3 - 6 - - - Other contract charges 1 1 6 - - - Amortization of deferred charges related to: Deferred sales load - - - - - - Premium taxes - - - - - - ---------------------------------------------------------------------------------------- Total expenses 27 29 80 - 1 2 ---------------------------------------------------------------------------------------- Net investment income (loss) (27) (6) (80) (4) (1) (2) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (189) (8) (918) - 1 - Capital gains distributions - - - 5 1 - ---------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions (189) (8) (918) 5 2 - Net unrealized appreciation (depreciation) of investments 3 20 297 2 4 3 ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(213) $ 6 $(701) $ 3 $ 5 $ 1 ======================================================================================== (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 15
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) PIMCO STOCKSPLUS SP JENNISON SMITH BARNEY PIMCO HIGH GROWTH AND PRUDENTIAL INTERNATIONAL HIGH YIELD BOND INCOME JENNISON GROWTH APPRECIATION INCOME DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION ----------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 16,834 $ 10,135 $ - $ 19 $ 9 $ 50 ----------------------------------------------------------------------------------------- Total investment income 16,834 10,135 - 19 9 50 Expenses: Mortality and expense risk and other charges 3,406 3,823 338 126 11 6 Annual administrative charges 66 90 4 1 1 - Minimum death benefit guarantee charges - - - - - - Contingent deferred sales charges 388 453 43 11 4 - Other contract charges 90 67 22 7 - - Amortization of deferred charges related to: Deferred sales load 5 3 - - - - Premium taxes - - - - - - ----------------------------------------------------------------------------------------- Total expenses 3,955 4,436 407 145 16 6 ----------------------------------------------------------------------------------------- Net investment income (loss) 12,879 5,699 (407) (126) (7) 44 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (12,967) (21,014) (5,590) (3,123) 1 (32) Capital gains distributions - - 189 - - - ----------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions (12,967) (21,014) (5,401) (3,123) 1 (32) Net unrealized appreciation (depreciation) of investments 448 (20,466) 2,985 418 (46) (32) ----------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $ 360 $(35,781) $(2,823) $(2,831) $(52) $(20) ========================================================================================= (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 16
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) SMITH SMITH BARNEY BARNEY INTERNATIONAL SMITH BARNEY LARGE ALL CAP MONEY ASSET CAP VALUE GROWTH MARKET ALLOCATION EQUITY DIVISION DIVISION DIVISION DIVISION DIVISION ------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 9 $ - $ 7 $ 30 $ - ------------------------------------------------------------------------- Total investment income 9 - 7 30 - Expenses: Mortality and expense risk and other charges 9 5 3 20 14 Annual administrative charges 1 - - 1 1 Minimum death benefit guarantee charges - - - - - Contingent deferred sales charges - - 16 4 5 Other contract charges - - - - - Amortization of deferred charges related to: Deferred sales load - - - - - Premium taxes - - - - - ------------------------------------------------------------------------- Total expenses 10 5 19 25 20 ------------------------------------------------------------------------- Net investment income (loss) (1) (5) (12) 5 (20) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (9) 1 - (14) (45) Capital gains distributions 22 - - - - ------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions 13 1 - (14) (45) Net unrealized appreciation (depreciation) of investments (79) (142) - (136) (162) ------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(67) $(146) $(12) $(145) $(227) ========================================================================= (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 16a
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) GALAXY HIGH SMALL ALLIANCE ALLIANCE GROWTH AND QUALITY COMPANY BERNSTEIN GROWTH & PREMIER INCOME BOND GROWTH VALUE INCOME GROWTH DIVISION DIVISION DIVISION DIVISION (c) DIVISION (c) DIVISION (c) -------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ 7 $ - $ - $ - $ - -------------------------------------------------------------------------------------- Total investment income - 7 - - - - Expenses: Mortality and expense risk and other charges 4 2 1 2 4 3 Annual administrative charges - - - - - - Minimum death benefit guarantee charges - - - - - - Contingent deferred sales charges - - - - - - Other contract charges - - - - - - Amortization of deferred charges related to: Deferred sales load - - - - - - Premium taxes - - - - - -------------------------------------------------------------------------------------- Total expenses 4 2 1 2 4 3 -------------------------------------------------------------------------------------- Net investment income (loss) (4) 5 (1) (2) (4) (3) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (9) 1 (1) (5) (3) (6) Capital gains distributions - - - - - - -------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions (9) 1 (1) (5) (3) (6) Net unrealized appreciation (depreciation) of investments (14) 1 1 18 41 61 -------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(27) $ 7 $(1) $11 $34 $52 ====================================================================================== (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 16b
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) GET GET GET INDEX INDEX FUND - FUND - FUND - VALUE PLUS PLUS SERIES N SERIES P SERIES Q OPPORTUNITY LARGE CAP MID CAP DIVISION(c) DIVISION (d) DIVISION(f) DIVISION (c) DIVISION (c) DIVISION (c) ------------------------------------------------------------------------------------ NET INVESTMENT INCOME (LOSS) Income: Dividends $222 $ 89 $ - $ - $ 4 $ - ------------------------------------------------------------------------------------ Total investment income 222 89 - - 4 - Expenses: Mortality and expense risk and other charges 189 163 - 1 2 2 Annual administrative charges - - - - - - Minimum death benefit guarantee charges - - - - - - Contingent deferred sales charges 5 5 - - - - Other contract charges - - - - - - Amortization of deferred charges related to: Deferred sales load - - - - - - Premium taxes - - - - - - ------------------------------------------------------------------------------------ Total expenses 194 168 - 1 2 2 ------------------------------------------------------------------------------------ Net investment income (loss) 28 (79) - (1) 2 (2) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 72 - - (1) (4) (5) Capital gains distributions - - - - - - ------------------------------------------------------------------------------------ Net realized gain (loss) on investments and capital gains distributions 72 - - (1) (4) (5) Net unrealized appreciation (depreciation) of investments 661 293 - - 21 35 ------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations $761 $214 $ - $(2) $19 $28 ==================================================================================== (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 16c
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) AIM V.I. DENT BRINSON INDEX PLUS DEMOGRAPHIC AIM V.I. TACTICAL EQUITY- SMALL CAP TRENDS GROWTH ALLOCATION INCOME GROWTH DIVISION (c) DIVISION (e) DIVISION (e) DIVISION (c) DIVISION (c) DIVISION (c) ---------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ - $ 1 $ - $ - $ - ---------------------------------------------------------------------------------- Total investment income - - 1 - - - Expenses: Mortality and expense risk and other charges 2 3 1 2 5 2 Annual administrative charges - - - - - - Minimum death benefit guarantee charges - - - - - - Contingent deferred sales charges - - - - - - Other contract charges - - - - - - Amortization of deferred charges related to: Deferred sales load - - - - - - Premium taxes - - - - - - ---------------------------------------------------------------------------------- Total expenses 2 3 1 2 5 2 ---------------------------------------------------------------------------------- Net investment income (loss) (2) (3) - (2) (5) (2) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (2) 3 - (4) (4) (4) Capital gains distributions - - - - - - ---------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions (2) 3 - (4) (4) (4) Net unrealized appreciation (depreciation) of investments 55 (12) 18 46 63 36 ---------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $51 $(12) $18 $40 $54 $30 ================================================================================== (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 16d
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) JANUS ASPEN PPI MFS FINANCIAL HEALTH WORLDWIDE CAPITAL CONTRAFUND SERVICES SCIENCES UTILITIES GROWTH OPPORTUNITIES DIVISION (c) DIVISION (c) DIVISION (c) DIVISION (c) DIVISION(c) DIVISION (c) -------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ 9 $ 37 $ 4 $ 1 $ - -------------------------------------------------------------------------------------- Total investment income - 9 37 4 1 - Expenses: Mortality and expense risk and other charges 3 4 15 1 3 2 Annual administrative charges - - - - - - Minimum death benefit guarantee charges - - - - - - Contingent deferred sales charges - - - - - - Other contract charges - - - - - - Amortization of deferred charges related to: Deferred sales load - - - - - - Premium taxes - - - - - - -------------------------------------------------------------------------------------- Total expenses 3 4 15 1 3 2 -------------------------------------------------------------------------------------- Net investment income (loss) (3) 5 22 3 (2) (2) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments - 25 16 2 (4) (2) Capital gains distributions - - - 2 - - -------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions - 25 16 4 (4) (2) Net unrealized appreciation (depreciation) of investments 51 33 (81) (6) 64 48 -------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $48 $63 $(43) $ 1 $58 $44 ====================================================================================== (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 16e
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) PIONEER PIONEER PIONEER SMALL MID-CAP FUND VCT COMPANY VCT VALUE VCT BULL SMALL-CAP EUROPE 30 DIVISION (c) DIVISION (c) DIVISION (b) DIVISION (a) DIVISION (a) DIVISION (a) ------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ 3 $ - $ - $ - $ - $ - ------------------------------------------------------------------------------------- Total investment income 3 - - - - - Expenses: Mortality and expense risk and other charges 3 3 4 75 87 84 Annual administrative charges - - - 1 1 - Minimum death benefit guarantee charges - - - - - - Contingent deferred sales charges - - - 1 3 3 Other contract charges - - - 5 3 1 Amortization of deferred charges related to: Deferred sales load - - - - - - Premium taxes - - - - - ------------------------------------------------------------------------------------- Total expenses 3 3 4 82 94 88 ------------------------------------------------------------------------------------- Net investment income (loss) - (3) (4) (82) (94) (88) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments 3 (7) - (640) (1,538) (4,198) Capital gains distributions - - - - - - ------------------------------------------------------------------------------------- Net realized gain (loss) on investments and capital gains distributions 3 (7) - (640) (1,538) (4,198) Net unrealized appreciation (depreciation) of investments 20 49 97 214 141 83 ------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $23 $39 $93 $(508) $(1,491) $(4,203) ===================================================================================== (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 16f
Golden American Life Insurance Company Separate Account B Statement of Operations (continued) For the year ended December 31, 2001, except as noted (DOLLARS IN THOUSANDS) PUTNAM INTERNATIONAL GROWTH & GROWTH AND INCOME INCOME VOYAGER DIVISION (c) DIVISION(c) DIVISION (c) -------------------------------------------- NET INVESTMENT INCOME (LOSS) Income: Dividends $ - $ - $ - -------------------------------------------- Total investment income - - - Expenses: Mortality and expense risk and other charges 1 2 1 Annual administrative charges - - - Minimum death benefit guarantee charges - - - Contingent deferred sales charges - - - Other contract charges - - - Amortization of deferred charges related to: Deferred sales load - - - Premium taxes - - - -------------------------------------------- Total expenses 1 2 1 -------------------------------------------- Net investment income (loss) (1) (2) (1) REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments (1) (4) - Capital gains distributions - - - -------------------------------------------- Net realized gain (loss) on investments and capital gains distributions (1) (4) - Net unrealized appreciation (depreciation) of investments 13 16 46 -------------------------------------------- Net increase (decrease) in net assets resulting from operations $11 $10 $45 ============================================ (a) Commencement of operations, May 1, 2001. (b) Commencement of operations, July 13, 2001. (c) Commencement of operations, July 16, 2001. (d) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 15, 2001. (f) Commencement of operations, December 13, 2001. SEE ACCOMPANYING NOTES. 16g
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) LIQUID LIMITED LARGE CAP HARD ALL ASSET MATURITY BOND VALUE ASSETS GROWTH ALL CAP DIVISION DIVISION DIVISION (a) DIVISION DIVISION DIVISION (a) ------------------------------------------------------------------------------------------ NET ASSETS AT JANUARY 1, 2000 $ 522,326 $150,401 $ - $38,929 $ 145,863 $ - Increase (decrease) in net assets: Operations: Net investment income (loss) 18,885 9,842 267 (449) 71,237 1,786 Net realized gain (loss) on investments and capital gains distributions - (105) 239 (889) (17,900) 242 Net unrealized appreciation (depreciation) of investments - (15) (699) (651) (51,150) (1,344) ------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 18,885 9,722 (193) (1,989) 2,187 684 Changes from principal transactions: Purchase payments 596,489 36,148 55,323 7,384 22 41,432 Contract distributions and terminations (474,039) (10,071) (1,282) (2,536) (2,005) (1,349) Transfer payments from (to) Fixed Accounts and other Divisions 16,005 14,758 44,697 (279) (146,067) 64,116 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - ------------------------------------------------------------------------------------------ Increase (decrease) in net assets derived from principal transactions 138,455 40,835 98,738 4,569 (148,050) 104,199 ------------------------------------------------------------------------------------------ Total increase (decrease) 157,340 50,557 98,545 2,580 (145,863) 104,883 ------------------------------------------------------------------------------------------ Net assets at December 31, 2000 679,666 200,958 98,545 41,509 - 104,883 Increase (decrease) in net assets: Operations: Net investment income (loss) (1,253) 8,924 (2,813) (662) - (818) Net realized gain (loss) on investments and capital gains distributions - 4,818 (343) (1,681) - (209) Net unrealized appreciation (depreciation) of investments - 3,378 (1,637) (3,365) - (2,272) ------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations (1,253) 17,120 (4,793) (5,708) - (3,299) Changes from principal transactions: Purchase payments 591,523 94,671 114,157 6,781 - 110,856 Contract distributions and terminations (449,815) (16,054) (6,489) (1,927) - (9,054) Transfer payments from (to) Fixed Accounts and other Divisions 251,363 67,367 74,069 (7,446) - 95,928 Addition to assets retained in the Account by Golden American Life Insurance Company 1 - - - - - ------------------------------------------------------------------------------------------ Increase (decrease) in net assets derived from principal transactions 393,072 145,984 181,737 (2,592) - 197,730 ------------------------------------------------------------------------------------------ Total increase (decrease) 391,819 163,104 176,944 (8,300) - 194,431 ------------------------------------------------------------------------------------------ NET ASSETS AT DECEMBER 31, 2001 $1,071,485 $364,062 $275,489 $33,209 $ - $299,314 ========================================================================================== (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 17
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) REAL FULLY EQUITY CAPITAL RISING EMERGING ESTATE MANAGED INCOME APPRECIATION DIVIDENDS MARKETS DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION --------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ 55,677 $267,218 $271,284 $401,967 $ 813,094 $ 35,472 Increase (decrease) in net assets: Operations: Net investment income (loss) 3,006 11,042 11,274 (1,180) (9,314) (427) Net realized gain (loss) on investments and capital gains distributions (6,745) 26,765 3,807 28,348 55,582 (1,161) Net unrealized appreciation (depreciation) of investments 20,074 15,994 13,813 (117,226) (79,215) (9,340) --------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 16,335 53,801 28,894 (90,058) (32,947) (10,928) Changes from principal transactions: Purchase payments 10,381 37,354 37,977 156,864 138,073 3,076 Contract distributions and terminations (4,280) (17,995) (20,552) (27,188) (49,067) (2,533) Transfer payments from (to) Fixed Accounts and other Divisions 22,190 5,271 (25,811) 36,346 (8,823) (5,134) Addition to assets retained in the Account by Golden American Life Insurance Company - 2 1 3 8 - --------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 28,291 24,632 (8,385) 166,025 80,191 (4,591) --------------------------------------------------------------------------------- Total increase (decrease) 44,626 78,433 20,509 75,967 47,244 (15,519) --------------------------------------------------------------------------------- Net assets at December 31, 2000 100,303 345,651 291,793 477,934 860,338 19,953 Increase (decrease) in net assets: Operations: Net investment income (loss) 2,682 7,691 814 (7,700) (11,298) (46) Net realized gain (loss) on investments and capital gains distributions 6,128 21,548 (1,482) (15,294) 30,166 (1,106) Net unrealized appreciation (depreciation) of investments (3,608) 1,318 (822) (50,801) (137,786) 898 --------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 5,202 30,557 (1,490) (73,795) (118,918) (254) Changes from principal transactions: Purchase payments 23,104 146,482 78,113 75,117 70,829 305 Contract distributions and terminations (4,974) (26,120) (19,657) (21,611) (39,067) (580) Transfer payments from (to) Fixed Accounts and other Divisions 2,531 148,392 68,000 (17,438) (41,139) (19,424) Addition to assets retained in the Account by Golden American Life Insurance Company 3 9 4 2 6 - --------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 20,664 268,763 126,460 36,070 (9,371) (19,699) --------------------------------------------------------------------------------- Total increase (decrease) 25,866 299,320 124,970 (37,725) (128,289) (19,953) --------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $126,169 $644,971 $416,763 $440,209 $ 732,049 $ - ================================================================================= (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 18
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) MARKET VALUE STRATEGIC MANAGED MID-CAP MANAGER EQUITY EQUITY SMALL CAP GLOBAL GROWTH DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION ------------------------------------------------------------------------------------ NET ASSETS AT JANUARY 1, 2000 $ 7,084 $137,380 $197,526 $324,429 $181,345 $539,215 Increase (decrease) in net assets: Operations: Net investment income (loss) 71 (497) (5,559) 134,762 48,911 387,415 Net realized gain (loss) on investments and capital gains distributions 883 (2,232) 64,740 93,230 8,079 221,840 Net unrealized appreciation (depreciation) of investments (868) 13,904 (146,317) (336,905) (91,449) (585,733) ------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 86 11,175 (87,136) (108,913) (34,459) 23,522 Changes from principal transactions: Purchase payments 32 21,970 159,024 158,999 83,233 355,851 Contract distributions and terminations (214) (7,690) (15,811) (19,691) (13,929) (51,535) Transfer payments from (to) Fixed Accounts and other Divisions (369) 17,887 106,131 67,271 12,151 291,004 Addition to assets retained in the Account by Golden American Life Insurance Company - - - 2 6 4 ------------------------------------------------------------------------------------ Increase (decrease) in net assets derived from principal transactions (551) 32,167 249,344 206,581 81,461 595,324 ------------------------------------------------------------------------------------ Total increase (decrease) (465) 43,342 162,208 97,668 47,002 618,846 ------------------------------------------------------------------------------------ Net assets at December 31, 2000 6,619 180,722 359,734 422,097 228,347 1,158,061 Increase (decrease) in net assets: Operations: Net investment income (loss) (545) (1,768) (5,301) (7,294) (3,832) (14,522) Net realized gain (loss) on investments and capital gains distributions 3,429 265 (127,454) (283,317) (98,932) (607,476) Net unrealized appreciation (depreciation) of investments (3,695) (14,146) 52,004 276,874 72,788 312,790 ------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations (811) (15,649) (80,751) (13,737) (29,976) (309,208) Changes from principal transactions: Purchase payments (168) 32,137 38,833 72,626 58,076 180,227 Contract distributions and terminations (10) (9,292) (13,819) (19,753) (10,294) (45,653) Transfer payments from (to) Fixed Accounts and other Divisions (5,630) 11,120 (44,615) 19,278 4,232 (55,138) Addition to assets retained in the Account by Golden American Life Insurance Company - 1 - 2 3 1 ------------------------------------------------------------------------------------ Increase (decrease) in net assets derived from principal transactions (5,808) 33,966 (19,601) 72,153 52,017 79,437 ------------------------------------------------------------------------------------ Total increase (decrease) (6,619) 18,317 (100,352) 58,416 22,041 (229,771) ------------------------------------------------------------------------------------ NET ASSETS AT DECEMBER 31, 2001 $ - $199,039 $259,382 $480,513 $250,388 $928,290 ==================================================================================== (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 19
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) CAPITAL TOTAL DEVELOPING GROWTH RESEARCH RETURN GROWTH CORE BOND WORLD DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION --------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $430,246 $636,760 $455,380 $1,205,510 $21,258 $51,673 Increase (decrease) in net assets: Operations: Net investment income (loss) (1,269) (3,095) 18,946 53,063 1,744 (784) Net realized gain (loss) on investments and capital gains distributions 12,678 88,334 21,577 303,706 (159) (14,480) Net unrealized appreciation (depreciation) of investments (108,099) (144,747) 31,039 (808,716) (1,223) (9,975) --------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (96,690) (59,508) 71,562 (451,947) 362 (25,239) Changes from principal transactions: Purchase payments 119,650 184,644 92,211 640,780 10,963 36,474 Contract distributions and terminations (21,267) (32,193) (25,842) (71,995) (1,185) (3,361) Transfer payments from (to) Fixed Accounts and other Divisions 31,458 70,825 15,551 152,627 8,600 (5,151) Addition to assets retained in the Account by Golden American Life Insurance Company 2 - 6 5 2 2 --------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 129,843 223,276 81,926 721,417 18,380 27,964 --------------------------------------------------------------------------------- Total increase (decrease) 33,153 163,768 153,488 269,470 18,742 2,725 --------------------------------------------------------------------------------- Net assets at December 31, 2000 463,399 800,528 608,868 1,474,980 40,000 54,398 Increase (decrease) in net assets: Operations: Net investment income (loss) (7,708) (11,613) 21,062 (21,671) (857) (422) Net realized gain (loss) on investments and capital gains distributions (21,430) 2,768 17,228 (652,014) (1,057) (8,712) Net unrealized appreciation (depreciation) of investments (46,715) (178,581) (46,531) 196,709 2,969 4,320 --------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (75,853) (187,426) (8,241) (476,976) 1,055 (4,814) Changes from principal transactions: Purchase payments 40,288 98,910 174,830 150,918 45,161 11,440 Contract distributions and terminations (22,815) (32,070) (38,220) (53,998) (3,062) (3,183) Transfer payments from (to) Fixed Accounts and other Divisions (9,586) (42,232) 56,153 (92,035) 31,839 13,624 Addition to assets retained in the Account by Golden American Life Insurance Company 1 1 4 3 3 1 --------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 7,888 24,609 192,767 4,888 73,941 21,882 --------------------------------------------------------------------------------- Total increase (decrease) (67,965) (162,817) 184,526 (472,088) 74,996 17,068 --------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $395,434 $637,711 $793,394 $1,002,892 $114,996 $71,466 ================================================================================= (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 20
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) ASSET GROWTH SPECIAL GROWTH ALLOCATION DIVERSIFIED AND SITUATIONS OPPORTUNITIES GROWTH MID CAP INVESTORS INCOME DIVISION DIVISION DIVISION (e) DIVISION (d) DIVISION (f) DIVISION (d) (d) ------------------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ 6,663 $ - $ - $ - $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) 332 (3) (4) 491 (14) (8) Net realized gain (loss) on investments and capital gains distributions (268) (8) (172) 124 (41) (5) Net unrealized appreciation (depreciation) of investments (460) (15) 130 (235) (75) (354) ------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (396) (26) (46) 380 (130) (367) Changes from principal transactions: Purchase payments 7 3,166 3,403 8,798 5,771 2,383 Contract distributions and terminations (10) (8) (53) (368) (45) (43) Transfer payments from (to) Fixed Accounts and other Divisions (6,264) 1,564 8,054 12,748 7,130 3,918 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - ------------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions (6,267) 4,722 11,404 21,178 12,856 6,258 ------------------------------------------------------------------------------------------- Total increase (decrease) (6,663) 4,696 11,358 21,558 12,726 5,891 ------------------------------------------------------------------------------------------- Net assets at December 31, 2000 - 4,696 11,358 21,558 12,726 5,891 Increase (decrease) in net assets: Operations: Net investment income (loss) - (27) (408) (325) (420) (241) Net realized gain (loss) on investments and capital gains distributions - (61) (602) (368) (175) (359) Net unrealized appreciation (depreciation) of investments - (644) 668 (3,000) (3,724) (769) ------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations - (732) (342) (3,693) (4,319) (1,369) Changes from principal transactions: Purchase payments - 30,995 33,892 41,981 56,119 12,758 Contract distributions and terminations - (753) (956) (2,329) (1,615) (535) Transfer payments from (to) Fixed Accounts and other Divisions - 15,035 13,862 33,883 29,809 7,580 Addition to assets retained in the Account by Golden American Life Insurance Company - 1 - - - - ------------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions - 45,278 46,798 73,535 84,313 19,803 ------------------------------------------------------------------------------------------- Total increase (decrease) - 44,546 46,456 69,842 79,994 18,434 ------------------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $ - $49,242 $57,814 $91,400 $92,720 $24,325 =========================================================================================== (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 21
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) INTER- PILGRIM PILGRIM PILGRIM PILGRIM SMALL PILGRIM INTERNET NATIONAL WORLDWIDE GROWTH MAGNACAP CAP CONVERTIBLE TOLLKEEPER EQUITY GROWTH OPPORTUNITIES DIVISION OPPORTUNITIES CLASS DIVISION(h) DIVISION DIVISION(c) DIVISION(h) (h) DIVISION(h) DIVISION(j) --------------------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ - $175,569 $ - $ - $ - $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) - 2,223 (9) - - - - Net realized gain (loss) on investments and capital gains distributions - (4,245) (220) - - - - Net unrealized appreciation (depreciation) of investments - (52,548) (216) - - - - --------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations - (54,570) (445) - - - - Changes from principal transactions: Purchase payments - 78,906 4,326 - - - - Contract distributions and terminations - (9,015) (39) - - - - Transfer payments from (to) Fixed Accounts and other Divisions - 3,728 1,712 - - - - Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - - --------------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions - 73,619 5,999 - - - - --------------------------------------------------------------------------------------------- Total increase (decrease) - 19,049 5,554 - - - - --------------------------------------------------------------------------------------------- Net assets at December 31, 2000 - 194,618 5,554 - - - - Increase (decrease) in net assets: Operations: Net investment income (loss) (27) (3,180) (237) (27) (6) (80) (4) Net realized gain (loss) on investments and capital gains distributions (152) (66,811) (1,558) (189) (8) (918) 5 Net unrealized appreciation (depreciation) of investments (1) 30,006 (466) 3 20 297 2 --------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (180) (39,985) (2,261) (213) 6 (701) 3 Changes from principal transactions: Purchase payments 3,417 21,029 12,903 3,287 3,746 8,651 146 Contract distributions and terminations (36) (7,978) (485) (61) (117) (133) - Transfer payments from (to) Fixed Accounts and other Divisions 2,188 (23,623) 4,303 2,206 1,767 6,620 45 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - - --------------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 5,569 (10,572) 16,721 5,432 5,396 15,138 191 --------------------------------------------------------------------------------------------- Total increase (decrease) 5,389 (50,557) 14,460 5,219 5,402 14,437 194 --------------------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $5,389 $144,061 $20,014 $5,219 $5,402 $14,437 $194 ============================================================================================= (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 22
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) PIMCO PILGRIM PILGRIM PIMCO STOCKSPLUS SP JENNISON GROWTH AND LARGECAP HIGH GROWTH AND PRUDENTIAL INTERNATIONAL INCOME GROWTH YIELD BOND INCOME JENNISON GROWTH DIVISION (j) DIVISION (j) DIVISION DIVISION DIVISION (b) DIVISION (b) ---------------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ - $ - $146,057 $221,230 $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) - - 10,796 13,614 (44) (7) Net realized gain (loss) on investments and capital gains distributions - - (7,571) 12,254 925 49 Net unrealized appreciation (depreciation) of investments - - (6,847) (55,206) (2,191) (98) ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations - - (3,622) (29,338) (1,310) (56) Changes from principal transactions: Purchase payments - - 36,534 73,805 6,264 1,189 Contract distributions and terminations - - (7,991) (13,426) (138) (45) Transfer payments from (to) Fixed Accounts and other Divisions - - (8,121) 6,213 2,916 1,632 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - ---------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions - - 20,422 66,592 9,042 2,776 ---------------------------------------------------------------------------------------- Total increase (decrease) - - 16,800 37,254 7,732 2,720 ---------------------------------------------------------------------------------------- Net assets at December 31, 2000 - - 162,857 258,484 7,732 2,720 Increase (decrease) in net assets: Operations: Net investment income (loss) (1) (2) 12,879 5,699 (407) (126) Net realized gain (loss) on investments and capital gains distributions 2 - (12,967) (21,014) (5,401) (3,123) Net unrealized appreciation (depreciation) of investments 4 3 448 (20,466) 2,985 418 ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 5 1 360 (35,781) (2,823) (2,831) Changes from principal transactions: Purchase payments 343 488 56,951 34,841 16,595 7,856 Contract distributions and terminations (1) - (12,056) (11,973) (945) (448) Transfer payments from (to) Fixed Accounts and other Divisions (191) 44 28,231 (4,506) 25,432 4,013 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - ---------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 151 532 73,126 18,362 41,082 11,421 ---------------------------------------------------------------------------------------- Total increase (decrease) 156 533 73,486 (17,419) 38,259 8,590 ---------------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $ 156 $533 $236,343 $241,065 $45,991 $11,310 ======================================================================================== (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 23a
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) SMITH BARNEY SMITH BARNEY SMITH BARNEY INTERNATIONAL SMITH BARNEY APPRE- HIGH LARGE CAP ALL CAP MONEY CIATION INCOME VALUE GROWTH MARKET DIVISION DIVISION DIVISION DIVISION DIVISION ------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ 983 $ 547 $ 643 $ 537 $ 579 Increase (decrease) in net assets: Operations: Net investment income (loss) (6) 45 5 (4) (2) Net realized gain (loss) on investments and capital gains distributions 37 (20) 12 15 - Net unrealized appreciation (depreciation) of investments (57) (66) 57 (162) - ------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (26) (41) 74 (151) (2) Changes from principal transactions: Purchase payments 16 5 - 10 - Contract distributions and terminations (11) (22) (8) (6) (700) Transfer payments from (to) Fixed Accounts and other Divisions (131) (43) (17) 65 279 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - ------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions (126) (60) (25) 69 (421) ------------------------------------------------------------------------------- Total increase (decrease) (152) (101) 49 (82) (423) ------------------------------------------------------------------------------- Net assets at December 31, 2000 831 446 692 455 156 Increase (decrease) in net assets: Operations: Net investment income (loss) (7) 44 (1) (5) (12) Net realized gain (loss) on investments and capital gains distributions 1 (32) 13 1 - Net unrealized appreciation (depreciation) of investments (46) (32) (79) (142) - ------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (52) (20) (67) (146) (12) Changes from principal transactions: Purchase payments 5 - - - - Contract distributions and terminations (44) (25) (15) (4) (241) Transfer payments from (to) Fixed Accounts and other Divisions (17) (31) (47) (5) 318 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - ------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions (56) (56) (62) (9) 77 ------------------------------------------------------------------------------- Total increase (decrease) (108) (76) (129) (155) 65 ------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $ 723 $ 370 $ 563 $ 300 $ 221 =============================================================================== (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 23b
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) GALAXY SMALL ALLIANCE ASSET GROWTH AND COMPANY BERNSTEIN ALLOCATION EQUITY INCOME HIGH QUALITY GROWTH VALUE DIVISION DIVISION DIVISION BOND DIVISION DIVISION DIVISION (j) ---------------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ 133 $ 297 $107 $ 27 $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) 10 (10) (3) 2 (1) - Net realized gain (loss) on investments and capital gains distributions 27 85 5 - 5 - Net unrealized appreciation (depreciation) of investments (70) (137) 5 3 (11) - ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (33) (62) 7 5 (7) - Changes from principal transactions: Purchase payments 1,153 817 138 33 50 - Contract distributions and terminations (8) (11) (11) (6) - - Transfer payments from (to) Fixed Accounts and other Divisions 142 30 43 19 29 - Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - ---------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 1,287 836 170 46 79 - ---------------------------------------------------------------------------------------- Total increase (decrease) 1,254 774 177 51 72 - ---------------------------------------------------------------------------------------- Net assets at December 31, 2000 1,387 1,071 284 78 72 - Increase (decrease) in net assets: Operations: Net investment income (loss) 5 (20) (4) 5 (1) (2) Net realized gain (loss) on investments and capital gains distributions (14) (45) (9) 1 (1) (5) Net unrealized appreciation (depreciation) of investments (136) (162) (14) 1 1 18 ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (145) (227) (27) 7 (1) 11 Changes from principal transactions: Purchase payments 105 87 48 33 9 463 Contract distributions and terminations (76) (87) (11) (4) - (1) Transfer payments from (to) Fixed Accounts and other Divisions (11) (37) (93) 38 4 122 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - ---------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 18 (37) (56) 67 13 584 ---------------------------------------------------------------------------------------- Total increase (decrease) (127) (264) (83) 74 12 595 ---------------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $1,260 $ 807 $201 $152 $ 84 $595 ======================================================================================== (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 23c
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) ALLIANCE GROWTH & PREMIER GET FUND- GET FUND - GET FUND - VALUE INCOME GROWTH SERIES N SERIES P SERIES Q OPPORTUNITY DIVISION (j) DIVISION (j) DIVISION (j) DIVISION (k) DIVISION (m) DIVISION (j) --------------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ - $ - $ - $ - $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) - - - - - - Net realized gain (loss) on investments and capital gains distributions - - - - - - Net unrealized appreciation (depreciation) of investments - - - - - - --------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations - - - - - - Changes from principal transactions: Purchase payments - - - - - - Contract distributions and terminations - - - - - - Transfer payments from (to) Fixed Accounts and other Divisions - - - - - - Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - --------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions - - - - - - --------------------------------------------------------------------------------------- Total increase (decrease) - - - - - - --------------------------------------------------------------------------------------- Net assets at December 31, 2000 - - - - - - Increase (decrease) in net assets: Operations: Net investment income (loss) (4) (3) 28 (79) - (1) Net realized gain (loss) on investments and capital gains distributions (3) (6) 72 - - (1) Net unrealized appreciation (depreciation) of investments 41 61 661 293 - - --------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 34 52 761 214 - (2) Changes from principal transactions: Purchase payments 1,467 921 1,687 6,196 - 289 Contract distributions and terminations (3) (1) (135) (202) - - Transfer payments from (to) Fixed Accounts and other Divisions 155 119 28,555 146,837 1,904 11 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - --------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 1,619 1,039 30,107 152,831 1,904 300 --------------------------------------------------------------------------------------- Total increase (decrease) 1,653 1,091 30,868 153,045 1,904 298 --------------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $1,653 $1,091 $30,868 $153,045 $1,904 $298 ======================================================================================= (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 23d
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) AIM V.I. DENT INDEX PLUS INDEX PLUS INDEX PLUS DEMOGRAPHIC AIM V.I. TACTICAL LARGE CAP MID CAP SMALL CAP TRENDS GROWTH ALLOCATION DIVISION (j) DIVISION (j) DIVISION (j) DIVISION (l) DIVISION (l) DIVISION (j) -------------------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ - $ - $ - $ - $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) - - - - - - Net realized gain (loss) on investments and capital gains distributions - - - - - - Net unrealized appreciation (depreciation) of investments - - - - - - -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations - - - - - - Changes from principal transactions: Purchase payments - - - - - - Contract distributions and terminations - - - - - - Transfer payments from (to) Fixed Accounts and other Divisions - - - - - - Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - -------------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions - - - - - - -------------------------------------------------------------------------------------------- Total increase (decrease) - - - - - - -------------------------------------------------------------------------------------------- Net assets at December 31, 2000 - - - - - - Increase (decrease) in net assets: Operations: Net investment income (loss) 2 (2) (2) (3) - (2) Net realized gain (loss) on investments and capital gains distributions (4) (5) (2) 3 - (4) Net unrealized appreciation (depreciation) of investments 21 35 55 (12) 18 46 -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 19 28 51 (12) 18 40 Changes from principal transactions: Purchase payments 834 684 489 404 137 718 Contract distributions and terminations - - - (5) (1) - Transfer payments from (to) Fixed Accounts and other Divisions (41) 108 140 3,163 289 29 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - -------------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 793 792 629 3,562 425 747 -------------------------------------------------------------------------------------------- Total increase (decrease) 812 820 680 3,550 443 787 -------------------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $812 $820 $680 $3,550 $443 $787 ============================================================================================ (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 23e
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) EQUITY- CONTRA- FINANCIAL HEALTH INCOME GROWTH FUND SERVICES SCIENCES UTILITIES DIVISION(j) DIVISION(j) DIVISION(j) DIVISION(j) DIVISION(j) DIVISION(j) ------------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ - $ - $ - $ - $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) - - - - - - Net realized gain (loss) on investments and capital gains distributions - - - - - - Net unrealized appreciation (depreciation) of investments - - - - - - ------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations - - - - - - Changes from principal transactions: Purchase payments - - - - - - Contract distributions and terminations - - - - - - Transfer payments from (to) Fixed Accounts and other Divisions - - - - - - Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - ------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions - - - - - - ------------------------------------------------------------------------------------- Total increase (decrease) - - - - - - ------------------------------------------------------------------------------------- Net assets at December 31, 2000 - - - - - - Increase (decrease) in net assets: Operations: Net investment income (loss) (5) (2) (3) 5 22 3 Net realized gain (loss) on investments and capital gains distributions (4) (4) - 25 16 4 Net unrealized appreciation (depreciation) of investments 63 36 51 33 (81) (6) ------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 54 30 48 63 (43) 1 Changes from principal transactions: Purchase payments 1,658 578 1,001 822 1,234 325 Contract distributions and terminations (10) (12) (2) (4) (55) - Transfer payments from (to) Fixed Accounts and other Divisions 247 97 136 1,523 9,654 638 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - ------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 1,895 663 1,135 2,341 10,833 963 ------------------------------------------------------------------------------------- Total increase (decrease) 1,949 693 1,183 2,404 10,790 964 ------------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $1,949 $693 $1,183 $2,404 $10,790 $964 ===================================================================================== (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 23f
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) JANUS ASPEN PPI MFS PIONEER SMALL PIONEER WORLDWIDE CAPITAL PIONEER FUND COMPANY MID-CAP BULL GROWTH OPPORTUNITIES VCT VCT VALUE VCT DIVISION DIVISION (j) DIVISION (j) DIVISION (j) DIVISION (j) DIVISION(i) (h) -------------------------------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ - $ - $ - $ - $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) - - - - - - Net realized gain (loss) on investments and capital gains distributions - - - - - - Net unrealized appreciation (depreciation) of investments - - - - - - -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations - - - - - - Changes from principal transactions: Purchase payments - - - - - - Contract distributions and terminations - - - - - - Transfer payments from (to) Fixed Accounts and other Divisions - - - - - - Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - -------------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions - - - - - - -------------------------------------------------------------------------------------------- Total increase (decrease) - - - - - - -------------------------------------------------------------------------------------------- Net assets at December 31, 2000 - - - - - - Increase (decrease) in net assets: Operations: Net investment income (loss) (2) (2) - (3) (4) (82) Net realized gain (loss) on investments and capital gains distributions (4) (2) 3 (7) - (640) Net unrealized appreciation (depreciation) of investments 64 48 20 49 97 214 -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 58 44 23 39 93 (508) Changes from principal transactions: Purchase payments 1,166 625 1,074 857 620 3,580 Contract distributions and terminations (7) (3) (6) - (6) (153) Transfer payments from (to) Fixed Accounts and other Divisions 81 32 1,184 42 4,432 17,664 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - - -------------------------------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 1,240 654 2,252 899 5,046 21,091 -------------------------------------------------------------------------------------------- Total increase (decrease) 1,298 698 2,275 938 5,139 20,583 -------------------------------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $1,298 $698 $2,275 $938 $5,139 $20,583 ============================================================================================ (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 23g
Golden American Life Insurance Company Separate Account B Statements of Changes in Net Assets (CONTINUED) For the years ended December 31, 2001 and 2000, except as noted (DOLLARS IN THOUSANDS) PUTNAM INTERNATIONAL GROWTH & GROWTH AND SMALL-CAP EUROPE 30 INCOME INCOME VOYAGER DIVISION (h) DIVISION (h) DIVISION (j) DIVISION (j) DIVISION (j) ----------------------------------------------------------------------- NET ASSETS AT JANUARY 1, 2000 $ - $ - $ - $ - $ - Increase (decrease) in net assets: Operations: Net investment income (loss) - - - - - Net realized gain (loss) on investments and capital gains distributions - - - - - Net unrealized appreciation (depreciation) of investments - - - - - ----------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations - - - - - Changes from principal transactions: Purchase payments - - - - - Contract distributions and terminations - - - - - Transfer payments from (to) Fixed Accounts and other Divisions - - - - - Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - ----------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions - - - - - ----------------------------------------------------------------------- Total increase (decrease) - - - - - ----------------------------------------------------------------------- Net assets at December 31, 2000 - - - - - Increase (decrease) in net assets: Operations: Net investment income (loss) (94) (88) (1) (2) (1) Net realized gain (loss) on investments and capital gains distributions (1,538) (4,198) (1) (4) - Net unrealized appreciation (depreciation) of investments 141 83 13 16 46 ----------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (1,491) (4,203) 11 10 45 Changes from principal transactions: Purchase payments 2,754 1,157 450 488 456 Contract distributions and terminations (281) (293) - - (1) Transfer payments from (to) Fixed Accounts and other Divisions 18,986 9,651 (6) 106 77 Addition to assets retained in the Account by Golden American Life Insurance Company - - - - - ----------------------------------------------------------------------- Increase (decrease) in net assets derived from principal transactions 21,459 10,515 444 594 532 ----------------------------------------------------------------------- Total increase (decrease) 19,968 6,312 455 604 577 ----------------------------------------------------------------------- NET ASSETS AT DECEMBER 31, 2001 $19,968 $6,312 $455 $604 $577 ======================================================================= (a) Commencement of operations, January 3, 2000. (h) Commencement of operations, May 1, 2001. (b) Commencement of operations, February 1, 2000. (i) Commencement of operations, July 13, 2001. (c) Commencement of operations, May 5, 2000. (j) Commencement of operations, July 16, 2001. (d) Commencement of operations, May 8, 2000. (k) Commencement of operations, September 17, 2001. (e) Commencement of operations, October 2, 2000. (l) Commencement of operations, October 15, 2001. (f) Commencement of operations, October 3, 2000. (m) Commencement of operations, December 13, 2001. (g) Commencement of operations, October 4, 2000. SEE ACCOMPANYING NOTES. 23h
Golden American Life Insurance Company Separate Account B Notes To Financial Statements December 31, 2001 1. ORGANIZATION Golden American Life Insurance Company Separate Account B (the "Account") was established by Golden American Life Insurance Company ("Golden American") to support the operations of variable annuity contracts ("Contracts"). Golden American is primarily engaged in the issuance of variable insurance products and is licensed as a life insurance company in the District of Columbia and all states except New York. The Account is registered as a unit investment trust with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended. Golden American provides for variable accumulation and benefits under the Contracts by crediting annuity considerations to one or more divisions within the Account or the Golden American Guaranteed Interest Division, the Golden American Fixed Interest Division, and the Fixed Separate Account, which are not part of the Account, as directed by the Contractowners. The portion of the Account's assets applicable to Contracts will not be charged with liabilities arising out of any other business Golden American may conduct, but obligations of the Account, including the promise to make benefit payments, are obligations of Golden American. The assets and liabilities of the Account are clearly identified and distinguished from the other assets and liabilities of Golden American. During 2001, the Account had GoldenSelect Contracts, Granite PrimElite Contracts, and SmartDesign Contracts. GoldenSelect Contracts sold by Golden American during 2001 include DVA Plus, Access, Premium Plus, ESII, Value, Access One, Landmark and Generations. SmartDesign Contracts include Variable Annuity (VA) and Advantage. The Account discontinued offering DVA 80 in May 1991 and discontinued registering DVA and DVA Series 100 for sale to the public as of May 1, 2000. At December 31, 2001, the Account had, under GoldenSelect Contracts, fifty investment Divisions: Liquid Asset, Limited Maturity Bond, Large Cap Value, Hard Assets, All Cap, Real Estate, Fully Managed, Equity Income, Capital Appreciation, Rising Dividends, Value Equity, Strategic Equity, Small Cap, Managed Global, Mid-Cap Growth, Capital Growth, Research, Total Return, Growth, Core Bond, Developing World, Asset Allocation Growth, Diversified Mid Cap, Investors, Growth and Income, Special Situations, Internet Tollkeeper, International Equity, Pilgrim Worldwide Growth, Pilgrim Growth Opportunities, Pilgrim MagnaCap, Pilgrim Small Cap Opportunities, PIMCO High Yield Bond, PIMCO 24 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 1. ORGANIZATION (CONTINUED) StocksPLUS Growth and Income, Prudential Jennison, SP Jennison International Growth, Asset Allocation, Equity, Galaxy Growth and Income, High Quality Bond, Small Company Growth, AIM V.I. Dent Demographic Trends, Financial Services, Health Sciences, Utilities, Pioneer Fund VCT, Pioneer Mid-Cap Value VCT, Bull, Small-Cap and Europe 30 Divisions. The Account had, under SmartDesign Contracts, forty investment Divisions: Liquid Asset, Value Equity, Research, Total Return, Core Bond, Growth and Income, Pilgrim Worldwide Growth, Pilgrim MagnaCap, Pilgrim Convertible Class, Pilgrim Growth and Income, Pilgrim LargeCap Growth, PIMCO High Yield Bond, Prudential Jennison, SP Jennison International Growth, Alliance Bernstein Value, Alliance Growth and Income, Premier Growth, AIM V.I. Dent Demographic Trends, AIM V.I. Growth, GET Fund - Series N, GET Fund - Series P, GET Fund - Series Q, Value Opportunity, Index Plus Large Cap, Index Plus Mid Cap, Index Plus Small Cap, Brinson Tactical Allocation, Equity-Income, Growth, Contrafund, Financial Services, Health Sciences, Utilities, Janus Aspen Worldwide Growth, PPI MFS Capital Opportunities, Pioneer Fund VCT, Pioneer Small Company VCT, Putnam Growth and Income, International Growth and Income and Voyager Divisions. The Account also had, under Granite PrimElite Contracts, eight investments divisions: Mid-Cap Growth, Research, Total Return, Appreciation, Smith Barney High Income, Smith Barney Large Cap Value, Smith Barney International All Cap Growth, and Smith Barney Money Market Divisions (collectively with the Divisions noted above, "Divisions"). The assets in each Division are invested in shares of a designated Series ("Series," which may also be referred to as "Portfolio") of mutual funds of The GCG Trust, Pilgrim Variable Insurance Trust, Pilgrim Variable Products Trust, PIMCO Variable Insurance Trust, Prudential Series Fund Inc., Greenwich Street Series Fund Inc., Travelers Series Fund Inc., The Galaxy VIP Fund, Alliance Variable Products Series Fund Inc., Aetna Variable Portfolios Inc., AIM Variable Insurance Funds, Inc., Brinson Series Trust, INVESCO Variable Investment Funds Inc., Janus Aspen Series, Portfolio Partners Inc., Pioneer Variable Contracts Trust, The ProFunds VP, or Putnam Variable Trust (the "Trusts"). The Account also includes The Fund For Life Division, which is not included in the accompanying financial statements, and which ceased to accept new Contracts effective December 31, 1994. 25 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 1. ORGANIZATION (CONTINUED) On January 28, 2000, the consolidation of the All Growth and Growth Opportunities Series into the Mid-Cap Growth Series took place at no cost to current contract holders. The separate accounts in the Series substituted shares of Mid-Cap Growth Series for shares of All Growth and Growth Opportunities Series. The Market Manager Division was open for investment for only a brief period during 1994 and 1995. This Division is now closed and Contractowners are not permitted to direct their investments into this Division. On March 6, 2001, all remaining proceeds in the Market Manager Series were liquidated and Contractowner holdings were reallocated to the Liquid Asset Series as described in the contract prospectus. Following approval by its shareholders, the Emerging Markets Series was merged into the Developing World Series on April 27, 2001 at no cost to current contract holders. Directed Services, Inc., the Series' manager, absorbed all costs associated with the merger. On December 14, 2001, the consolidation of the Warburg Pincus International Equity Portfolio into the GCG Trust International Equity Series took place at no cost to contract holders. Shares of GCG Trust International Equity Series were substituted for shares of Warburg Pincus International Equity Portfolio. 2. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the significant accounting policies of the Account: USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. INVESTMENTS Investments are made in shares of a Series or Portfolio of the Trusts and are recorded at fair value, determined by the net asset value per share of the respective Series or Portfolio of the Trusts. Investment transactions in each Series or Portfolio of the Trusts are recorded on the trade date. Distributions of net investment income and capital gains from each Series or Portfolio of the Trusts are recognized on the ex-distribution date. Realized gains and losses on 26 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVESTMENTS (CONTINUED) redemptions of the shares of the Series or Portfolio of the Trusts are determined on the specific identification basis. FEDERAL INCOME TAXES Operations of the Account form a part of, and are taxed with, the total operations of Golden American, which is taxed as a life insurance company under the Internal Revenue Code. Earnings and realized capital gains of the Account attributable to the Contractowners are excluded in the determination of the federal income tax liability of Golden American. RECLASSIFICATIONS Certain amounts in the 2000 financial information have been reclassified to conform to the 2001 presentation. 3. CHARGES AND FEES Prior to February 1, 2000, DVA Plus, Access, and the Premium Plus each had three different death benefit options referred to as Standard, Annual Ratchet, and 7% Solution; however, in the state of Washington, the 5.5% Solution is offered instead of the 7% Solution. After February 1, 2000, DVA Plus, Access and Premium Plus each had four different death benefit options referred to as Standard, Annual Ratchet, 7% Solution and Max 7. Granite PrimElite has two death benefit options referred to as Standard and Annual Ratchet. Golden American discontinued external sales of DVA 80 in May 1991. Golden American has also discontinued external sales of DVA 100, DVA Series 100, and Granite PremElite. Under the terms of the Contract, certain charges are allocated to the Contracts to cover Golden American's expenses in connection with the issuance and administration of the Contracts. Following is a summary of these charges: 27 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 3. CHARGES AND FEES (CONTINUED) MORTALITY AND EXPENSE RISK CHARGES Golden American assumes mortality and expense risks related to the operations of the Account and, in accordance with the terms of the Contracts, deducts a daily charge from the assets of the Account. Daily charges deducted at annual rates to cover these risks follows: SERIES ANNUAL RATES - ------ ------------------ DVA 80 0.80% DVA 0.90 DVA Series 100 1.25 DVA Plus (pre February 2000) - Standard 1.10 DVA Plus (post January 2000) - Standard 1.15 DVA Plus (post 2000) - Standard 1.15 DVA Plus (pre February 2000) - Annual Ratchet 1.25 DVA Plus (pre February 2000) - 5.5% Solution 1.25 DVA Plus (post January 2000) - 5.5% Solution 1.25 DVA Plus (post January 2000) - Annual Ratchet 1.30 DVA Plus (post 2000) - 5.5% Solution 1.30 DVA Plus (pre February 2000) - 7% Solution 1.40 DVA Plus (post January 2000) - Max 5.5 1.40 DVA Plus (post 2000) - Annual Ratchet 1.40 DVA Plus (post 2000) - Max 5.5 1.45 DVA Plus (post January 2000) - 7% Solution 1.50 DVA Plus (post 2000) - 7% Solution 1.50 DVA Plus (post January 2000) - Max 7 1.60 DVA Plus (post 2000) - Max 7 1.60 Access (pre February 2000) - Standard 1.25 Access (post January 2000) - Standard 1.30 Access (post 2000) - Standard 1.30 Access (pre February 2000) - Annual Ratchet 1.40 Access (pre February 2000) - 5.5% Solution 1.40 28 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 3. CHARGES AND FEES (CONTINUED) SERIES ANNUAL RATES - ------ ------------------- Access (post January 2000) - Annual Ratchet 1.45% Access (post January 2000) - 5.5% Solution 1.45 Access (post 2000) - 5.5% Solution 1.45 Access (pre February 2000) - 7% Solution 1.55 Access (post January 2000) - Max 5.5 1.55 Access (post 2000) - Annual Ratchet 1.55 Access (post 2000) - Max 5.5 1.60 Access (post January 2000) - 7% Solution 1.65 Access (post 2000) - 7% Solution 1.65 Access (post April 2001) - Standard 1.65 Access (post January 2000) - Max 7 1.75 Access (post 2000) - Max 7 1.75 Access (post April 2001) - 5.5% Solution 1.80 Access (post April 2001) - Annual Ratchet 1.90 Access (post April 2001) - Max 5.5 1.95 Access (post April 2001) - 7% Solution 2.00 Access (post April 2001) - Max 7 2.10 Premium Plus (pre February 2000) - Standard 1.25 Premium Plus (post January 2000) - Standard 1.30 Premium Plus (post 2000) - Standard 1.30 Premium Plus (pre February 2000) - Annual Ratchet 1.40 Premium Plus (pre February 2000) - 5.5% Solution 1.40 Premium Plus (post January 2000) - Annual Ratchet 1.45 Premium Plus (post January 2000) - 5.5% Solution 1.45 Premium Plus (post 2000) - 5.5% Solution 1.45 Premium Plus (pre February 2000) - 7% Solution 1.55 Premium Plus (post January 2000) - Max 5.5 1.55 Premium Plus (post 2000) - Annual Ratchet 1.55 Premium Plus (post 2000) - Max 5.5 1.60 Premium Plus (post January 2000) - 7% Solution 1.65 Premium Plus (post 2000) - 7% Solution 1.65 29 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 3. CHARGES AND FEES (CONTINUED) SERIES ANNUAL RATES - ------ ------------------- Premium Plus (post January 2000) - Max 7 1.75% Premium Plus (post 2000) - Max 7 1.75 ES II (pre 2001) 1.25 ES II (post 2000) - Standard 1.25 ES II (post 2000) - Deferred Ratchet 1.30 ES II (post 2000) - 5.5% Solution 1.40 ES II (post 2000) - Annual Ratchet 1.50 ES II (post 2000) - Max 5.5 1.55 ES II (post 2000) - 7% Solution 1.60 ES II (post 2000) - Max 7 1.70 Value - Standard 0.75 Access One 0.35 Granite PrimElite - Standard 1.10 Granite PrimElite - Annual Ratchet 1.25 Generations - Standard 1.25 Generations - Deferred Ratchet 1.30 Generations - Annual Ratchet 1.50 Generations - 7% Solution 1.60 Generations - Max 7 1.70 Landmark - Standard 1.50 Landmark - 5.5% Solution 1.65 Landmark - Annual Ratchet 1.75 Landmark - Max 5.5 1.80 Landmark - 7% Solution 1.85 Landmark - Max 7 1.95 VA Option I 0.80 VA Option II 1.10 VA Option III 1.25 VA Bonus Option I 1.30 VA Bonus Option II 1.60 VA Bonus Option III 1.75 30 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 3. CHARGES AND FEES (CONTINUED) SERIES ANNUAL RATES - ------ ------------------- Advantage Option I 2.20% Advantage Option II 2.40 Advantage Option III 2.55 ASSET BASED ADMINISTRATIVE CHARGES A daily charge at an annual rate of 0.10% is deducted from assets attributable to DVA and DVA Series 100 Contracts. A daily charge at an annual rate of 0.15% is deducted from the assets attributable to the DVA Plus, Access, Premium Plus, ESII, Value, Access One, Granite PrimElite, Generations, Landmark, VA and Advantage Contracts. ADMINISTRATIVE CHARGES An administrative charge is deducted from the accumulation value of Deferred Annuity Contracts to cover ongoing administrative expenses. The charge is $30 per Contract year for ES II, Value, VA, and Advantage contracts. For DVA Series 100 and Access One Contracts there is no charge. For all other Contracts the charge is $40. The charge is incurred at the beginning of the Contract processing period and deducted at the end of the Contract processing period. This charge had been waived for certain offerings of the Contracts. MINIMUM DEATH BENEFIT GUARANTEE CHARGES For certain Contracts, a minimum death benefit guarantee charge of up to $1.20 per $1,000 of guaranteed death benefit per Contract year is deducted from the accumulation value of Deferred Annuity Contracts on each Contract anniversary date. 31 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 3. CHARGES AND FEES (CONTINUED) CONTINGENT DEFERRED SALES CHARGES Under DVA 80, DVA, DVA Plus, Premium Plus, ES II, Value, Granite PrimElite Contracts, Landmark, VA, and Advantage Contracts, a contingent deferred sales charge ("Surrender Charge") is imposed as a percentage of each premium payment if the Contract is surrendered or an excess partial withdrawal is taken. The following table reflects the surrender charge that is assessed based upon the date a premium payment is received.
SURRENDER CHARGE COMPLETE YEARS DVA ELAPSED SINCE 80 & DVA PREMIUM ES II & GRANITE LANDMARK & PREMIUM PAYMENT DVA PLUS PLUS GENERATIONS VALUE PRIMELITE ADVANTAGE VA ------------------------------------------------------------------------------------------------------------ 0 6% 7% 8% 8% 6% 7% 6% 7% 1 5 7 8 7 6 7 5 7 2 4 6 8 6 6 6 4 6 3 3 5 8 5 5 5 - 6 4 2 4 7 4 4 4 - 5 5 1 3 6 3 3 3 - 4 6 - 1 5 2 1 1 - 3 7 - - 3 1 - - - - 8 - - 1 - - - - - 9+ - - - - - - - - ------------------------------------------------------------------------------------------------------------ 32
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 3. CHARGES AND FEES (CONTINUED) OTHER CONTRACT CHARGES Under DVA 80, DVA, and DVA Series 100 Contracts, a charge is deducted from the accumulation value for Contracts taking more than one conventional partial withdrawal during a Contract year. For DVA 80 and DVA Contracts, annual distribution fees are deducted from the Contract accumulation values. DEFERRED SALES LOAD Under Contracts offered prior to October 1995, a sales load of up to 7.5 % was assessed against each premium payment for sales-related expenses as specified in the Contracts. For DVA Series 100, the sales load is deducted in equal annual installments over the period the Contract is in force, not to exceed 10 years. For DVA 80 and DVA Contracts, although the sales load is chargeable to each premium when it is received by Golden American, the amount of such charge is initially advanced by Golden American to Contractowners and included in the accumulation value and then deducted in equal installments on each Contract anniversary date over a period of six years. Upon surrender of the Contract, the unamortized deferred sales load is deducted from the accumulation value. In addition, when partial withdrawal limits are exceeded, a portion of the unamortized deferred sales load is deducted. PREMIUM TAXES For certain Contracts, premium taxes are deducted, where applicable, from the accumulation value of each Contract. The amount and timing of the deduction depend on the annuitant's state of residence and currently ranges up to 3.5% of premiums. 33 Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 3. CHARGES AND FEES (CONTINUED) FEES WAIVED BY GOLDEN AMERICAN Certain charges and fees for various types of Contracts are currently waived by Golden American. Golden American reserves the right to discontinue these waivers at its discretion or to conform with changes in the law. A summary of the net assets retained in the Account, representing the unamortized deferred sales load and premium taxes advanced by Golden American previously noted, follows: YEAR ENDED DECEMBER 31 2001 2000 --------------------------------------- (DOLLARS IN THOUSANDS) Balance at beginning of year $ 678 $ 3,093 Sales load advanced 46 43 Amortization of deferred sales load and premium tax (724) (2,458) --------------------------------------- Balance at end of year $ - $ 678 ======================================= 34
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 4. PURCHASES AND SALES OF INVESTMENT SECURITIES The aggregate cost of purchases and proceeds from sales of investments follows: YEAR ENDED DECEMBER 31 2001 2000 --------------------------------------------------------- PURCHASES SALES PURCHASES SALES --------------------------------------------------------- (DOLLARS IN THOUSANDS) The GCG Trust: Liquid Asset Series $5,778,907 $5,387,088 $5,009,626 $4,852,286 Limited Maturity Bond Series 320,388 165,480 100,400 49,723 Large Cap Value Series 192,419 13,495 104,683 5,678 Hard Assets Series 15,759 19,014 40,084 35,964 All Growth Series - - 71,697 148,258 All Cap Series 215,529 18,161 111,560 5,575 Real Estate Series 71,207 46,270 96,209 64,912 Fully Managed Series 377,005 90,177 112,464 61,046 Equity Income Series 216,341 81,506 98,938 88,840 Capital Appreciation Series 142,512 114,142 227,251 51,623 Rising Dividends Series 60,251 72,471 151,463 58,223 Emerging Markets Series 49,902 69,646 62,812 67,830 Market Manager Series 3,388 8,410 594 813 Value Equity Series 109,345 74,755 126,574 94,165 Strategic Equity Series 199,079 223,594 404,992 147,040 Small Cap Series 474,975 410,116 668,534 299,869 Managed Global Series 994,534 946,349 773,452 628,437 Mid-Cap Growth Series 813,977 747,789 1,570,684 553,073 Capital Growth Series 150,331 150,151 163,005 24,871 Research Series 208,240 178,793 332,012 33,449 Total Return Series 303,584 73,267 177,368 58,592 Growth Series 838,003 854,786 2,357,943 1,555,976 Core Bond Series 96,443 23,096 21,953 1,829 Developing World Series 514,464 492,886 224,227 196,834 Growth Opportunities Series - - 397 6,296 Asset Allocation Growth Series 46,049 798 4,913 194 Diversified Mid-Cap Series 51,740 5,350 16,411 5,011 Investors Series 79,313 6,102 37,309 15,640 Growth and Income Series 85,909 2,016 15,051 2,209 Special Situations Series 21,339 1,778 6,296 46 Internet Tollkeeper Series 5,934 392 - - International Equity Series 1,288,757 1,304,170 1,216,239 1,119,035 35
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 4. PURCHASES AND SALES OF INVESTMENT SECURITIES (CONTINUED) YEAR ENDED DECEMBER 31 2001 2000 --------------------------------------------------------- PURCHASES SALES PURCHASES SALES --------------------------------------------------------- (DOLLARS IN THOUSANDS) Pilgrim Variable Insurance Trust: Pilgrim Worldwide Growth Fund $ 24,855 $ 8,371 $ 8,467 $ 2,477 Pilgrim Variable Products Trust: Pilgrim Growth Opportunities Portfolio 7,080 1,675 - - Pilgrim MagnaCap Portfolio 5,521 131 - - Pilgrim Small Cap Opportunities Portfolio 20,495 5,437 - - Pilgrim Convertible Class Portfolio 195 3 - - Pilgrim Growth and Income Portfolio 442 291 - - Pilgrim LargeCap Growth Portfolio 538 8 - - PIMCO Variable Insurance Trust: PIMCO High Yield Bond Portfolio 187,456 101,450 104,012 72,796 PIMCO StocksPLUS Growth and Income Portfolio 78,983 54,922 128,021 38,274 Prudential Series Fund, Inc.: Prudential Jennison Portfolio 161,864 120,999 10,354 418 SP Jennison International Growth Portfolio 72,009 60,714 13,316 10,547 Greenwich Street Series Fund Inc.: Appreciation Portfolio 54 116 136 255 Travelers Series Fund Inc.: Smith Barney High Income Portfolio 51 62 78 93 Smith Barney Large Cap Value Portfolio 30 71 77 82 Smith Barney International All Cap Growth Portfolio 4 19 111 46 Smith Barney Money Market Portfolio 194 129 13 436 The Galaxy VIP Fund: Asset Allocation Portfolio 214 191 1,340 17 Equity Portfolio 130 187 946 35 Growth and Income Portfolio 59 119 185 14 High Quality Bond Portfolio 90 18 58 10 Small Company Growth Portfolio 19 6 84 1 Alliance Variable Products Series Fund, Inc.: Alliance Bernstein Value Portfolio 648 66 - - Growth and Income Portfolio 1,659 44 - - Premier Growth Portfolio 1,115 79 - - 36
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 4. PURCHASES AND SALES OF INVESTMENT SECURITIES (CONTINUED) YEAR ENDED DECEMBER 31 2001 2000 --------------------------------------------------------- PURCHASES SALES PURCHASES SALES --------------------------------------------------------- (DOLLARS IN THOUSANDS) Aetna Variable Portfolios, Inc.: GET Fund - Series N $33,144 $ 3,009 $ - $ - GET Fund - Series P 152,998 246 - - GET Fund - Series Q 1,904 0 - - Value Opportunity Portfolio 314 15 - - Index Plus Large Cap Portfolio 896 101 - - Index Plus Mid Cap Portfolio 852 62 - - Index Plus Small Cap Portfolio 854 227 - - AIM Variable Insurance Funds, Inc.: AIM V.I. Dent Demographic Trends Fund 3,649 90 - - AIM V.I. Growth Fund 427 2 - - Brinson Series Trust: Tactical Allocation Portfolio 794 49 - - Fidelity Variable Insurance Products: Equity-Income Portfolio 1,945 55 - - Growth Portfolio 705 44 - - Contrafund Portfolio 1,568 436 - - INVESCO Variable Investment Funds, Inc.: Financial Services Fund 3,684 1,338 - - Health Sciences Fund 13,606 2,751 - - Utilities Fund 1,085 117 - - Janus Aspen Series: Janus Aspen Worldwide Growth Portfolio 1,300 62 - - Portfolio Partners, Inc.: PPI MFS Capital Opportunities Portfolio 661 9 - - Pioneer Variable Contracts Trust: Pioneer Fund VCT Portfolio 2,403 151 - - Pioneer Small Company VCT Portfolio 978 82 - - Pioneer Mid-Cap VCT Portfolio 5,058 16 - - The ProFunds VP: Bull 41,559 20,550 - - Small-Cap 202,340 180,975 - - Europe 30 179,473 169,046 - - Putnam Variable Trust: Growth and Income Fund 456 13 - - International Growth and Income Fund 625 33 - - Voyager Fund 539 8 - - --------------------------------------------------------- COMBINED $14,943,146 $12,316,643 $14,572,339 $10,358,838 ========================================================= 37, 38
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 5. CHANGES IN UNITS The changes in units outstanding for the years ended December 31, 2001 and 2000 are shown in the following table. The activity includes Contractowners electing to update a DVA 100 or DVA Series 100 Contract to a DVA PLUS Contract. Updates to DVA PLUS Contracts resulted in both a redemption (surrender of the old Contract) and an issue (acquisition of the new Contract). All of the units issued for the Market Manager Division resulted from such updates. FOR THE YEAR ENDED DECEMBER 31 2001 2000 ------------------------------------------------------------------------------- UNITS UNITS NET UNITS UNITS NET ISSUED REDEEMED INCREASE ISSUED REDEEMED INCREASE (DECREASE) (DECREASE) ------------------------------------------------------------------------------- The GCG Trust: Liquid Asset Division 406,837,337 381,974,408 24,862,929 359,367,174 350,362,386 9,004,788 Limited Maturity Bond Division 21,094,466 13,022,965 8,071,501 6,653,002 4,238,782 2,414,220 Large Cap Value Division 21,298,417 3,032,221 18,266,196 10,510,495 1,148,728 9,361,767 Hard Assets Division 1,479,521 1,669,257 (189,736) 2,834,446 2,496,801 337,645 All-Growth Division - - - 1,772 4,534,313 (4,532,541) All Cap Division 20,782,291 4,029,958 16,752,333 10,302,677 1,241,107 9,061,570 Real Estate Division 3,276,661 2,545,459 731,202 4,319,128 3,211,948 1,107,180 Fully Managed Division 15,753,519 5,774,203 9,979,316 4,937,015 3,912,225 1,024,790 Equity Income Division 11,244,435 5,753,173 5,491,262 5,587,065 5,891,560 (304,495) Capital Appreciation Division 9,170,101 7,646,399 1,523,702 9,788,554 3,977,530 5,811,024 Rising Dividends Division 5,403,189 5,969,298 (566,109) 8,048,967 4,882,590 3,166,377 Emerging Markets Division 7,053,917 9,615,850 (2,561,933) 6,972,719 7,369,824 (397,105) Market Manager Division - 238,516 (238,516) - 26,641 (26,641) Value Equity Division 7,284,108 5,650,995 1,633,113 7,941,727 6,192,411 1,749,316 Strategic Equity Division 18,048,284 19,375,073 (1,326,789) 19,709,430 9,587,363 10,122,067 Small Cap Division 32,782,567 28,723,840 4,058,727 26,260,160 17,429,511 8,830,649 Managed Global Division 57,913,358 54,827,286 3,086,072 34,701,368 30,852,410 3,848,958 Mid-Cap Growth Division 26,837,412 24,939,789 1,897,623 29,199,551 15,272,144 13,927,407 Capital Growth Division 12,516,724 12,352,679 164,045 9,504,070 2,906,917 6,597,153 Research Division 11,109,168 10,124,605 984,563 10,607,414 2,858,194 7,749,220 Total Return Division 16,341,446 6,826,503 9,514,943 9,344,159 5,124,311 4,219,848 Growth Division 56,738,599 57,342,210 (603,611) 90,088,344 64,904,288 25,184,056 Core Bond Division 9,464,453 3,028,846 6,435,607 2,067,425 444,699 1,622,726 Developing World Division 77,143,940 74,214,198 2,929,742 25,929,101 23,178,428 2,750,673 Growth Opportunities Division - - - 2,653 586,755 (584,102) Asset Allocation Growth Division 5,576,656 359,275 5,217,381 536,932 35,902 501,030 Diversified Mid-Cap Division 6,501,025 1,269,887 5,231,138 1,738,197 587,931 1,150,266 39
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 5. CHANGES IN UNITS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31 2001 2000 ------------------------------------------------------------------------------- UNITS UNITS NET UNITS UNITS NET ISSUED REDEEMED INCREASE ISSUED REDEEMED INCREASE (DECREASE) (DECREASE) ------------------------------------------------------------------------------- The GCG Trust (continued): Investors Division 8,174,409 1,445,937 6,728,472 3,506,979 1,589,857 1,917,122 Growth and Income Division 10,214,159 1,007,740 9,206,419 1,550,837 270,440 1,280,397 Special Situations Division 3,020,279 751,676 2,268,603 696,811 33,708 663,103 Internet Tollkeeper Division 867,730 158,666 709,064 - - - International Equity Division 140,797,564 141,233,941 (436,377) 92,849,675 86,976,149 5,873,526 Pilgrim Variable Insurance Trust: Pilgrim Worldwide Growth Division 3,791,068 1,563,623 2,227,445 966,161 330,869 635,292 Pilgrim Variable Products Trust: Pilgrim Growth Opportunities Division 931,175 259,800 671,375 - - - Pilgrim MagnaCap Division 632,349 53,590 578,759 - - - Pilgrim Small Cap Opportunities Division 2,548,996 811,701 1,737,295 - - - Pilgrim Convertible Class Division 18,782 347 18,435 - - - Pilgrim Growth and Income Division 45,138 30,153 14,985 - - - Pilgrim LargeCap Growth Division 56,377 733 55,644 - - - PIMCO Variable Insurance Trust: PIMCO High Yield Bond Division 21,217,537 13,988,901 7,228,636 11,171,609 9,133,980 2,037,629 PIMCO StocksPLUS Growth and Income Division 8,925,373 7,365,612 1,559,761 10,253,524 4,989,762 5,263,762 Prudential Series Fund, Inc.: Prudential Jennison Division 26,252,187 19,904,133 6,348,054 1,167,863 181,053 986,810 SP Jennison International Growth 12,383,699 10,604,474 1,779,225 1,516,731 1,198,936 317,795 Division Greenwich Street Series Fund Inc.: Appreciation Division 2,637 6,303 (3,666) 6,545 13,984 (7,439) Travelers Series Fund Inc.: Smith Barney High Income Division 93 4,626 (4,533) 2,416 6,424 (4,008) Smith Barney Large Cap Value Division 6 3,282 (3,276) 2,886 4,081 (1,195) Smith Barney International All Cap Growth Division 277 1,051 (774) 4,883 1,931 2,952 Smith Barney Money Market Division 15,005 10,129 4,876 - 36,664 (36,664) The Galaxy VIP Fund: Asset Allocation Division 19,007 19,492 (485) 117,695 1,286 116,409 Equity Division 11,685 17,902 (6,217) 71,978 3,194 68,784 Growth and Income Division 5,606 12,104 (6,498) 16,903 1,136 15,767 High Quality Bond Division 7,406 1,490 5,916 5,210 922 4,288 Small Company Growth Division 1,341 329 1,012 5,427 2 5,425 40
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 5. CHANGES IN UNITS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31 2001 2000 ------------------------------------------------------------------------------- UNITS UNITS NET UNITS UNITS NET ISSUED REDEEMED INCREASE ISSUED REDEEMED INCREASE (DECREASE) (DECREASE) ------------------------------------------------------------------------------- Alliance Variable Products Series Fund, Inc.: Alliance Bernstein Value Division 71,653 12,180 59,473 - - - Growth and Income Division 181,005 8,620 172,385 - - - Premier Growth Division 123,347 9,253 114,094 - - - Aetna Variable Portfolios, Inc.: GET Fund - Series N Division 3,305,373 296,325 3,009,048 - - - GET Fund - Series P Division 15,403,642 127,730 15,275,912 - - - GET Fund - Series Q Division 190,471 - 190,471 - - - Value Opportunity Division 34,696 1,645 33,051 - - - Index Plus Large Cap Division 99,176 12,643 86,533 - - - Index Plus Mid Cap Division 90,604 7,688 82,916 - - - Index Plus Small Cap Division 96,255 28,852 67,403 - - - AIM Variable Insurance Funds, Inc.: AIM V.I. Dent Demographic Trends Division 339,548 16,457 323,091 - - - AIM V.I. Growth Division 42,954 57 42,897 - - - Brinson Series Trust: Brinson Tactical Allocation Division 89,352 5,615 83,737 - - - Fidelity Variable Insurance Products: Equity-Income Division 214,691 11,435 203,256 - - - Growth Division 80,283 5,508 74,775 - - - Contrafund Division 171,166 49,255 121,911 - - - INVESCO Variable Investment Funds, Inc.: Financial Services Division 434,280 177,355 256,925 - - - Health Sciences Division 1,421,950 369,814 1,052,136 - - - Utilities Division 141,238 22,159 119,079 - - - Janus Aspen Series: Janus Aspen Worldwide Growth Division 146,938 8,275 138,663 - - - Portfolio Partners, Inc.: PPI MFS Capital Opportunities Division 79,584 1,274 78,310 - - - Pioneer Variable Contracts Trust: Pioneer Fund VCT Division 268,899 26,350 242,549 - - - Pioneer Small Company VCT Division 107,907 10,101 97,806 - - - Pioneer Mid-Cap VCT Division 576,552 96,828 479,724 - - - 41
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 5. CHANGES IN UNITS (CONTINUED) FOR THE YEAR ENDED DECEMBER 31 2001 2000 -------------------------------------------------------------------------------- UNITS UNITS NET UNITS UNITS NET ISSUED REDEEMED INCREASE ISSUED REDEEMED INCREASE (DECREASE) (DECREASE) -------------------------------------------------------------------------------- The ProFunds VP: Bull Division 4,686,896 2,370,498 2,316,398 - - - Small-Cap Division 21,972,144 19,853,663 2,118,481 - - - Europe 30 Division 23,135,968 22,371,682 764,286 - - - Putnam Variable Trust: Growth and Income Division 50,302 2,090 48,212 - - - International Growth and Income Division 70,513 6,733 63,780 - - - Voyager Division 68,823 2,835 65,988 - - - -------------------------------------------------------------------------------- COMBINED 1,175,287,689 985,477,548 189,810,141 820,867,678 678,030,077 142,837,601 ================================================================================
6. UNIT VALUES Accumulation unit value information for units outstanding, by Contract type, as of December 31, 2001 follows: UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) LIQUID ASSET Currently payable annuity products: DVA 80 1,451 $17.11 $ 24 DVA 1,419 16.67 24 Contracts in accumulation period: DVA 80 222,827 17.11 3,813 DVA 905,779 16.67 15,099 DVA Series 100 51,726 15.92 824 DVA Plus - Standard (pre February 2000) 785,739 16.16 12,698 DVA Plus - Standard (post January 2000 and post 2000) 231,818 15.98 3,705 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 14,053,317 15.84 222,606 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 12,017,917 15.67 188,321 DVAPlus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 7,210,821 15.54 112,056 42
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) LIQUID ASSET (CONTINUED) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% Solution (post January 2000 and post 2000) 2,858,557 $15.36 $ 43,908 DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark 953,602 15.26 14,552 - Standard Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), Premium Plus - Max 5.5 (post January 2000) 10,759,451 15.21 163,652 Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 1,500,979 15.06 22,605 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 9,752,616 14.96 145,900 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 6,235,817 14.77 92,103 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 92 14.72 1 Access - Annual Ratchet (post April 2001) 329,210 14.53 4,784 Access - Max 5.5 (post April 2001), Landmark - Max 7 261,606 14.43 3,775 Access - 7% Solution (post April 2001) 131,130 14.34 1,881 Access - Max 7 (post April 2001) 255,666 14.15 3,618 Value 115,038 16.89 1,943 Access One 23,869 17.79 425 VA Option I 10,854 16.78 182 VA Option II 12,665 16.13 205 VA Option III 18,061 16.89 305 VA Bonus Option I 116,590 15.71 1,832 VA Bonus Option II 20,175 15.11 305 VA Bonus Option III 45,601 14.81 676 ES II - Max 7 (post 2000), Generations - Max 7 371,667 14.92 5,545 Landmark - 7% Solution 202,030 14.62 2,954 Advantage Option I 47,932 14.26 684 Advantage Option II 16,519 13.89 230 Advantage Option III 18,352 13.62 250 ---------------- $1,071,485 ================ 43
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) LIMITED MATURITY BOND Currently payable annuity products: DVA 80 $ 2,363 $20.57 $ 49 DVA 8,431 20.04 169 Contracts in accumulation period: DVA 80 24,997 20.57 514 DVA 980,533 20.04 19,650 DVA Series 100 10,239 19.14 196 DVA Plus - Standard (pre February 2000) 366,850 19.44 7,132 DVA Plus - Standard (post January 2000 and post 2000) 344,127 19.26 6,628 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 4,326,402 19.06 82,461 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 2,416,706 18.88 45,627 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 2,547,140 18.69 47,606 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 497,060 18.51 9,201 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 389,086 18.39 7,155 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 3,653,890 18.30 66,866 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 342,316 18.15 6,213 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,730,152 18.03 31,195 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,441,971 17.80 25,667 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 994 17.71 18 Access - Annual Ratchet (post April 2001) 33,099 17.48 579 Access - Max 5.5 (post April 2001), Landmark - Max 7 63,527 17.36 1,103 Access - 7% Solution (post April 2001) 14,995 17.25 259 44
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) LIMITED MATURITY BOND (CONTINUED) Access - Max 7 (post April 2001) 33,665 $17.02 $ 573 Value 70,078 20.32 1,424 Access One 1,261 21.41 27 ES II - Max 7 (post 2000), Generations - Max 7 177,355 17.95 3,184 Landmark - 7% Solution 32,154 17.59 566 ---------------- $ 364,062 ================ LARGE CAP VALUE Contracts in accumulation period: DVA 39,349 $10.10 $ 397 DVA Plus - Standard (pre February 2000) 135,888 10.05 1,365 DVA Plus - Standard (post January 2000 and post 2000) 356,503 10.04 3,579 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 3,900,664 10.02 39,084 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 4,561,875 10.01 45,664 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 1,783,085 9.99 17,813 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 1,370,680 9.98 13,679 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 1,400,045 9.97 13,958 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 3,260,906 9.96 32,478 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 1,513,414 9.95 15,058 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 3,603,942 9.94 35,823 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 4,320,852 9.93 42,905 45
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) LARGE CAP VALUE (CONTINUED) Access - Annual Ratchet (post April 2001) 64,872 $9.89 $ 641 Access - Max 5.5 (post April 2001), Landmark - Max 7 261,939 9.88 2,588 Access - 7% Solution (post April 2001) 82,700 9.87 816 Access - Max 7 (post April 2001) 172,888 9.85 1,703 Value 77,937 10.12 788 Access One 185 10.20 2 ES II - Max 7 (post 2000), Generations - Max 7 609,108 9.93 6,048 Landmark - 7% Solution 111,131 9.90 1,100 ---------------- $ 275,489 ================ HARD ASSETS Currently payable annuity products: DVA 2,975 $14.88 $ 44 Contracts in accumulation period: DVA 80 34,308 15.27 524 DVA 246,318 14.88 3,665 DVA Series 100 10,367 14.21 147 DVA Plus - Standard (pre February 2000) 77,971 14.42 1,124 DVA Plus - Standard (post January 2000 and post 2000) 14,140 14.31 202 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 295,871 14.14 4,184 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 144,214 14.03 2,023 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 458,821 13.87 6,364 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% Solution (post January 2000 and post 2000) 22,851 13.76 314 DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 18,910 13.67 258 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 474,627 13.58 6,445 2000), Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 30,794 13.49 415 46
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) HARD ASSETS (CONTINUED) Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 94,215 $13.40 $ 1,262 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 315,573 13.22 4,172 Access - Annual Ratchet (post April 2001) 8,522 12.96 110 Access - Max 5.5 (post April 2001), Landmark - Max 7 2,532 12.88 33 Access - 7% Solution (post April 2001) 6,075 12.79 78 Access - Max 7 (post April 2001) 9,098 12.63 115 Value 26,881 15.07 405 ES II - Max 7 (post 2000), Generations - Max 7 95,942 13.31 1,277 Landmark - 7% Solution 3,712 13.05 48 ---------------- $ 33,209 ================ ALL CAP Contracts in accumulation period: DVA 49,190 $11.74 $ 577 DVA Series 100 948 11.66 11 DVA Plus - Standard (pre February 2000) 124,190 11.68 1,450 DVA Plus - Standard (post January 2000 and post 2000) 251,795 11.67 2,938 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 4,280,223 11.65 49,864 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 3,977,598 11.64 46,299 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 2,043,716 11.62 23,748 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 1,200,300 11.60 13,923 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 807,562 11.59 9,359 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 3,995,359 11.58 46,266 Premium Plus - Max 5.5 (post January 2000) 47
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) ALL CAP (CONTINUED) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 902,603 $11.57 $ 10,443 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 2,722,089 11.56 31,467 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 4,291,400 11.54 49,522 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 778 11.53 9 Access - Annual Ratchet (post April 2001) 101,331 11.50 1,165 Access - Max 5.5 (post April 2001), Landmark - Max 7 225,937 11.49 2,596 Access - 7% Solution (post April 2001) 31,699 11.48 364 Access - Max 7 (post April 2001) 202,778 11.46 2,324 Value 55,362 11.76 651 ES II - Max 7 (post 2000), Generations - Max 7 471,202 11.55 5,442 Landmark - 7% Solution 77,843 11.51 896 ---------------- $ 299,314 ================ REAL ESTATE Currently payable annuity products: DVA 80 230 $30.67 $ 7 DVA 3,512 29.88 105 Contracts in accumulation period: DVA 80 13,962 30.67 428 DVA 349,958 29.88 10,457 DVA Series 100 6,396 28.54 183 DVA Plus - Standard (pre February 2000) 112,185 28.96 3,249 DVA Plus - Standard (post January 2000 and post 2000) 31,389 28.74 902 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 887,731 28.40 25,212 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations Deferred Ratchet 414,152 28.18 11,671 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 715,122 27.85 19,916 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 107,794 27.63 2,978 Solution (post January 2000 and post 2000) 48
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) REAL ESTATE (CONTINUED) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 77,778 $27.45 $ 2,135 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 801,893 27.27 21,868 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 101,334 27.09 2,745 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 310,014 26.91 8,342 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 474,134 26.56 12,593 Access - Annual Ratchet (post April 2001) 8,515 26.04 222 Access - Max 5.5 (post April 2001), Landmark - Max 7 7,350 25.87 190 Access - 7% Solution (post April 2001) 6,621 25.70 170 Access - Max 7 (post April 2001) 16,849 25.36 427 Value 4,235 30.28 128 Access One 74 31.90 2 ES II - Max 7 (post 2000), Generations - Max 7 81,301 26.74 2,174 Landmark - 7% Solution 2,487 26.21 65 ---------------- $ 126,169 ================ FULLY MANAGED Currently payable annuity products: DVA 80 660 $30.47 $ 20 DVA 26,524 29.68 787 Contracts in accumulation period: DVA 80 40,514 30.47 1,235 DVA 1,370,762 29.68 40,684 DVA Series 100 26,501 28.35 751 DVA Plus - Standard (pre February 2000) 453,058 28.77 13,035 DVA Plus - Standard (post January 2000 and post 2000) 152,493 28.55 4,354 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 4,592,779 28.22 129,608 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution . (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 2,279,908 27.99 63,815 49
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) FULLY MANAGED (CONTINUED) DVAPlus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 3,679,280 $27.67 $ 101,806 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 495,196 27.44 13,588 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 477,872 27.27 13,032 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 4,693,130 27.09 127,137 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 531,690 26.91 14,308 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,927,532 26.74 51,542 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,940,880 26.39 51,220 Access - Annual Ratchet (post April 2001) 43,670 25.87 1,130 Access - Max 5.5 (post April 2001), Landmark - Max 7 92,605 25.70 2,380 Access - 7% Solution (post April 2001) 43,006 25.53 1,098 Access - Max 7 (post April 2001) 93,509 25.20 2,356 Value 39,680 30.08 1,194 ES II - Max 7 (post 2000), Generations - Max 7 329,417 26.56 8,749 Landmark - 7% Solution 43,865 26.04 1,142 ---------------- $ 644,971 ================ EQUITY INCOME Currently payable annuity products: DVA 80 3,201 $25.81 $ 83 DVA 33,619 25.14 845 Contracts in accumulation period: DVA 80 127,596 25.81 3,293 DVA 2,438,128 25.14 61,295 DVA Series 100 38,217 24.02 918 DVA Plus - Standard (pre February 2000) 293,213 24.37 7,146 DVA Plus - Standard (post January 2000 and post 2000) 103,145 24.18 2,494 50
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) EQUITY INCOME (CONTINUED) DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 3,366,040 $23.90 $ 80,448 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,599,946 23.71 37,935 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 2,377,260 23.43 55,699 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 398,073 23.25 9,255 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 410,546 23.10 9,484 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 3,203,913 22.94 73,498 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 387,753 22.79 8,837 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,103,378 22.65 24,992 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,364,874 22.35 30,505 Access - Annual Ratchet (post April 2001) 27,313 21.91 599 Access - Max 5.5 (post April 2001), Landmark - Max 7 107,272 21.77 2,335 Access - 7% Solution (post April 2001) 25,079 21.62 542 Access - Max 7 (post April 2001) 36,452 21.34 778 Value 31,320 25.48 798 Access One 875 26.84 23 ES II - Max 7 (post 2000), Generations - Max 7 191,974 22.50 4,320 Landmark - 7% Solution 29,036 22.06 641 ---------------- $ 416,763 ================ 51
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) CAPITAL APPRECIATION Currently payable annuity products: DVA 25,182 $22.43 $ 565 Contracts in accumulation period: DVA 80 17,235 22.87 394 DVA 1,442,077 22.43 32,346 DVA Series 100 21,812 21.67 473 DVA Plus - Standard (pre February 2000) 355,810 21.91 7,796 DVA Plus - Standard (post January 2000 and post 2000) 162,730 21.78 3,544 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 3,606,211 21.60 77,895 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,862,499 21.46 39,970 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 3,688,602 21.28 78,494 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 938,385 21.15 19,847 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 337,955 21.05 7,114 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 4,160,509 20.94 87,121 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 446,323 20.84 9,302 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,587,677 20.74 32,929 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,748,122 20.53 35,890 Access - Annual Ratchet (post April 2001) 17,631 20.23 357 Access - Max 5.5 (post April 2001), Landmark - Max 7 41,070 20.13 827 Access - 7% Solution (post April 2001) 10,853 20.03 217 52
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) CAPITAL APPRECIATION (CONTINUED) Access - Max 7 (post April 2001) 49,630 $19.84 $ 985 Value 46,988 22.65 1,064 ES II - Max 7 (post 2000), Generations - Max 7 138,978 20.64 2,869 Landmark - 7% Solution 10,329 20.33 210 ---------------- $ 440,209 ================ RISING DIVIDENDS Currently payable annuity products: DVA 80 675 $22.72 $ 15 DVA 8,983 22.35 201 Contracts in accumulation period: DVA 80 15,986 22.72 363 DVA 1,509,592 22.35 33,739 DVA Series 100 42,509 21.70 922 DVA Plus - Standard (pre February 2000) 979,243 21.91 21,455 DVA Plus - Standard (post January 2000 and post 2000) 181,196 21.80 3,950 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 7,290,570 21.65 157,841 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,737,220 21.52 37,385 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 8,520,621 21.38 182,171 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 529,164 21.26 11,250 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 752,795 21.17 15,937 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 8,865,679 21.08 186,889 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 485,828 20.99 10,198 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,489,476 20.90 31,130 53
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) RISING DIVIDENDS (CONTINUED) Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,546,448 $20.73 $ 32,058 Access - Annual Ratchet (post April 2001) 20,785 20.47 425 Access - Max 5.5 (post April 2001), Landmark - Max 7 51,722 20.39 1,055 Access - 7% Solution (post April 2001) 13,112 20.30 266 Access - Max 7 (post April 2001) 27,684 20.13 557 Value 38,906 22.54 877 Access One 48 23.30 1 ES II - Max 7 (post 2000), Generations - Max 7 118,228 20.82 2,462 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 23 20.64 - Landmark - 7% Solution 43,851 20.56 902 ---------------- $ 732,049 ================ VALUE EQUITY Currently payable annuity products: DVA 80 247 $19.10 $ 5 DVA 1,241 18.84 23 Contracts in accumulation period: DVA 80 5,894 19.10 112 DVA 311,818 18.84 5,875 DVA Series 100 13,074 18.38 240 DVA Plus - Standard (pre February 2000) 324,375 18.53 6,011 DVA Plus - Standard (post January 2000 and post 2000) 58,111 18.44 1,072 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 2,404,426 18.34 44,097 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Pre mium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 833,753 18.25 15,216 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 2,428,124 18.14 44,046 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 252,946 18.06 4,568 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 183,495 17.99 3,301 54
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) VALUE EQUITY (CONTINUED) Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 2,414,646 $ 17.92 $ 43,270 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 174,298 17.87 3,115 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 706,804 17.81 12,588 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 665,937 17.68 11,774 Access - Annual Ratchet (post April 2001) 15,882 17.49 278 Access - Max 5.5 (post April 2001), Landmark - Max 7 34,231 17.43 597 Access - 7% Solution (post April 2001) 7,195 17.36 125 Access - Max 7 (post April 2001) 50,098 17.24 864 Value 8,978 18.96 170 VA Option II 557 18.51 10 VA Option III 2 18.96 - VA Bonus Option I 4,264 18.25 78 VA Bonus Option II 644 17.86 11 VA Bonus Option III 157 17.67 3 ES II - Max 7 (post 2000), Generations - Max 7 69,963 17.74 1,241 Landmark - 7% Solution 18,689 17.55 328 1,082 18.90 21 ---------------- $ 199,039 ================ STRATEGIC EQUITY Currently payable annuity products: DVA 25,018 $ 15.06 $ 377 Contracts in accumulation period: DVA 80 20,015 15.26 306 DVA 172,533 15.06 2,598 DVA Series 100 9,142 14.73 135 55
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) STRATEGIC EQUITY (CONTINUED) DVA Plus - Standard (pre February 2000) 353,212 $14.85 $ 5,245 DVA Plus - Standard (post January 2000 and post 2000) 134,200 14.78 1,984 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 3,787,157 14.71 55,709 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 2,160,543 14.64 31,631 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 2,640,191 14.57 38,468 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 1,052,847 14.50 15,266 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 414,298 14.46 5,991 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 3,613,808 14.41 52,075 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 327,852 14.37 4,711 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,447,650 14.32 20,731 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,475,163 14.23 20,992 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 32 14.19 1 Access - Annual Ratchet (post April 2001) 9,284 14.10 131 Access - Max 5.5 (post April 2001), Landmark - Max 7 21,990 14.05 309 Access - 7% Solution (post April 2001) 11,976 14.01 168 Access - Max 7 (post April 2001) 32,366 13.92 451 Value 21,915 15.16 332 ES II - Max 7 (post 2000), Generations - Max 7 107,256 14.28 1,532 Landmark - 7% Solution 16,923 14.14 239 ---------------- $ 259,382 ================ 56
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) SMALL CAP Currently payable annuity products: DVA 5,271 $18.31 $ 96 Contracts in accumulation period: DVA 80 21,166 18.53 392 DVA 264,035 18.31 4,835 DVA Series 100 11,620 17.92 208 DVA Plus - Standard (pre February 2000) 408,938 18.04 7,377 DVA Plus - Standard (post January 2000 and post 2000) 189,790 17.98 3,413 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 7,129,781 17.87 127,409 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 2,714,045 17.82 48,364 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 4,908,965 17.71 86,938 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 1,205,577 17.65 21,278 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 534,470 17.60 9,407 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 4,881,594 17.55 85,672 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 525,394 17.50 9,194 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,876,959 17.44 32,734 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,918,122 17.33 33,241 Access - Annual Ratchet (post April 2001) 28,016 17.18 481 Access - Max 5.5 (post April 2001), Landmark - Max 7 77,139 17.12 1,321 Access - 7% Solution (post April 2001) 21,559 17.07 368 Access - Max 7 (post April 2001) 36,881 16.97 626 Value 96,856 18.42 1,784 Access One 1,141 18.87 22 ES II - Max 7 (post 2000), Generations - Max 7 279,566 17.39 4,862 Landmark - 7% Solution 28,511 17.23 491 ---------------- $ 480,513 ================ 57
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) MANAGED GLOBAL Currently payable annuity products: DVA 8,711 $18.21 $ 159 Contracts in accumulation period: DVA 80 13,743 18.55 255 DVA 1,458,583 18.21 26,561 DVA Series 100 31,532 17.64 556 DVA Plus - Standard (pre February 2000) 485,438 17.78 8,631 DVA Plus - Standard (post January 2000 and post 2000) 203,822 17.68 3,604 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 1,757,558 17.54 30,828 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,775,926 17.43 30,955 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 3,208,565 17.30 55,508 DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 726,953 17.19 12,496 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 791,259 17.11 13,538 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), Premium 922,271 17.03 15,706 Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 361,440 16.95 6,127 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,137,846 16.87 19,196 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,118,604 16.71 18,692 Access - Annual Ratchet (post April 2001) 24,750 16.48 408 Access - Max 5.5 (post April 2001), Landmark - Max 7 72,320 16.41 1,187 Access - 7% Solution (post April 2001) 32,608 16.33 533 Access - Max 7 (post April 2001) 55,217 16.18 893 Value 84,214 18.35 1,545 Access One 953 19.04 18 ES II - Max 7 (post 2000), Generations - Max 7 153,710 16.79 2,581 Landmark - 7% Solution 24,836 16.56 411 ---------------- $ 250,388 ================ 58
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) MID-CAP GROWTH Currently payable annuity products: DVA 5,027 $32.79 $ 165 Contracts in accumulation period: DVA 80 28,311 33.27 942 DVA 836,818 32.79 27,439 DVA Series 100 14,158 31.96 453 DVA Plus - Standard (pre February 2000) 464,847 32.20 14,968 DVA Plus - Standard (post January 2000 and post 2000) 229,352 32.08 7,358 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 6,612,250 31.80 210,270 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 3,144,090 31.73 99,762 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 4,965,396 31.50 156,410 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% Solution (post January 2000 and post 2000) 1,323,824 31.38 41,542 DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 569,708 31.27 17,815 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 5,852,719 31.15 182,312 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 577,691 31.04 17,932 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 2,066,676 30.93 63,922 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 2,275,454 30.70 69,857 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 15 30.58 1 Access - Annual Ratchet (post April 2001) 32,214 30.36 978 Access - Max 5.5 (post April 2001), Landmark - Max 7 93,233 30.25 2,820 Access - 7% Solution (post April 2001) 29,442 30.14 888 Access - Max 7 (post April 2001) 50,086 29.92 1,499 Granite PrimElite - Standard 3,120 32.20 101 Granite PrimElite - Annual Ratchet 25,006 31.80 795 59
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) MID-CAP GROWTH (CONTINUED) Value 74,567 $33.03 $ 2,463 Access One 53 34.01 2 ES II - Max 7 (post 2000), Generations - Max 7 217,014 30.81 6,686 Landmark - 7% Solution 29,847 30.47 910 ---------------- $ 928,290 ================ CAPITAL GROWTH Contracts in accumulation period: DVA 80 4,130 $15.15 $ 63 DVA 199,338 14.98 2,986 DVA Series 100 6,847 14.68 101 DVA Plus - Standard (pre February 2000) 519,605 14.76 7,670 DVA Plus - Standard (post January 2000 and post 2000) 117,979 14.72 1,737 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 6,450,279 14.64 94,432 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,780,512 14.59 25,978 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 5,716,523 14.51 82,947 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 826,425 14.47 11,959 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 388,823 14.43 5,611 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 7,379,706 14.38 106,120 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 395,575 14.34 5,673 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,586,390 14.30 22,685 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,557,258 14.21 22,129 Access - Annual Ratchet (post April 2001) 13,857 14.09 195 Access - Max 5.5 (post April 2001), Landmark - Max 7 63,924 14.05 898 60
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) CAPITAL GROWTH (CONTINUED) Access - 7% Solution (post April 2001) 45,184 $14.01 $ 633 Access - Max 7 (post April 2001) 35,301 13.93 492 Value 71,346 15.07 1,075 ES II - Max 7 (post 2000), Generations - Max 7 115,782 14.26 1,651 Landmark - 7% Solution 28,215 14.13 399 ---------------- $ 395,434 ================ RESEARCH Contracts in accumulation period: DVA 80 5,149 $21.34 $ 110 DVA 223,037 21.03 4,690 DVA Series 100 15,556 20.50 319 DVA Plus - Standard (pre February 2000) 519,229 20.65 10,722 DVA Plus - Standard (post January 2000 and post 2000) 165,278 20.58 3,401 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 7,316,945 20.44 149,558 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 2,427,133 20.36 49,416 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 6,799,019 20.21 137,408 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 1,029,430 20.13 20,722 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 792,239 20.05 15,884 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 7,706,338 19.98 153,973 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 588,415 19.91 11,715 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,666,295 19.84 33,059 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,829,741 19.69 36,028 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 23 19.62 - Access - Annual Ratchet (post April 2001) 25,925 19.48 505 61
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) RESEARCH (CONTINUED) Access - Max 5.5 (post April 2001), Landmark - Max 7 85,348 $19.40 $ 1,656 Access - 7% Solution (post April 2001) 35,638 19.33 689 Access - Max 7 (post April 2001) 49,977 19.19 959 Granite PrimElite - Standard 2,993 20.66 62 Granite PrimElite - Annual Ratchet 32,689 20.44 668 Value 78,637 21.19 1,666 VA Option II 4,166 20.65 86 VA Option III 1,497 21.03 31 VA Bonus Option I 7,932 20.35 161 VA Bonus Option II 9,494 19.91 189 VA Bonus Option III 1,675 19.69 33 ES II - Max 7 (post 2000), Generations - Max 7 167,034 19.77 3,302 Landmark - 7% Solution 33,529 19.55 655 2,097 21.11 44 ----------------- $ 637,711 ================= TOTAL RETURN Contracts in accumulation period: DVA 80 3,320 $21.47 $ $72 DVA 231,273 21.16 4,894 DVA Series 100 4,503 20.62 93 DVA Plus - Standard (pre February 2000) 715,333 20.78 14,865 DVA Plus - Standard (post January 2000 and post 2000) 307,521 20.70 6,366 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 9,253,395 20.55 190,157 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 3,612,214 20.48 73,978 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 6,331,856 20.33 128,727 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 856,471 20.25 17,344 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 915,770 20.18 18,480 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 9,559,265 20.10 192,141 Premium Plus - Max 5.5 (post January 2000) 62
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) TOTAL RETURN (CONTINUED) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 934,683 $20.03 $ 18,722 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 2,673,135 19.96 53,356 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 2,637,733 19.81 52,254 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 470 19.74 9 Access - Annual Ratchet (post April 2001) 48,787 19.59 956 Access - Max 5.5 (post April 2001), Landmark - Max 7 203,036 19.52 3,963 Access - 7% Solution (post April 2001) 62,233 19.45 1,211 Access - Max 7 (post April 2001) 77,305 19.30 1,492 Granite PrimElite - Standard 3,850 20.78 80 Granite PrimElite - Annual Ratchet 24,514 20.56 504 Value 104,593 21.32 2,230 Access One 243 21.94 5 ES II - Max 7 (post 2000), Generations - Max 7 338,408 19.88 6,728 Landmark - 7% Solution 91,026 19.66 1,790 VA Option I 23,176 21.24 492 VA Option II 22,001 20.77 457 VA Option III 4,628 21.16 98 VA Bonus Option I 41,845 20.47 857 VA Bonus Option II 43,753 20.03 877 VA Bonus Option III 8,837 19.81 175 Advantage Option I 335 19.39 7 Advantage Option II 529 19.11 10 Advantage Option III 190 18.90 4 ---------------- $ 793,394 ================ GROWTH Contracts in accumulation period: DVA 80 25,741 $15.68 $ 404 DVA 492,815 15.50 7,639 DVA Series 100 20,294 15.18 308 DVA Plus - Standard (pre February 2000) 747,104 15.28 11,416 DVA Plus - Standard (post January 2000 and post 2000) 478,470 15.23 7,287 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 16,739,731 15.14 253,441 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 6,476,226 15.10 97,791 63
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) GROWTH (CONTINUED) DVAPlus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 11,192,041 $15.01 $ 167,993 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 3,005,289 14.97 44,990 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 1,236,744 14.93 18,465 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 15,394,399 14.88 229,070 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 1,104,093 14.84 16,385 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 5,132,970 14.79 75,918 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 4,093,893 14.71 60,222 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 31 14.66 1 Value 132,904 15.59 2,072 Access One 808 15.95 13 Access - Annual Ratchet (post April 2001) 37,524 14.58 547 Access - Max 5.5 (post April 2001), Landmark - Max 7 126,140 14.54 1,834 Access - 7% Solution (post April 2001) 50,456 14.49 731 Access - Max 7 (post April 2001) 58,239 14.41 839 ES II - Max 7 (post 2000), Generations - Max 7 332,353 14.75 4,902 Landmark - 7% Solution 42,687 14.62 624 ---------------- $1,002,892 ================ CORE BOND Contracts in accumulation period: DVA 80 1 $12.39 $ - DVA 15,512 12.21 189 DVA Plus - Standard (pre February 2000) 97,048 11.99 1,164 DVA Plus - Standard (post January 2000 and post 2000) 72,163 11.94 862 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 1,667,406 11.86 19,776 64
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) CORE BOND (CONTINUED) DVAPlus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,400,288 $11.81 $ 16,538 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 813,385 11.72 9,533 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 227,468 11.68 2,657 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 244,510 11.64 2,846 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 1,575,824 11.60 18,280 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 328,907 11.55 3,799 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 957,821 11.51 11,025 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,352,199 11.43 15,456 Access - Annual Ratchet (post April 2001) 45,492 11.30 514 Access - Max 5.5 (post April 2001), Landmark - Max 7 221,684 11.26 2,496 Access - 7% Solution (post April 2001) 75,861 11.22 851 Access - Max 7 (post April 2001) 70,209 11.14 782 Value 18,021 12.30 222 ES II - Max 7 (post 2000), Generations - Max 7 153,360 11.47 1,759 Landmark - 7% Solution 160,007 11.35 1,816 VA Option I 42,619 12.25 522 VA Option II 24,543 11.99 294 VA Option III 7,501 12.21 92 VA Bonus Option I 169,853 11.81 2,006 VA Bonus Option II 111,130 11.55 1,284 VA Bonus Option III 20,362 11.43 233 ---------------- $ 114,996 ================ 65
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) DEVELOPING WORLD Currently payable annuity products: DVA 15,984 $7.19 $ 115 Contracts in accumulation period: DVA 80 17,006 7.25 123 DVA 567,759 7.19 4,082 DVA Series 100 18,759 7.09 133 DVA Plus - Standard (pre February 2000) 256,486 7.12 1,826 DVA Plus - Standard (post January 2000 and post 2000) 145,023 7.11 1,031 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 2,270,963 7.08 16,079 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,495,432 7.07 10,573 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 1,610,889 7.04 11,341 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 673,090 7.03 4,732 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 203,418 7.01 1,426 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 1,380,293 7.00 9,662 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 138,409 6.98 966 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 640,404 6.97 4,464 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 509,513 6.94 3,536 Access - Annual Ratchet (post April 2001) 32,141 6.90 222 Access - Max 5.5 (post April 2001), Landmark - Max 7 52,358 6.89 361 Access - 7% Solution (post April 2001) 9,242 6.87 64 Access - Max 7 (post April 2001) 28,075 6.85 192 Value 38,465 7.22 278 ES II - Max 7 (post 2000), Generations - Max 7 27,104 6.96 189 Landmark - 7% Solution 10,205 6.92 71 ---------------- $ 71,466 ================ 66
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) ASSET ALLOCATION GROWTH Contracts in accumulation period: DVA 3,236 $8.69 $ 28 DVA Plus - Standard (pre February 2000) 37,771 8.66 327 DVA Plus - Standard (post January 2000 and post 2000) 49,658 8.65 429 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 584,327 8.64 5,048 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,123,696 8.64 9,709 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 150,928 8.62 1,301 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 221,600 8.62 1,910 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 279,947 8.61 2,410 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 531,855 8.61 4,579 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 318,190 8.60 2,736 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 836,215 8.60 7,191 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,087,070 8.59 9,338 Access - Annual Ratchet (post April 2001) 32,417 8.57 278 Access - Max 5.5 (post April 2001), Landmark - Max 7 158,518 8.56 1,357 Access - 7% Solution (post April 2001) 24,972 8.56 214 Access - Max 7 (post April 2001) 43,463 8.55 372 Value 7,139 8.70 62 ES II - Max 7 (post 2000), Generations - Max 7 198,228 8.59 1,703 Landmark - 7% Solution 29,181 8.58 250 ---------------- $ 49,242 ================ 67
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) DIVERSIFIED MID-CAP Contracts in accumulation period: DVA 8,410 $9.14 $ 77 DVA Plus - Standard (pre February 2000) 35,636 9.11 325 DVA Plus - Standard (post January 2000 and post 2000) 53,163 9.10 484 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 685,330 9.09 6,230 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 959,092 9.09 8,718 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 261,790 9.08 2,377 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 264,852 9.07 2,402 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 390,858 9.06 3,541 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 722,318 9.06 6,544 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 335,910 9.05 3,040 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 815,848 9.04 7,375 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,385,135 9.04 12,522 Access - Annual Ratchet (post April 2001) 30,404 9.02 274 Access - Max 5.5 (post April 2001), Landmark - Max 7 76,525 9.01 690 Access - 7% Solution (post April 2001) 17,789 9.01 160 Access - Max 7 (post April 2001) 78,758 8.99 708 Value 6,132 9.15 56 ES II - Max 7 (post 2000), Generations - Max 7 233,654 9.04 2,112 Landmark - 7% Solution 19,800 9.02 179 ---------------- $ 57,814 ================ 68
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) INVESTORS Contracts in accumulation period: DVA 2,969 $10.71 $ 31 DVA Plus - Standard (pre February 2000) 62,733 10.66 668 DVA Plus - Standard (post January 2000 and post 2000) 136,519 10.65 1,454 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 952,473 10.63 10,124 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,224,296 10.62 13,002 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 533,884 10.60 5,659 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 353,861 10.59 3,747 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 401,684 10.58 4,250 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), Premium Plus - Max 5.5 (post January 2000) 1,410,056 10.57 14,904 Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 384,799 10.56 4,063 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 820,331 10.55 8,654 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,766,107 10.52 18,579 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5 847 10.52 9 Access - Annual Ratchet (post April 2001) 50,350 10.49 528 Access - Max 5.5 (post April 2001), Landmark - Max 7 136,482 10.48 1,430 Access - 7% Solution (post April 2001) 16,003 10.47 167 Access - Max 7 (post April 2001) 96,447 10.45 1,008 Value 38,219 10.73 410 ES II - Max 7 (post 2000), Generations - Max 7 221,246 10.54 2,332 Landmark - 7% Solution 36,288 10.51 381 ---------------- $ 91,400 ================ 69
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - --------------------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) GROWTH AND INCOME Contracts in accumulation period: DVA 10,036 $8.92 $ 89 DVA Plus - Standard (pre February 2000) 87,647 8.89 779 DVA Plus - Standard (post January 2000 and post 2000) 107,396 8.88 954 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 1,073,857 8.87 9,525 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,698,200 8.86 15,046 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 470,484 8.86 4,168 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 295,863 8.85 2,618 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 480,294 8.85 4,251 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 1,431,166 8.84 12,652 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 638,395 8.83 5,637 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,282,148 8.83 11,321 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 2,016,515 8.82 17,786 Access - Annual Ratchet (post April 2001) 41,233 8.80 363 Access - Max 5.5 (post April 2001), Landmark - Max 7 164,770 8.79 1,448 Access - 7% Solution (post April 2001) 26,572 8.79 234 Access - Max 7 (post April 2001) 80,339 8.78 705 Value 32,527 8.93 290 ES II - Max 7 (post 2000), Generations - Max 7 297,442 8.82 2,623 Landmark - 7% Solution 56,788 8.80 500 VA Option I 45,955 8.92 410 VA Option II 26,626 8.89 237 VA Option III 4,948 8.87 44 VA Bonus Option I 62,913 8.87 558 70
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) GROWTH AND INCOME (CONTINUED) VA Bonus Option II 35,491 $8.83 $ 313 VA Bonus Option III 19,211 8.82 169 ----------------- $ 92,720 ================= SPECIAL SITUATIONS Contracts in accumulation period: DVA Plus - Standard (pre February 2000) 7,214 $8.34 $ 60 DVA Plus - Standard (post January 2000 and post 2000) 57,110 8.33 476 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 368,091 8.32 3,063 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 538,056 8.32 4,477 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre 158,129 8.31 1,314 February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% Solution 132,268 8.30 1,098 (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 151,551 8.30 1,258 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), Premium 389,304 8.29 3,227 Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 197,278 8.29 1,635 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 319,420 8.28 2,645 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 420,371 8.27 3,476 Access - Annual Ratchet (post April 2001) 7,008 8.25 58 Access - Max 5.5 (post April 2001), Landmark - Max 7 38,065 8.25 314 Access - 7% Solution (post April 2001) 5,305 8.24 44 Access - Max 7 (post April 2001) 5,941 8.23 49 Value 3,563 8.38 30 ES II - Max 7 (post 2000), Generations - Max 7 116,186 8.28 962 Landmark - 7% Solution 16,846 8.26 139 ----------------- $ 24,325 ================= 71
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) INTERNET TOLLKEEPER Contracts in accumulation period: DVA 1,708 $7.64 $ 13 DVA Series 100 1,522 7.62 12 DVA Plus - Standard (pre February 2000) 174 7.63 1 DVA Plus - Standard (post January 2000 and post 2000) 3,316 7.62 25 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 47,817 7.62 364 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 89,535 7.61 681 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 36,478 7.61 278 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 12,070 7.61 92 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 35,022 7.60 266 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 87,897 7.60 668 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 69,117 7.60 525 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 46,906 7.60 357 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 162,626 7.59 1,234 Access - Annual Ratchet (post April 2001) 9,038 7.58 69 Access - Max 5.5 (post April 2001), Landmark - Max 7 23,594 7.58 179 Access - 7% Solution (post April 2001) 14,867 7.58 113 Access - Max 7 (post April 2001) 12,668 7.57 96 Value 4,138 7.64 32 ES II - Max 7 (post 2000), Generations - Max 7 44,111 7.59 335 Landmark - 7% Solution 6,460 7.59 49 ---------------- $ 5,389 ================ 72
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) INTERNATIONAL EQUITY Contracts in accumulation period: DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 5,073,421 $8.66 $ 43,936 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,053,050 8.70 9,162 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 2,043,470 8.65 17,676 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 1,265,057 8.62 10,905 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 66,132 8.60 569 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 4,631,066 8.57 39,688 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 100,590 8.55 860 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 953,619 8.52 8,125 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,403,293 8.47 11,886 Access - Max 5.5 (post April 2001), Landmark - Max 7 2,399 $8.37 20 Value 53,479 8.98 480 ES II - Max 7 (post 2000), Generations - Max 7 88,668 8.50 754 Landmark - 7% Solution 2 8.42 - ---------------- $ 144,061 ================ 73
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PILGRIM WORLDWIDE GROWTH Contracts in accumulation period: DVA 1,988 $7.07 $ 14 DVA Plus - Standard (pre February 2000) 9,163 7.04 65 DVA Plus - Standard (post January 2000 and post 2000) 41,855 7.04 295 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 306,137 7.02 2,149 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 479,640 7.02 3,367 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 112,980 7.01 792 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 135,471 7.00 948 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 158,546 6.99 1,108 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 247,751 6.99 1,732 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 169,312 6.98 1,182 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 468,772 6.98 3,272 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 477,958 6.96 3,326 Access - Annual Ratchet (post April 2001) 30,233 6.95 210 Access - Max 5.5 (post April 2001), Landmark - Max 7 46,283 6.94 321 Access - 7% Solution (post April 2001) 20,405 6.93 141 Access - Max 7 (post April 2001) 27,011 6.92 187 Value 18,443 7.08 131 ES II - Max 7 (post 2000), Generations - Max 7 75,724 6.97 528 Landmark - 7% Solution 15,369 6.95 107 VA Option I 3,190 7.08 23 VA Option II 1,875 7.04 13 74
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PILGRIM WORLDWIDE GROWTH (CONTINUED) VA Option III 1,275 $7.02 $ 9 VA Bonus Option I 3,087 7.02 22 VA Bonus Option II 7,572 6.98 53 VA Bonus Option III 2,697 6.96 19 ---------------- $ 20,014 ================ PILGRIM GROWTH OPPORTUNITIES Contracts in accumulation period: DVA 508 $7.81 $ 4 DVA Plus - Standard (pre February 2000) 128 7.80 1 DVA Plus - Standard (post January 2000 and post 2000) 2,631 7.80 21 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 82,839 7.79 645 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 83,426 7.79 650 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 19,161 7.78 149 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 17,748 7.78 138 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 50,782 7.78 395 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 51,380 7.78 400 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 27,449 7.77 213 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 74,652 7.77 580 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 182,159 7.76 1,414 Access - Annual Ratchet (post April 2001) 6,308 7.76 49 Access - Max 5.5 (post April 2001), Landmark - Max 7 6,269 7.75 49 75
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PILGRIM GROWTH OPPORTUNITIES (CONTINUED) Access - 7% Solution (post April 2001) 2,927 $7.75 $ 23 Access - Max 7 (post April 2001) 5,214 7.75 40 Value 1,330 7.82 10 ES II - Max 7 (post 2000), Generations - Max 7 52,668 7.77 409 Landmark - 7% Solution 3,796 7.76 29 ---------------- $ 5,219 ================ PILGRIM MAGNACAP Contracts in accumulation period: DVA 14,602 $9.38 $ 137 DVA Plus - Standard (pre February 2000) 1,128 9.36 11 DVA Plus - Standard (post January 2000 and post 2000) 3,691 9.36 35 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 38,846 9.35 363 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 91,138 9.35 852 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 7,517 9.34 70 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 4,693 9.34 44 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 28,170 9.34 263 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 76,115 9.33 710 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 24,770 9.33 231 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 102,247 9.33 954 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 117,705 9.32 1,097 Access - Annual Ratchet (post April 2001) 11,483 9.31 107 76
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PILGRIM MAGNACAP (CONTINUED) Access - Max 5.5 (post April 2001), Landmark - Max 7 10,474 $9.31 $ 98 Access - 7% Solution (post April 2001) 4,684 9.31 44 Access - Max 7 (post April 2001) 11,700 9.30 109 Value 1,964 9.39 18 ES II - Max 7 (post 2000), Generations - Max 7 19,437 9.33 181 Landmark - 7% Solution 6,880 9.32 64 VA Option I 549 9.38 5 VA Option II 97 9.36 1 VA Bonus Option I 869 9.35 8 ---------------- $ 5,402 ================ PILGRIM SMALLCAP OPPORTUNITIES Contracts in accumulation period: DVA 3,234 $8.35 $ 27 DVA Plus - Standard (pre February 2000) 3,816 8.34 32 DVA Plus - Standard (post January 2000 and post 2000) 20,998 8.34 175 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 180,638 8.33 1,505 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 267,587 8.32 2,226 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 61,323 8.32 510 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 59,195 8.32 492 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 111,946 8.32 931 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 188,337 8.31 1,565 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 79,269 8.31 659 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 222,328 8.30 1,845 77
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PILGRIM SMALLCAP OPPORTUNITIES (CONTINUED) Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 253,382 $8.30 $ 2,103 Access - Annual Ratchet (post April 2001) 21,419 8.30 178 Access - Max 5.5 (post April 2001), Landmark - Max 7 45,115 8.29 374 Access - 7% Solution (post April 2001) 6,290 8.29 52 Access - Max 7 (post April 2001) 29,301 8.28 242 Value 16,287 8.36 136 ES II - Max 7 (post 2000), Generations - Max 7 141,397 8.30 1,174 Landmark - 7% Solution 25,433 8.30 211 ---------------- $ 14,437 ================ PILGRIM CONVERTIBLE CLASS Contracts in accumulation period: VA Option I 37 $10.52 $ - VA Option II 12,767 10.51 134 VA Bonus Option I 2,059 10.50 22 VA Bonus Option II 2,911 10.48 31 VA Bonus Option III 415 10.47 4 Advantage Option I 246 10.46 3 ---------------- $ 194 ================ PILGRIM GROWTH AND INCOME Contracts in accumulation period: VA Option I 4,658 $10.45 $ 48 VA Option II 4,575 10.43 48 VA Option III 1,794 10.43 19 VA Bonus Option I 2,452 10.42 26 VA Bonus Option II 826 10.41 8 VA Bonus Option III 508 10.40 5 Advantage Option III 172 10.37 2 ---------------- $ 156 ================ PILGRIM LARGECAP GROWTH Contracts in accumulation period: VA Option I 2,762 $9.62 $ 27 VA Option II 10,314 9.60 99 VA Option III 2,947 9.60 28 VA Bonus Option I 19,732 9.59 189 VA Bonus Option II 19,228 9.58 184 VA Bonus Option III 661 9.57 6 ---------------- $ 533 ================ 78
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PIMCO HIGH YIELD BOND Contracts in accumulation period: DVA 80 1 $10.33 $ - DVA 90,862 10.25 931 DVA Series 100 944 10.12 10 DVA Plus - Standard (pre February 2000) 287,228 10.16 2,918 DVA Plus - Standard (post January 2000 and post 2000) 199,285 10.14 2,021 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 5,836,178 10.10 58,945 DVAPlus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 2,641,283 10.08 26,624 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 3,198,237 10.05 32,142 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 673,993 10.03 6,760 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 581,040 10.01 5,816 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 5,191,930 9.99 51,867 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 489,627 9.97 4,882 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,847,565 9.95 18,383 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,858,684 9.91 18,420 Access - Annual Ratchet (post April 2001) 54,726 9.86 540 Access - Max 5.5 (post April 2001), Landmark - Max 7 118,177 9.84 1,163 Access - 7% Solution (post April 2001) 27,443 9.82 269 Access - Max 7 (post April 2001) 92,431 9.79 905 Value 56,470 10.30 582 Access One 178 10.44 2 ES II - Max 7 (post 2000), Generations - Max 7 217,554 9.93 2,160 Landmark - 7% Solution 42,157 9.88 417 79
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PIMCO HIGH YIELD BOND (CONTINUED) VA Option I 1,801 $10.27 $ 18 VA Option II 7,569 10.16 77 VA Option III 437 10.10 4 VA Bonus Option I 18,670 10.08 188 VA Bonus Option II 21,063 9.97 210 VA Bonus Option III 8,662 9.91 86 Advantage Option I 263 9.81 3 ---------------- $ 236,343 ================ PIMCO STOCKSPLUS GROWTH AND INCOME Contracts in accumulation period: DVA 80 398 $10.46 $ 4 DVA 99,953 10.39 1,038 DVA Series 100 2,440 10.25 25 DVA Plus - Standard (pre February 2000) 218,233 10.29 2,246 DVA Plus - Standard (post January 2000 and post 2000) 146,243 10.27 1,502 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 5,825,877 10.24 59,657 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 2,222,192 10.21 22,688 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 4,054,658 10.18 41,276 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 614,802 10.16 6,246 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 468,627 10.14 4,752 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 6,171,296 10.12 62,453 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 441,295 10.10 4,457 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,789,954 10.08 18,043 80
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PIMCO STOCKSPLUS GROWTH AND INCOME (CONTINUED) Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,325,932 $10.04 $ 13,312 Access - Annual Ratchet (post April 2001) 10,158 9.99 101 Access - Max 5.5 (post April 2001), Landmark - Max 7 61,575 9.97 614 Access - 7% Solution (post April 2001) 20,309 9.95 202 Access - Max 7 (post April 2001) 74,639 9.91 740 Value 15,385 10.42 160 ES II - Max 7 (post 2000), Generations - Max 7 126,058 10.06 1,268 Landmark - 7% Solution 28,122 10.01 281 ---------------- $ 241,065 ================ PRUDENTIAL JENNISON Contracts in accumulation period: DVA 7,943 $6.34 $ 50 DVA Plus - Standard (pre February 2000) 17,257 6.31 109 DVA Plus - Standard (post January 2000 and post 2000) 136,978 6.31 864 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 1,264,693 6.30 7,968 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,272,891 6.29 8,007 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 417,345 6.28 2,621 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 244,934 6.28 1,538 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 201,082 6.27 1,261 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 1,001,521 6.26 6,270 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 273,111 6.26 1,710 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,102,268 6.25 6,889 81
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PRUDENTIAL JENNISON (CONTINUED) Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 1,029,815 $6.24 $ 6,426 Access - Annual Ratchet (post April 2001) 21,785 6.23 136 Access - Max 5.5 (post April 2001), Landmark - Max 7 70,772 6.22 440 Access - 7% Solution (post April 2001) 14,542 6.22 91 Access - Max 7 (post April 2001) 88,316 6.21 549 Value 6,717 6.35 43 ES II - Max 7 (post 2000), Generations - Max 7 107,206 6.25 670 Landmark - 7% Solution 28,394 6.23 177 VA Option I 159 6.34 1 VA Option II 3,710 6.31 24 VA Bonus Option I 6,637 6.29 42 VA Bonus Option II 13,955 6.26 87 VA Bonus Option III 1,752 6.24 11 Advantage Option I 1,081 6.21 7 ---------------- $ 45,991 ================ SP JENNISON INTERNATIONAL GROWTH Contracts in accumulation period: DVA 305 $5.44 $ 2 DVA Plus - Standard (pre February 2000) 15,970 5.42 87 DVA Plus - Standard (post January 2000 and post 2000) 67,611 5.42 367 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 294,591 5.41 1,594 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 385,100 5.41 2,083 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 101,972 5.40 551 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 42,845 5.40 231 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 109,343 5.39 589 82
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) SP JENNISON INTERNATIONAL GROWTH (CONTINUED) Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 214,255 $5.39 $ 1,155 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 146,026 5.39 787 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 212,147 5.38 1,141 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 320,127 5.37 1,719 Access - Annual Ratchet (post April 2001) 11,907 5.36 64 Access - Max 5.5 (post April 2001), Landmark - Max 7 86,395 5.36 463 Access - 7% Solution (post April 2001) 3,450 5.36 19 Access - Max 7 (post April 2001) 24,815 5.35 133 Value 22,797 5.44 124 ES II - Max 7 (post 2000), Generations - Max 7 19,406 5.38 104 Landmark - 7% Solution 14,879 5.37 80 VA Option I 131 5.44 1 VA Option II 419 5.42 2 VA Bonus Option I 1,922 5.41 10 VA Bonus Option II 141 5.39 1 VA Bonus Option III 466 5.37 3 ---------------- $ 11,310 ================ APPRECIATION Contracts in accumulation period: Granite PrimElite - Standard 415 $17.22 $ 7 Granite PrimElite - Annual Ratchet 41,993 17.07 716 ---------------- $ 723 ================ SMITH BARNEY HIGH INCOME Contracts in accumulation period: Granite PrimElite - Standard 4,203 $11.94 $ 50 Granite PrimElite - Annual Ratchet 27,019 11.82 320 ---------------- $ 370 ================ SMITH BARNEY LARGE CAP VALUE Contracts in accumulation period: Granite PrimElite - Standard 2,902 $19.35 $ 56 Granite PrimElite - Annual Ratchet 26,471 19.16 507 ---------------- $ 563 ================ 83
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) SMITH BARNEY INTERNATIONAL ALL CAP GROWTH Contracts in accumulation period: Granite PrimElite - Standard 1,951 $12.16 $ 24 Granite PrimElite - Annual Ratchet 22,932 12.04 276 ---------------- $ 300 ================ SMITH BARNEY MONEY MARKET Contracts in accumulation period: Granite PrimElite - Standard 9,433 $12.68 $ 120 Granite PrimElite - Annual Ratchet 8,053 12.55 101 ---------------- $ 221 ================ ASSET ALLOCATION Contracts in accumulation period: DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 12,953 $9.84 $ 127 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 71,708 9.83 705 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 4,757 9.80 47 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 9,458 9.79 93 Solution (post January 2000 and post 2000) Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 17,516 9.77 171 Premium Plus - Max 5.5 (post January 2000) Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 11,977 9.75 117 ---------------- $ 1,260 ================ 84
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) EQUITY Contracts in accumulation period: DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 6,687 $9.21 $ 62 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 47,169 9.20 434 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 10,523 9.18 97 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% Solution (post January 2000 and post 2000) 3,013 9.17 28 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), Premium Plus - Max 5.5 (post January 2000) 5,671 9.14 52 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 14,708 9.12 134 ---------------- $ 807 ================ GALAXY GROWTH AND INCOME Contracts in accumulation period: DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 5,565 $10.40 $58 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 7,205 10.39 75 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 896 10.37 9 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 1,438 10.35 15 Solution (post January 2000 and post 2000) 85
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) GALAXY GROWTH AND INCOME (CONTINUED) Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 3,507 $10.33 $ 36 Premium Plus - Max 5.5 (post January 2000) Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 785 10.31 8 ---------------- $ 201 ================ HIGH QUALITY BOND Contracts in accumulation period: DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 8,082 $11.70 $ 95 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 2,443 11.69 29 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 959 11.65 11 Solution (post January 2000 and post 2000) Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 1,476 11.60 17 ---------------- $ 152 ================ SMALL COMPANY GROWTH Contracts in accumulation period: DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 1,744 $13.14 $ 23 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 1,321 13.12 17 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 1,508 13.09 20 (pre February 2000), ES II - 5.5% Solution (post 2000) 86
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) SMALL COMPANY GROWTH (CONTINUED) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 973 $13.08 $ 13 Solution (post January 2000 and post 2000) Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 792 13.02 10 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 99 12.99 1 ---------------- $ 84 ================ ALLIANCE BERNSTEIN VALUE Contracts in accumulation period: DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 508 $10.01 $ 5 Solution (post January 2000 and post 2000) VA Option I 10,325 10.05 104 VA Option II 3,654 10.03 37 VA Option III 5,388 10.03 54 VA Bonus Option I 10,643 10.02 107 VA Bonus Option II 17,506 10.01 175 VA Bonus Option III 5,924 10.00 59 Advantage Option I 669 9.99 6 Advantage Option II 4,856 9.98 48 ---------------- $ 595 ================ ALLIANCE GROWTH AND INCOME Contracts in accumulation period: VA Option I 20,342 $9.61 $ 195 VA Option II 31,407 9.60 302 VA Option III 6,642 9.60 64 VA Bonus Option I 47,693 9.59 457 VA Bonus Option II 55,989 9.58 536 VA Bonus Option III 10,312 9.57 99 ---------------- $ 1,653 ================ 87
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PREMIER GROWTH Contracts in accumulation period: DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 321 $9.55 $ 3 Solution (post January 2000 and post 2000) VA Option I 7,037 9.58 68 VA Option II 44,632 9.57 427 VA Option III 3,508 9.57 34 VA Bonus Option I 20,008 9.56 191 VA Bonus Option II 27,531 9.55 263 VA Bonus Option III 5,206 9.54 50 Advantage Option I 773 9.53 7 Advantage Option II 5,078 9.52 48 ---------------- $ 1,091 ================ GET FUND - SERIES N Contracts in accumulation period: VA Option I 393,214 $10.28 $ 4,042 VA Option II 240,885 10.27 2,474 VA Option III 118,456 10.27 1,217 VA Bonus Option I 10.26 10,440 1,017,518 VA Bonus Option II 721,740 10.25 7,398 VA Bonus Option III 517,235 10.24 5,297 ---------------- $ 30,868 ================ GET FUND - SERIES P Contracts in accumulation period: DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 71,533 $10.02 $ 717 Solution (post January 2000 and post 2000) Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 10,501 10.01 105 Access - 5.5% Solution (post April 2001), Landmark - Max 5.5% 3,705 10.01 37 VA Option I 1,784,901 10.04 17,920 VA Option II 952,184 10.03 9,550 VA Option III 514,337 10.02 5,154 VA Bonus Option I 5,669,614 10.02 56,810 VA Bonus Option II 3,733,809 10.01 37,376 VA Bonus Option III 2,357,273 10.01 23,596 Advantage Option I 114,881 10.00 1,149 Advantage Option II 35,943 9.99 359 Advantage Option III 27,231 9.99 272 ---------------- $ 153,045 ================ 88
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) GET FUND - SERIES Q Contracts in accumulation period: VA Option I 24,230 $10.00 $ 242 VA Option II 21,339 10.00 213 VA Bonus Option I 45,829 10.00 458 VA Bonus Option II 87,706 10.00 877 VA Bonus Option III 11,367 10.00 114 ---------------- $ 1,904 ================ VALUE OPPORTUNITY Contracts in accumulation period: VA Option I 1,584 $9.04 $ 14 VA Option II 1,858 9.03 17 VA Bonus Option I 10,936 9.02 99 VA Bonus Option II 15,561 9.01 140 VA Bonus Option III 3,112 9.00 28 ---------------- $ 298 ================ INDEX PLUS LARGE CAP Contracts in accumulation period: VA Option I 16,897 $9.40 $ 159 VA Option II 7,036 9.38 66 VA Option III 24,809 9.39 233 VA Bonus Option I 27,003 9.38 253 VA Bonus Option II 6,121 9.36 57 VA Bonus Option III 4,667 9.36 44 ---------------- $ 812 ================ INDEX PLUS MID CAP Contracts in accumulation period: VA Option I 25,943 $9.91 $ 257 VA Option II 10,835 9.90 107 VA Option III 3,276 9.90 32 VA Bonus Option I 14,892 9.89 147 VA Bonus Option II 23,563 9.87 233 VA Bonus Option III 4,407 9.87 44 ---------------- $ 820 ================ INDEX PLUS SMALL CAP Contracts in accumulation period: VA Option I 18,193 $10.11 $ 184 VA Option II 6,817 10.10 69 VA Option III 795 10.11 8 VA Bonus Option I 28,552 10.09 288 VA Bonus Option II 7,283 10.07 73 VA Bonus Option III 5,763 10.07 58 ---------------- $ 680 ================ 89
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) AIM V.I. DENT DEMOGRAPHIC TRENDS Contracts in accumulation period: DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 16,786 $10.99 $ 184 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 23,503 10.99 258 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 77,645 10.99 853 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 1,822 10.99 20 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 9,170 10.99 101 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 51,753 10.99 569 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 4,183 10.99 46 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 7,111 10.98 78 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 119,539 10.98 1,313 Access - Annual Ratchet (post April 2001) 270 10.98 3 Access - 7% Solution (post April 2001) 228 10.98 3 Access - Max 7 (post April 2001) 724 10.97 8 ES II - Max 7 (post 2000), Generations - Max 7 7,383 10.98 81 Landmark - 7% Solution 1,155 10.98 13 VA Option I 982 11.00 11 VA Bonus Option I 167 10.99 2 VA Bonus Option III 670 10.98 7 ---------------- $ 3,550 ================ 90
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) AIM V.I. GROWTH Contracts in accumulation period: VA Option I 309 $10.35 $ 3 VA Option II 7,677 10.34 79 VA Bonus Option II 34,765 10.33 359 VA Bonus Option III 146 10.32 2 ---------------- $ 443 ================ BRINSON TACTICAL ALLOCATION Contracts in accumulation period: DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 536 $9.39 $ 5 Solution (post January 2000 and post 2000) VA Option I 31,473 9.42 296 VA Option II 4,853 9.41 46 VA Option III 1,093 9.41 10 VA Bonus Option I 16,438 9.40 155 VA Bonus Option II 24,146 9.38 226 VA Bonus Option III 4,485 9.38 42 Advantage Option I 713 9.37 7 ---------------- $ 787 ================ EQUITY-INCOME Contracts in accumulation period: VA Option I 26,225 $9.61 $ 252 VA Option II 21,430 9.60 206 VA Option III 6,165 9.60 59 VA Bonus Option I 99,509 9.59 954 VA Bonus Option II 39,753 9.57 380 VA Bonus Option III 9,493 9.57 91 Advantage Option I 681 9.55 7 ---------------- $ 1,949 ================ GROWTH Contracts in accumulation period: Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 652 $9.25 $ 6 VA Option I 14,042 9.29 130 VA Option II 9,484 9.28 88 VA Option III 3,394 9.29 32 VA Bonus Option I 21,879 9.27 203 VA Bonus Option II 16,676 9.26 154 VA Bonus Option III 8,648 9.25 80 ---------------- $ 693 ================ 91
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) CONTRAFUND Contracts in accumulation period: VA Option I 23,962 $9.73 $ 233 VA Option II 31,173 9.71 303 VA Option III 309 9.72 3 VA Bonus Option I 23,738 9.70 230 VA Bonus Option II 34,448 9.69 334 VA Bonus Option III 8,281 9.68 80 ---------------- $ 1,183 ================ FINANCIAL SERVICES Contracts in accumulation period: DVA Plus - Standard (pre February 2000) 2,766 $9.37 $ 26 DVA Plus - Standard (post January 2000 and post 2000) 4,734 9.37 44 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 28,966 9.37 272 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 37,443 9.36 350 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 23,862 9.36 223 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 8,703 9.36 81 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 5,433 9.35 51 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 45,911 9.35 429 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 3,522 9.35 33 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 18,560 9.35 174 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 18,432 9.34 172 92
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) FINANCIAL SERVICES (CONTINUED) Access - Max 5.5 (post April 2001), Landmark - Max 7 3,260 $9.33 $ 30 Access - 7% Solution (post April 2001) 3,752 9.33 35 Access - Max 7 (post April 2001) 107 9.33 1 ES II - Max 7 (post 2000), Generations - Max 7 677 9.35 6 Landmark - 7% Solution 1,385 9.34 13 VA Option I 7,644 9.39 72 VA Option II 8,008 9.37 75 VA Option III 1,095 9.37 10 VA Bonus Option I 9,779 9.36 92 VA Bonus Option II 17,709 9.35 166 VA Bonus Option III 4,900 9.34 46 Advantage Option I 277 9.33 3 ---------------- $ 2,404 ================ HEALTH SCIENCES Contracts in accumulation period: DVA Plus - Standard (pre February 2000) 9,245 $10.28 $ 95 DVA Plus - Standard (post January 2000 and post 2000) 2,712 10.28 28 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 20,414 10.27 209 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 38,465 10.27 395 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 110,902 10.26 1,138 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 3,132 10.26 32 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 7,400 10.26 76 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 367,187 10.26 3,767 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 16,015 10.26 164 93
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) HEALTH SCIENCES (CONTINUED) Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 25,836 $10.25 $ 265 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 289,358 10.25 2,966 Access - Annual Ratchet (post April 2001) 332 10.24 3 Access - Max 5.5 (post April 2001), Landmark - Max 7 466 10.24 5 Access - 7% Solution (post April 2001) 1,063 10.24 11 Access - Max 7 (post April 2001) 5,379 10.23 55 ES II - Max 7 (post 2000), Generations - Max 7 81,775 10.25 838 Landmark - 7% Solution 1,482 10.24 15 VA Option I 7,242 10.29 74 VA Option II 11,285 10.28 116 VA Option III 3,081 10.28 32 VA Bonus Option I 11,674 10.27 120 VA Bonus Option II 13,222 10.25 136 VA Bonus Option III 24,044 10.25 246 Advantage Option I 252 10.23 2 Advantage Option III 173 10.22 2 ---------------- $ 10,790 ================ UTILITIES Contracts in accumulation period: DVAPlus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 5,342 $8.11 $ 43 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 8,160 8.11 66 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 18,794 8.10 152 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 960 8.10 8 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 1,002 8.10 8 94
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) UTILITIES (CONTINUED) Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 6,689 $8.10 $ 54 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 3,860 8.09 31 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 16,134 8.09 131 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 23,627 8.09 191 ES II - Max 7 (post 2000), Generations - Max 7 1,176 8.09 10 VA Option I 3,379 8.13 28 VA Option II 4,483 8.11 36 VA Option III 183 8.11 1 VA Bonus Option I 17,386 8.11 141 VA Bonus Option II 1,036 8.09 8 VA Bonus Option III 6,868 8.09 56 ---------------- $ 964 ================ JANUS ASPEN WORLDWIDE GROWTH Contracts in accumulation period: Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 661 $9.35 $ 6 VA Option I 32,123 9.39 302 VA Option II 16,977 9.37 159 VA Option III 4,296 9.38 40 VA Bonus Option I 57,358 9.36 537 VA Bonus Option II 13,913 9.35 130 VA Bonus Option III 12,779 9.34 119 Advantage Option I 281 9.33 3 Advantage Option II 275 9.32 2 ---------------- $ 1,298 ================ 95
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PPI MFS CAPITAL OPPORTUNITIES Contracts in accumulation period: VA Option I 3,867 $8.93 $ 34 VA Option II 8,088 8.92 72 VA Option III 2,330 9.91 23 VA Bonus Option I 18,641 8.91 166 VA Bonus Option II 39,763 8.89 353 VA Bonus Option III 5,621 8.89 50 ---------------- $ 698 ================ PIONEER FUND VCT Contracts in accumulation period: DVA Plus - Standard (pre February 2000) 11,177 $9.39 $ 105 DVA Plus - Standard (post January 2000 and post 2000) 4,693 9.39 44 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 27,047 9.39 254 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 5,663 9.38 53 DVA Plus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 14,633 9.38 137 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 4,756 9.38 45 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 9,738 9.37 91 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 27,155 9.37 254 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 2,197 9.37 21 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 22,142 9.37 207 96
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PIONEER FUND VCT (CONTINUED) Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 47,468 $9.36 $ 444 ES II - Max 7 (post 2000), Generations - Max 7 161 9.37 2 VA Option I 17,258 9.41 162 VA Option II 11,820 9.39 111 VA Option III 3,571 9.40 34 VA Bonus Option I 9,143 9.38 86 VA Bonus Option II 19,587 9.37 184 VA Bonus Option III 4,340 9.36 41 ---------------- $ 2,275 ================ PIONEER SMALL COMPANY VCT Contracts in accumulation period: DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 536 $9.58 $ 5 Solution (post January 2000 and post 2000) Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 655 9.57 6 VA Option I 16,862 9.61 162 VA Option II 11,516 9.60 111 VA Option III 1,955 9.60 19 VA Bonus Option I 26,083 9.59 250 VA Bonus Option II 18,597 9.58 178 VA Bonus Option III 17,291 9.57 166 Advantage Option I 4,125 9.56 39 Advantage Option III 186 9.54 2 ---------------- $ 938 ================ PIONEER MID-CAP VALUE VCT Contracts in accumulation period: DVA Plus - Standard (pre February 2000) 5,621 $10.72 $ 60 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 170,277 10.72 1,825 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 98,183 10.71 1,052 97
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) PIONEER MID-CAP VALUE VCT (CONTINUED) DVAPlus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 27,109 $10.71 $ 290 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 4,960 10.71 53 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 6,577 10.71 71 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 55,679 10.71 596 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 5,379 10.71 58 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 23,811 10.71 255 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 72,421 10.71 776 Access - Annual Ratchet (post April 2001) 661 10.70 7 Access - Max 7 (post April 2001) 598 10.70 6 ES II - Max 7 (post 2000), Generations - Max 7 6,479 10.71 69 Landmark - 7% Solution 1,969 10.70 21 ---------------- $ 5,139 ================ BULL Contracts in accumulation period: DVA Plus - Standard (pre February 2000) 8,366 $8.90 $ 74 DVA Plus - Standard (post January 2000 and post 2000) 10,121 8.90 90 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 805,047 8.90 7,165 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 267,236 8.89 2,376 98
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) BULL (CONTINUED) DVAPlus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 256,466 $8.88 $ 2,277 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 117,895 8.88 1,047 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 92,174 8.88 818 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 353,534 8.88 3,139 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 27,581 8.87 245 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 244,571 8.87 2,169 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 103,369 8.87 917 Access - Annual Ratchet (post April 2001) 5,613 8.86 50 Access - Max 5.5 (post April 2001), Landmark - Max 7 1,813 8.85 16 Access - 7% Solution (post April 2001) 901 8.85 8 Access - Max 7 (post April 2001) 4,584 8.84 40 ES II - Max 7 (post 2000), Generations - Max 7 15,636 8.87 139 Landmark - 7% Solution 1,491 8.86 13 ---------------- $ 20,583 ================ SMALL-CAP Contracts in accumulation period: DVA Plus - Standard (pre February 2000) 46,913 $9.44 $ 443 DVA Plus - Standard (post January 2000 and post 2000) 13,767 9.44 130 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 1,134,989 9.43 10,703 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 403,215 9.43 3,802 99
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) SMALL-CAP (CONTINUED) DVAPlus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution 67,787 $9.42 $ 639 (pre February 2000), ES II - 5.5% Solution (post 2000) DVAPlus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 43,781 9.42 412 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 18,942 9.41 178 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 128,298 9.41 1,207 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 19,151 9.41 180 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 132,360 9.41 1,246 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 47,995 9.40 451 Access - Annual Ratchet (post April 2001) 12,960 9.39 122 Access - Max 5.5 (post April 2001), Landmark - Max 7 12,110 9.39 114 Access - 7% Solution (post April 2001) 4,031 9.38 38 Access - Max 7 (post April 2001) 3,530 9.38 33 Value 698 9.46 7 ES II - Max 7 (post 2000), Generations - Max 7 21,722 9.40 204 Landmark - 7% Solution 6,232 9.39 59 ---------------- $ 19,968 ================ EUROPE 30 Contracts in accumulation period: DVA Plus - Standard (post January 2000 and post 2000) 5,341 $8.27 $ 44 DVA Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000 and post January 2000), Access - Standard (pre February 2000), Premium Plus - Standard (pre February 2000), ES II (pre 2001), ES II - Standard (post 2000), Generations - Standard 8,429 8.27 70 DVA Plus - Annual Ratchet (post January 2000), DVA Plus - 5.5% Solution (post 2000), Access - Standard (post January 2000 and post 2000), Premium Plus - Standard (post January 2000 and post 2000), ES II - Deferred Ratchet (post 2000), Generations - Deferred Ratchet 568,995 8.26 4,701 100
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) EUROPE 30 (CONTINUED) DVAPlus - 7% Solution (pre February 2000), DVA Plus - Annual Ratchet (post 2000), DVA Plus - Max 5.5 (post January 2000), Access - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), Premium Plus - Annual Ratchet (pre February 2000) and 5.5% Solution (pre February 2000), ES II - 5.5% Solution (post 2000) 5,726 $8.26 $ 47 DVA Plus - Max 5.5 (post 2000), Access - Annual Ratchet (post January 2000), Access - 5.5% Solution (post January 2000 and post 2000), Premium Plus - Annual Ratchet (post January 2000), Premium Plus - 5.5% 4,340 8.26 36 Solution (post January 2000 and post 2000) DVA Plus - 7% Solution (post January 2000 and post 2000), ES II - Annual Ratchet (post 2000), Generations - Annual Ratchet, Landmark - Standard 14,669 8.25 121 Access - 7% Solution (pre February 2000), Access - Annual Ratchet (post 2000), Access - Max 5.5 (post January 2000), DVA Plus - Annual Ratchet (post 2000), ES II - Max 5.5 (post 2000), Premium Plus - 7% Solution (pre February 2000), Premium Plus - Annual Ratchet (post 2000), 13,357 8.25 110 Premium Plus - Max 5.5 (post January 2000) Access - Max 5.5 (post 2000), DVA Plus - Max 7 (post January 2000 and post 2000), Premium Plus - Max 5.5 (post 2000), ES II - 7% Solution (post 2000), Generations - 7% Solution 38,959 8.25 322 Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 39,269 8.24 324 Access - Max 7 (post January 2000 and post 2000), Premium Plus - Max 7 (post January 2000 and post 2000), Landmark - Annual Ratchet 19,682 8.24 162 Access - Annual Ratchet (post April 2001) 15,189 8.23 125 Access - 7% Solution (post April 2001) 7,153 8.22 59 Access - Max 7 (post April 2001) 15,212 8.22 125 Value 746 8.29 6 ES II - Max 7 (post 2000), Generations - Max 7 6,318 8.24 52 Landmark - 7% Solution 901 8.23 8 ---------------- $ 6,312 ================ PUTNAM GROWTH AND INCOME Contracts in accumulation period: VA Option I 8,202 $9.50 $ 78 VA Option II 5,020 9.48 48 VA Option III 109 9.48 1 VA Bonus Option I 8,318 9.47 79 VA Bonus Option II 9,657 9.46 91 VA Bonus Option III 11,884 9.45 112 Advantage Option I 5,022 9.25 46 ---------------- $ 455 ================ 101
Golden American Life Insurance Company Separate Account B Notes to Financial Statements (continued) 6. UNIT VALUES (CONTINUED) UNIT EXTENDED DIVISION/CONTRACT UNITS VALUE VALUE - ------------------------------------------------------------------------------------------------------------------------------ (IN THOUSANDS) INTERNATIONAL GROWTH AND INCOME Contracts in accumulation period: VA Option I 20,630 $9.49 $ 196 VA Option II 5,921 9.47 56 VA Option III 2,520 9.47 24 VA Bonus Option I 20,019 9.46 189 VA Bonus Option II 6,330 9.45 60 VA Bonus Option III 8,360 9.44 79 ---------------- $ 604 ================ VOYAGER Contracts in accumulation period: Access - 7% Solution (post January 2000 and post 2000), Access - Standard (post April 2001), Premium Plus - 7% Solution (post January 2000 and post 2000), Landmark - 5.5% Solution 686 $8.74 $ 6 VA Option I 14,754 8.77 129 VA Option II 9,782 8.76 85 VA Option III 495 8.76 4 VA Bonus Option I 26,612 8.75 233 VA Bonus Option II 4,333 8.74 38 VA Bonus Option III 8,442 8.73 74 Advantage Option II 884 8.71 8 ---------------- $ 577 ================ 102
Golden American Life Insurance Company Separate Account B Notes To Financial Statements (continued) 7. UNIT SUMMARY A summary of unit values and units outstanding for variable annuity contracts, expense ratios, excluding expenses of underlying funds, investment income ratios, and total return for the year ended December 31, 2001, along with unit values for the year ended December 31, 2000, follows: At December 31, 2000 At December 31, 2001 -------------------------------------------------------------------------------- Unit Fair Value lowest Units Unit Fair Value Net Assets Division to highest (000s) lowest to highest (000s) ------------------------ ------------- -------------------- --------------- The GCG Trust: Liquid Asset Division $14.50 to $16.61 69,541 $13.62 to $17.79 $1,071,485 Limited Maturity Bond Division $16.67 to $19.77 19,509 $17.02 to $21.41 364,062 Large Cap Value Division $10.50 to $10.59 27,628 $9.85 to $10.20 275,489 Hard Assets Division $15.34 to $17.52 2,395 $12.63 to $15.27 33,209 All Cap Division $11.54 to $11.65 25,814 $11.46 to $11.76 299,314 Real Estate Division $25.04 to $28.59 4,535 $25.36 to $31.90 126,169 Fully Managed Division $24.47 to $27.95 23,375 $25.20 to $30.47 644,971 Equity Income Division $22.48 to $26.61 17,698 $21.34 to 26.84 416,763 Capital Appreciation Division $24.06 to $26.49 20,717 $19.84 to $22.87 440,209 Rising Dividends Division $24.00 to $26.02 34,270 $20.13 to 23.30 732,049 Value Equity Division $18.85 to $20.15 10,991 $17.24 to $19.10 199,039 Strategic Equity Division $18.40 to $19.51 17,855 $13.92 to $15.26 259,382 Small Cap Division $17.94 to $19.25 27,165 $16.97 to $18.87 480,513 Managed Global Division $19.34 to $21.72 14,451 $16.18 to $19.04 250,388 Mid-Cap Growth Division $40.98 to $43.92 29,521 $29.92 to $34.01 928,290 Capital Growth Division $16.80 to $17.71 27,303 $13.93 to 15.15 395,434 Research Division $25.56 to $27.39 31,622 $19.19 to $21.34 637,711 Total Return Division $20.10 to $21.54 39,136 $18.90 to $21.94 793,394 Growth Division $21.49 to $22.98 66,921 $14.41 to $15.95 1,002,892 Core Bond Division $11.37 to $12.19 9,873 $11.14 to $12.39 114,996 Developing World Division $7.47 to $7.71 10,141 $6.85 to $7.25 71,466 Asset Allocation Growth Division $9.37 to $9.38 5,718 $8.55 to $8.70 49,242 Diversified Mid-Cap Division $9.87 to $9.88 6,381 $8.99 to $9.15 57,814 Investors Division $11.21 to $11.31 8,646 $10.45 to $10.73 91,400 Growth and Income Division $9.93 to $9.96 10,487 $8.78 to $8.93 92,720 Special Situations Division $8.88 to $8.89 2,932 $8.23 to $8.38 24,325 Internet Tollkeeper Division 709 $7.57 to $7.64 5,389 International Equity Division $11.23 to $11.73 16,734 $8.37 to $8.98 144,061 Pilgrim Variable Insurance Trust: Pilgrim Worldwide Growth Division $8.72 to $8.78 2,863 $6.92 to $7.08 20,014 Pilgrim Growth Opportunities Division - 671 $7.75 to $7.82 5,219 Pilgrim MagnaCap Division - 579 $9.30 to $9.39 5,402 Pilgrim Small Cap Opportunities Division - 1,737 $8.28 to $8.36 14,437 Pilgrim Convertible Class Division - 18 $10.46 to $10.52 194 Pilgrim Growth and Income Division - 15 $10.37 to $10.45 156 Pilgrim LargeCap Growth Division - 56 $9.57 to $9.62 533 PIMCO Variable Insurance Trust: PIMCO High Yield Bond Division $9.88 to $10.17 23,564 $9.79 to $10.44 236,343 PIMCO StocksPLUS Growth and Income Division $11.56 to $11.91 23,718 $9.91 to $10.46 241,065 Prudential Series Fund, Inc.: Prudential Jennison Division $7.82 to $7.85 7,335 $6.21 to $6.35 45,991 SP Jennison International Growth Division $8.55 to $8.57 2,097 $5.35 to $5.44 11,310 * As this sub-account is new in 2001, this ratio is not meaningful and therefore not presented 103
Golden American Life Insurance Company Separate Account B Notes To Financial Statements (continued) At December 31, 2000 At December 31, 2001 -------------------------------------------------------------------------------- Unit Fair Value lowest Units Unit Fair Value Net Assets Division to highest (000s) lowest to highest (000s) ------------------------ ------------- -------------------- --------------- Greenwich Street Series Fund Inc.: Appreciation Division $18.03 to $18.16 42 $17.07 to $17.22 $ 723 Travelers Series Fund Inc.: Smith Barney High Income Division $12.46 to $12.56 31 $11.82 to $11.94 370 Smith Barney Large Cap Value Division $21.16 to $21.34 29 $19.16 to $19.35 563 Smith Barney International All Cap Growth $17.74 to $17.89 25 $12.04 to $12.16 300 Division Smith Barney Money Market Division $12.27 to $12.38 17 $12.55 to $12.68 221 The Galaxy VIP Fund: Asset Allocation Division $10.73 to $10.78 128 $9.75 to $9.84 1,260 Equity Division $11.36 to $11.41 88 $9.12 to $9.21 807 Growth and Income Division $10.93 to $10.98 19 $10.31 to $10.40 201 High Quality Bond Division $11.04 to $11.05 13 $11.60 to $11.70 152 Small Company Growth Division $13.27 to $13.35 6 $12.99 to $13.14 84 Alliance Variable Products Series Fund, Inc.: Alliance Bernstein Value Division - 59 $9.98 to $10.05 595 Growth and Income Division - 172 $9.57 to $9.61 1,653 Premier Growth Division - 114 $9.52 to $9.58 1,091 Aetna Variable Portfolios, Inc.: GET Fund - Series N Division - 3,009 $10.24 to $10.28 30,868 GET Fund - Series P Division - 15,276 $9.99 to $10.04 153,045 GET Fund - Series Q Division - 190 $10.00 1,904 Value Opportunity Division - 33 $9.00 to $9.04 298 Index Plus Large Cap Division - 87 $9.36 to $9.40 812 Index Plus Mid Cap Division - 83 $9.87 to $9.91 820 Index Plus Small Cap Division 67 $10.07 to $10.11 680 AIM Variable Insurance Funds, Inc.: AIM V.I. Dent Demographic Trends Division - 323 $10.97 to $11.00 3,550 AIM V.I. Growth Division - 43 $10.32 to $10.35 443 Brinson Series Trust: Brinson Tactical Allocation Division - 84 $9.37 to $9.42 787 Fidelity Variable Insurance Products Equity-Income Division - 203 $9.55 to 9.61 1,949 Growth Division - 75 $9.25 to $9.29 693 Contrafund Division - 122 $9.68 to $9.73 1,183 INVESCO Variable Investment Funds, Inc.: Financial Services Division - 256 $9.33 to $9.39 2,404 Health Sciences Division - 1,052 $10.22 to $10.29 10,790 Utilities Division - 119 $8.09 to $8.13 964 Janus Aspen Series: Janus Aspen Worldwide Growth Division - 139 $9.32 to $9.39 1,298 Portfolio Partners, Inc.: PPI MFS Capital Opportunities Division - 78 $8.92 to $9.91 698 Pioneer Variable Contracts Trust: Pioneer Fund VCT Division - 243 $9.36 to $9.41 2,275 Pioneer Small Company VCT Division - 98 $9.54 to $9.61 938 Pioneer Mid-Cap Value VCT Division - 480 $10.70 to $10.72 5,139 The ProFunds VP: Bull Division - 2,316 $8.84 to $8.92 20,583 Small-Cap Division - 2,118 $9.38 to $9.46 19,968 Europe 30 Division - 764 $8.22 to $8.29 6,312 Putnam Variable Trust: Growth and Income Division - 48 $9.25 to $9.50 455 International Growth and Income Division - 64 $9.44 to $9.49 604 Voyager Division - 66 $8.71 to $8.77 577 * As this sub-account is new in 2001, this ratio is not meaningful and therefore not presented. 104
Golden American Life Insurance Company Separate Account B Notes To Financial Statements (continued) For the Year Ended December 31, 2001 ---------------------------------------------------------- Mortality, Expense Risk and Asset Based Investment Admin Charges Total Return lowest Division Income Ratio lowest to highest to highest ------------- ------------------ ----------------------- The GCG Trust: Liquid Asset Division 3.59 0.50% to 2.55% 1.86% to 3.01% Limited Maturity Bond Division 4.84 0.50% to 2.25% 6.78% to 8.30% Large Cap Value Division 0.25 0.50% to 2.25% -5.43% to -4.44% Hard Assets Division 0.00 0.80% to 2.25% -13.82% to -12.84% All Cap Division 1.47 0.90% to 2.25% 0.00% to 0.94% Real Estate Division 4.29 0.50% to 2.25% 6.07% to 7.28% Fully Managed Division 3.34 0.80% to 2.25% 7.85% to 9.02% Equity Income Division 1.95 0.50% to 2.25% -0.58% to 1.46% Capital Appreciation Division 0.07 0.80% to 2.25% -14.67% to -13.67% Rising Dividends Division 0.30 0.50% to 2.25% -13.63% to -12.68% Value Equity Division 0.85 0.80% to 2.25% -6.21% to -5.21% Strategic Equity Division 0.00 0.80% to 2.25% -22.66% to -21.78% Small Cap Division 0.13 0.50% to 2.25% -3.40% to -1.97% Managed Global Division 0.13 0.50% to 2.25% -13.60% to -12.34% Mid-Cap Growth Division 0.37 0.50% to 2.25% -25.09% to -24.25% Capital Growth Division 0.00 0.80% to 2.25% -15.42% to -14.46% Research Division 0.12 0.80% to 2.25% -22.97% to -22.09% Total Return Division 4.88 0.50% to 2.55% -1.44% to -0.32% Growth Division 0.00 0.50% to 2.25% -31.55% to -30.59% Core Bond Division 0.40 0.80% to 2.25% 0.53% to 1.64% Developing World Division 1.18 0.80% to 2.25% -7.10% to -5.97% Asset Allocation Growth Division 1.78 0.90% to 2.25% -8.32% to -7.68% Diversified Mid-Cap Division 0.48 0.90% to 2.25% -8.41% to -7.79% Investors Division 1.30 0.90% to 2.25% -6.16% to -5.13% Growth and Income Division 1.02 0.90% to 2.25% -11.18% to -10.34% Special Situations Division 0.37 0.90% to 2.25% -6.87% to -6.19% Internet Tollkeeper Division 0.00 0.90% to 2.25% * International Equity Division 0.00 0.90% to 2.10% -24.87% to -22.18% Pilgrim Variable Insurance Trust: Pilgrim Worldwide Growth Division 0.00 0.90% to 2.25% -20.18% to -19.36% Pilgrim Growth Opportunities Division 0.00 0.90% to 2.25% * Pilgrim MagnaCap Division 1.36 0.90% to 2.25% * Pilgrim Small Cap Opportunities Division 0.00 0.90% to 2.25% * Pilgrim Convertible Class Division -10.36 0.95% to 2.20% * Pilgrim Growth and Income Division 0.92 0.95% to 2.55% * Pilgrim LargeCap Growth Division 0.00 0.95% to 1.90% * PIMCO Variable Insurance Trust: PIMCO High Yield Bond Division 7.91 0.50% to 2.25% 0.30% to 1.57% PIMCO StocksPLUS Growth and Income Division 4.22 0.80% to 2.25% -13.15% to -12.17% Prudential Series Fund, Inc.: Prudential Jennison Division 0.00 0.90% to 2.25% -20.20% to -19.62% SP Jennison International Growth Division 0.24 0.90% to 2.25% -37.19% to -36.52% * As this sub-account is new in 2001, this ratio is not meaningful and therefore not presented 105
Golden American Life Insurance Company Separate Account B Notes To Financial Statements (continued) For the Year Ended December 31, 2001 ---------------------------------------------------------- Mortality, Expense Risk and Asset Based Investment Admin Charges Total Return lowest Division Income Ratio lowest to highest to highest ------------- ------------------ ----------------------- Greenwich Street Series Fund Inc.: Appreciation Division 1.15% 1.25% to 1.40% -5.32% to -5.18% Travelers Series Fund Inc.: Smith Barney High Income Division 12.01 1.25% to 1.40% -5.14% to -4.94% Smith Barney Large Cap Value Division 1.39 1.25% to 1.40% -9.45% to -9.33% Smith Barney International All Cap Growth 0.00 1.25% to 1.40% -32.13% to -32.03% Division Smith Barney Money Market Division 3.49 1.25% to 1.40% 2.28% to 2.42% The Galaxy VIP Fund: Asset Allocation Division 2.29 1.40% to 1.80% -9.13% to -8.72% Equity Division 0.00 1.40% to 1.80% -19.72% to -19.28% Growth and Income Division 0.15 1.40% to 1.80% -5.67% to -5.28% High Quality Bond Division 5.35 1.40% to 1.80% 5.88% to 5.89% Small Company Growth Division 0.00 1.40% to 1.90% -2.11% to -1.57% Alliance Variable Products Series Fund, Inc.: Alliance Bernstein Value Division 0.00 0.95% to 2.40% * Growth and Income Division 0.00 0.95% to 1.90% * Premier Growth Division 0.00 0.95% to 2.40% * Aetna Variable Portfolios, Inc.: GET Fund - Series N Division 2.25 0.95% to 1.90% * GET Fund - Series P Division 0.75 0.95% to 2.55% * GET Fund - Series Q Division 0.00 0.95% to 1.90% * Value Opportunity Division 0.00 0.95% to 1.90% * Index Plus Large Cap Division 2.73 0.95% to 1.90% * Index Plus Mid Cap Division 0.00 0.95% to 1.90% * Index Plus Small Cap Division 0.00 0.95% to 1.90% * AIM Variable Insurance Funds, Inc.: AIM V.I. Dent Demographic Trends Division 0.00 0.95% to 2.25% * AIM V.I. Growth Division 1.09 0.95% to 1.90% * Brinson Series Trust: Brinson Tactical Allocation Division 0.00 0.95% to 2.20% * Fidelity Variable Insurance Products Equity-Income Division 0.00 0.95% to 2.20% * Growth Division 0.00 0.95% to 1.90% * Contrafund Division 0.00 0.95% to 1.90% * INVESCO Variable Investment Funds, Inc.: Financial Services Division 2.70 0.95% to 2.25% * Health Sciences Division 3.60 0.95% to 2.55% * Utilities Division 3.07 0.95% to 1.90% * Janus Aspen Series: Janus Aspen Worldwide Growth Division 0.33 0.95% to 2.40% * Portfolio Partners, Inc.: PPI MFS Capital Opportunities Division 0.00 0.95% to 1.90% * Pioneer Variable Contracts Trust: Pioneer Fund VCT Division 0.91 0.95% to 1.90% * Pioneer Small Company VCT Division 0.00 0.95% to 2.55% * Pioneer Mid-Cap Value VCT Division 0.00 1.25% to 2.25% * The ProFunds VP: Bull Division 0.00 1.25% to 2.25% * Small-Cap Division 0.00 1.25% to 2.25% * Europe 30 Division 0.00 0.90% to 2.25% * Putnam Variable Trust: Growth and Income Division 0.00 0.95% to 2.20% * International Growth and Income Division 0.00 0.95% to 1.90% * Voyager Division 0.00 0.95% to 2.40% * * As this sub-account is new in 2001, this ratio is not meaningful and therefore not presented. 106
PART C - OTHER INFORMATION Item 24. Financial Statements and Exhibits (a) Financial Statements: (1) All financial statements are included in either the Prospectus or the Statement of Additional Information, as indicated therein (2) Schedules I, III and IV follow. All other schedules to the consolidated financial statements required by Article 7 of Regulation S-X are omitted because they are not applicable or because the information is included elsewhere in the consolidated financial statements or notes thereto.
SCHEDULE I SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES (DOLLARS IN THOUSANDS) BALANCE SHEET DECEMBER 31, 2001 COST(1) VALUE AMOUNT - -------------------------------------------------------------------------------------------------------------------------------- TYPE OF INVESTMENT Fixed maturities, available for sale: Bonds: United States government and governmental agencies and authorities.... $132,081 $129,125 $129,125 Public utilities...................................................... 39,775 38,746 38,746 Foreign government.................................................... 143,574 146,687 146,687 Corporate securities.................................................. 1,111,798 1,116,788 1,116,788 Other asset-backed securities......................................... 388,250 393,836 393,836 Mortgage-backed securities............................................ 167,049 169,731 169,731 ---------------------------------------------- Total fixed maturities, available for sale............................ 1,982,527 1,994,913 1,994,913 Equity securities: Common stocks: industrial, miscellaneous, and all other............... 74 55 55 Mortgage loans on real estate............................................ 213,883 213,883 Policy loans............................................................. 14,847 14,847 Short-term investments................................................... 10,021 10,021 --------------- -------------- Total investments........................................................ $2,221,352 $2,233,719 =============== ============== Note 1: Cost is defined as original cost for common stocks, amortized cost for bonds and short-term investments, and unpaid principal for policy loans and mortgage loans on real estate, adjusted for amortization of premiums and accrual of discounts.
SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION (DOLLARS IN THOUSANDS) COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I COLUMN J COLUMN K - ------------------------------------------------------------------------------------------------------------------------------------ FUTURE POLICY AMORTIZA- BENEFITS, OTHER BENEFITS TION OF LOSSES, POLICY CLAIMS, DEFERRED DEFERRED CLAIMS CLAIMS INSURANCE LOSSES POLICY POLICY AND UNEARNED AND PREMIUMS NET AND ACQUI- OTHER ACQUISITION LOSS REVENUE BENEFITS AND INVESTMENT SETTLEMENT SITION OPERATING PREMIUMS SEGMENT COSTS EXPENSES RESERVE PAYABLE CHARGES INCOME EXPENSES COSTS EXPENSES* WRITTEN - ------------------------------------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 2001: Life insurance $709,042 $2,178,189 $6,241 $836 $163,805 $94,396 $209,082 $45,229 $232,659 -- YEAR ENDED DECEMBER 31, 2000: Life insurance $635,147 $1,062,891 $6,817 $82 $144,877 $64,140 $200,031 $55,154 $143,764 -- YEAR ENDED DECEMBER 31, 1999: Life insurance $528,957 $1,033,701 $6,300 $8 $82,935 $59,169 $182,221 $33,119 $(83,370) -- * This includes policy acquisition costs deferred for first year commissions and interest bonuses, premium credit, and other expenses related to the production of new business. The costs related to first year interest bonuses and the premium credit are included in benefits claims, losses, and settlement expenses.
SCHEDULE IV REINSURANCE Column A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------------------------------------------------------------------------------------------------------------------------------- PERCENTAGE CEDED TO ASSUMED OF AMOUNT GROSS OTHER FROM OTHER NET ASSUMED AMOUNT COMPANIES COMPANIES AMOUNT TO NET - -------------------------------------------------------------------------------------------------------------------------------- AT DECEMBER 31, 2001: Life insurance in force................. $169,252,000 $94,783,000 -- $74,469,000 -- ================================================================================ AT DECEMBER 31, 2000: Life insurance in force................. $196,334,000 $105,334,000 -- $91,000,000 -- ================================================================================ AT DECEMBER 31, 1999: Life insurance in force................. $225,000,000 $119,575,000 -- $105,425,000 -- ================================================================================
EXHIBITS (b) 1 Resolution of the Board of Directors of Depositor authorizing the establishment of the Registrant (1) 2 Not applicable 3 (a) Distribution Agreement between the Depositor and Directed Services, Inc. (1) (b) Form of Dealers Agreement (1) (c) Organizational Agreement (1) (d) Addendum to Organizational Agreement (1) (e) Expense Reimbursement Agreement (1) (f) Form of Assignment Agreement for Organizational Agreement (1) 4 (a) Form of Variable Annuity Group Master Contract (2) (b) Form of Variable Annuity Contract (2) (c) Form of Variable Annuity Certificate (2) (d) Form of Endorsement for Premium Bonus (2) (e) Earnings Enhancement Death Benefit Rider (2) 5 Not applicable 6 (a) Resolution of the Board of Directors for Powers of Attorney, dated 04/23/99 (1) (b) Certificate of Amendment of the Restated Articles of Incorporation of Golden American Life Insurance Company, dated 03/01/95 (1) (c) By-laws of Golden American Life Insurance Company, dated 01/07/94 (1) 7 Not applicable 8 (a) Service Agreement between Golden American Life Insurance Company and Equitable Life Insurance Company of Iowa (1) (b) Service Agreement between Golden American Life Insurance Company and Directed Services, Inc. (1) (c) Participation Agreement between Golden American Life Insurance Company, Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund, Aetna Variable Portfolios, Inc. and Aeltus Investment Management, Inc. (d) Participation Agreement between Golden American Life Insurance Company, AIM Variable Insurance Funds, Inc., and Directed Services, Inc. (e) Form of Participation Agreement between Golden American Life Insurance Company, Directed Services, Inc., Alliance Capital Management L.P., Alliance Variable Products Series Fund, Inc. and Alliance Fund Distributors, Inc. (2) (f) Participation Agreement between Golden American Life Insurance Company, Brinson Series Trust and Brinson Advisors, Inc. (2) (g) Participation Agreement between Golden American Life Insurance Company, Fidelity Distributors Corporation and each of Variable Insurance Products Fund, Variable Insurance Products Fund II and Variable Insurance Products Fund III. (2) (h) Participation Agreement between Golden American Life Insurance Company, INVESCO Variable Investment Funds, Inc., INVESCO Funds Group, Inc. and INVESCO Distributors, Inc. (i) Participation Agreement between Golden American Life Insurance Company and Janus Aspen Series (j) Participation Agreement between Golden American Life Insurance Company and ING Variable Insurance Trust (k) Participation Agreement between Golden American Life Insurance Company and ING Variable Products Trust (l) Participation Agreement between Golden American Life Insurance Company, Pioneer Variable Contracts Trust, Pioneer Investment Management, Inc. and Pioneer Funds Distributor, Inc. (m) Participation Agreement between Golden American Life Insurance Company, Aetna Life Insurance and Annuity Company and ING Partners, Inc. (n) Participation Agreement between Golden American Life Insurance Company, Prudential Series Fund, Inc., Prudential Insurance Company of America and Prudential Investment Management Services LLC (2) (o) Amendment to the Participation Agreement between Golden American Life Insurance Company, Prudential Series Fund, Inc., Prudential Insurance Company of America and Prudential Investment Management Services LLC (2) (p) Participation Agreement between Golden American Life Insurance Company, PIMCO Variable Insurance Trust and PIMCO Funds Distributors LLC (2) (q) Participation Agreement among Golden American Life Insurance Company, Putnam Variable Trust and Putnam Retail Management, L.P. (2) (r) Amendment to the Participation Agreement between Golden American Life Insurance Company, Aetna Life Insurance and Annuity Company and ING Partners, Inc. (9) Opinion and Consent of Kimberly J. Smith (10)(a) Consent of Ernst & Young LLP, Independent Auditors (b) Consent of Kimberly J. Smith, incorporated in Item 9 of this Part C, together with the Opinion of Kimberly J. Smith. 11 Not applicable 12 Not applicable 13 Schedule of Performance Data (4) 14 Not applicable 15 Powers of Attorney (3) 16 Subsidiaries of ING Groep N.V. (3) - ------------------------------------ (1) Incorporated herein by reference to the Initial Registration Statement on Form N-4 for Separate Account B of Golden American filed with the Securities and Exchange Commission on June 22, 2001 (Nos. 333-63692; 811-05626) (2) Incorporated herein by reference to Pre-Effective Amendment No. 1 to a Registration Statement on Form N-4 for Separate Account B filed with the Securities and Exchange Commission on October 26, 2001 (File Nos. 333-63692, 811-5626). (3) Incorporated herein by reference to Post-Effective Amendment No. 32 to a Registration Statement on Form N-4 for Golden American Life Insurance Company Separate Account B (File Nos. 033-23351, 811-5626). (4) Incorporated herein by reference to Post-Effective Amendment No. 1 to a Registration Statement on Form N-4 for Separate Account B filed with the Securities and Exchange Commission on April 30, 2002 (File Nos. 333-70600, 811-5626). ITEM 25: DIRECTORS AND OFFICERS OF THE DEPOSITOR Principal Position(s) Name Business Address with Depositor - ---- ---------------- -------------- Chris D. Schreier ReliaStar Financial Corp. President 20 Washington Avenue South Minneapolis, MN 55402 Thomas J. McInerney ING Aetna Financial Services Director 151 Farmington Avenue Hartford, CT 06156 Mark A. Tullis ING Insurance Operations Director 5780 Powers Ferry Road Atlanta, GA 30327-4390 P. Randall Lowery ING Insurance Operations Director 5780 Powers Ferry Road Atlanta, GA 30327-4390 Wayne R. Huneke ING Insurance Operations Director and Chief 5780 Powers Ferry Road Financial Officer Atlanta, GA 30327-4390 Kimberly J. Smith Golden American Life Ins. Co. Executive Vice President, 1475 Dunwoody Drive General Counsel and West Chester, PA 19380 Assistant Secretary James R. McInnis Golden American Life Ins. Co. Executive Vice President 1475 Dunwoody Drive and Chief Marketing West Chester, PA 19380 Officer Stephen J. Preston Golden American Life Ins. Co. Executive Vice President 1475 Dunwoody Drive and Chief Actuary West Chester, PA 19380 Steven G. Mandel Golden American Life Ins. Co. Senior Vice President and 1475 Dunwoody Drive Chief Information Officer West Chester, PA 19380 Antonio M. Muniz Golden American Life Ins. Co. Senior Vice President, 1475 Dunwoody Drive Actuary West Chester, PA 19380 David L. Jacobson Golden American Life Ins. Co. Senior Vice President and 1475 Dunwoody Drive Assistant Secretary West Chester, PA 19380 William L. Lowe Equitable of Iowa Companies Senior Vice President, 909 Locust Street Sales & Marketing Des Moines, IA 50309 Robert W. Crispin ING Investment Management Inc. Senior Vice President 5780 Powers Ferry Road Investment Atlanta, GA 30327-4390 Boyd G. Combs ING Insurance Operations Senior Vice President 5780 Powers Ferry Road Taxation Atlanta, GA 30327-4390 David S. Pendergrass ING Insurance Operations Vice President and 5780 Powers Ferry Road Treasurer Atlanta, GA 30327-4390 Paula Cludray-Engelke ReliaStar Financial Corp. Secretary 20 Washington Avenue South Minneapolis, MN 55402 ITEM 26: PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT The Depositor owned 100% of the stock of a New York company, First Golden American Life Insurance Company of New York ("First Golden"). The primary purpose of First Golden was to offer variable products in the state of New York. First Golden was merged into ReliaStar Life Insurance Company of New York, an affiliate of the Depositor on April 1, 2002. The following persons control or are under common control with the Depositor: DIRECTED SERVICES, INC. ("DSI") - This corporation is a general business corporation organized under the laws of the State of New York, and is wholly owned by ING Groep, N.V. ("ING"). The primary purpose of DSI is to act as a broker-dealer in securities. It acts as the principal underwriter and distributor of variable insurance products including variable annuities as required by the SEC. The contracts are issued by the Depositor. DSI also has the power to carry on a general financial, securities, distribution, advisory or investment advisory business; to act as a general agent or broker for insurance companies and to render advisory, managerial, research and consulting services for maintaining and improving managerial efficiency and operation. DSI is also registered with the SEC as an investment adviser. The registrant is a segregated asset account of the Company and is therefore owned and controlled by the Company. All of the Company's outstanding stock is owned and controlled by ING. Various companies and other entities controlled by ING may therefore be considered to be under common control with the registrant or the Company. Such other companies and entities, together with the identity of their controlling persons (where applicable), are set forth on the following organizational chart. The subsidiaries of ING Groep N.V., as of February 5, 2002, are included in this Registration Statement as Exhibit 16. ITEM 27: NUMBER OF CONTRACT OWNERS As of March 28, 2002, there are 90,310 qualified contract owners and 113,651 non-qualified contract owners in Golden American's Separate Account B. ITEM 28: INDEMNIFICATION Golden American shall indemnify (including therein the prepayment of expenses) any person who is or was a director, officer or employee, or who is or was serving at the request of Golden American as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise for expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him with respect to any threatened, pending or completed action, suit or proceedings against him by reason of the fact that he is or was such a director, officer or employee to the extent and in the manner permitted by law. Golden American may also, to the extent permitted by law, indemnify any other person who is or was serving Golden American in any capacity. The Board of Directors shall have the power and authority to determine who may be indemnified under this paragraph and to what extent (not to exceed the extent provided in the above paragraph) any such person may be indemnified. Golden American or its parents may purchase and maintain insurance on behalf of any such person or persons to be indemnified under the provision in the above paragraphs, against any such liability to the extent permitted by law. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Registrant, as provided above or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification by the Depositor is against public policy, as expressed in the Securities Act of 1933, and therefore may be unenforceable. In the event that a claim of such indemnification (except insofar as it provides for the payment by the Depositor of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted against the Depositor by such director, officer or controlling person and the SEC is still of the same opinion, the Depositor or Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by the Depositor is against public policy as expressed by the Securities Act of 1933 and will be governed by the final adjudication of such issue. ITEM 29: PRINCIPAL UNDERWRITER (a) At present, Directed Services, Inc. ("DSI"), the Registrant's Distributor, also serves as principal underwriter for all contracts issued by Golden American. DSI is the principal underwriter for Separate Account A, Separate Account B, Equitable Life Insurance Company of Iowa Separate Account A, ReliaStar Life Insurance Company of New York Separate Account NY-B, Alger Separate Account A of Golden American and The GCG Trust. (b) The following information is furnished with respect to the principal officers and directors of Directed Services, Inc., the Registrant's Distributor. The principal business address for each officer and director following is 1475 Dunwoody Drive, West Chester, PA 19380-1478, unless otherwise noted. Name and Principal Positions and Offices Business Address with Underwriter - -------------------- --------------------- James R. McInnis Director and President Alan G. Hoden Director Stephen J. Preston Director David S. Pendergrass Vice President and Treasurer ING Insurance Operations 5780 Powers Ferry Road Atlanta, GA 30327-4390 David L. Jacobson Senior Vice President (c) 2001 Net Name of Underwriting Compensation Principal Discounts and on Brokerage Underwriter Commissions Redemption Commissions Compensation - ----------- ------------ ------------- ----------- ------------ DSI $229,726,411 $0 $0 $0 ITEM 30: LOCATION OF ACCOUNTS AND RECORDS Accounts and records are maintained by Golden American Life Insurance Company at 1475 Dunwoody Drive, West Chester, Pennsylvania 19380-1478, ING Americas at 5780 Powers Ferry Road, N.W., Atlanta, GA 30327-4390 and by Equitable Life Insurance Company of Iowa, an affiliate, at 909 Locust Street, Des Moines, Iowa 50309. ITEM 31: MANAGEMENT SERVICES None. ITEM 32: UNDERTAKINGS (a) Registrant hereby undertakes to file a post-effective amendment to this registration statement as frequently as it is necessary to ensure that the audited financial statements in the registration statement are never more that 16 months old so long as payments under the variable annuity contracts may be accepted. (b) Registrant hereby 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 post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and, (c) Registrant hereby 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. REPRESENTATIONS 1. The account meets the definition of a "separate account" under federal securities laws. 2. Golden American Life Insurance Company hereby represents that the fees and charges deducted under the Contract described in the Prospectus, in the aggregate, are reasonable in relation to the services rendered, the expenses to be incurred and the risks assumed by the Company. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Registration Statement and has caused this Registration Statement to be signed on its behalf in the City of West Chester and Commonwealth of Pennsylvania on this 29th day of April, 2002. SEPARATE ACCOUNT B (Registrant) By: GOLDEN AMERICAN LIFE INSURANCE COMPANY (Depositor) By: -------------------- Chris D. Schreier* President Attest: /s/ Linda E. Senker ------------------------ Linda E. Senker Vice President and Associate General Counsel of Depositor As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on April 29, 2002. Signature Title - --------- ----- President - -------------------- Chris D. Schreier* Director, Senior Vice President - -------------------- and Chief Financial Officer Wayne R. Huneke* DIRECTORS OF DEPOSITOR - ---------------------- Thomas J. McInerney* - ---------------------- Wayne R. Huneke* - ---------------------- Mark A. Tullis* - ---------------------- P. Randall Lowery* Attest: /s/ Linda E. Senker ------------------------ Linda E. Senker Vice President and Associate General Counsel of Depositor *Executed by Linda E. Senker on behalf of those indicated pursuant to Power of Attorney. EXHIBIT INDEX ITEM EXHIBIT PAGE # - ---- ------- ------ 8(c) Participation Agreement between Golden American Life Insurance Company, ING Variable Portfolios, Inc. EX-99.B8C 8(d) Participation Agreement between Golden American Life Insurance Company and AIM Variable Insurance Funds, Inc. EX-99.B8D 8(h) Participation Agreement between Golden American Life Insurance Company and INVESCO EX-99.B8H 8(i) Participation Agreement between Golden American Life Insurance Company and Janus Capital Corporation EX-99.B8I 8(j) Participation Agreement between Golden American Life Insurance Company and ING Variable Insurance Trust EX-99.B8J 8(k) Participation Agreement between Golden American Life Insurance Company and ING Variable Products Trust EX-99.B8K 8(l) Participation Agreement between Golden American Life Insurance Company and Pioneer Funds Distributor, Inc. EX-99.B8L 8(m) Participation Agreement between Golden American Life Insurance Company and Portfolio Partners, Inc. EX-99.B8M 8(r) Amendment to the Participation Agreement between Golden American Life Insurance Company and Portfolio Partners, Inc. EX-99.B8R 9 Opinion and Consent of Kimberly J. Smith EX-99.B9 10(a) Consent of Ernst & Young, LLP, Independent Auditors EX-99.B10A EX-99.B8C 3 ingvarport.txt ING VARIABLE PORTFOLIO FUND PARTICIPATION AGREEMENT Golden American Life Insurance Company (the "Company"), and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund, on behalf of each of its series, and Aetna Variable Portfolios, Inc., on behalf of each of its series (each a "Fund" or in the aggregate "Funds"), and Aeltus Investment Management, Inc. ("Aeltus" or "Adviser") hereby agree to an arrangement whereby the Funds shall be made available to serve as underlying investment media for Variable Annuity Contracts ("Contracts") to be issued by the Company. 1. Establishment of Account. ------------------------ The Company represents that it has established Variable Annuity Account B and may establish such other accounts as may be set forth in Schedule A attached hereto (as may be amended from time to time with the mutual consent of the parties hereto) (the "Accounts"), each of which is a separate account registered under the Investment Company Act of 1940 (except for such accounts for which no registration is required), to serve as investment vehicles for the Contracts. Each Contract provides for the allocation of net amounts received by the Company to an Account for investment in the shares of one of more specified open-end management investment companies available through that Account as underlying investment media. Selection of a particular investment management company and changes therein from time to time are made by the participant or Contract owner, as applicable under a particular Contract. 2. Pricing Information; Orders; Settlement. --------------------------------------- (a) Each Fund will make shares available to be purchased by the Company, and will accept redemption orders from the Company, on behalf of each Account at the net asset value applicable to each order on those days on which the Fund calculates its net asset value (a "Business Day"). Fund shares shall be purchased and redeemed in such quantity and at such times as determined by the Company to be necessary to meet the requirements of those Contracts for which the Fund serves as underlying investment media, provided, however, that the Board of Directors of the Fund (hereinafter the "Directors") may, upon reasonable notice to the Company, refuse to sell shares of any Fund to any person, or suspend or terminate the offering of shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Directors acting in good faith and in light of their fiduciary duties under federal and/or any applicable state laws, necessary in the best interests of the shareholders of such Fund. (b) Each Fund will provide to the Company closing net asset value, dividend and capital gain information at the close of trading each day that the New York Stock Exchange (the "Exchange") is open (each such day a "Business Day"), and in no event later than 6:30 p.m. eastern time on such Business Day. The Company will send via facsimile or electronic transmission to each Fund or its specified agent orders to purchase and/or redeem Fund shares by 9:30 a.m. eastern time the following business day. Payment for net purchases will be wired by the Company to an account designated by the Fund. (c) Each Fund hereby appoints the Company as its agent for the limited purpose of accepting purchase and redemption orders for Fund shares relating to the Contracts from Contract owners. Orders from Contract owners received by the Company, acting as agent for the Fund, from any distributor of the Contracts (including affiliates of the Company), prior to the close of the Exchange on any given business day will be executed by the Fund at the net asset value determined as of the close of the Exchange on such Business Day, provided that the Fund receives written (or facsimile) notice of such order by 9:30 a.m. eastern time on the next following Business Day. Any orders received by the Company acting as agent on such day but after the close of the Exchange will be executed by the Fund at the net asset value determined as of the close of the Exchange on the next business day following the day of receipt of such order, provided that the Fund receives written (or facsimile) notice of such order by 9:30 a.m. eastern time within two days following the day of receipt of such order. (d) Payments for net redemptions of shares of a Fund will be wired by the Fund to an account designated by the Company. Payments for net purchases of the Fund will be wired by the Company to an account designated by the Fund on the same Business Day the Company places an order to purchase Fund shares. Payments shall be in federal funds transmitted by wire. (e) Each party has the right to rely on information or confirmations provided by the other party (or by any affiliate of the other party), and shall not be liable in the event that an error is a result of any misinformation supplied by the other party. The Company shall assume responsibility as herein described for any loss to a Fund caused by a cancellation or correction made to an Instruction by a Contract owner or person authorized to act on his or her behalf subsequent to the date as of which such Instruction has been received by the Company and originally relayed to Aeltus, and the Company will immediately pay such loss to such Fund upon the Company's receipt of written notification, with supporting data. Aeltus shall indemnify and hold the Company harmless, from the effective date of this Agreement, against any amount the Company is required to pay to a Contract owner due to: (i) an incorrect calculation of a Fund's daily net asset value, dividend rate, or capital gains distribution rate or (ii) incorrect or unreasonably late reporting of the daily net asset value deemed material in accordance with the Fund's error correction policy, dividend rate, or capital gain distribution rate, upon written notification by the Company, with supporting data, to Aeltus. (f) The Company agrees to purchase and redeem the shares of the Funds named in this Agreement or in Schedule B hereof in accordance with the provisions of each Fund's 2 then-current prospectus and statement of additional information. The Company shall not permit any person other than a Contract owner or person authorized to act on his or her behalf to give instructions to the Company which would require the Company to redeem or exchange shares of a Fund. This provision shall not be construed to prohibit the Company from substituting shares of another fund, as permitted by law. 3. Expenses. -------- (a) Except as otherwise provided in this Agreement, all expenses incident to the performance by each respective Fund under this Agreement shall be paid by that Fund, including the cost of registration of its shares with the Securities and Exchange Commission (the "SEC") and in states where required. All expenses incident to performance by each party of its respective duties under this Agreement shall be paid by that party, unless otherwise specified in this Agreement. (b) The Funds or the Adviser shall provide to the Company periodic fund reports to shareholders and other materials that are required by law to be sent to Contract owners. In addition, the Funds or the Adviser shall provide the Company with a sufficient quantity of prospectuses, statements of additional information and any supplements to any of these materials, to be used in connection with the offerings and transactions contemplated by this Agreement. In addition, the Funds shall provide the Company with a sufficient quantity of proxy material that is required to be sent to Contract owners. The Adviser shall be permitted to review and approve the typeset form of such material prior to such printing provided such material has been provided by the Adviser to the Company within a reasonable period of time prior to typesetting. (c) In lieu of the Funds' or Adviser's providing printed copies of prospectuses, statements of additional information and any supplements to any of these materials, and periodic fund reports to shareholders, the Company shall have the right to request that the Funds transmit a copy of such materials in an electronic format, which the Company may use to have such materials printed together with similar materials of other Account funding media that the Company or any distributor will distribute to existing or prospective Contract owners. 4. Representations. --------------- The Company agrees that it and its agents shall not, without the written consent of a Fund or the Adviser, make representations concerning the Fund, or its shares except those contained in the then current prospectuses and in current printed sales literature approved by or deemed approved by the Fund or the Adviser. 3 5. Termination. ----------- This agreement shall terminate as to the sale and issuance of new Contracts: (a) at the option of either the Company, the Adviser or with respect to any Fund, upon sixty days advance written notice to the other parties; (b) at the option of the Company, upon one week advance written notice to the Adviser and to any Fund, if Fund shares are not available for any reason to meet the requirement of Contracts as determined by the Company. Reasonable advance notice of election to terminate shall be furnished by the Company; (c) at the option of either the Company, the Adviser or any Fund, immediately upon institution of formal proceedings against the broker-dealer or broker-dealers marketing the Contracts, the Account, the Company, the Fund or the Adviser by the National Association of Securities Dealers, Inc. (the "NASD"), the SEC or any other regulatory body; (d) upon the determination of the Accounts to substitute for the shares of a Fund the shares of another investment company in accordance with the terms of the applicable Contracts. The Company will give sixty days written notice to the Fund and the Adviser of any decision to replace the shares of that Fund; (e) upon assignment of this Agreement, unless made with the written consent of all other parties hereto; (f) if shares of a Fund are not registered, issued or sold in conformance with Federal law or such law precludes the use of such shares as an underlying investment medium for Contracts issued or to be issued by the Company. Prompt notice shall be given by the appropriate party should such situation occur. 6. Continuation of Agreement. ------------------------- Termination as the result of any cause listed in Section 5 shall not affect the Funds' obligation to furnish shares to Contracts then in force for which such shares serve or may serve as the underlying medium unless such further sale of Fund shares is prohibited by law or the SEC or other regulatory body. 7. Advertising Materials; Filed Documents. -------------------------------------- (a) Advertising and sales literature with respect to any Fund prepared by the Company or its agents for use in marketing its Contracts will be submitted to that Fund or its designee for review before such material is submitted to any regulatory body for review. No such material shall be used if the Fund or its designee reasonably objects 4 to such use in writing, transmitted by facsimile within two business days after receipt of such material. (b) Each Fund will provide additional copies of its financials as soon as available to the Company and at least one complete copy of all registration statements, prospectuses, statements of additional information, annual and semi-annual reports, proxy statements and all amendments or supplements to any of the above that relate to the Fund promptly after the filing of such document with the SEC or other regulatory authorities. At the Adviser's request, the Company will provide to the Adviser at least one complete copy of all registration statements, prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, and all amendments or supplements to any of the above that relate to the Accounts promptly after the filing of such document with the SEC or other regulatory authority. (c) Each Fund or the Adviser will provide via Excel spreadsheet diskette format or in electronic transmission to the Company at least quarterly portfolio information necessary to update Fund profiles within seven business days following the end of each quarter. 8. Proxy Voting. ------------ (a) The Company shall provide pass-through voting privileges on shares of a Fund held by the separate accounts to all Contract owners. (b) The Company will distribute to Contract owners all proxy material furnished by any Fund and will vote shares of the Fund in accordance with instructions received from such Contract owners. The Company and its agents shall not oppose or interfere with the solicitation of proxies for shares of a Fund held for such Contract owners. 9. Indemnification. --------------- (a) The Company agrees to indemnify and hold harmless each Fund and the Adviser, and their directors, officers, employees, agents and each person, if any, who controls any Fund or its Adviser within the meaning of the Securities Act of 1933 (the "1933 Act") against any losses, claims, damages or liabilities to which the Fund or any such director, officer, employee, agent, or controlling person may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, prospectus or sales literature of the Company or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or arise out of or as a result of conduct, statements or representations (other than statements or representations contained in the prospectuses or sales literature of the Fund) of the Company or its agents, with respect to the sale and distribution of Contracts for which 5 shares of the Fund are the underlying investment. The Company will reimburse any legal or other expenses reasonably incurred by a Fund or any such director, officer, employee, agent, investment adviser, or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon (i) an untrue statement or omission or alleged omission made in such Registration Statement or prospectus in conformity with written materials furnished to the Company by the Fund specifically for use therein or (ii) the willful misfeasance, bad faith, or gross negligence by the Fund or Adviser in the performance of their duties or the Fund's or Adviser's reckless disregard of obligations or duties under this Agreement or to the Company, whichever is applicable. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Fund and the Adviser agree to indemnify and hold harmless the Company and its directors, officers, employees, agents and each person, if any, who controls the Company within the meaning of the 1933 Act against any losses, claims, damages or liabilities to which the Company or any such director, officer, employee, agent or controlling person may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, prospectuses or sales literature of the Fund or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or material fact required to be stated therein or necessary to make the statements therein not misleading. Each Fund, as appropriate, will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, employee, agent, or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Fund will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or omission or alleged omission made in such Registration Statement or prospectuses which are in conformity with written materials furnished to the Fund by the Company specifically for use therein. (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 9. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish to, assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party will not be liable to 6 such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. 10. Miscellaneous. ------------- (a) AMENDMENT AND WAIVER. Neither this Agreement, nor any provision hereof, may be amended, waived, discharged or terminated orally, but only by an instrument in writing signed by all parties hereto. (b) NOTICES. All notices and other communications hereunder shall be given or made in writing and shall be delivered personally, or sent by telex, facsimile or registered or certified mail, postage prepaid, return receipt requested, or recognized overnight courier service to the party or parties to whom they are directed at the following addresses, or at such other addresses as may be designated by notice from such party to all other parties. TO THE COMPANY: TO THE ADVISER: Golden American Life Insurance Company Aeltus Investment Management, Inc. 1475 Dunwoody Drive 10 State House Square, SH11 West Chester, PA 19380 Hartford, Connecticut 06103-3602 Attn: Attn: Chief Compliance Officer TO ANY FUND: 10 State House Square, SH14 Hartford, Connecticut 06103-3602 Attn: President Any notice, demand or other communication given in a manner prescribed in this subsection (b) shall be deemed to have been delivered on receipt. (c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. (d) COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any party hereto may execute this Agreement by signing any such counterpart. 7 (e) SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. (f) ENTIRE AGREEMENT. This Agreement constitutes the entire agreements and understanding between the parties hereto and supersedes all prior agreement and understandings relating to the subject matter hereof. (g) GOVERNING LAW. This Agreement shall be governed and interpreted in accordance with the laws of the State of Connecticut. (h) NON-EXCLUSIVE AGREEMENT. It is understood by the parties that this Agreement is not an exclusive arrangement in any respect. (i) CONFIDENTIALITY. The terms of this Agreement and the Schedules thereto will be held confidential by each party except to the extent that either party or its counsel may deem it necessary to disclose such terms. IN WITNESS WHEREOF, the undersigned have executed this Agreement by their duly authorized officers effective as of the 16th day of July, 2001. GOLDEN AMERICAN LIFE INSURANCE COMPANY By: /s/Myles R. Tashman -------------------------------- Name: Myles R. Tashman -------------------------------- Title: Executive Vice President -------------------------------- 8 AETNA VARIABLE FUND AETNA VARIABLE ENCORE FUND AETNA INCOME SHARES AETNA BALANCED VP, INC. AETNA GET FUND AETNA VARIABLE PORTFOLIOS, INC. By: /s/Stephen A. DeSisto -------------------------------- Name: Stephen A. DeSisto -------------------------------- Title: Treasurer -------------------------------- AELTUS INVESTMENT MANAGEMENT, INC. By: /s/J. Scott Fox -------------------------------- Name: J. Scott Fox -------------------------------- Title: President -------------------------------- 9 SCHEDULE A (For any future separate accounts - See Section 1) SCHEDULE B AETNA VARIABLE FUND ------------------- d/b/a Aetna Growth and Income VP -------------------------------- AETNA VARIABLE ENCORE FUND -------------------------- d/b/a Aetna Money Market VP --------------------------- AETNA INCOME SHARES ------------------- d/b/a/Aetna Bond VP ------------------- AETNA BALANCED VP, INC. ----------------------- AETNA GET FUND -------------- Series N and all subsequent series AETNA VARIABLE PORTFOLIOS, INC. ------------------------------- Aetna Index Plus Large Cap VP Aetna Value Opportunity VP Aetna Index Plus Mid Cap VP Aetna Index Plus Small Cap VP EX-99.B8D 4 aim.txt AIM PARTICIPATION AGREE PARTICIPATION AGREEMENT BY AND AMONG AIM VARIABLE INSURANCE FUNDS, INC., GOLDEN AMERICAN LIFE INSURANCE COMPANY ON BEHALF OF ITSELF AND ITS SEPARATE ACCOUNTS, AND DIRECTED SERVICES, INC. TABLE OF CONTENTS DESCRIPTION PAGE - ----------- ---- Section 1. Available Funds....................................................2 1.1 Availability.......................................................2 1.2 Addition, Deletion or Modification of Funds........................2 1.3 No Sales to the General Public.....................................2 Section 2. Processing Transactions............................................2 2.1 Timely Pricing and Orders..........................................2 2.2 Timely Payments....................................................3 2.3 Applicable Price...................................................3 2.4 Dividends and Distributions........................................4 2.5 Book Entry.........................................................4 Section 3. Costs and Expenses.................................................4 3.1 General............................................................4 3.2 Registration.......................................................4 3.3 Other (Non-Sales-Related)..........................................5 3.4 Other (Sales-Related)..............................................5 3.5 Parties To Cooperate...............................................5 Section 4. Legal Compliance...................................................5 4.1 Tax Laws...........................................................5 4.2 Insurance and Certain Other Laws...................................8 4.3 Securities Laws....................................................8 4.4 Notice of Certain Proceedings and Other Circumstances..............9 4.5 LIFE COMPANY To Provide Documents; Information About AVIF.........10 4.6 AVIF To Provide Documents; Information About LIFE COMPANY.........11 Section 5. Mixed and Shared Funding..........................................12 5.1 General...........................................................12 5.2 Disinterested Directors...........................................13 5.3 Monitoring for Material Irreconcilable Conflicts..................13 5.4 Conflict Remedies.................................................14 5.5 Notice to LIFE COMPANY ...........................................15 5.6 Information Requested by Board of Directors.......................15 5.7 Compliance with SEC Rules.........................................15 5.8 Other Requirements................................................16 Section 6. Termination.......................................................16 6.1 Events of Termination.............................................16 6.2 Notice Requirement for Termination................................17 i 6.3 Funds To Remain Available.........................................17 6.4 Survival of Warranties and Indemnifications.......................18 6.5 Continuance of Agreement for Certain Purposes.....................18 Section 7. Parties To Cooperate Respecting Termination.......................18 Section 8. Assignment........................................................18 Section 9. Notices...........................................................18 Section 10. Voting Procedures.................................................19 Section 11. Foreign Tax Credits...............................................20 Section 12. Indemnification...................................................20 12.1 Of AVIF by LIFE COMPANY and DSI...................................20 12.2 Of LIFE COMPANY and DSI by AVIF...................................22 12.3 Effect of Notice..................................................25 12.4 Successors........................................................25 Section 13. Applicable Law....................................................25 Section 14. Execution in Counterparts.........................................25 Section 15. Severability......................................................25 Section 16. Rights Cumulative.................................................25 Section 17. Headings..........................................................25 Section 18. Confidentiality...................................................26 Section 19. Trademarks and Fund Names.........................................26 Section 20. Parties to Cooperate..............................................27 ii PARTICIPATION AGREEMENT THIS AGREEMENT, made and entered into as of the 13TH day of July, 2001 ("Agreement"), by and among AIM Variable Insurance Funds, Inc., a Maryland corporation ("AVIF"); Golden American Life Insurance Company, a Delaware life insurance company ("LIFE COMPANY"), on behalf of itself and each of its segregated asset accounts listed in Schedule A hereto, as the parties hereto may amend from time to time (each, an "Account," and collectively, the "Accounts"); and Directed Services, Inc., an affiliate of LIFE COMPANY and the principal underwriter of the Contracts ("DSI") (collectively, the "Parties"). WITNESSETH THAT: WHEREAS, AVIF is registered with the Securities and Exchange Commission ("SEC") as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, AVIF currently consists of nine separate series ("Series"), shares ("Shares") of each of which are registered under the Securities Act of 1933, as amended (the "1933 Act") and are currently sold to one or more separate accounts of life insurance companies to fund benefits under variable annuity contracts and variable life insurance contracts; and WHEREAS, AVIF will make Shares of each Series listed on Schedule A hereto as the Parties hereto may amend from time to time (each a "Fund"; reference herein to "AVIF" includes reference to each Fund, to the extent the context requires) available for purchase by the Accounts; and WHEREAS, LIFE COMPANY will be the issuer of certain variable annuity contracts and variable life insurance contracts ("Contracts") as set forth on Schedule A hereto, as the Parties hereto may amend from time to time, which Contracts (hereinafter collectively, the "Contracts"), if required by applicable law, will be registered under the 1933 Act; and WHEREAS, LIFE COMPANY will fund the Contracts through the Accounts, each of which may be divided into two or more subaccounts ("Subaccounts"; reference herein to an "Account" includes reference to each Subaccount thereof to the extent the context requires); and WHEREAS, LIFE COMPANY will serve as the depositor of the Accounts, each of which is registered as a unit investment trust investment company under the 1940 Act (or exempt therefrom), and the security interests deemed to be issued by the Accounts under the Contracts will be registered as securities under the 1933 Act (or exempt therefrom); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, LIFE COMPANY intends to purchase Shares in one or more of the Funds on behalf of the Accounts to fund the Contracts; and 1 WHEREAS, DSI is a broker-dealer registered with the SEC under the Securities Exchange Act of 1934 ("1934 Act") and a member in good standing of the National Association of Securities Dealers, Inc. ("NASD"); NOW, THEREFORE, in consideration of the mutual benefits and promises contained herein, the Parties hereto agree as follows: SECTION 1. AVAILABLE FUNDS -------------------------- 1.1 AVAILABILITY. ------------- AVIF will make Shares of each Fund available to LIFE COMPANY for purchase and redemption at net asset value and with no sales charges, subject to the terms and conditions of this Agreement. The Board of Directors of AVIF may refuse to sell Shares of any Fund to any person, or suspend or terminate the offering of Shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction or if, in the sole discretion of the Directors acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, such action is deemed in the best interests of the shareholders of such Fund. 1.2 ADDITION, DELETION OR MODIFICATION OF FUNDS. -------------------------------------------- The Parties hereto may agree, from time to time, to add other Funds to provide additional funding media for the Contracts, or to delete, combine, or modify existing Funds, by amending Schedule A hereto. Upon such amendment to Schedule A, any applicable reference to a Fund, AVIF, or its Shares herein shall include a reference to any such additional Fund. Schedule A, as amended from time to time, is incorporated herein by reference and is a part hereof. 1.3 NO SALES TO THE GENERAL PUBLIC. ------------------------------- AVIF represents and warrants that no Shares of any Fund have been or will be sold to the general public. SECTION 2. PROCESSING TRANSACTIONS ---------------------------------- 2.1 TIMELY PRICING AND ORDERS. -------------------------- (a) AVIF or its designated agent will use its best efforts to provide LIFE COMPANY with the net asset value per Share for each Fund by 5:30 p.m. Central Time on each Business Day. As used herein, "Business Day" shall mean any day on which (i) the New York Stock Exchange is open for regular trading, (ii) AVIF calculates the Fund's net asset value, and (iii) LIFE COMPANY is open for business. 2 (b) LIFE COMPANY will use the data provided by AVIF each Business Day pursuant to paragraph (a) immediately above to calculate Account unit values and to process transactions that receive that same Business Day's Account unit values. LIFE COMPANY will perform such Account processing the same Business Day, and will place corresponding orders to purchase or redeem Shares with AVIF by 9:00 a.m. Central Time the following Business Day; provided, however, that AVIF shall provide additional time to LIFE COMPANY in the event that AVIF is unable to meet the 5:30 p.m. time stated in paragraph (a) immediately above. Such additional time shall be equal to the additional time that AVIF takes to make the net asset values available to LIFE COMPANY. (c) With respect to payment of the purchase price by LIFE COMPANY and of redemption proceeds by AVIF, LIFE COMPANY and AVIF shall net purchase and redemption orders with respect to each Fund and shall transmit one net payment per Fund in accordance with Section 2.2, below. (d) If AVIF provides materially incorrect Share net asset value information (as determined under SEC guidelines), LIFE COMPANY shall be entitled to an adjustment to the number of Shares purchased or redeemed to reflect the correct net asset value per Share. Any material error in the calculation or reporting of net asset value per Share, dividend or capital gain information shall be reported promptly upon discovery to LIFE COMPANY. 2.2 TIMELY PAYMENTS. ---------------- LIFE COMPANY will wire payment for net purchases to a custodial account designated by AVIF by 1:00 p.m. Central Time on the same day as the order for Shares is placed, to the extent practicable. AVIF will wire payment for net redemptions to an account designated by LIFE COMPANY by 1:00 p.m. Central Time on the same day as the Order is placed, to the extent practicable, but in any event within five (5) calendar days after the date the order is placed in order to enable LIFE COMPANY to pay redemption proceeds within the time specified in Section 22(e) of the 1940 Act or such shorter period of time as may be required by law. 2.3 APPLICABLE PRICE. ----------------- (a) Share purchase payments and redemption orders that result from purchase payments, premium payments, surrenders and other transactions under Contracts (collectively, "Contract transactions") and that LIFE COMPANY receives prior to the close of regular trading on the New York Stock Exchange on a Business Day will be executed at the net asset values of the appropriate Funds next computed after receipt by AVIF or its designated agent of the orders. For purposes of this Section 2.3(a), LIFE COMPANY shall be the designated agent of AVIF for receipt of orders relating to Contract transactions on each Business Day and receipt by such designated agent shall constitute receipt by AVIF; provided that AVIF receives notice of such orders by 9:00 a.m. Central Time on the next following Business Day or such later time as computed in accordance with Section 2.1(b) hereof. 3 (b) All other Share purchases and redemptions by LIFE COMPANY will be effected at the net asset values of the appropriate Funds next computed after receipt by AVIF or its designated agent of the order therefor, and such orders will be irrevocable. 2.4 DIVIDENDS AND DISTRIBUTIONS. ---------------------------- AVIF will furnish notice by wire or telephone (followed by written confirmation) on or prior to the payment date to LIFE COMPANY of any income dividends or capital gain distributions payable on the Shares of any Fund. LIFE COMPANY hereby elects to reinvest all dividends and capital gains distributions in additional Shares of the corresponding Fund at the ex-dividend date net asset values until LIFE COMPANY otherwise notifies AVIF in writing, it being agreed by the Parties that the ex-dividend date and the payment date with respect to any dividend or distribution will be the same Business Day. LIFE COMPANY reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. 2.5 BOOK ENTRY. ----------- Issuance and transfer of AVIF Shares will be by book entry only. Stock certificates will not be issued to LIFE COMPANY. Shares ordered from AVIF will be recorded in an appropriate title for LIFE COMPANY, on behalf of its Account. SECTION 3. COSTS AND EXPENSES ----------------------------- 3.1 GENERAL. -------- Except as otherwise specifically provided herein, each Party will bear all expenses incident to its performance under this Agreement. 3.2 REGISTRATION. ------------- (a) AVIF will bear the cost of its registering as a management investment company under the 1940 Act and registering its Shares under the 1933 Act, and keeping such registrations current and effective; including, without limitation, the preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with respect to AVIF and its Shares and payment of all applicable registration or filing fees with respect to any of the foregoing. (b) LIFE COMPANY will bear the cost of registering, to the extent required, each Account as a unit investment trust under the 1940 Act and registering units of interest under the Contracts under the 1933 Act and keeping such registrations current and effective; including, without limitation, the preparation and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices with respect to each Account and its units of interest and payment of all applicable registration or filing fees with respect to any of the foregoing. 3.3 OTHER (NON-SALES-RELATED). -------------------------- 4 (a) AVIF will bear, or arrange for others to bear, the costs of preparing, filing with the SEC and setting for printing AVIF's prospectus, statement of additional information and any amendments or supplements thereto (collectively, the "AVIF Prospectus"), periodic reports to shareholders, AVIF proxy material and other shareholder communications. (b) LIFE COMPANY will bear the costs of preparing, filing with the SEC and setting for printing each Account's prospectus, statement of additional information and any amendments or supplements thereto (collectively, the "Account Prospectus"), any periodic reports to Contract owners, annuitants, insureds or participants (as appropriate) under the Contracts (collectively, "Participants"), voting instruction solicitation material, and other Participant communications. (c) LIFE COMPANY will print in quantity and deliver to existing Participants the documents described in Section 3.3(b) above and the prospectus provided by AVIF in camera ready form. AVIF will print the AVIF statement of additional information, proxy materials relating to AVIF and periodic reports of AVIF. 3.4 OTHER (SALES-RELATED). ---------------------- LIFE COMPANY will bear the expenses of distribution. These expenses would include by way of illustration, but are not limited to, the costs of distributing to Participants the following documents, whether they relate to the Account or AVIF: prospectuses, statements of additional information, proxy materials and periodic reports. These costs would also include the costs of preparing, printing, and distributing sales literature and advertising relating to the Funds, as well as filing such materials with, and obtaining approval from, the SEC, the NASD, any state insurance regulatory authority, and any other appropriate regulatory authority, to the extent required. 3.5 PARTIES TO COOPERATE. --------------------- Each Party agrees to cooperate with the others, as applicable, in arranging to print, mail and/or deliver, in a timely manner, combined or coordinated prospectuses or other materials of AVIF and the Accounts. SECTION 4. LEGAL COMPLIANCE --------------------------- 4.1 TAX LAWS. --------- (a) AVIF represents and warrants that each Fund is currently qualified as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and represents that it will use its best efforts to qualify and to maintain qualification of each Fund as a RIC. AVIF will notify LIFE COMPANY immediately upon having a reasonable basis for believing that a Fund has ceased to so qualify or that it might not so qualify in the future. (b) AVIF represents that it will use its best efforts to comply and to maintain each Fund's compliance with the diversification requirements set forth in Section 817(h) of the Code and Section 1.817-5(b) of the regulations under the Code. AVIF will notify LIFE COMPANY immediately 5 upon having a reasonable basis for believing that a Fund has ceased to so comply or that a Fund might not so comply in the future. In the event of a breach of this Section 4.1(b) by AVIF, it will take all reasonable steps to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Section 1.817-5 of the regulations under the Code. (c) LIFE COMPANY agrees that if the Internal Revenue Service ("IRS") asserts in writing in connection with any governmental audit or review of LIFE COMPANY or, to LIFE COMPANY"s knowledge, of any Participant, that any Fund has failed to comply with the diversification requirements of Section 817(h) of the Code or LIFE COMPANY otherwise becomes aware of any facts that could give rise to any claim against AVIF or its affiliates as a result of such a failure or alleged failure: (i) LIFE COMPANY shall promptly notify AVIF of such assertion or potential claim (subject to the Confidentiality provisions of Section 18 as to any Participant); (ii) LIFE COMPANY shall consult with AVIF as to how to minimize any liability that may arise as a result of such failure or alleged failure; (iii) LIFE COMPANY shall use its best efforts to minimize any liability of AVIF or its affiliates resulting from such failure, including, without limitation, demonstrating, pursuant to Treasury Regulations Section 1.817-5(a)(2), to the Commissioner of the IRS that such failure was inadvertent; (iv) LIFE COMPANY shall permit AVIF, its affiliates and their legal and accounting advisors to participate in any conferences, settlement discussions or other administrative or judicial proceeding or contests (including judicial appeals thereof) with the IRS, any Participant or any other claimant regarding any claims that could give rise to liability to AVIF or its affiliates as a result of such a failure or alleged failure; provided, however, that LIFE COMPANY will retain control of the conduct of such conferences discussions, proceedings, contests or appeals; (v) any written materials to be submitted by LIFE COMPANY to the IRS, any Participant or any other claimant in connection with any of the foregoing proceedings or contests (including, without limitation, any such materials to be submitted to the IRS pursuant to Treasury Regulations Section 1.817-5(a)(2)), (a) shall be provided by LIFE COMPANY to AVIF (together with any supporting information or analysis); subject to the confidentiality provisions of Section 18, at least ten (10) business days or such shorter period to which the Parties hereto agree prior to the day on which such proposed materials are to be submitted, and (b) shall not be submitted by LIFE COMPANY to any such person without the express written consent of AVIF which shall not be unreasonably withheld; 6 (vi) LIFE COMPANY shall provide AVIF or its affiliates and their accounting and legal advisors with such cooperation as AVIF shall reasonably request (including, without limitation, by permitting AVIF and its accounting and legal advisors to review the relevant books and records of LIFE COMPANY) in order to facilitate review by AVIF or its advisors of any written submissions provided to it pursuant to the preceding clause or its assessment of the validity or amount of any claim against its arising from such a failure or alleged failure; (vii) LIFE COMPANY shall not with respect to any claim of the IRS or any Participant that would give rise to a claim against AVIF or its affiliates (a) compromise or settle any claim, (b) accept any adjustment on audit, or (c) forego any allowable administrative or judicial appeals, without the express written consent of AVIF or its affiliates, which shall not be unreasonably withheld, provided that LIFE COMPANY shall not be required, after exhausting all administrative penalties, to appeal any adverse judicial decision unless AVIF or its affiliates shall have provided an opinion of independent counsel to the effect that a reasonable basis exists for taking such appeal; and provided further that the costs of any such appeal shall be borne equally by the Parties hereto; and (viii) AVIF and its affiliates shall have no liability as a result of such failure or alleged failure if LIFE COMPANY fails to comply with any of the foregoing clauses (i) through (vii), and such failure could be shown to have materially contributed to the liability. Should AVIF or any of its affiliates refuse to give its written consent to any compromise or settlement of any claim or liability hereunder, LIFE COMPANY may, in its discretion, authorize AVIF or its affiliates to act in the name of LIFE COMPANY in, and to control the conduct of, such conferences, discussions, proceedings, contests or appeals and all administrative or judicial appeals thereof, and in that event AVIF or its affiliates shall bear the fees and expenses associated with the conduct of the proceedings that it is so authorized to control; provided, that in no event shall LIFE COMPANY have any liability resulting from AVIF's refusal to accept the proposed settlement or compromise with respect to any failure caused by AVIF. As used in this Agreement, the term "affiliates" shall have the same meaning as "affiliated person" as defined in Section 2(a)(3) of the 1940 Act. (d) LIFE COMPANY represents and warrants that the Contracts currently are and will be treated as annuity contracts or life insurance contracts under applicable provisions of the Code and that it will use its best efforts to maintain such treatment; LIFE COMPANY will notify AVIF immediately upon having a reasonable basis for believing that any of the Contracts have ceased to be so treated or that they might not be so treated in the future. (e) LIFE COMPANY represents and warrants that each Account is a "segregated asset account" and that interests in each Account are offered exclusively through the purchase of or transfer into a "variable contract," within the meaning of such terms under Section 817 of the Code 7 and the regulations thereunder. LIFE COMPANY will use its best efforts to continue to meet such definitional requirements, and it will notify AVIF immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they might not be met in the future. 4.2 INSURANCE AND CERTAIN OTHER LAWS. --------------------------------- (a) AVIF will use its best efforts to comply with any applicable state insurance laws or regulations, to the extent specifically requested in writing by LIFE COMPANY, including, the furnishing of information not otherwise available to LIFE COMPANY which is required by state insurance law to enable LIFE COMPANY to obtain the authority needed to issue the Contracts in any applicable state. (b) LIFE COMPANY represents and warrants that (i) it is an insurance company duly organized, validly existing and in good standing under the laws of the State of Colorado and has full corporate power, authority and legal right to execute, deliver and perform its duties and comply with its obligations under this Agreement, (ii) it has legally and validly established and maintains each Account as a segregated asset account under Section 10-7-402 of the Colorado Insurance Law and the regulations thereunder, and (iii) the Contracts comply in all material respects with all other applicable federal and state laws and regulations. (c) AVIF represents and warrants that it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Maryland and has full power, authority, and legal right to execute, deliver, and perform its duties and comply with its obligations under this Agreement. 4.3 SECURITIES LAWS. ---------------- (a) LIFE COMPANY represents and warrants that (i) interests in each Account pursuant to the Contracts are or will be registered under the 1933 Act to the extent required by the 1933 Act, (ii) the Contracts will be duly authorized for issuance and sold in compliance with all applicable federal and state laws, including, without limitation, the 1933 Act, the 1934 Act, the 1940 Act and Colorado law, (iii) each Account is and will remain registered under the 1940 Act, to the extent required by the 1940 Act, (iv) each Account does and will comply in all material respects with the requirements of the 1940 Act and the rules thereunder, to the extent required, (v) each Account's 1933 Act registration statement relating to the Contracts, together with any amendments thereto, will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder, (vi) LIFE COMPANY will amend the registration statement for its Contracts under the 1933 Act and for its Accounts under the 1940 Act from time to time as required in order to effect the continuous offering of its Contracts or as may otherwise be required by applicable law, and (vii) each Account Prospectus will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder. (b) AVIF represents and warrants that (i) Shares sold pursuant to this Agreement will be registered under the 1933 Act to the extent required by the 1933 Act and duly authorized for issuance and sold in compliance with Maryland law, (ii) AVIF is and will remain registered under the 1940 Act to the extent required by the 1940 Act, (iii) AVIF will amend the registration statement for its 8 Shares under the 1933 Act and itself under the 1940 Act from time to time as required in order to effect the continuous offering of its Shares, (iv) AVIF does and will comply in all material respects with the requirements of the 1940 Act and the rules thereunder, (v) AVIF's 1933 Act registration statement, together with any amendments thereto, will at all times comply in all material respects with the requirements of the 1933 Act and rules thereunder, and (vi) AVIF"s Prospectus will at all times comply in all material respects with the requirements of the 1933 Act and the rules thereunder. (c) AVIF will at its expense register and qualify its Shares for sale in accordance with the laws of any state or other jurisdiction if and to the extent reasonably deemed advisable by AVIF. (d) AVIF currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it reserves the right to make such payments in the future. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, AVIF undertakes to have its Board of Directors, a majority of whom are not "interested" persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. (e) AVIF represents and warrants that all of its trustees, officers, employees, investment advisers, and other individuals/entities having access to the funds and/or securities of the Fund are and continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company. 4.4 NOTICE OF CERTAIN PROCEEDINGS AND OTHER CIRCUMSTANCES. ------------------------------------------------------ (a) AVIF will immediately notify LIFE COMPANY of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to AVIF's registration statement under the 1933 Act or AVIF Prospectus, (ii) any request by the SEC for any amendment to such registration statement or AVIF Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of AVIF's Shares, or (iv) any other action or circumstances that may prevent the lawful offer or sale of Shares of any Fund in any state or jurisdiction, including, without limitation, any circumstances in which (a) such Shares are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law, or (b) such law precludes the use of such Shares as an underlying investment medium of the Contracts issued or to be issued by LIFE COMPANY. AVIF will make every reasonable effort to prevent the issuance, with respect to any Fund, of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time. (b) LIFE COMPANY will immediately notify AVIF of (i) the issuance by any court or regulatory body of any stop order, cease and desist order, or other similar order with respect to each Account's registration statement under the 1933 Act relating to the Contracts or each Account Prospectus, (ii) any request by the SEC for any amendment to such registration statement or Account Prospectus that may affect the offering of Shares of AVIF, (iii) the initiation of any proceedings for that purpose or for any other purpose relating to the registration or offering of each Account's 9 interests pursuant to the Contracts, or (iv) any other action or circumstances that may prevent the lawful offer or sale of said interests in any state or jurisdiction, including, without limitation, any circumstances in which said interests are not registered and, in all material respects, issued and sold in accordance with applicable state and federal law. LIFE COMPANY will make every reasonable effort to prevent the issuance of any such stop order, cease and desist order or similar order and, if any such order is issued, to obtain the lifting thereof at the earliest possible time. 4.5 LIFE COMPANY TO PROVIDE DOCUMENTS; INFORMATION ABOUT AVIF. ---------------------------------------------------------- (a) LIFE COMPANY will provide to AVIF or its designated agent at least one (1) complete copy of all SEC registration statements, Account Prospectuses, reports, any preliminary and final voting instruction solicitation material, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to each Account or the Contracts, contemporaneously with the filing of such document with the SEC or other regulatory authorities. (b) LIFE COMPANY will provide to AVIF or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which AVIF or any of its affiliates is named, at least five (5) Business Days prior to its use or such shorter period as the Parties hereto may, from time to time, agree upon. No such material shall be used if AVIF or its designated agent objects to such use within five (5) Business Days after receipt of such material or such shorter period as the Parties hereto may, from time to time, agree upon. AVIF hereby designates A I M as the entity to receive such sales literature, until such time as AVIF appoints another designated agent by giving notice to LIFE COMPANY in the manner required by Section 9 hereof. (c) Neither LIFE COMPANY nor any of its affiliates, will give any information or make any representations or statements on behalf of or concerning AVIF or its affiliates in connection with the sale of the Contracts other than (i) the information or representations contained in the registration statement, including the AVIF Prospectus contained therein, relating to Shares, as such registration statement and AVIF Prospectus may be amended from time to time; or (ii) in reports or proxy materials for AVIF; or (iii) in published reports for AVIF that are in the public domain and approved by AVIF for distribution; or (iv) in sales literature or other promotional material approved by AVIF, except with the express written permission of AVIF. (d) LIFE COMPANY shall adopt and implement procedures reasonably designed to ensure that information concerning AVIF and its affiliates that is intended for use only by brokers or agents selling the Contracts (i.e., information that is not intended for distribution to Participants) ("broker only materials") is so used, and neither AVIF nor any of its affiliates shall be liable for any losses, damages or expenses relating to the improper use of such broker only materials. (e) For the purposes of this Section 4.5, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media, (e.g., on-line networks such as the Internet or other electronic messages), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, 10 research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, statements of additional information, shareholder reports, and proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act. 4.6 AVIF TO PROVIDE DOCUMENTS; INFORMATION ABOUT LIFE COMPANY. ---------------------------------------------------------- (a) AVIF will provide to LIFE COMPANY at least one (1) complete copy of all SEC registration statements, AVIF Prospectuses, reports, any preliminary and final proxy material, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to AVIF or the Shares of a Fund, contemporaneously with the filing of such document with the SEC or other regulatory authorities. (b) AVIF will provide to LIFE COMPANY camera ready or computer diskette copies of all AVIF prospectuses and printed copies, in an amount specified by LIFE COMPANY, of AVIF statements of additional information, proxy materials, periodic reports to shareholders and other materials required by law to be sent to Participants who have allocated any Contract value to a Fund. AVIF will provide such copies to LIFE COMPANY in a timely manner so as to enable LIFE COMPANY, as the case may be, to print and distribute such materials within the time required by law to be furnished to Participants. (c) AVIF will provide to LIFE COMPANY or its designated agent at least one (1) complete copy of each piece of sales literature or other promotional material in which LIFE COMPANY, or any of its respective affiliates is named, or that refers to the Contracts, at least five (5) Business Days prior to its use or such shorter period as the Parties hereto may, from time to time, agree upon. No such material shall be used if LIFE COMPANY or its designated agent objects to such use within five (5) Business Days after receipt of such material or such shorter period as the Parties hereto may, from time to time, agree upon. LIFE COMPANY shall receive all such sales literature until such time as it appoints a designated agent by giving notice to AVIF in the manner required by Section 9 hereof. (d) Neither AVIF nor any of its affiliates will give any information or make any representations or statements on behalf of or concerning LIFE COMPANY, each Account, or the Contracts other than (i) the information or representations contained in the registration statement, including each Account Prospectus contained therein, relating to the Contracts, as such registration statement and Account Prospectus may be amended from time to time; or (ii) in published reports for the Account or the Contracts that are in the public domain and approved by LIFE COMPANY for distribution; or (iii) in sales literature or other promotional material approved by LIFE COMPANY or its affiliates, except with the express written permission of LIFE COMPANY. (e) AVIF shall cause its principal underwriter to adopt and implement procedures reasonably designed to ensure that information concerning LIFE COMPANY, and its respective affiliates that is intended for use only by brokers or agents selling the Contracts (i.e., information that is not intended for distribution to Participants) ("broker only materials") is so used, and neither LIFE 11 COMPANY, nor any of its respective affiliates shall be liable for any losses, damages or expenses relating to the improper use of such broker only materials. (f) For purposes of this Section 4.6, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media, (e.g., on-line networks such as the Internet or other electronic messages), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, statements of additional information, shareholder reports, and proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act. SECTION 5. MIXED AND SHARED FUNDING ----------------------------------- 5.1 GENERAL. -------- The SEC has granted an order to AVIF exempting it from certain provisions of the 1940 Act and rules thereunder so that AVIF may be available for investment by certain other entities, including, without limitation, separate accounts funding variable annuity contracts or variable life insurance contracts, separate accounts of insurance companies unaffiliated with LIFE COMPANY, and trustees of qualified pension and retirement plans (collectively, "Mixed and Shared Funding"). The Parties recognize that the SEC has imposed terms and conditions for such orders that are substantially identical to many of the provisions of this Section 5. Sections 5.2 through 5.8 below shall apply pursuant to such an exemptive order granted to AVIF. AVIF hereby notifies LIFE COMPANY that, in the event that AVIF implements Mixed and Shared Funding, it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of Mixed and Shared Funding. 5.2 DISINTERESTED DIRECTORS. ------------------------ AVIF agrees that its Board of Directors shall at all times consist of directors a majority of whom (the "Disinterested Directors") are not interested persons of AVIF within the meaning of Section 2(a)(19) of the 1940 Act and the Rules thereunder and as modified by any applicable orders of the SEC, except that if this condition is not met by reason of the death, disqualification, or bona fide resignation of any director, then the operation of this condition shall be suspended (a) for a period of forty-five (45) days if the vacancy or vacancies may be filled by the Board; (b) for a period of sixty (60) days if a vote of shareholders is required to fill the vacancy or vacancies; or (c) for such longer period as the SEC may prescribe by order upon application. 12 5.3 MONITORING FOR MATERIAL IRRECONCILABLE CONFLICTS. ------------------------------------------------- AVIF agrees that its Board of Directors will monitor for the existence of any material irreconcilable conflict between the interests of the Participants in all separate accounts of life insurance companies utilizing AVIF ("Participating Insurance Companies"), including each Account, and participants in all qualified retirement and pension plans investing in AVIF ("Participating Plans"). LIFE COMPANY agrees to inform the Board of Directors of AVIF of the existence of or any potential for any such material irreconcilable conflict of which it is aware. The concept of a "material irreconcilable conflict" is not defined by the 1940 Act or the rules thereunder, but the Parties recognize that such a conflict may arise for a variety of reasons, including, without limitation: (a) an action by any state insurance or other regulatory authority; (b) a change in applicable federal or state insurance, tax or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Fund are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract Participants or by Participants of different Participating Insurance Companies; (f) a decision by a Participating Insurance Company to disregard the voting instructions of Participants; or (g) a decision by a Participating Plan to disregard the voting instructions of Plan participants. Consistent with the SEC's requirements in connection with exemptive orders of the type referred to in Section 5.1 hereof, LIFE COMPANY will assist the Board of Directors in carrying out its responsibilities by providing the Board of Directors with all information reasonably necessary for the Board of Directors to consider any issue raised, including information as to a decision by LIFE COMPANY to disregard voting instructions of Participants. 5.4 CONFLICT REMEDIES. ------------------ (a) It is agreed that if it is determined by a majority of the members of the Board of Directors or a majority of the Disinterested Directors that a material irreconcilable conflict exists, LIFE COMPANY will, if it is a Participating Insurance Company for which a material irreconcilable conflict is relevant, at its own expense and to the extent reasonably practicable (as determined by a majority of the Disinterested Directors), take whatever steps are necessary to remedy or eliminate the material irreconcilable conflict, which steps may include, but are not limited to: (i) withdrawing the assets allocable to some or all of the Accounts from AVIF or any Fund and reinvesting such assets in a different investment medium, including 13 another Fund of AVIF, or submitting the question whether such segregation should be implemented to a vote of all affected Participants and, as appropriate, segregating the assets of any particular group (e.g., annuity Participants, life insurance Participants or all Participants) that votes in favor of such segregation, or offering to the affected Participants the option of making such a change; and (ii) establishing a new registered investment company of the type defined as a "management company" in Section 4(3) of the 1940 Act or a new separate account that is operated as a management company. (b) If the material irreconcilable conflict arises because of LIFE COMPANY's decision to disregard Participant voting instructions and that decision represents a minority position or would preclude a majority vote, LIFE COMPANY may be required, at AVIF's election, to withdraw each Account's investment in AVIF or any Fund. No charge or penalty will be imposed as a result of such withdrawal. Any such withdrawal must take place within six (6) months after AVIF gives notice to LIFE COMPANY that this provision is being implemented, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. (c) If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to LIFE COMPANY conflicts with the majority of other state regulators, then LIFE COMPANY will withdraw each Account's investment in AVIF within six (6) months after AVIF's Board of Directors informs LIFE COMPANY that it has determined that such decision has created a material irreconcilable conflict, and until such withdrawal AVIF shall continue to accept and implement orders by LIFE COMPANY for the purchase and redemption of Shares of AVIF. No charge or penalty will be imposed as a result of such withdrawal. (d) LIFE COMPANY agrees that any remedial action taken by it in resolving any material irreconcilable conflict will be carried out at its expense and with a view only to the interests of Participants. (e) For purposes hereof, a majority of the Disinterested Directors will determine whether or not any proposed action adequately remedies any material irreconcilable conflict. In no event, however, will AVIF or any of its affiliates be required to establish a new funding medium for any Contracts. LIFE COMPANY will not be required by the terms hereof to establish a new funding medium for any Contracts if an offer to do so has been declined by vote of a majority of Participants materially adversely affected by the material irreconcilable conflict. 5.5 NOTICE TO LIFE COMPANY. ---------------------- AVIF will promptly make known in writing to LIFE COMPANY the Board of Directors' determination of the existence of a material irreconcilable conflict, a description of the facts that give rise to such conflict and the implications of such conflict. 14 5.6 INFORMATION REQUESTED BY BOARD OF DIRECTORS. -------------------------------------------- LIFE COMPANY and AVIF (or its investment adviser) will at least annually submit to the Board of Directors of AVIF such reports, materials or data as the Board of Directors may reasonably request so that the Board of Directors may fully carry out the obligations imposed upon it by the provisions hereof or any exemptive order granted by the SEC to permit Mixed and Shared Funding, and said reports, materials and data will be submitted at any reasonable time deemed appropriate by the Board of Directors. All reports received by the Board of Directors of potential or existing conflicts, and all Board of Directors actions with regard to determining the existence of a conflict, notifying Participating Insurance Companies and Participating Plans of a conflict, and determining whether any proposed action adequately remedies a conflict, will be properly recorded in the minutes of the Board of Directors or other appropriate records, and such minutes or other records will be made available to the SEC upon request. 5.7 COMPLIANCE WITH SEC RULES. -------------------------- If, at any time during which AVIF is serving as an investment medium for variable life insurance Contracts, 1940 Act Rules 6e-3(T) or, if applicable, 6e-2 are amended or Rule 6e-3 is adopted to provide exemptive relief with respect to Mixed and Shared Funding, AVIF agrees that it will comply with the terms and conditions thereof and that the terms of this Section 5 shall be deemed modified if and only to the extent required in order also to comply with the terms and conditions of such exemptive relief that is afforded by any of said rules that are applicable. 5.8 OTHER REQUIREMENTS. ------------------- AVIF will require that each Participating Insurance Company and Participating Plan enter into an agreement with AVIF that contains in substance the same provisions as are set forth in Sections 4.1(b), 4.1(d), 4.3(a), 4.4(b), 4.5(a), 5, and 10 of this Agreement. SECTION 6. TERMINATION ---------------------- 6.1 EVENTS OF TERMINATION. ---------------------- Subject to Section 6.4 below, this Agreement will terminate as to a Fund: (a) at the option of any party, with or without cause with respect to the Fund, upon six (6) months advance written notice to the other parties, or, if later, upon receipt of any required exemptive relief from the SEC, unless otherwise agreed to in writing by the parties; or (b) at the option of AVIF upon institution of formal proceedings against LIFE COMPANY or its affiliates by the NASD, the SEC, any state insurance regulator or any other regulatory body regarding LIFE COMPANY's obligations under this Agreement or related to the sale of the Contracts, the operation of each Account, or the purchase of Shares, if, in each case, AVIF reasonably determines that such proceedings, or the facts on which such proceedings would be 15 based, have a material likelihood of imposing material adverse consequences on the Fund with respect to which the Agreement is to be terminated; or (c) at the option of LIFE COMPANY upon institution of formal proceedings against AVIF, its principal underwriter, or its investment adviser by the NASD, the SEC, or any state insurance regulator or any other regulatory body regarding AVIF's obligations under this Agreement or related to the operation or management of AVIF or the purchase of AVIF Shares, if, in each case, LIFE COMPANY reasonably determines that such proceedings, or the facts on which such proceedings would be based, have a material likelihood of imposing material adverse consequences on LIFE COMPANY, or the Subaccount corresponding to the Fund with respect to which the Agreement is to be terminated; or (d) at the option of any Party in the event that (i) the Fund's Shares are not registered and, in all material respects, issued and sold in accordance with any applicable federal or state law, or (ii) such law precludes the use of such Shares as an underlying investment medium of the Contracts issued or to be issued by LIFE COMPANY; or (e) upon termination of the corresponding Subaccount's investment in the Fund pursuant to Section 5 hereof; or (f) at the option of LIFE COMPANY if the Fund ceases to qualify as a RIC under Subchapter M of the Code or under successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so qualify; or (g) at the option of LIFE COMPANY if the Fund fails to comply with Section 817(h) of the Code or with successor or similar provisions, or if LIFE COMPANY reasonably believes that the Fund may fail to so comply; or (h) at the option of AVIF if the Contracts issued by LIFE COMPANY cease to qualify as annuity contracts or life insurance contracts under the Code (other than by reason of the Fund's noncompliance with Section 817(h) or Subchapter M of the Code) or if interests in an Account under the Contracts are not registered, where required, and, in all material respects, are not issued or sold in accordance with any applicable federal or state law; or (i) upon another Party's material breach of any provision of this Agreement. 6.2 NOTICE REQUIREMENT FOR TERMINATION. ----------------------------------- No termination of this Agreement will be effective unless and until the Party terminating this Agreement gives prior written notice to the other Party to this Agreement of its intent to terminate, and such notice shall set forth the basis for such termination. Furthermore: (a) in the event that any termination is based upon the provisions of Sections 6.1(a) or 6.1(e) hereof, such prior written notice shall be given at least six (6) months in advance of the effective date of termination unless a shorter time is agreed to by the Parties hereto; 16 (b) in the event that any termination is based upon the provisions of Sections 6.1(b) or 6.1(c) hereof, such prior written notice shall be given at least ninety (90) days in advance of the effective date of termination unless a shorter time is agreed to by the Parties hereto; and (c) in the event that any termination is based upon the provisions of Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, such prior written notice shall be given as soon as possible within twenty-four (24) hours after the terminating Party learns of the event causing termination to be required. 6.3 FUNDS TO REMAIN AVAILABLE. -------------------------- Notwithstanding any termination of this Agreement, AVIF will, at the option of LIFE COMPANY, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts."). Specifically, without limitation, the owners of the Existing Contracts will be permitted to reallocate investments in the Fund (as in effect on such date), redeem investments in the Fund and/or invest in the Fund upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 6.3 will not apply to any terminations under Section 5 and the effect of such terminations will be governed by Section 5 of this Agreement. 6.4 SURVIVAL OF WARRANTIES AND INDEMNIFICATIONS. -------------------------------------------- All warranties and indemnifications will survive the termination of this Agreement. 6.5 CONTINUANCE OF AGREEMENT FOR CERTAIN PURPOSES. ---------------------------------------------- If any Party terminates this Agreement with respect to any Fund pursuant to Sections 6.1(b), 6.1(c), 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i) hereof, this Agreement shall nevertheless continue in effect as to any Shares of that Fund that are outstanding as of the date of such termination (the "Initial Termination Date"). This continuation shall extend to the earlier of the date as of which an Account owns no Shares of the affected Fund or a date (the "Final Termination Date") six (6) months following the Initial Termination Date, except that LIFE COMPANY may, by written notice shorten said six (6) month period in the case of a termination pursuant to Sections 6.1(d), 6.1(f), 6.1(g), 6.1(h) or 6.1(i). SECTION 7. PARTIES TO COOPERATE RESPECTING TERMINATION ------------------------------------------------------ The Parties hereto agree to cooperate and give reasonable assistance to one another in taking all necessary and appropriate steps for the purpose of ensuring that an Account owns no Shares of a Fund after the Final Termination Date with respect thereto, or, in the case of a termination pursuant to Section 6.1(a), the termination date specified in the notice of termination. Such steps may include combining the affected Account with another Account, substituting other mutual fund shares for those of the affected Fund, or otherwise terminating participation by the Contracts in such Fund. 17 SECTION 8. ASSIGNMENT --------------------- This Agreement may not be assigned by any Party, except with the written consent of each other Party. SECTION 9. NOTICES ------------------ Notices and communications required or permitted by Section 9 hereof will be given by means mutually acceptable to the Parties concerned. Each other notice or communication required or permitted by this Agreement will be given to the following persons at the following addresses and facsimile numbers, or such other persons, addresses or facsimile numbers as the Party receiving such notices or communications may subsequently direct in writing: AIM VARIABLE INSURANCE FUNDS 11 Greenway Plaza, Suite 100 Houston, Texas 77046 Facsimile: (713) 993-9185 Attn: Nancy L. Martin, Esq. GOLDEN AMERICAN LIFE INSURANCE COMPANY 1475 Dunwoody Drive West Chester PA 19380 Facsimile: 610-425-3520 Attn: Myles R. Tashman Executive Vice President DIRECTED SERVICES, INC. 1475 Dunwoody Drive West Chester PA 19380 Facsimile: 610-425-3520 Attn: Myles R. Tashman Executive Vice President SECTION 10. VOTING PROCEDURES ----------------------------- Subject to the cost allocation procedures set forth in Section 3 hereof, LIFE COMPANY will distribute all proxy material furnished by AVIF to Participants to whom pass-through voting privileges are required to be extended and will solicit voting instructions from Participants. LIFE 18 COMPANY will vote Shares in accordance with timely instructions received from Participants. LIFE COMPANY will vote Shares that are (a) not attributable to Participants to whom pass-through voting privileges are extended, or (b) attributable to Participants, but for which no timely instructions have been received, in the same proportion as Shares for which said instructions have been received from Participants, so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass through voting privileges for Participants. Neither LIFE COMPANY nor any of its affiliates will in any way recommend action in connection with or oppose or interfere with the solicitation of proxies for the Shares held for such Participants. LIFE COMPANY reserves the right to vote shares held in any Account in its own right, to the extent permitted by law. LIFE COMPANY shall be responsible for assuring that each of its Accounts holding Shares calculates voting privileges in a manner consistent with that of other Participating Insurance Companies or in the manner required by the Mixed and Shared Funding exemptive order obtained by AVIF. AVIF will notify LIFE COMPANY of any changes of interpretations or amendments to Mixed and Shared Funding exemptive order it has obtained. AVIF will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular, AVIF either will provide for annual meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not to require such meetings) or will comply with Section 16(c) of the 1940 Act (although AVIF is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, AVIF will act in accordance with the SEC"s interpretation of the requirements of Section 16(a) with respect to periodic elections of directors and with whatever rules the SEC may promulgate with respect thereto. SECTION 11. FOREIGN TAX CREDITS ------------------------------- AVIF agrees to consult in advance with LIFE COMPANY concerning any decision to elect or not to elect pursuant to Section 853 of the Code to pass through the benefit of any foreign tax credits to its shareholders. SECTION 12. INDEMNIFICATION --------------------------- 12.1 OF AVIF BY LIFE COMPANY AND DSI. ------------------------------- (a) Except to the extent provided in Sections 12.1(b) and 12.1(c), below, LIFE COMPANY and DSI agree to indemnify and hold harmless AVIF, its affiliates, and each person, if any, who controls AVIF or its affiliates within the meaning of Section 15 of the 1933 Act and each of their respective directors and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of LIFE COMPANY and DSI) or actions in respect thereof (including, to the extent reasonable, legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise; provided, the Account owns shares of the Fund and insofar as such losses, claims, damages, liabilities or actions: 19 (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Account's 1933 Act registration statement, any Account Prospectus, the Contracts, or sales literature or advertising for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY or DSI by or on behalf of AVIF for use in any Account's 1933 Act registration statement, any Account Prospectus, the Contracts, or sales literature or advertising or otherwise for use in connection with the sale of Contracts or Shares (or any amendment or supplement to any of the foregoing); or (ii) arise out of or as a result of any other statements or representations (other than statements or representations contained in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing, not supplied for use therein by or on behalf of LIFE COMPANY, DSI or their respective affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of LIFE COMPANY, DSI or their respective affiliates or persons under their control (including, without limitation, their employees and "Associated Persons," as that term is defined in paragraph (m) of Article I of the NASD's By-Laws), in connection with the sale or distribution of the Contracts or Shares; or (iii) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon and in conformity with information furnished to AVIF or its affiliates by or on behalf of LIFE COMPANY, DSI or their respective affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus, sales literature or advertising of AVIF, or any amendment or supplement to any of the foregoing; or (iv) arise as a result of any failure by LIFE COMPANY or DSI to perform the obligations, provide the services and furnish the materials required of them under the terms of this Agreement, or any material breach of any representation and/or warranty made by LIFE COMPANY or DSI in this Agreement or arise out of or result from any other material breach of this Agreement by LIFE COMPANY or DSI; or 20 (v) arise as a result of failure by the Contracts issued by LIFE COMPANY to qualify as annuity contracts or life insurance contracts under the Code, otherwise than by reason of any Fund's failure to comply with Subchapter M or Section 817(h) of the Code. (b) Neither LIFE COMPANY nor DSI shall be liable under this Section 12.1 with respect to any losses, claims, damages, liabilities or actions to which an Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance by that Indemnified Party of its duties or by reason of that Indemnified Party's reckless disregard of obligations or duties (i) under this Agreement, or (ii) to AVIF. (c) Neither LIFE COMPANY nor DSI shall be liable under this Section 12.1 with respect to any action against an Indemnified Party unless AVIF shall have notified LIFE COMPANY and DSI in writing within a reasonable time after the summons or other first legal process giving information of the nature of the action shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify LIFE COMPANY and DSI of any such action shall not relieve LIFE COMPANY and DSI from any liability which they may have to the Indemnified Party against whom such action is brought otherwise than on account of this Section 12.1. Except as otherwise provided herein, in case any such action is brought against an Indemnified Party, LIFE COMPANY and DSI shall be entitled to participate, at their own expense, in the defense of such action and also shall be entitled to assume the defense thereof, with counsel approved by the Indemnified Party named in the action, which approval shall not be unreasonably withheld. After notice from LIFE COMPANY or DSI to such Indemnified Party of LIFE COMPANY"s or DSI's election to assume the defense thereof, the Indemnified Party will cooperate fully with LIFE COMPANY and DSI and shall bear the fees and expenses of any additional counsel retained by it, and neither LIFE COMPANY nor DSI will be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof, other than reasonable costs of investigation. 12.2 OF LIFE COMPANY AND DSI BY AVIF. -------------------------------- (a) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e), below, AVIF agrees to indemnify and hold harmless LIFE COMPANY, DSI, their respective affiliates, and each person, if any, who controls LIFE COMPANY, DSI or their respective affiliates within the meaning of Section 15 of the 1933 Act and each of their respective directors and officers, (collectively, the "Indemnified Parties" for purposes of this Section 12.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of AVIF ) or actions in respect thereof (including, to the extent reasonable, legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law, or otherwise; provided, the Account owns shares of the Fund and insofar as such losses, claims, damages, liabilities or actions: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in AVIF's 1933 Act registration statement, AVIF Prospectus or sales literature or advertising of AVIF (or any amendment or 21 supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to AVIF or its affiliates by or on behalf of LIFE COMPANY, DSI or their respective affiliates for use in AVIF's 1933 Act registration statement, AVIF Prospectus, or in sales literature or advertising or otherwise for use in connection with the sale of Contracts or Shares (or any amendment or supplement to any of the foregoing); or (ii) arise out of or as a result of any other statements or representations (other than statements or representations contained in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising for the Contracts, or any amendment or supplement to any of the foregoing, not supplied for use therein by or on behalf of AVIF or its affiliates and on which such persons have reasonably relied) or the negligent, illegal or fraudulent conduct of AVIF or its affiliates or persons under its control (including, without limitation, their employees and "Associated Persons" as that Term is defined in Section (n) of Article 1 of the NASD By-Laws), in connection with the sale or distribution of AVIF Shares; or (iii) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon and in conformity with information furnished to LIFE COMPANY, DSI or their respective affiliates by or on behalf of AVIF for use in any Account's 1933 Act registration statement, any Account Prospectus, sales literature or advertising covering the Contracts, or any amendment or supplement to any of the foregoing; or (iv) arise as a result of any failure by AVIF to perform the obligations, provide the services and furnish the materials required of it under the terms of this Agreement, or any material breach of any representation and/or warranty made by AVIF in this Agreement or arise out of or result from any other material breach of this Agreement by AVIF. (b) Except to the extent provided in Sections 12.2(c), 12.2(d) and 12.2(e) hereof, AVIF agrees to indemnify and hold harmless the Indemnified Parties from and against any and all losses, claims, damages, liabilities (including amounts paid in settlement thereof with, the written consent of AVIF) or actions in respect thereof (including, to the extent reasonable, legal and other expenses) to which the Indemnified Parties may become subject directly or indirectly under any statute, at 22 common law or otherwise, insofar as such losses, claims, damages, liabilities or actions directly or indirectly result from or arise out of the failure of any Fund to operate as a regulated investment company in compliance with (i) Subchapter M of the Code and regulations thereunder, or (ii) Section 817(h) of the Code and regulations thereunder, including, without limitation, any income taxes and related penalties, rescission charges, liability under state law to Participants asserting liability against LIFE COMPANY pursuant to the Contracts, the costs of any ruling and closing agreement or other settlement with the IRS, and the cost of any substitution by LIFE COMPANY of Shares of another investment company or portfolio for those of any adversely affected Fund as a funding medium for each Account that LIFE COMPANY reasonably deems necessary or appropriate as a result of the noncompliance. (c) AVIF shall not be liable under this Section 12.2 with respect to any losses, claims, damages, liabilities or actions to which an Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance by that Indemnified Party of its duties or by reason of such Indemnified Party's reckless disregard of its obligations and duties (i) under this Agreement, or (ii) to LIFE COMPANY, DSI, each Account or Participants. (d) AVIF shall not be liable under this Section 12.2 with respect to any action against an Indemnified Party unless the Indemnified Party shall have notified AVIF in writing within a reasonable time after the summons or other first legal process giving information of the nature of the action shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify AVIF of any such action shall not relieve AVIF from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this Section 12.2. Except as otherwise provided herein, in case any such action is brought against an Indemnified Party, AVIF will be entitled to participate, at its own expense, in the defense of such action and also shall be entitled to assume the defense thereof (which shall include, without limitation, the conduct of any ruling request and closing agreement or other settlement proceeding with the IRS), with counsel approved by the Indemnified Party named in the action, which approval shall not be unreasonably withheld. After notice from AVIF to such Indemnified Party of AVIF's election to assume the defense thereof, the Indemnified Party will cooperate fully with AVIF and shall bear the fees and expenses of any additional counsel retained by it, and AVIF will not be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof, other than reasonable costs of investigation. (e) In no event shall AVIF be liable under the indemnification provisions contained in this Agreement to any individual or entity, including, without limitation, LIFE COMPANY, DSI or any other Participating Insurance Company or any Participant, with respect to any losses, claims, damages, liabilities or expenses that arise out of or result from (i) a breach of any representation, warranty, and/or covenant made by LIFE COMPANY or DSI hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by LIFE COMPANY or any Participating Insurance Company to maintain its segregated asset account (which invests in any Fund) as a legally and validly established segregated asset account under applicable state law and as a duly registered unit investment trust under the provisions of the 1940 Act (unless exempt therefrom); or (iii) the failure by LIFE COMPANY or any Participating Insurance Company to maintain its variable annuity or life 23 insurance contracts (with respect to which any Fund serves as an underlying funding vehicle) as annuity contracts or life insurance contracts under applicable provisions of the Code. 12.3 EFFECT OF NOTICE. ----------------- Any notice given by the indemnifying Party to an Indemnified Party referred to in Sections 12.1(c) or 12.2(d) above of participation in or control of any action by the indemnifying Party will in no event be deemed to be an admission by the indemnifying Party of liability, culpability or responsibility, and the indemnifying Party will remain free to contest liability with respect to the claim among the Parties or otherwise. 12.4 SUCCESSORS. ----------- A successor by law of any Party shall be entitled to the benefits of the indemnification contained in this Section 12. SECTION 13. APPLICABLE LAW -------------------------- This Agreement will be construed and the provisions hereof interpreted under and in accordance with Maryland law, without regard for that state's principles of conflict of laws. SECTION 14. EXECUTION IN COUNTERPARTS ------------------------------------- This Agreement may be executed simultaneously in two or more counterparts, each of which taken together will constitute one and the same instrument. SECTION 15. SEVERABILITY ------------------------ If any provision of this Agreement is held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement will not be affected thereby. SECTION 16. RIGHTS CUMULATIVE ----------------------------- The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, that the Parties are entitled to under federal and state laws. SECTION 17. HEADINGS -------------------- The Table of Contents and headings used in this Agreement are for purposes of reference only and shall not limit or define the meaning of the provisions of this Agreement. 24 SECTION 18. CONFIDENTIALITY --------------------------- AVIF acknowledges that the identities of the customers of LIFE COMPANY or any of its affiliates (collectively, the "LIFE COMPANY Protected Parties" for purposes of this Section 18), information maintained regarding those customers, and all computer programs and procedures or other information developed by the LIFE COMPANY Protected Parties or any of their employees or agents in connection with LIFE COMPANY"s performance of its duties under this Agreement are the valuable property of the LIFE COMPANY Protected Parties. AVIF agrees that if it comes into possession of any list or compilation of the identities of or other information about the LIFE COMPANY Protected Parties" customers, or any other information or property of the LIFE COMPANY Protected Parties, other than such information as may be independently developed or compiled by AVIF from information supplied to it by the LIFE COMPANY Protected Parties" customers who also maintain accounts directly with AVIF, AVIF will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with LIFE COMPANY"s prior written consent; or (b) as required by law or judicial process. LIFE COMPANY acknowledges that the identities of the customers of AVIF or any of its affiliates (collectively the "AVIF Protected Parties" for purposes of this Section 18), information maintained regarding those customers, and all computer programs and procedures or other information developed by the AVIF Protected Parties or any of their employees or agents in connection with AVIF"s performance of its duties under this Agreement are the valuable property of the AVIF Protected Parties. LIFE COMPANY agrees that if it comes into possession of any list or compilation of the identities of or other information about the AVIF Protected Parties" customers or any other information or property of the AVIF Protected Parties, other than such information as may be independently developed or compiled by LIFE COMPANY from information supplied to it by the AVIF Protected Parties" customers who also maintain accounts directly with LIFE COMPANY, LIFE COMPANY will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with AVIF"s prior written consent; or (b) as required by law or judicial process. Each party acknowledges that any breach of the agreements in this Section 18 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate. SECTION 19. TRADEMARKS AND FUND NAMES ------------------------------------- (a) A I M Management Group Inc. ("AIM" or "licensor"), an affiliate of AVIF, owns all right, title and interest in and to the name, trademark and service mark "AIM" and such other tradenames, trademarks and service marks as may be set forth on Schedule B, as amended from time to time by written notice from AIM to LIFE COMPANY (the "AIM licensed marks" or the "licensor"s licensed marks") and is authorized to use and to license other persons to use such marks. LIFE COMPANY and its affiliates are hereby granted a non-exclusive license to use the AIM licensed marks in connection with LIFE COMPANY"s performance of the services contemplated under this Agreement, subject to the terms and conditions set forth in this Section 19. 25 (b) The grant of license to LIFE COMPANY and its affiliates ( the "licensee") shall terminate automatically upon termination of this Agreement. Upon automatic termination, the licensee shall cease to use the licensor"s licensed marks, except that LIFE COMPANY shall have the right to continue to service any outstanding Contracts bearing any of the AIM licensed marks. Upon AIM"s elective termination of this license, LIFE COMPANY and its affiliates shall immediately cease to issue any new annuity or life insurance contracts bearing any of the AIM licensed marks and shall likewise cease any activity which suggests that it has any right under any of the AIM licensed marks or that it has any association with AIM, except that LIFE COMPANY shall have the right to continue to service outstanding Contracts bearing any of the AIM licensed marks. (c) The licensee shall obtain the prior written approval of the licensor for the public release by such licensee of any materials bearing the licensor"s licensed marks. The licensor"s approvals shall not be unreasonably withheld. (d) During the term of this grant of license, a licensor may request that a licensee submit samples of any materials bearing any of the licensor"s licensed marks which were previously approved by the licensor but, due to changed circumstances, the licensor may wish to reconsider. If, on reconsideration, or on initial review, respectively, any such samples fail to meet with the written approval of the licensor, then the licensee shall immediately cease distributing such disapproved materials. The licensor"s approval shall not be unreasonably withheld, and the licensor, when requesting reconsideration of a prior approval, shall assume the reasonable expenses of withdrawing and replacing such disapproved materials. The licensee shall obtain the prior written approval of the licensor for the use of any new materials developed to replace the disapproved materials, in the manner set forth above. (e) The licensee hereunder: (i) acknowledges and stipulates that, to the best of the knowledge of the licensee, the licensor"s licensed marks are valid and enforceable trademarks and/or service marks and that such licensee does not own the licensor"s licensed marks and claims no rights therein other than as a licensee under this Agreement; (ii) agrees never to contend otherwise in legal proceedings or in other circumstances; and (iii) acknowledges and agrees that the use of the licensor"s licensed marks pursuant to this grant of license shall inure to the benefit of the licensor. SECTION 20. PARTIES TO COOPERATE -------------------------------- Each party to this Agreement will cooperate with each other party and all appropriate governmental authorities (including, without limitation, the SEC, the NASD and state insurance regulators) and will permit each other and such authorities reasonable access to its books and records (including copies thereof) in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 26 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers signing below. AIM VARIABLE INSURANCE FUNDS, INC. Attest:/s/Nancy L. Martin By:/s/Robert H. Graham ------------------------- ----------------------- Nancy L. Martin Name: Robert H. Graham Assistant Secretary Title: President GOLDEN AMERICAN LIFE INSURANCE COMPANY, on behalf of itself and its separate accounts Attest:/s/Linda E. Senker By:/s/David L. Jacobson ------------------------- ------------------------- Name: Linda E. Senker Name: David L. Jacobson Title: Vice President and Title: Senior Vice President Assistant General Counsel DIRECTED SERVICES, INC. Attest:/s/Linda E. Senker By:/s/David L. Jacobson ------------------------- -------------------------- Name: Linda E. Senker Name: David L. Jacobson Title: Vice President and Title: Senior Vice President Assistant General Counsel 27 SCHEDULE A FUNDS AVAILABLE UNDER THE CONTRACTS - ----------------------------------- AIM VARIABLE INSURANCE FUNDS SEPARATE ACCOUNTS UTILIZING THE FUNDS - ------------------------------------- GOLDEN AMERICAN SEPARATE ACCOUNT B CONTRACTS FUNDED BY THE SEPARATE ACCOUNTS - ----------------------------------------- SMARTDESIGN VARIABLE ANNUITY SMARTDESIGN ADVANTAGE 28 SCHEDULE B [] AIM VARIABLE INSURANCE FUNDS [] AIM and Design [LOGO] AIM 29 EX-99.B8H 5 invesco.txt INVESCO PART. AGREE. FUND PARTICIPATION AGREEMENT THIS AGREEMENT, made and entered into this 15th day of July, 2001 (the "Agreement") by and among Golden American Life Insurance Company, organized under the laws of the State of Minnesota and currently domiciled in Delaware (the "Company"), on behalf of itself and each separate account of the Company named in Schedule A to this Agreement, as may be amended from time to time (each account referred to as the "Account" and collectively as the "Accounts"); INVESCO Variable Investment Funds, Inc., an open-end management investment company organized under the laws of the State of Maryland (the "Fund"); INVESCO Funds Group, Inc., a corporation organized under the laws of the State of Delaware and investment adviser to the Fund (the "Adviser"); and INVESCO Distributors, Inc., a corporation organized under the laws of the State of Delaware and principal underwriter/distributor of the Fund (the "Distributor").. WHEREAS, the Fund engages in business as an open-end management investment company and was established for the purpose of serving as the investment vehicle for separate accounts established for variable life insurance contracts and variable annuity contracts to be offered by insurance companies which have entered into participation agreements substantially similar to this Agreement (the "Participating Insurance Companies"), and WHEREAS, beneficial interests in the Fund are divided into several series of shares, each representing the interest in a particular managed portfolio of securities and other assets (the "Portfolios"); and WHEREAS, the Company, as depositor, has established the Accounts to serve as investment vehicles for certain variable annuity contracts and variable life insurance policies and funding agreements offered by the Company set forth on Schedule A (the "Contracts"); and WHEREAS, the Accounts are duly organized, validly existing segregated asset accounts, established by resolutions of the Board of Directors of the Company under the insurance laws of the State of Minnesota, to set aside and invest assets attributable to the Contracts; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares of the Portfolios named in Schedule B, as such schedule may be amended from time to time (the "Designated Portfolios") on behalf of the Accounts to fund the Contracts; 1 NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund, the Adviser and the Distributor agree as follows: ARTICLE I - SALE OF FUND SHARES 1.1 The Fund agrees to sell to the Company those shares of the Designated Portfolios which each Account orders, executing such orders on a daily basis at the net asset value (and with no sales charges) next computed after receipt and acceptance by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company will be the designee of the Fund for receipt of such orders from each Account and receipt by such designee will constitute receipt by the Fund; provided that the Fund receives notice of such order by 11:00 a.m. Eastern Time on the next following business day. "Business Day" will mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the Securities and Exchange Commission (the "Commission"). The Fund may net the notice of redemptions it receives from the Company under Section 1.3 of this Agreement against the notice of purchases it receives from the Company under this Section 1.1. 1.2 The Company will pay for Fund shares on the next Business Day after an order to purchase Fund shares is made in accordance with Section 1.1. Payment will be made in federal funds transmitted by wire. Upon receipt by the Fund of the payment, such funds shall cease to be the responsibility of the Company and shall become the responsibility of the Fund. 1.3 The Fund agrees to redeem for cash, upon the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt and acceptance by the Fund or its agent of the request for redemption. For purposes of this Section 1.3, the Company will be the designee of the Fund for receipt of requests for redemption from each Account and receipt by such designee will constitute receipt by the Fund; provided the Fund receives notice of such requests for redemption by 11:00 a.m. Eastern Time on the next following Business Day. Payment will be made in federal funds transmitted by wire to the Company's account as designated by the Company in writing from time to time, on the same Business Day the Fund receives notice of the redemption order from the Company. After consulting with the Company, the Fund reserves the right to delay payment of redemption proceeds, but in no event may such payment be delayed longer than the period permitted under Section 22(e) of the Investment Company Act of 1940 (the "1940 Act"). The Fund will not bear any responsibility whatsoever for the proper disbursement or crediting of redemption proceeds; the Company alone will be responsible for such action. If notification of redemption is received after 11:00 Eastern Time, payment for redeemed 2 shares will be made on the next following Business Day. The Fund may net the notice of purchases it receives from the Company under Section 1.1 of this Agreement against the notice of redemptions it receives from the Company under this Section 1.3. 1.4 The Fund agrees to make shares of the Designated Portfolios available continuously for purchase at the applicable net asset value per share by the Company and its separate accounts on those days on which the Fund calculates its Designated Portfolio net asset value pursuant to rules of the Commission; provided, however, that the Board of Directors of the Fund (the "Fund Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Fund Board, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.5 The Fund agrees that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts, qualified pension and retirement plans or such other persons as are permitted under Section 817(h)(4) of the Internal Revenue Code of 1986, as amended, (the "Code"), and regulations promulgated thereunder, the sale to which will not impair the tax treatment currently afforded the Contracts. No shares of any Portfolio will be sold directly to the general public. 1.6 The Fund will not sell Fund shares to any insurance company or separate account unless an agreement containing provisions substantially the same as Articles I, III, V, and VI of this Agreement are in effect to govern such sales. 1.7 The Company agrees to purchase and redeem the shares of the Designated Portfolios offered by the then current prospectus of the Fund in accordance with the provisions of such prospectus. 1.8 Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to the Company or to any Account. Purchase and redemption orders for Fund shares will be recorded in an appropriate title for each Account or the appropriate sub-account of each Account. 1.9 The Fund will furnish same day notice (by facsimile) to the Company of the declaration of any income, dividends or capital gain distributions payable on each Designated Portfolio's shares. The Company hereby elects to receive all such dividends and distributions as are payable on the Portfolio shares in the form of additional shares of that Portfolio at the ex-dividend date net asset values. The Company reserves the right to revoke this election and to receive all such dividends and distributions in cash. The Fund will notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.10 The Fund will make the net asset value per share for each Designated Portfolio available to the Company via electronic means on a daily basis as soon as reasonably practical after the net asset value 3 per share is calculated and will use its best efforts to make such net asset value per share available by 7:00 p.m., Eastern Time, each business day. If the Fund provides the Company materially incorrect net asset value per share information (as determined under SEC guidelines), the Company shall be entitled to an adjustment to the number of shares purchased or redeemed to reflect the correct net asset value per share. Any material error in the calculation or reporting of net asset value per share, dividend or capital gain information shall be reported to the Company upon discovery by the Fund. ARTICLE II - REPRESENTATIONS AND WARRANTIES 2.1 The Company represents and warrants that the Contracts are or will be registered under the Securities Act of 1933 (the "1933 Act"), or are exempt from registration thereunder, and that the Contracts will be issued and sold in compliance with all applicable federal and state laws. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account as a separate account under the General Statutes of Minnesota and that each Account is or will be registered as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts, or is exempt from registration thereunder, and that it will maintain such registration for so long as any Contracts are outstanding, as applicable. The Company will amend the registration statement under the 1933 Act for the Contracts and the registration statement under the 1940 Act for the Account from time to time as required in order to effect the continuous offering of the Contracts or as may otherwise be required by applicable law. The Company will register and qualify the Contracts for sale in accordance with the securities laws of the various states only if and to the extent deemed necessary by the Company. 2.2 The Company represents that the Contracts are currently and at the time of issuance will be treated as annuity contracts and/or life insurance policies (as applicable) under applicable provisions of the Code, and further represents that it will make every effort to maintain such treatment and that it will notify the Fund and the Adviser immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.3 The Company represents and warrants that it will not purchase shares of the Designated Portfolio(s) with assets derived from tax-qualified retirement plans except, indirectly, through Contracts purchased in connection with such plans. 2.4 The Fund represents and warrants that shares of the Designated Portfolio(s) sold pursuant to this Agreement will be registered under the 1933 Act and duly authorized for issuance in accordance with applicable law and that the Fund is and will remain registered as an open-end management investment 4 company under the 1940 Act for as long as such shares of the Designated Portfolio(s) are sold. The Fund will amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund will register and qualify the shares of the Designated Portfolio(s) for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund. 2.5 The Fund represents that it will use its best efforts to comply with any applicable state insurance laws or regulations as they may apply to the investment objectives, policies and restrictions of the Portfolios, as they may apply to the Fund, to the extent specifically requested in writing by the Company. If the Fund cannot comply with such state insurance laws or regulations, it will so notify the Company in writing. The Fund makes no other representation as to whether any aspect of its operations (including, but not limited to, fees and expenses, and investment policies) complies with the insurance laws or regulations of any state. The Company represents that it will use its best efforts to notify the Fund of any restrictions imposed by state insurance laws that may become applicable to the Fund as a result of the Accounts' investments therein. The Fund and the Adviser agree that they will furnish the information required by state insurance laws to assist the Company in obtaining the authority needed to issue the Contracts in various states. 2.6 The Fund currently does not intend to make any payments to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or otherwise, although it reserves the right to make such payments in the future. To the extent that it decides to finance distribution expenses pursuant to Rule 12b-1, the Fund undertakes to have the directors of its Fund Board, a majority of whom are not "interested" persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. 2.7 The Fund represents that it is lawfully organized and validly existing under the laws of the State of Maryland and that it does and will comply in all material respects with applicable provisions of the 1940 Act. 2.8 The Fund represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities having access to the funds and/or securities of the Fund are and continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company. 2.9 The Adviser represents and warrants that it is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and will remain duly registered under all applicable federal and state securities laws and that it will perform its obligations for the Fund in accordance in all 5 material respects with the laws of the State of Delaware and any applicable state and federal securities laws. 2.10 The Distributor represents and warrants that it is registered as a broker-dealer under the Securities and Exchange Act of 1934, as amended (the "1934 Act") and will remain duly registered under all applicable federal and state securities laws, and is a member in good standing of the National Association of Securities Dealers, Inc. ("NASD") and serves as principal underwriter/distributor of the Funds and that it will perform its obligations for the Fund in accordance in all material respects with the laws of the State of Delaware and any applicable state and federal securities laws. ARTICLE III - FUND COMPLIANCE 3.1 The Fund and the Adviser acknowledge that any failure (whether intentional or in good faith or otherwise) to comply with the requirements of Subchapter M of the Code or the diversification requirements of Section 817(h) of the Code may result in the Contracts not being treated as variable contracts for federal income tax purposes, which would have adverse tax consequences for Contract owners and could also adversely affect the Company's corporate tax liability. The Fund and the Adviser further acknowledge that any such failure may result in costs and expenses being incurred by the Company in obtaining whatever regulatory authorizations are required to substitute shares of another investment company for those of the failed Fund, as well as fees and expenses of legal counsel and other advisors to the Company and any federal income taxes, interest or tax penalties incurred by the Company in connection with any such failure. 3.2 The Fund represents and warrants that it is currently qualified as a Regulated Investment Company under Subchapter M of the Code, and that it will maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 3.3 The Fund represents that it will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder; including, but not limited to, that the Fund will at all times comply with Section 817(h) of the Code and Treasury Regulation 1.817-5, as amended from time to time, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts, and with Section 817(d) of the Code, relating to the definition of a variable contract, and any amendments or other modifications to such Section or Regulation. The Fund will notify the Company immediately upon having a reasonable basis for believing that the Fund or a Portfolio thereunder has ceased to comply with the diversification requirements or that the Fund or Portfolio might not comply with the diversification requirements in the future. In the event of a breach of this representation by the Fund, it will take all reasonable steps to 6 adequately diversify the Fund so as to achieve compliance within the grace period afforded by Treasury Regulation 1.817-5. 3.4 The Adviser agrees to provide the Company with a certificate or statement indicating compliance by each Portfolio of the Fund with Section 817(h) of the Code, such certificate or statement to be sent to the Company no later than thirty (30) days following the end of each calendar quarter. ARTICLE IV - PROSPECTUS AND PROXY STATEMENTS/VOTING 4.1 The Fund will provide the Company with as many copies of the current Fund prospectus and any supplements thereto for the Designated Portfolio(s) as the Company may reasonably request for distribution, at the Fund's expense, to Contract owners at the time of Contract fulfillment and confirmation. To the extent that the Designated Portfolio(s) are one or more of several Portfolios of the Fund, the Fund shall bear the cost of providing the Company only with disclosure related to the Designated Portfolio(s). The Fund will provide, at the Fund's expense, as many copies of said prospectus as necessary for distribution, at the Fund's expense, to existing Contract owners. The Fund will provide the copies of said prospectus to the Company or to its mailing agent. The Company will distribute the prospectus to existing Contract owners and will bill the Fund for the reasonable cost of such distribution. If requested by the Company, in lieu thereof, the Fund will provide such documentation, including a final copy of a current prospectus set in type at the Fund's expense, and other assistance as is reasonably necessary in order for the Company at least annually (or more frequently if the Fund prospectus is amended more frequently) to have the new prospectus for the Contracts and the Fund's new prospectus printed together, in which case the Fund agrees to pay its proportionate share of reasonable expenses directly related to the required disclosure of information concerning the Fund. The Fund will, upon request, provide the Company with a copy of the Fund's prospectus through electronic means to facilitate the Company's efforts to provide Fund prospectuses via electronic delivery, in which case the Fund agrees to pay its proportionate share of reasonable expenses related to the required disclosure of information concerning the Fund. 4.2 The Fund's prospectus will state that the Statement of Additional Information (the "SAI") for the Fund is available from the Company. The Fund will provide the Company, at the Fund's expense, with as many copies of the SAI and any supplements thereto as the Company may reasonably request for distribution, at the Fund's expense, to prospective Contract owners and applicants. To the extent that the Designated Portfolio(s) are one or more of several Portfolios of the Fund, the Fund shall bear the cost of providing the Company only with disclosure related to the Designated Portfolio(s). The Fund will provide, at the Fund's expense, as many copies of said SAI as necessary for distribution, at the 7 Fund's expense, to any existing Contract owner who requests such statement or whenever state or federal law requires that such statement be provided. The Fund will provide the copies of said SAI to the Company or to its mailing agent. The Company will distribute the SAI as requested or required and will bill the Fund for the reasonable cost of such distribution. 4.3 The Fund, at its expense, will provide the Company or its mailing agent with copies of its proxy material, if any, reports to shareholders/Contract owners and other permissible communications to shareholders/Contract owners in such quantity as the Company will reasonably require. The Company will distribute this proxy material, reports and other communications to existing Contract owners and will bill the Fund for the reasonable cost of such distribution. 4.4 If and to the extent required by law, the Company will: (a) solicit voting instructions from Contract owners; (b) vote the shares of the Designated Portfolios held in the Account in accordance with instructions received from Contract owners; and (c) vote shares of the Designated Portfolios held in the Account for which no timely instructions have been received, in the same proportion as shares of such Designated Portfolio for which instructions have been received from the Company's Contract owners, so long as and to the extent that the Commission continues to interpret the 1940 Act to require pass-through voting privileges for variable Contract owners. The Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. The Company will be responsible for assuring that the Accounts participating in the Fund calculate voting privileges in a manner consistent with all legal requirements, including the Proxy Voting Procedures set forth in Schedule C and the Mixed and Shared Funding Exemptive Order, as described in Section 7.1. 4.5 The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular, the Fund either will provide for annual meetings (except insofar as the Commission may interpret Section 16 of the 1940 Act not to require such meetings) or, as the Fund currently intends, to comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of the 1940 Act) as well as with Section 16(a) and, if and when applicable, Section 16(b). Further, the Fund will act in accordance with the Commission's interpretation of the requirements of Section 16(a) with respect to periodic elections of directors and with whatever rules the Commission may promulgate with respect thereto. 8 ARTICLE V - SALES MATERIAL AND INFORMATION 5.1 The Company will furnish, or will cause to be furnished, to the Fund or the Adviser, each piece of sales literature or other promotional material in which the Fund or the Adviser is named, at least ten (10) Business Days prior to its use. No such material will be used if the Fund or the Adviser reasonably objects to such use within five (5) Business Days after receipt of such material. 5.2 The Company will not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement, prospectus or SAI for Fund shares, as such registration statement, prospectus and SAI may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in published reports for the Fund which are in the public domain or approved by the Fund or the Adviser for distribution, or in sales literature or other material provided by the Fund or by the Adviser, except with permission of the Fund or the Adviser. The Fund and the Adviser agree to respond to any request for approval on a prompt and timely basis. 5.3 The Fund or the Adviser will furnish, or will cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material in which the Company or its separate account is named, at least ten (10) Business Days prior to its use. No such material will be used if the Company reasonably objects to such use within five (5) Business Days after receipt of such material. 5.4 The Fund and the Adviser will not give any information or make any representations or statements on behalf of the Company or concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement, prospectus or SAI for the Contracts, as such registration statement, prospectus and SAI may be amended or supplemented from time to time, or in published reports for each Account or the Contracts which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other material provided by the Company, except with permission of the Company. The Company agrees to respond to any request for approval on a prompt and timely basis. 5.5 The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, SAIs, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, within a reasonable time after the filing of each such document with the Commission or the NASD. 5.6 The Company will provide to the Fund at least one complete copy of all definitive prospectuses, definitive SAI, reports, solicitations for voting instructions, sales literature and other promotional 9 materials, applications for exemptions, requests for no action letters, and all amendments to any of the above, that relate to the Contracts or each Account, contemporaneously with the filing of each such document with the Commission or the NASD (except that with respect to post-effective amendments to such prospectuses and SAIs and sales literature and promotional material, only those prospectuses and SAIs and sales literature and promotional material that relate to or refer to the Fund will be provided). In addition, the Company will provide to the Fund at least one complete copy of (i) a registration statement that relates to the Contracts or each Account, containing representative and relevant disclosure concerning the Fund; and (ii) any post-effective amendments to any registration statements relating to the Contracts or such Account that refer to or relate to the Fund. 5.7 For purposes of this Article V, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media, (i.e., on-line networks such as the Internet or other electronic messages)), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, SAIs, shareholder reports, and proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act. 5.8 The Fund, the Adviser and the Distributor hereby consent to the Company's use of the names of the INVESCO, AMVESCAP and INVESCO Funds Group, Inc. as well as the names of the Designated Portfolios set forth in Schedule B of this Agreement, in connection with marketing the Contracts, subject to the terms of Sections 5.1 of this Agreement. The Company acknowledges and agrees that Adviser and Distributor and/or their affiliates own all right, title and interest in and to the name INVESCO and the INVESCO open circle design, and covenants not, at any time, to challenge the rights of Adviser and Distributor and/or their affiliates to such name or design, or the validity or distinctiveness thereof. The Fund, the Adviser and the Distributor hereby consent to the use of any trademark, trade name, service mark or logo used by the Fund, the Adviser and the Distributor, subject to the Fund's, the Adviser's and/or the Distributor's approval of such use and in accordance with reasonable requirements of the Investment Company, the Adviser or the Distributor. Such consent will terminate with the termination of this Agreement. Adviser or Distributor may withdraw this consent as to any particular use of any such name or identifying marks at any time (i) upon Adviser's or 10 Distributor's reasonable determination that such use would have a material adverse effect on the reputation or marketing efforts of the Adviser, the Distributor or the Fund or (ii) if no investment company, or series or class of shares of any investment company advised by Adviser or distributed by Distributor continues to be offered through variable insurance contracts issued by the Company; provided however, that Adviser or Distributor may, in either's individual discretion, continue to use materials prepared or printed prior to the withdrawal of such authorization. The Company agrees and acknowledges that all use of any designation comprised in whole or in part of the name, trademark, trade name, service mark and logo under this Agreement shall inure to the benefit of the Fund, Adviser and/or the Distributor. 5.9 The Fund, the Adviser, the Distributor and the Company agree to adopt and implement procedures reasonably designed to ensure that information concerning the Company, the Fund, the Adviser or the Distributor, respectively, and their respective affiliated companies, that is intended for use only by brokers or agents selling the Contracts is properly marked as "Not For Use With The Public" and that such information is only so used. ARTICLES VI - FEES, COSTS AND EXPENSES 6.1 The Fund will pay no fee or other compensation to the Company under this Agreement, except: (a) if the Fund or any Designated Portfolio adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses, then, subject to obtaining any required exemptive orders or other regulatory approvals, THE Fund may make payments to the Company or to the underwriter for the Contracts if and in such amounts agreed to by the Fund in writing; and (b) the Fund may pay fees to the Company for administrative services provided to Contract owners that are not primarily intended to result in the sale of shares of the Designated Portfolio or of underlying Contracts. 6.2 All expenses incident to performance by the Fund of this Agreement will be paid by the Fund to the extent permitted by law. All shares of the Designated Portfolios will be duly authorized for issuance and registered in accordance with applicable federal law and, to the extent deemed advisable by the Fund, in accordance with applicable state law, prior to sale. The Fund will bear the expenses for the cost of registration and qualification of the Fund's shares, including without limitation, the preparation of and filing with the SEC of Forms N-SAR and Rule 24f-2 Notices and payment of all applicable registration or filing fees with respect to shares of the Fund; preparation and filing of the Fund's prospectus, SAI and registration statement, proxy materials and reports; typesetting the Fund's prospectus; typesetting and printing proxy materials and reports to Contract owners (including the costs of printing a Fund prospectus that constitutes an annual report); the preparation of all statements and 11 notices required by any federal or state law; all taxes on the issuance or transfer of the Fund's shares; any expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act; and other costs associated with preparation of prospectuses and SAIs for the Designated Portfolios in electronic or typeset format, as well as any distribution expenses as set forth in Article IV of this Agreement. ARTICLE VII - MIXED & SHARED FUNDING RELIEF 7.1 The Fund represents and warrants that it has received an order from the Commission granting Participating Insurance Companies and variable annuity separate accounts and variable life insurance separate accounts relief from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity separate accounts and variable life insurance separate accounts of both affiliated and unaffiliated Participating Insurance Companies and qualified pension and retirement plans outside of the separate account context (the "Mixed and Shared Funding Exemptive Order"). The parties to this Agreement agree that the conditions or undertakings specified in the Mixed and Shared Funding Exemptive Order and that may be imposed on the Company, the Fund and/or the Adviser by virtue of the receipt of such order by the Commission, will be incorporated herein by reference, and such parties agree to comply with such conditions and undertakings to the extent applicable to each such party. 7.2 The Fund Board will monitor the Fund for the existence of any irreconcilable material conflict among the interests of the Contract owners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including, but not limited to: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by Participating Insurance Companies or by variable annuity and variable life insurance Contract owners; or (f) a decision by an insurer to disregard the voting instructions of Contract owners. The Fund Board will promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. A majority of the Fund Board will consist of persons who are not "interested" persons of the Fund. 7.3 The Company will report any potential or existing conflicts of which it is aware to the Fund Board. The Company agrees to assist the Fund Board in carrying out its responsibilities, as delineated in the 12 Mixed and Shared Funding Exemptive Order, by providing the Fund Board with all information reasonably necessary for the Fund Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Fund Board whenever Contract owner voting instructions are to be disregarded. The Fund Board will record in its minutes, or other appropriate records, all reports received by it and all action with regard to a conflict. 7.4 If it is determined by a majority of the Fund Board, or a majority of its disinterested directors, that an irreconcilable material conflict exists, the Company and other Participating Insurance Companies will, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested directors), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (a) withdrawing the assets allocable to some or all of the Accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be submitted to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., variable annuity Contract owners or variable life insurance Contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Contract owners the option of making such a change; and (b) establishing a new registered management investment company or managed separate account. 7.5 If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions, and such disregard of voting instructions could conflict with the majority of Contract owner voting instructions, and the Company's judgment represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the affected sub-account of the Account's investment in the Fund and terminate this Agreement with respect to such sub-account; provided, however, that such withdrawal and termination will be limited to the extent required by the foregoing irreconcilable material conflict as determined by a majority of the disinterested directors of the Fund Board. No charge or penalty will be imposed as a result of such withdrawal. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice to the Company that this provision is being implemented. Until the end of such six-month period the Adviser and Fund will, to the extent permitted by law and any exemptive relief previously granted to the Fund, continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.6 If an irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state insurance regulators, then the Company will withdraw the affected sub-account of the Account's investment in the Fund and terminate this 13 Agreement with respect to such sub-account; provided, however, that such withdrawal and termination will be limited to the extent required by the foregoing irreconcilable material conflict as determined by a majority of the disinterested directors of the Fund Board. No charge or penalty will be imposed as a result of such withdrawal. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice to the Company that this provision is being implemented. Until the end of such six-month period the Advisor and Fund will, to the extent permitted by law and any exemptive relief previously granted to the Fund, continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.7 For purposes of Sections 7.4 through 7.7 of this Agreement, a majority of the disinterested members of the Fund Board will determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event, other than as specified in Section 7.4, will the Fund be required to establish a new funding medium for the Contracts. The Company will not be required by Section 7.4 to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners affected by the irreconcilable material conflict. 7.8 The Company will at least annually submit to the Fund Board such reports, materials or data as the Fund Board may reasonably request so that the Fund Board may fully carry out the duties imposed upon it as delineated in the Mixed and Shared Funding Exemptive Order, and said reports, materials and data will be submitted more frequently if deemed appropriate by the Fund Board. 7.9 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Mixed and Shared Funding Exemptive Order, then: (a) the Fund and/or the Participating Insurance Companies, as appropriate, will take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 4.4, 4.5, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement will continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII - INDEMNIFICATION 8.1 INDEMNIFICATION BY THE COMPANY (a) The Company agrees to indemnify and hold harmless the Fund, the Adviser, the Distributor, and each person, if any, who controls or is associated with the Fund, the Adviser, or the Distributor within the meaning of such terms under the federal securities laws and any director, 14 trustee, officer, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or actions in respect thereof (including reasonable legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements: (1) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus or SAI for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated or necessary to make such statements not misleading in light of the circumstances in which they were made; provided that this agreement to indemnify will not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund, the Adviser, or the Distributor for use in the registration statement, prospectus or SAI for the Contracts or in the Contracts or sales literature (or any amendment or supplement to any of the foregoing) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (2) arise out of or as a result of statements or representations by or on behalf of the Company (other than statements or representations contained in the Fund registration statement, prospectus, SAI or sales literature or other promotional material of the Fund, or any amendment or supplement to the foregoing, not supplied by the Company or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund shares; or (3) arise out of untrue statement or alleged untrue statement of a material fact contained in the Fund registration statement, prospectus, SAI or sales literature or other promotional material of the Fund (or any amendment or supplement to the foregoing) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make such statements not misleading in light of the circumstances in which they were made, if such a statement or omission was made in 15 reliance upon and in conformity with information furnished to the Fund by or on behalf of the Company or persons under its control; or (4) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (5) arise out of any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach by the Company of this Agreement; except to the extent provided in Sections 8.1(b) and 8.4 hereof. This indemnification will be in addition to any liability that the Company otherwise may have. (b) No party will be entitled to indemnification under Section 8.1(a) if such loss, claim, damage, liability or action is due to the willful misfeasance, bad faith, or gross negligence in the performance of such party's duties under this Agreement, or by reason of such party's reckless disregard of its obligations or duties under this Agreement. (c) The Indemnified Parties promptly will notify the Company of the commencement of any litigation, proceedings, complaints or actions by regulatory authorities against them in connection with the issuance or sale of the Fund shares or the Contracts or the operation of the Fund. 8.2 INDEMNIFICATION BY THE ADVISER & DISTRIBUTOR (a) The Adviser and Distributor agree to indemnify and hold harmless the Company and each person, if any, who controls or is associated with the Company within the meaning of such terms under the federal securities laws and any director, officer, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser and Distributor) or actions in respect thereof (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements: (1) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or SAI for the Fund or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated or necessary to make such statements not misleading in light of the circumstances in which they were 16 made; provided that this agreement to indemnify will not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Adviser or the Fund by or on behalf of the Company for use in the registration statement, prospectus or SAI for the Fund or in sales literature of the Fund (or any amendment or supplement thereto) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (2) arise out of or as a result of statements or representations by or on behalf of the Adviser, the Distributor, or the Fund (other than statements or representations contained in the Contracts or in the Contract or Fund registration statements, prospectuses or statements of additional information or sales literature or other promotional material for the Contracts or of the Fund, or any amendment or supplement to the foregoing, not supplied by the Adviser, the Distributor, or the Fund or persons under the control of the Adviser, the Distributor, or the Fund respectively) or wrongful conduct of the Adviser, the Distributor, or the Fund or persons under the control of the Adviser, the Distributor, or the Fund respectively, with respect to the sale or distribution of the Contracts or Fund shares; or (3) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI or sales literature or other promotional material covering the Contracts (or any amendment or supplement thereto), or the omission or alleged omission to state therein a material fact required to be stated or necessary to make such statement or statements not misleading in light of the circumstances in which they were made, if such statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Adviser, the Distributor, or the Fund, or persons under any of their control; or (4) arise as a result of any failure by the Fund, the Distributor, or the Adviser to provide the services and furnish the materials under the terms of this Agreement; or (5) arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Distributor, or the Fund in this Agreement, or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor, or the Fund (including a failure, whether intentional or in good faith or otherwise, to comply with the requirements of Subchapter M of the Code specified in Article III, 17 Section 3.2 of this Agreement and the diversification requirements specified in Article III, Section 3.3 of this Agreement, as described more fully in Section 8.5 below); except to the extent provided in Sections 8.2(b) and 8.4 hereof. This indemnification will be in addition to any liability that the Adviser or Distributor otherwise may have. (b) No party will be entitled to indemnification under Section 8.2(a) if such loss, claim, damage, liability or action is due to the willful misfeasance, bad faith, or gross negligence in the performance of such party's duties under this Agreement, or by reason of such party's reckless disregard or its obligations or duties under this Agreement. (c) The Indemnified Parties will promptly notify the Adviser, the Fund, and the Distributor of the commencement of any litigation, proceedings, complaints or actions by regulatory authorities against them in connection with the issuance or sale of the Contracts or the operation of the Account. 8.3 INDEMNIFICATION BY THE FUND (a) The Fund agrees to indemnify and hold harmless the Company and each person, if any, who controls or is associated with the Company within the meaning of such terms under the federal securities laws and any director, officer, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 8.3) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or action in respect thereof (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements, are related to the operations of the Fund and: (1) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement; or (2) arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund (including a failure, whether intentional or in good faith or otherwise, to comply with the requirements of Subchapter M of the Code specified in Article III, Section 3.2 of this Agreement and the diversification requirements specified in Article III, Section 3.3 of this Agreement as described more fully in Section 8.5 below); or (3) arise out of or result from the incorrect or untimely calculation or reporting of daily net asset value per share or dividend or capital gain distribution rate; except to the extent 18 provided in Sections 8.3(b) and 8.4 hereof. This indemnification will be in addition to any liability that the Fund otherwise may have. (b) No party will be entitled to indemnification under Section 8.3(a) if such loss, claim, damage, liability or action is due to the willful misfeasance, bad faith, or gross negligence in the performance of such party's duties under this Agreement, or by reason of such party's reckless disregard of its obligations and duties under this Agreement. (c) The Indemnified Parties will promptly notify the Fund of the commencement of any litigation, proceedings, complaints or actions by regulatory authorities against them in connection with the issuance or sale of the Contracts or the operation of the Account. 8.4 INDEMNIFICATION PROCEDURE Any person obligated to provide indemnification under this Article VIII ("Indemnifying Party" for the purpose of this Section 8.4) will not be liable under the indemnification provisions of this Article VIII with respect to any claim made against a party entitled to indemnification under this Article VIII ("Indemnified Party" for the purpose of this Section 8.4) unless such Indemnified Party will have notified the Indemnifying Party in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim upon such Indemnified Party (or after such party will have received notice of such service on any designated agent), but failure to notify the Indemnifying Party of any such claim will not relieve the Indemnifying Party from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of the indemnification provision of this Article VIII, except to the extent that the failure to notify results in the failure of actual notice to the Indemnifying Party and such Indemnifying Party is damaged solely as a result of failure to give such notice. In case any such action is brought against the Indemnified Party, the Indemnifying Party will be entitled to participate, at its own expense, in the defense thereof. The Indemnifying Party also will be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Indemnifying Party to the Indemnified Party of the Indemnifying Party's election to assume the defense thereof, the Indemnified Party will bear the fees and expenses of any additional counsel retained by it, and the Indemnifying Party will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation, unless: (a) the Indemnifying Party and the Indemnified Party will have mutually agreed to the retention of such counsel; or (b) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The 19 Indemnifying Party will not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there is a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party from and against any loss or liability by reason of such settlement or judgment. A successor by law of the parties to this Agreement will be entitled to the benefits of the indemnification contained in this Article VIII. The indemnification provisions contained in this Article VIII will survive any termination of this Agreement. 8.5 INDEMNIFICATION FOR FAILURE TO COMPLY WITH DIVERSIFICATION REQUIREMENTS The Fund and the Adviser acknowledge that any failure (whether intentional or in good faith or otherwise) to comply with the diversification requirements specified in Article III, Section 3.3 of this Agreement may result in the Contracts not being treated as variable contracts for federal income tax purposes, which would have adverse tax consequences for Contract owners and could also adversely affect the Company's corporate tax liability. Accordingly, without in any way limiting the effect of Sections 8.2(a) and 8.3(a) hereof and without in any way limiting or restricting any other remedies available to the Company, the Fund, the Adviser and the Distributor will pay on a joint and several basis all costs associated with or arising out of any failure, or any anticipated or reasonably foreseeable failure, of the Fund or any Portfolio to comply with Section 3.3 of this Agreement, including all costs associated with correcting or responding to any such failure; such costs may include, but are not limited to, the costs involved in creating, organizing, and registering a new investment company as a funding medium for the Contracts and/or the costs of obtaining whatever regulatory authorizations are required to substitute shares of another investment company for those of the failed Fund or Portfolio (including but not limited to an order pursuant to Section 26(b) of the 1940 Act); fees and expenses of legal counsel and other advisors to the Company and any federal income taxes or tax penalties (or "toll charges" or exactments or amounts paid in settlement) incurred by the Company in connection with any such failure or anticipated or reasonably foreseeable failure. Such indemnification and reimbursement obligation shall be in addition to any other indemnification and reimbursement obligations of the Fund, the Adviser and/or the Distributor under this Agreement. ARTICLE IX - APPLICABLE LAW 9.1 This Agreement will be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware. 9.2 This Agreement will be subject to the provisions of the 1933 Act, the 1934 Act and the 1940 Act, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the Commission may grant (including, but not limited to, the Mixed and Shared 20 Funding Exemptive Order) and the terms hereof will be interpreted and construed in accordance therewith. ARTICLE X - TERMINATION 10.1 This Agreement will terminate: (a) at the option of any party, with or without cause, with respect to one, some or all of the Portfolios, upon six (6) month's advance written notice to the other parties or, if later, upon receipt of any required exemptive relief or orders from the SEC, unless otherwise agreed in a separate written agreement among the parties; or (b) at the option of the Company, upon written notice to the other parties, with respect to any Portfolio if shares of the Portfolio are not reasonably available to meet the requirements of the Contracts as determined in good faith by the Company; or (c) at the option of the Company, upon written notice to the other parties, with respect to any Portfolio in the event any of the Portfolio's shares are not registered, issued or sold in accordance with applicable state and/or federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by Company; or (d) at the option of the Fund, upon written notice to the other parties, upon institution of formal proceedings against the Company by the NASD, the Commission, the Insurance Commission of any state or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, the administration of the Contracts, the operation of the Account, or the purchase of the Fund shares, provided that the Fund determines in its sole judgment, exercised in good faith, that any such proceeding would have a material adverse effect on the Company's ability to perform its obligations under this Agreement; or (e) at the option of the Company, upon written notice to the other parties, upon institution of formal proceedings against the Fund, the Distributor, or the Adviser by the NASD, the Commission or any state securities or insurance department or any other regulatory body, provided that the Company determines in its sole judgment, exercised in good faith, that any such proceeding would have a material adverse effect on the Fund's, the Distributor's, or the Adviser's ability to perform its obligations under this Agreement; or (f) at the option of the Company, upon written notice to the other parties, if the Fund ceases to qualify as a Regulated Investment Company under Subchapter M of the Code, or under any 21 successor or similar provision, or if the Company reasonably and in good faith believes that the Fund may fail to so qualify; or (g) at the option of the Company, upon written notice to the other parties, with respect to any Portfolio if the Fund fails to meet the diversification requirements specified in Section 3.3 hereof or if the Company reasonably and in good faith believes the Fund may fail to meet such requirements; or (h) at the option of any party to this Agreement, upon written notice to the other parties, upon another party's material breach of any provision of this Agreement; or (i) at the option of the Company, if the Company determines in its sole judgment exercised in good faith that either the Fund or the Adviser has suffered a material adverse change in its business, operations or financial condition since the date of this Agreement or is the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Company, such termination to be effective sixty (60) days' after receipt by the other parties of written notice of the election to terminate; or (j) at the option of the Fund or the Adviser, if the Fund or Adviser respectively, determines in its sole judgment exercised in good faith that the Company has suffered a material adverse change in its business, operations or financial condition since the date of this Agreement or is the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Fund or the Adviser, such termination to be effective sixty (60) days' after receipt by the other parties of written notice of the election to terminate; or (k) at the option of the Company or the Fund upon receipt of any necessary regulatory approvals and/or the vote of the Contract owners having an interest in the Account (or any sub-account) to substitute the shares of another investment company for the corresponding Portfolio's shares of the Fund in accordance with the terms of the Contracts for which those Portfolio shares had been selected to serve as the underlying portfolio. The Company will give sixty (60) days' prior written notice to the Fund of the date of any proposed vote or other action taken to replace the Fund's shares or of the filing of any required regulatory approval(s); or (1) at the option of the Company or the Fund upon a determination by a majority of the Fund Board, or a majority of the disinterested Fund Board members, that an irreconcilable material conflict exists among the interests of: (1) all Contract owners of variable insurance products of all separate accounts; or (2) the interests of the Participating Insurance Companies investing in the Fund as set forth in Article VII of this Agreement; or 22 (m) at the option of the Fund in the event any of the Contracts are not issued or sold in accordance with applicable federal and/or state law. Termination will be effective immediately upon such occurrence without notice. 10.2 NOTICE REQUIREMENT (a) No termination of this Agreement, except a termination under Section 10.1 (m) of this Agreement, will be effective unless and until the party terminating this Agreement gives prior written notice to all other parties of its intent to terminate, which notice will set forth the basis for the termination. (b) In the event that any termination of this Agreement is based upon the provisions of Article VII, such prior written notice will be given in advance of the effective date of termination as required by such provisions. 10.3 EFFECT OF TERMINATION Notwithstanding any termination of this Agreement, the Fund, the Adviser and the Distributor will, at the option of the Company, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, the owners of the Existing Contracts will be permitted to reallocate investments in the Designated Portfolios (as in effect on such date), redeem investments in the Designated Portfolios and/or invest in the Designated Portfolios upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.3 will not apply to any terminations under Article VII and the effect of such Article VII terminations will be governed by Article VII of this Agreement. 10.4 SURVIVING PROVISIONS Notwithstanding any termination of this Agreement, each party's obligations under Article VIII to indemnify other parties will survive and not be affected by any termination of this Agreement. In addition, with respect to Existing Contracts, all provisions of this Agreement also will survive and not be affected by any termination of this Agreement. ARTICLE XI - NOTICES Any notice will be deemed duly given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other parties. 23 If to the Company: ----------------- Golden American Life Insurance Company 1475 Dunwoody Drive West Chester, Pennsylvania 19380 Attn: Myles R. Tashman, Executive Vice President If to the Fund: -------------- INVESCO Variable Investment Funds, Inc. 4350 South Monaco St. Denver, Colorado 80217 Attn: Ronald L. Grooms, Senior Vice President If to the Adviser: ----------------- INVESCO Funds Group, Inc. 4350 South Monaco St. Denver, Colorado 80217 Attn: Ronald L. Grooms, Senior Vice President If to the Distributor: --------------------- INVESCO Distributors, Inc. 4350 South Monaco St. Denver, Colorado 80217 Attn: Ronald L. Grooms, Senior Vice President ARTICLE XII - MISCELLANEOUS 12.1 All persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund as neither the directors, officers, agents or shareholders assume any personal liability for obligations entered into on behalf of the Fund. 12.2 The Fund, the Distributor, and the Adviser acknowledge that the identities of the customers of the Company or any of its affiliates (collectively the "Protected Parties" for purposes of this Section 12.2), information maintained regarding those customers, and all computer programs and procedures developed by the Protected Parties or any of their employees or agents in connection with the Company's performance of its duties under this Agreement are the valuable property of the Protected Parties. The Fund and the Adviser agree that if they come into possession of any list or compilation of the identities of or other information about the Protected Parties' customers, or any other property of the Protected Parties, other than such information as may be independently developed or compiled by the Fund or the Adviser from information supplied to them by the Protected Parties' customers who also maintain accounts directly with the Fund or the Adviser, the Fund and the Adviser will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with the Company's prior written consent; or (b) as required by law or judicial process. The Fund and the Adviser acknowledge that any breach of the agreements 24 in this Section 12.2 would result in immediate and irreparable harm to the Protected Parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the Protected Parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate. Each party agrees to maintain all information about other parties that it may acquire pursuant to this Agreement in confidence, and each party agrees not to use, or permit the use of, any such information for any purpose except that set forth herein, or to disclose any such information to any person, without the prior written consent of the other parties. This provision shall survive the termination of this Agreement. 12.3 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together will constitute one and the same instrument. 12.5 If any provision of this Agreement will be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement will not be affected thereby. 12.6 This Agreement will not be assigned by any party hereto without the prior written consent of all the parties. 12.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal law. 12.8 The parties to this Agreement acknowledge and agree that this Agreement shall not be exclusive in any respect. 12.9 Each party to this Agreement will cooperate with each other party and all appropriate governmental authorities (including without limitation the Commission, the NASD and state insurance regulators) and will permit each other and such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 12.10 Each party represents that the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate or board action, as applicable, by such party and when so executed and delivered this Agreement will be the valid and binding obligation of such party enforceable in accordance with its terms. 12.11 The parties to this Agreement may amend the schedules to this Agreement in writing from time to time to reflect changes in or relating to the Contracts, the Accounts or the Portfolios of the Fund or other applicable terms of this Agreement. 25 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below. GOLDEN AMERICAN LIFE INSURANCE COMPANY By: /s/Myles R. Tashman ------------------------ Name: Myles R. Tashman Title: Executive Vice President INVESCO VARIABLE INVESTMENT FUNDS, INC. By: /s/Ronald L. Grooms ------------------------- Ronald L. Grooms Treasurer INVESCO FUNDS GROUP, INC. By: /s/Ronald L. Grooms ------------------------- Ronald L. Grooms Senior Vice President & Treasurer INVESCO DISTRIBUTORS, INC. By: /s/Ronald L. Grooms ------------------------- Ronald L. Grooms Senior Vice President & Treasurer 26 PARTICIPATION AGREEMENT SCHEDULE A The following Separate Accounts and Associated Contracts of Golden American Life Insurance Company are permitted in accordance with the provisions of this Agreement to invest in Portfolios of the Fund shown in Schedule B: CONTRACTS FUNDED BY SEPARATE ACCOUNT NAME OF SEPARATE ACCOUNT - ------------------------------------ ------------------------ ING SmartDesign Variable Annuity Separate Account B ING SmartDesign Advantage Separate Account B GoldenSelect Access Separate Account B GoldenSelect DVA Plus Separate Account B GoldenSelect ESII Separate Account B GoldenSelect Landmark Separate Account B GoldenSelect Premium Plus Separate Account B GoldenSelect Galaxy Premium Plus Separate Account B Page 1 of 1 PARTICIPATION AGREEMENT SCHEDULE B The Separate Account(s) shown on Schedule A may invest in the following Portfolios of the Fund. INVESCO VIF - Financial Services Fund INVESCO VIF - Health Sciences Fund INVESCO VIF - Utilities Fund Page 1 of 1 PARTICIPATION AGREEMENT SCHEDULE C PROXY VOTING PROCEDURES The following is a list of procedures and corresponding responsibilities for the handling of proxies and voting instructions relating to the Fund. The defined terms herein shall have the meanings assigned in the Participation Agreement except that the term "Company" shall also include the department or third party, if any, assigned by the Company to perform the steps delineated below. 1. The proxy proposals are given to the Company by the Fund as early as possible before the date set by the Fund for the shareholder meeting to enable the Company to consider and prepare for the solicitation of voting instructions from owners of the Contracts and to facilitate the establishment of tabulation procedures. At this time the Fund will inform the Company of the Record, Mailing and Meeting dates. This will be done verbally approximately two months before the shareholder meeting. 2. Promptly after the Record Date, the Company will perform a "tape run", or other activity, which will generate the names, addresses and number of units which are attributed to each contract owner/policyholder (the "Customer") as of the Record Date. Allowance should be made for account adjustments made after this date that could affect the status of the Customers' accounts as of the Record Date. NOTE: The number of proxy statements is determined by the activities described in this Step #2. The Company will use its best efforts to call in the number of Customers to the Fund , as soon as possible, but no later than two weeks after the Record Date. 3. The Fund's Annual Report must be sent to each Customer by the Company either before or together with the Customers' receipt of voting, instruction solicitation material. The Fund will provide the last Annual Report to the Company pursuant to the terms of Section 6.2 of the Agreement to which this Schedule relates. 4. The text and format for the Voting Instruction Cards ("Cards" or "Card") is provided to the Company by the Fund. The Company, at its expense, shall produce and personalize the Voting Instruction Cards. The Fund or its affiliate must approve the Card before it is printed. Allow approximately 2-4 business days for printing information on the Cards. Information commonly found on the Cards includes: o name (legal name as found on account registration) o address o Fund or account number o coding to state number of units o individual Card number for use in tracking and verification of votes (already on Cards as printed by the Fund). (This and related steps may occur later in the chronological process due to possible uncertainties relating to the proposals.) 5. During this time, the Fund will develop, produce and pay for the Notice of Proxy and the Proxy Statement (one document). Printed and folded notices and statements will be sent to Company for insertion into envelopes (envelopes and return envelopes are provided and paid for by the Company). Contents of envelope sent to Customers by the Company will include: Page 1 of 1 o Voting Instruction Card(s) o one proxy notice and statement (one document) o return envelope (postage pre-paid by Company) addressed to the Company or its tabulation agent o "urge buckslip" - optional, but recommended. (This is a small, single sheet of paper that requests Customers to vote as quickly as possible and that their vote is important. One copy will be supplied by the Fund.) o cover letter - optional, supplied by Company and reviewed and approved in advance by the Fund 6. The above contents should be received by the Company approximately 3-5 business days before mail date. Individual in charge at Company reviews and approves the contents of the mailing package to ensure correctness and completeness. Copy of this approval sent to the Fund. 7. Package mailed by the Company. * The Fund must allow at least a 15-day solicitation time to the Company as the shareowner. (A 5-week period is recommended.) Solicitation time is calculated as calendar days from (but NOT including,) the meeting, counting backwards. 8. Collection and tabulation of Cards begins. Tabulation usually takes place in another department or another vendor depending on process used. An often used procedure is to sort Cards on arrival by proposal into vote categories of all yes, no, or mixed replies, and to begin data entry. NOTE: Postmarks are not generally needed. A need for postmark information would be due to an insurance company's internal procedure and has not been required by the Fund in the past. 9. Signatures on Card checked against legal name on account registration which was printed on the Card. NOTE: For Example, if the account registration is under "John A. Smith, Trustee," then that is the exact legal name to be printed on the Card and is the signature needed on the Card. 10. If Cards are mutilated, or for any reason are illegible or are not signed properly, they are sent back to Customer with an explanatory letter and a new Card and return envelope. The mutilated or illegible Card is disregarded and considered to be NOT RECEIVED for purposes of vote tabulation. Any Cards that have been "kicked out" (e.g. mutilated, illegible) of the procedure are "hand verified," i.e., examined as to why they did not complete the system. Any questions on those Cards are usually remedied individually. 11. There are various control procedures used to ensure proper tabulation of votes and accuracy of that tabulation. The most prevalent is to sort the Cards as they first arrive into categories depending upon their vote; an estimate of how the vote is progressing may then be calculated. If the initial estimates and the actual vote do not coincide, then an internal audit of that vote should occur. This may entail a recount. 12. The actual tabulation of votes is done in units which is then converted to shares. (It is very important that the Fund receives the tabulations stated in terms of a percentage and the number of SHARES.) The Fund must review and approve tabulation format. 13. Final tabulation in shares is verbally given by the Company to the Fund on the morning of the meeting not later than 10:00 a.m. Eastern time. The Fund may request an earlier deadline if reasonable and if required to calculate the vote in time for the meeting. 14. A Certification of Mailing and Authorization to Vote Shares will be required from the Company as well as an original copy of the final vote. The Fund will provide a standard form for each Certification. Page 1 of 1 15. The Company will be required to box and archive the Cards received from the Customers. In the event that any vote is challenged or if otherwise necessary for legal, regulatory, or accounting purposes, the Fund will be permitted reasonable access to such Cards. 16. All approvals and "signing-off' may be done orally, but must always be followed up in writing. Page 1 of 1 EX-99.B8I 6 janus.txt JANUS PART. AGREE. JANUS ASPEN SERIES FUND PARTICIPATION AGREEMENT (SERVICE SHARES) THIS AGREEMENT is made as of this 13th day of July, 2001, between JANUS ASPEN SERIES, an open-end management investment company organized as a Delaware business trust (the "Trust"), and GOLDEN AMERICAN LIFE INSURANCE COMPANY, a life insurance company organized under the laws of the State of Delaware (the "Company"), on its own behalf and on behalf of each segregated asset account of the Company set forth on Schedule A, as may be amended from time to time (the "Accounts"). W I T N E S S E T H: ------------------- WHEREAS, the Trust has registered with the Securities and Exchange Commission as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), and the beneficial interest in the Trust is divided into several series of shares, each series representing an interest in a particular managed portfolio of securities and other assets (the "Portfolios"); and WHEREAS, the Trust has registered the offer and sale of a class of shares designated the Service Shares ("Shares") of each of its Portfolios under the Securities Act of 1933, as amended (the "1933 Act"); and WHEREAS, the Trust desires to act as an investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts to be offered by insurance companies that have entered into participation agreements with the Trust (the "Participating Insurance Companies"); and WHEREAS, the Trust has received an order from the Securities and Exchange Commission granting Participating Insurance Companies and their separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies and certain qualified pension and retirement plans (the "Exemptive Order"); and WHEREAS, the Company has registered or will register (unless registration is not required under applicable law) certain variable life insurance policies and/or variable annuity contracts under the 1933 Act (the "Contracts"); and WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act; and -1- WHEREAS, the Company desires to utilize the Shares of one or more Portfolios as an investment vehicle of the Accounts; NOW, THEREFORE, in consideration of their mutual promises, the parties agree as follows: ARTICLE I Sale of Trust Shares -------------------- 1.1 The Trust shall make Shares of its Portfolios listed on Schedule B available to the Accounts at the net asset value next computed after receipt of such purchase order by the Trust (or its agent), as established in accordance with the provisions of the then current prospectus of the Trust. Shares of a particular Portfolio of the Trust shall be ordered in such quantities and at such times as determined by the Company to be necessary to meet the requirements of the Contracts. The Trustees of the Trust (the "Trustees") may refuse to sell Shares of any Portfolio to any person, or suspend or terminate the offering of Shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Trustees acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.2 The Trust will redeem any full or fractional Shares of any Portfolio when requested by the Company on behalf of an Account at the net asset value next computed after receipt by the Trust (or its agent) of the request for redemption, as established in accordance with the provisions of the then current prospectus of the Trust. The Trust shall make payment for such Shares in the manner established from time to time by the Trust, but in no event shall payment be delayed for a greater period than is permitted by the 1940 Act. 1.3 For the purposes of Sections 1.1 and 1.2, the Trust hereby appoints the Company as its agent for the limited purpose of receiving and accepting purchase and redemption orders resulting from investment in and payments under the Contracts. Receipt by the Company shall constitute receipt by the Trust provided that i) such orders are received by the Company in good order prior to the time the net asset value of each Portfolio is priced in accordance with its prospectus and ii) the Trust receives notice of such orders by 10:00 a.m. New York time on the next following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Trust calculates its net asset value pursuant to the rules of the Securities and Exchange Commission. 1.4 Purchase orders that are transmitted to the Trust in accordance with Section 1.3 shall be paid for no later than 12:00 noon New York time on the same Business Day that the Trust receives notice of the order. Payments shall be made in federal funds transmitted by wire. -2- 1.5 Issuance and transfer of the Trust's Shares will be by book entry only. Stock certificates will not be issued to the Company or the Account. Shares ordered from the Trust will be recorded in the appropriate title for each Account or the appropriate subaccount of each Account. 1.6 The Trust shall furnish prompt notice to the Company of any income dividends or capital gain distributions payable on the Trust's Shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on a Portfolio's Shares in additional Shares of that Portfolio. The Trust shall notify the Company of the number of Shares so issued as payment of such dividends and distributions. 1.7 The Trust shall make the net asset value per Share for each Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per Share is calculated and shall use its best efforts to make such net asset value per Share available by 6 p.m. New York time. If the Trust provides the Company with materially incorrect share net asset value information, the Trust shall make an adjustment to the number of shares purchased or redeemed for the Accounts to reflect the correct net asset value per share. Any material error in the calculation or reporting of net asset value per share, dividend or capital gains information shall be reported promptly upon discovery to the Company. 1.8 The Trust agrees that its Shares will be sold only to Participating Insurance Companies and their separate accounts and to certain qualified pension and retirement plans to the extent permitted by the Exemptive Order. No Shares of any Portfolio will be sold directly to the general public. The Company agrees that Trust Shares will be used only for the purposes of funding the Contracts and Accounts listed in Schedule A, as amended from time to time. 1.9 The Trust agrees that all Participating Insurance Companies shall have the obligations and responsibilities regarding pass-through voting and conflicts of interest corresponding to those contained in Section 2.8 and Article IV of this Agreement. ARTICLE II Obligations of the Parties -------------------------- 2.1 The Trust shall prepare and be responsible for filing with the Securities and Exchange Commission and any state regulators requiring such filing all shareholder reports, notices, proxy materials (or similar materials such as voting instruction solicitation materials), prospectuses and statements of additional information of the Trust. The Trust shall bear the costs of registration and qualification of its shares, preparation and filing of the documents listed in this Section 2.1 and all taxes to which an issuer is subject on the issuance and transfer of its shares. 2.2 At the option of the Company, the Trust shall either (a) provide the Company (at the Company's expense) with as many copies of the Trust's Shares' current prospectus, annual -3- report, semi-annual report and other shareholder communications, including any amendments or supplements to any of the foregoing, as the Company shall reasonably request; or (b) provide the Company with a camera ready copy of such documents in a form suitable for printing. The Trust shall provide the Company with a copy of the Shares' statement of additional information in a form suitable for duplication by the Company. The Trust (at its expense) shall provide the Company with copies of any Trust-sponsored proxy materials in such quantity as the Company shall reasonably require for distribution to Contract owners. 2.3 (a) The Company shall bear the costs of printing and distributing the Trust's Shares' prospectus, statement of additional information, shareholder reports and other shareholder communications to applicants for policies for which Shares of the Trust are serving or are to serve as an investment vehicle. The Trust shall bear the costs of distributing Trust-sponsored proxy materials (or similar materials such as voting solicitation instructions) to Contract owners. The Company assumes sole responsibility for ensuring that such materials are delivered to Contract owners in accordance with applicable federal and state securities laws. (b) If the Company elects to include any materials provided by the Trust, specifically prospectuses, SAIs, shareholder reports and proxy materials, on its web site or in any other computer or electronic format, the Company assumes sole responsibility for maintaining such materials in the form provided by the Trust and for promptly replacing such materials with all updates provided by the Trust. 2.4 The Company agrees and acknowledges that the Trust's adviser, Janus Capital Corporation ("Janus Capital"), is the sole owner of the name and mark "Janus" and that all use of any designation comprised in whole or part of Janus (a "Janus Mark") under this Agreement shall inure to the benefit of Janus Capital. Except as provided in Section 2.5, the Company shall not use any Janus Mark on its own behalf or on behalf of the Accounts or Contracts in any registration statement, advertisement, sales literature or other materials relating to the Accounts or Contracts without the prior written consent of Janus Capital. Upon termination of this Agreement for any reason, the Company shall cease all use of any Janus Mark(s) as soon as reasonably practicable. 2.5 The Company shall furnish, or cause to be furnished, to the Trust or its designee, a copy of each Contract prospectus or statement of additional information in which the Trust or its investment adviser is named prior to the filing of such document with the Securities and Exchange Commission. The Company shall furnish, or shall cause to be furnished, to the Trust or its designee, each piece of sales literature or other promotional material in which the Trust or its investment adviser is named, at least fifteen Business Days prior to its use. No such material shall be used if the Trust or its designee reasonably objects to such use within fifteen Business Days after receipt of such material. 2.6 The Company shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust or its investment adviser in connection with the sale of the Contracts other than information or representations contained in and -4- accurately derived from the registration statement or prospectus for the Trust Shares (as such registration statement and prospectus may be amended or supplemented from time to time), reports of the Trust, Trust-sponsored proxy statements, or in sales literature or other promotional material approved by the Trust or its designee, except as required by legal process or regulatory authorities or with the written permission of the Trust or its designee. 2.7 The Trust shall not give any information or make any representations or statements on behalf of the Company or concerning the Company, the Accounts or the Contracts other than information or representations contained in and accurately derived from the registration statement or prospectus for the Contracts (as such registration statement and prospectus may be amended or supplemented from time to time), or in materials approved by the Company for distribution including sales literature or other promotional materials, except as required by legal process or regulatory authorities or with the written permission of the Company. 2.8 So long as, and to the extent that the Securities and Exchange Commission interprets the 1940 Act to require pass-through voting privileges for variable policyowners, the Company will provide pass-through voting privileges to owners of policies whose cash values are invested, through the Accounts, in shares of the Trust. The Trust shall require all Participating Insurance Companies to calculate voting privileges in the same manner and the Company shall be responsible for assuring that the Accounts calculate voting privileges in the manner established by the Trust. With respect to each Account, the Company will vote Shares of the Trust held by the Account and for which no timely voting instructions from policyowners are received as well as Shares it owns that are held by that Account, in the same proportion as those Shares for which voting instructions are received. The Company and its agents will in no way recommend or oppose or interfere with the solicitation of proxies for Trust shares held by Contract owners without the prior written consent of the Trust, which consent may be withheld in the Trust's sole discretion. 2.9 The Company shall notify the Trust of any applicable state insurance laws that restrict the Portfolios' investments or otherwise affect the operation of the Trust and shall notify the Trust of any changes in such laws. ARTICLE III Representations and Warranties ------------------------------ 3.1 The Company represents and warrants that it is an insurance company duly organized and in good standing under the laws of the State of Delaware and that it has legally and validly established each Account as a segregated asset account under such law on the date set forth in Schedule A. -5- 3.2 The Company represents and warrants that each Account has been registered or, prior to any issuance or sale of the Contracts, will be registered as a unit investment trust in accordance with the provisions of the 1940 Act. 3.3 The Company represents and warrants that the Contracts or interests in the Accounts (1) are or, prior to issuance, will be registered as securities under the 1933 Act or, alternatively (2) are not registered because they are properly exempt from registration under the 1933 Act or will be offered exclusively in transactions that are properly exempt from registration under the 1933 Act. The Company further represents and warrants that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws; and the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. 3.4 The Trust represents and warrants that it is duly organized and validly existing under the laws of the State of Delaware. 3.5 The Trust represents and warrants that the Trust Shares offered and sold pursuant to this Agreement will be registered under the 1933 Act and the Trust shall be registered under the 1940 Act prior to any issuance or sale of such Shares. The Trust shall amend its registration statement under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its Shares. The Trust shall register and qualify its Shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Trust. 3.6 The Trust represents and warrants that the investments of each Portfolio will comply with the diversification requirements set forth in Section 817(h) of the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder. ARTICLE IV Potential Conflicts ------------------- 4.1 The parties acknowledge that the Trust's shares may be made available for investment to other Participating Insurance Companies. In such event, the Trustees will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the contract owners of all Participating Insurance Companies. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard -6- the voting instructions of contract owners. The Trustees shall promptly inform the Company if they determine that an irreconcilable material conflict exists and the implications thereof. 4.2 The Company agrees to promptly report any potential or existing conflicts of which it is aware to the Trustees. The Company will assist the Trustees in carrying out their responsibilities under the Exemptive Order by providing the Trustees with all information reasonably necessary for the Trustees to consider any issues raised including, but not limited to, information as to a decision by the Company to disregard Contract owner voting instructions. 4.3 If it is determined by a majority of the Trustees, or a majority of its disinterested Trustees, that a material irreconcilable conflict exists that affects the interests of Contract owners, the Company shall, in cooperation with other Participating Insurance Companies whose contract owners are also affected, at its expense and to the extent reasonably practicable (as determined by the Trustees) take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, which steps could include: (a) withdrawing the assets allocable to some or all of the Accounts from the Trust or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Trust, or submitting the question of whether or not such segregation should be implemented to a vote of all affected Contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Contract owners the option of making such a change; and (b) establishing a new registered management investment company or managed separate account. 4.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Trust's election, to withdraw the affected Account's investment in the Trust and terminate this Agreement with respect to such Account; provided, however that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented. Until the end of such six (6) month period, the Trust shall continue to accept and implement orders by the Company for the purchase and redemption of shares of the Trust. 4.5 If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Trust and terminate this Agreement with respect to such Account within six (6) months after the Trustees inform the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. Until the end of such six (6) month period, the Trust shall continue to accept and implement orders by the Company for the purchase and redemption of Shares of the Trust. -7- 4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a majority of the disinterested Trustees shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Company be required to establish a new funding medium for the Contracts if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Trustees determine that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Trust and terminate this Agreement within six (6) months after the Trustees inform the Company in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested Trustees. 4.7 The Company shall at least annually submit to the Trustees such reports, materials or data as the Trustees may reasonably request so that the Trustees may fully carry out the duties imposed upon them by the Exemptive Order, and said reports, materials and data shall be submitted more frequently if deemed appropriate by the Trustees. 4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Exemptive Order) on terms and conditions materially different from those contained in the Exemptive Order, then the Trust and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable. ARTICLE V Indemnification --------------- 5.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify and hold harmless the Trust and each of its Trustees, officers, employees and agents and each person, if any, who controls the Trust within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Article V) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or expenses (including the reasonable costs of investigating or defending any alleged loss, claim, damage, liability or expense and reasonable legal counsel fees incurred in connection therewith) (collectively, "Losses"), to which the Indemnified Parties may become subject under any statute or regulation, or at common law or otherwise, insofar as such Losses: (a) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in a registration statement or prospectus for the Contracts or in the Contracts themselves or in sales literature for the Trust generated or -8- approved by the Company on behalf of the Contracts or Accounts (or any amendment or supplement to any of the foregoing) (collectively, "Company Documents" for the purposes of this Article V), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this indemnity shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and was accurately derived from written information furnished to the Company by or on behalf of the Trust for use in Company Documents or otherwise for use in connection with the sale of the Contracts or Trust Shares; or (b) arise out of or result from statements or representations (other than statements or representations contained in and accurately derived from Trust Documents as defined in Section 5.2(a)) or wrongful conduct of the Company or persons under its control, with respect to the sale or acquisition of the Contracts or Trust Shares; or (c) arise out of or result from any untrue statement or alleged untrue statement of a material fact contained in Trust Documents as defined in Section 5.2(a) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission was made in reliance upon and accurately derived from written information furnished to the Trust by or on behalf of the Company; or (d) arise out of or result from any failure by the Company to provide the services or furnish the materials required under the terms of this Agreement; or (e) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company. 5.2 INDEMNIFICATION BY THE TRUST. The Trust agrees to indemnify and hold harmless the Company and each of its directors, officers, employees and agents and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Article V) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Trust) or expenses (including the reasonable costs of investigating or defending any alleged loss, claim, damage, liability or expense and reasonable legal counsel fees incurred in connection therewith) (collectively, "Losses"), to which the Indemnified Parties may become subject under any statute or regulation, or at common law or otherwise, insofar as such Losses: (a) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus for the Trust (or any amendment or supplement thereto), (collectively, "Trust Documents" for the purposes of this Article V), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary -9- to make the statements therein not misleading, provided that this indemnity shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and was accurately derived from written information furnished to the Trust by or on behalf of the Company for use in Trust Documents or otherwise for use in connection with the sale of the Contracts or Trust Shares; or (b) arise out of or result from statements or representations (other than statements or representations contained in and accurately derived from Company Documents) or wrongful conduct of the Trust or persons under its control, with respect to the sale or acquisition of the Contracts or Trust Shares; or (c) arise out of or result from any untrue statement or alleged untrue statement of a material fact contained in Company Documents or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission was made in reliance upon and accurately derived from written information furnished to the Company by or on behalf of the Trust; or (d) arise out of or result from any failure by the Trust to provide the services or furnish the materials required under the terms of this Agreement; or (e) arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Trust. 5.3 Neither the Company nor the Trust shall be liable under the indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect to any Losses incurred or assessed against an Indemnified Party that arise from such Indemnified Party's willful misfeasance, bad faith or negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement. 5.4 Neither the Company nor the Trust shall be liable under the indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the other party in writing within a reasonable time after the summons, or other first written notification, giving information of the nature of the claim shall have been served upon or otherwise received by such Indemnified Party (or after such Indemnified Party shall have received notice of service upon or other notification to any designated agent), but failure to notify the party against whom indemnification is sought of any such claim shall not relieve that party from any liability which it may have to the Indemnified Party in the absence of Sections 5.1 and 5.2. 5.5 In case any such action is brought against the Indemnified Parties, the indemnifying party shall be entitled to participate, at its own expense, in the defense of such -10- action. The indemnifying party also shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to the party named in the action. After notice from the indemnifying party to the Indemnified Party of an election to assume such defense, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the indemnifying party will not be liable to the Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. ARTICLE VI Termination ----------- 6.1 This Agreement may be terminated by either party for any reason by ninety (90) days advance written notice delivered to the other party. 6.2 Notwithstanding any termination of this Agreement, the Trust shall, at the option of the Company, continue to make available additional shares of the Trust (or any Portfolio) pursuant to the terms and conditions of this Agreement for all Contracts in effect on the effective date of termination of this Agreement, provided that the Company continues to pay the costs set forth in Section 2.3. 6.3 The provisions of Article V shall survive the termination of this Agreement, and the provisions of Article IV and Section 2.8 shall survive the termination of this Agreement as long as Shares of the Trust are held on behalf of Contract owners in accordance with Section 6.2. ARTICLE VII Notices ------- Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Trust: Janus Aspen Series 100 Fillmore Street Denver, Colorado 80206 Attention: General Counsel If to the Company: Golden American Life Insurance Company1475 Dunwoody Drive West Chester, PA 19380Attention: Linda E. Senker -11- ARTICLE VIII Miscellaneous ------------- 8.1 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 8.2 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 8.3 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 8.4 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of State of Colorado. 8.5 The parties to this Agreement acknowledge and agree that all liabilities of the Trust arising, directly or indirectly, under this Agreement, of any and every nature whatsoever, shall be satisfied solely out of the assets of the Trust and that no Trustee, officer, agent or holder of shares of beneficial interest of the Trust shall be personally liable for any such liabilities. 8.6 Each party shall cooperate with each other party and all appropriate governmental authorities (including without limitation the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 8.7 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 8.8 The parties to this Agreement acknowledge and agree that this Agreement shall not be exclusive in any respect. 8.9 Neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the prior written approval of the other party. 8.10 No provisions of this Agreement may be amended or modified in any manner except by a written agreement properly authorized and executed by both parties. IN WITNESS WHEREOF, the parties have caused their duly authorized officers to execute this Participation Agreement as of the date and year first above written. -12- JANUS ASPEN SERIES By: /s/Bonnie M. Howe --------------------------------- Name: Bonnie M. Howe --------------------------------- Title: Vice President --------------------------------- GOLDEN AMERICAN LIFE INSURANCE COMPANY By: /s/Myles R. Tashman --------------------------------- Name: Myles R. Tashman --------------------------------- Title: Executive Vice President --------------------------------- -13- Schedule A ---------- Separate Accounts and Associated Contracts Contracts Funded Name of Separate Account By Separate Account - ------------------------ ------------------- Separate Account B SmartDesign Variable Annuity SmartDesign Advantage Retirement Solutions- ING Rollover Choice -14- Schedule B ---------- List of Portfolios ------------------ Name of Portfolio - ----------------- All Portfolios of Janus Aspen Series open to new investors (as set forth in the current prospectus of Janus Aspen Series) except Global Technology Portfolio and Global Life Sciences Portfolio. -15- EX-99.B8J 7 ingvit.txt ING VARIABLE INS TRUST PART. AGREE PARTICIPATION AGREEMENT ----------------------- AMONG GOLDEN AMERICAN LIFE INSURANCE COMPANY, ING VARIABLE INSURANCE TRUST, ING MUTUAL FUNDS MANAGEMENT CO. LLC AND ING FUNDS DISTRIBUTOR, INC. THIS AGREEMENT, dated as of the 28th day of April 2000, by and among Golden American Life Insurance Company (the "Company"), a life insurance company organized under the laws of the State of Delaware, on its own behalf and on behalf of each separate account of the Company set forth on Schedule A hereto as may be amended from time to time (each such account hereinafter referred to as the "Account"), ING Variable Insurance Trust (the "Fund"), a management investment company and business trust organized under the laws of the State of Delaware, ING Mutual Funds Management Co. LLC (the "Adviser"), a limited liability company organized under the laws of the State of Delaware, and ING Funds Distributors, Inc. (the "Distributor"), a corporation organized under the laws of the State of Iowa. WHEREAS, the Fund engages in business as an open-end management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance and variable annuity contracts (the "Variable Insurance Products") to be offered by insurance companies which have entered into participation agreements with the Fund, Adviser and Distributor ("Participating Insurance Companies"); WHEREAS, the shares of beneficial interest of the Fund are divided into several series of shares, each designated a "Portfolio" and representing the interest in a particular managed portfolio of securities and other assets; WHEREAS, the Fund has obtained, or will obtain before entering into a Participation Agreement with any other party, an order from the Securities and Exchange Commission (the "SEC") granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of sections 9(a), 13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended, (the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, if and to the extent necessary to permit shares of the Fund to be sold to and held by variable annuity and variable life insurance separate accounts of both affiliated and unaffiliated life insurance companies (the "Mixed and Shared Funding Exemptive Order"), and the parties to this Agreement agree to comply with the conditions or undertakings specified in the Mixed and Shared Funding Exemptive Order to the extent applicable to each such party; WHEREAS, the Fund is registered as an open-end management investment company under the 1940 Act and shares of the Portfolios are registered under the Securities Act of 1933, as amended (the "1933 Act"); WHEREAS, the Adviser, which serves as investment adviser to the Designated Portfolios (as hereinafter defined) of the Fund, is duly registered as an investment adviser under the federal Investment Advisers Act of 1940, as amended; WHEREAS, the Company has registered or will register certain variable annuity contracts (the "Contracts") under the 1933 Act; WHEREAS, the Account is a duly organized, validly existing segregated asset account, established by the Company under the insurance laws of the State of Delaware, to set aside and invest assets attributable to the Contracts; WHEREAS, the Company has registered the Account as a unit investment trust under the 1940 Act; WHEREAS, the Company has issued or will issue certain variable life insurance and/or variable annuity contracts supported wholly or partially by the Account (the "Contracts"), and said Contracts are listed in Schedule A hereto, as it may be amended from time to time by mutual written agreement; WHEREAS, the Distributor, which serves as distributor to the Fund, is registered as a broker dealer with the SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios listed in Schedule B hereto, as it may be amended from time to time by mutual written agreement (the "Designated Portfolios") on behalf of the Account to fund the aforesaid Contracts, and the Distributor is authorized to sell such shares to the Account at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Company, the Fund, the Adviser, and the Distributor agree as follows: ARTICLE I. Sale of Fund Shares ------------------- 1.1. The Fund agrees to sell to the Company those shares of the Designated Portfolios that each Account or the appropriate subaccount of each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt and acceptance by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company will be the designee of the Fund for receipt of such orders from each Account or the appropriate subaccount of each Account and receipt by such designee will constitute receipt by the Fund; provided that the Fund receives notice of such order by 10:00 a.m. Eastern Time on the next following business day ("T+1"). "Business Day" will mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the SEC. 1.2. The Company will pay for Fund shares on T+1 that an order to purchase Fund shares is made in accordance with Section 1.1 above. Payment will be in federal funds transmitted by wire. This wire transfer will be initiated by 12:00 p.m. Eastern Time. 1.3. The Fund agrees to make shares of the Designated Portfolios available indefinitely for purchase at the applicable net asset value per share by Participating Insurance Companies and their separate accounts on those days on which the Fund calculates its Designated Portfolio net asset value pursuant to rules of the SEC and the Fund shall use reasonable efforts to calculate such net asset value on -2- each day the New York Stock Exchange is open for trading; provided, however, that the Board of Trustees of the Fund (the "Fund Board") may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Fund Board, acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, necessary in the best interests of the shareholders of such Portfolio. 1.4. On each Business Day on which the Fund calculates its net asset value, the Company will aggregate and calculate the net purchase or redemption orders for each Account or the appropriate subaccount of each Account maintained by the Fund in which contractowner assets are invested. Net orders will only reflect orders that the Company has received prior to the close of regular trading on the New York Stock Exchange, Inc. (the "NYSE") (currently 4:00 p.m., Eastern Time) on that Business Day. Orders that the Company has received after the close of regular trading on the NYSE will be treated as though received on the next Business Day. Each communication of orders by the Company will constitute a representation that such orders were received by it prior to the close of regular trading on the NYSE on the Business Day on which the purchase or redemption order is priced in accordance with Rule 22c-1 under the 1940 Act. Other procedures relating to the handling of orders will be in accordance with the prospectus and statement of information of the relevant Designated Portfolio or with oral or written instructions that the Distributor or the Fund will forward to the Company from time to time. 1.5. The Fund agrees that shares of the Fund will be sold only to Participating Insurance Companies and their separate accounts, qualified pension and retirement plans or such other persons as are permitted under applicable provisions of the Internal Revenue Code of 1986, as amended, (the "Internal Revenue Code"), and regulations promulgated thereunder, the sale to which will not impair the tax treatment currently afforded the Contracts. No shares of any Portfolio will be sold to the general public except as set forth in this Section 1.5. 1.6. The Fund agrees to redeem for cash, upon the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt and acceptance by the Fund or its agent of the request for redemption. For purposes of this Section 1.6, the Company will be the designee of the Fund for receipt of requests for redemption from each Account or the appropriate subaccount of each Account and receipt by such designee will constitute receipt by the Fund, provided the Fund receives notice of request for redemption by 10:00 a.m. Eastern Time on the next following Business Day. Payment will be in federal funds transmitted by wire to the Company's account as designated by the Company in writing from time to time, on the same Business Day the Fund receives notice of the redemption order from the Company. The Fund reserves the right to delay payment of redemption proceeds, but in no event may such payment be delayed longer than the period permitted by the 1940 Act. The Fund will not bear any responsibility whatsoever for the proper disbursement or crediting of redemption proceeds; the Company alone will be responsible for such action. If notification of redemption is received after 10:00 a.m. Eastern Time, payment for redeemed shares will be made on the next following Business Day. 1.7. The Company agrees to purchase and redeem the shares of the Designated Portfolios offered by the then current prospectus of the Fund in accordance with the provisions of such prospectus. 1.8. Issuance and transfer of the Fund's shares will be by book entry only. Stock certificates will not be issued to the Company or any Account. Purchase and redemption orders for Fund shares will be recorded in an appropriate title for each Account or the appropriate subaccount of each Account. -3- 1.9. The Fund will furnish same day notice (by telecopier, followed by written confirmation) to the Company of the declaration of any income, dividends or capital gain distributions payable on each Designated Portfolio's shares. The Company hereby elects to receive all such dividends and distributions as are payable on the Designated Portfolio shares in the form of additional shares of that Designated Portfolio. The Fund will notify the Company of the number of shares so issued as payment of such dividends and distributions. The Company reserves the right to revoke this election upon reasonable prior notice to the Fund and to receive all such dividends and distributions in cash. 1.10. The Fund will make the net asset value per share for each Designated Portfolio available to the Company on a daily basis as soon as reasonably practical after the net asset value per share is calculated and will use its best efforts to make such net asset value per share available by 6:00 p.m., Eastern Time, but in no event later than 7:00 p.m., Eastern Time, each Business Day. 1.11. In the event adjustments are required to correct any error in the computation of the net asset value of the Fund's shares, the Fund or the Distributor will notify the Company as soon as practicable after discovering the need for those adjustments that result in an aggregate reimbursement of $150 or more to any one subaccount of each Account maintained by a Designated Portfolio unless notified otherwise by the Company (or, if greater, results in an adjustment of $10 or more to each contractowner's account). Any such notice will state for each day for which an error occurred the incorrect price, the correct price and, to the extent communicated to the Fund's shareholders, the reason for the price change. The Company may send this notice or a derivation thereof (so long as such derivation is approved in advance by the Distributor or the Adviser) to contractowners whose accounts are affected by the price change. The parties will negotiate in good faith to develop a reasonable method for effecting such adjustments. The Fund shall provide the Company, on behalf of the Account or the appropriate subaccount of each Account, with a prompt adjustment to the number of shares purchased or redeemed to reflect the correct share net asset value. 1.12. (a) The parties hereto acknowledge that the arrangement contemplated by this Agreement is not exclusive; the Fund's shares may be sold to other insurance companies (subject to Section 1.5 hereof) and the cash value of the Contracts may be invested in other investment companies, provided, however, that until this Agreement is terminated pursuant to Article X, the Company shall promote the Designated Portfolios on the same basis as other funding vehicles available under the Contracts and funding vehicles other than those listed on Schedule B to this Agreement may be available for the investment of the cash value of the Contracts. (b) The Company shall not, without prior notice to the Advisor and the Distributor (unless otherwise required by applicable law), take any action to operate the Account as a management investment company under the 1940 Act. (c) The Company shall not, without prior notice to the Advisor and the Distributor (unless otherwise required by applicable law), induce contractowners to change or modify the Fund or change the Fund's distributor or investment adviser. (d) The Company shall not, without prior notice to the Fund, induce contractowners to vote on any matter submitted for consideration by the shareholders of the Fund in a manner other than as recommended by the Fund Board. -4- ARTICLE II. Representations and Warranties ------------------------------ 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act and that the Contracts will be issued and sold in compliance with all applicable federal and state laws, including state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account as a separate account under applicable state law and has registered the Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts, and that it will maintain such registration for so long as any Contracts are outstanding. The Company will amend the registration statement under the 1933 Act for the Contracts and the registration statement under the 1940 Act for the Account from time to time as required in order to effect the continuous offering of the Contracts or as may otherwise be required by applicable law. The Company will register and qualify the Contracts for sale in accordance with the securities laws of the various states only if and to the extent deemed necessary by the Company. 2.2. The Company represents that the Contracts are currently and at the time of issuance will be treated as endowment, annuity or life insurance contracts under applicable provisions of the Internal Revenue Code, and that it will make every effort to maintain such treatment and that it will notify the Fund and the Adviser immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.3. The Company represents and warrants that it will not purchase shares of the Designated Portfolios with assets derived from tax-qualified retirement plans except, indirectly, through Contracts purchased in connection with such plans. 2.4. The Fund represents and warrants that Fund shares of the Designated Portfolios sold pursuant to this Agreement will be registered under the 1933 Act and duly authorized for issuance in accordance with applicable law and that the Fund is and will remain registered under the 1940 Act for as long as such shares of the Designated Portfolios are outstanding. The Fund will amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund will register and qualify the shares of the Designated Portfolios for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund. 2.5. The Fund represents that it is currently qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code, and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.6. The Fund represents and warrants that in performing the services described in this Agreement, the Fund will comply with all applicable laws, rules and regulations. The Fund makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies, objectives and restrictions) complies with the insurance laws and regulations of any state. The Fund and the Distributor agree that upon request they will use their best efforts to furnish the information required by state insurance laws so that the Company can obtain the authority needed to issue the Contracts in the various states. -5- 2.7. The Fund represents and warrants its Fund Board has formulated and approved a plan under Rule 12b-1 to finance distribution expenses in accordance with the 1940 Act. 2.8. The Distributor represents and warrants that it will distribute the Fund shares of the Designated Portfolios in accordance with all applicable federal and state securities laws including, without limitation, the 1933 Act, the 1934 Act and the 1940 Act. 2.9. The Fund represents that it is lawfully organized and validly existing under the laws of the State of Delaware and that it does and will comply in all material respects with applicable provisions of the 1940 Act. 2.10. The Distributor represents and warrants that it is and will remain duly registered under all applicable federal and state securities laws and that it will perform its obligations for the Fund in accordance in all material respects with any applicable state and federal securities laws. 2.11. The Fund and the Distributor represent and warrant that all of their trustees, officers, employees, investment advisers, and other individuals/entities having access to the funds and/or securities of the Fund are and continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company. ARTICLE III. Prospectuses and Proxy Statements; Voting ----------------------------------------- 3.1. The Fund or the Distributor will provide the Company in conjunction with the Company's standard printing cycle, at the Company's expense, with as many copies of the current Fund prospectus for the Designated Portfolios as the Company may reasonably request for distribution, at the Company's expense, to prospective contractowners and applicants. The Fund or the Distributor will provide the Company in conjunction with the Company's standard printing cycle, at the Company's expense, as many copies of said prospectus as necessary for distribution, at the Company's expense, to existing contractowners. The Fund or the Distributor will provide the copies of said prospectus to the Company or to its mailing agent. If requested by the Company in lieu thereof, the Fund or the Distributor will provide such documentation, including a computer diskette or a final copy of a current prospectus set in type at the Fund's or Distributor's expense, and such other assistance as is reasonably necessary in order for the Company at least annually (or more frequently if the Fund prospectus is amended more frequently) to have the Fund's prospectus and the prospectuses of other mutual funds in which assets attributable to the Contracts may be invested printed together in one document. If in the event the Fund issues a new prospectus outside of the Company's standard printing cycle, then the Fund or the Distributor will provide the Company, at the Fund's or Distributor's expense, with as many copies of the current Fund prospectus for the Designated Portfolios as the Company may reasonably request for distribution, at the Company's expense, to existing and prospective contractowners and applicants. 3.2. The Fund or the Distributor will provide the Company, at the Company's expense, with as many copies of the statement of additional information as the Company may reasonably request for distribution, at the Company's expense, to prospective contractowners and applicants. The Fund or the Distributor will provide, at the Company's expense, as many copies of said statement of additional information as necessary for distribution, at the Company's expense, to any existing contractowner who requests such statement or whenever state or federal law otherwise requires that such statement be provided. The Fund or the Distributor will provide the copies of said statement of additional information -6- to the Company or to its mailing agent. If requested by the Company in lieu thereof, the Fund or the Distributor will provide such documentation, including a computer diskette or a final copy of a current statement of additional information set in type at the Fund's or Distributor's expense. 3.3. The Fund or the Distributor, at the Fund's or its affiliate's expense, will provide the Company or its mailing agent with copies of its proxy material, if any, reports to shareholders and other communications to shareholders in such quantity as the Company will reasonably require. The Company will distribute this proxy material, reports and other communications to existing contractowners and tabulate the votes. 3.4. If and to the extent required by law the Company will: (a) solicit voting instructions from contractowners; (b) vote the shares of the Designated Portfolios held in the Account in accordance with instructions received from contractowners; and (c) vote shares of the Designated Portfolios held in the Account for which no timely instructions have been received, as well as shares it owns, in the same proportion as shares of such Designated Portfolio for which instructions have been received from the Company's contractowners; so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass-through voting privileges for variable contractowners. Except as set forth above, the Company reserves the right to vote Fund shares held in any segregated asset account in its own right, to the extent permitted by law. The Company will be responsible for assuring that each of its separate accounts participating in the Fund calculates voting privileges in a manner consistent with all legal requirements, including the Mixed and Shared Funding Exemptive Order. 3.5. The Fund will comply with all provisions of the 1940 Act requiring voting by shareholders, and in particular, the Fund either will provide for annual meetings (except insofar as the SEC may interpret Section 16 of the 1940 Act not to require such meetings) or, as the Fund currently intends to comply with Section 16(c) of the 1940 Act (although the Fund is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Fund will act in accordance with the SEC's interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the SEC may promulgate with respect thereto. ARTICLE IV. Sales Material and Information ------------------------------ 4.1. The Distributor will provide the Company on a timely basis with investment performance information for each Designated Portfolio in which the Company maintains a subaccount of the Account, including total return for the preceding calendar month and calendar quarter, the calendar year to date, and the prior one-year, five-year, and ten year (or life of the Fund) periods. The Company may, based on the SEC mandated information supplied by the Distributor, prepare communications for contractowners ("Contractowner Materials"). The Company will provide copies of all Contractowner Materials concurrently with their first use for the Distributor's internal recordkeeping purposes. It is understood that neither the Distributor nor any Designated Portfolio will be responsible for errors or omissions in, or the content of, Contractowner Materials except to the extent that the error or omission resulted from information provided by or on behalf of the Distributor or the Designated Portfolio. Any printed -7- information that is furnished to the Company pursuant to this Agreement other than each Designated Portfolio's prospectus or statement of additional information (or information supplemental thereto), periodic reports and proxy solicitation materials is the Distributor's sole responsibility and not the responsibility of any Designated Portfolio or the Fund. The Company agrees that the Portfolios, the shareholders of the Portfolios and the officers and governing Board of the Fund will have no liability or responsibility to the Company in these respects. 4.2. The Company will not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement, prospectus or statement of additional information for Fund shares, as such registration statement, prospectus and statement of additional information may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in published reports for the Fund which are in the public domain or approved by the Fund or the Distributor for distribution, or in sales literature or other material provided by the Fund, Adviser or by the Distributor, except with permission of the Distributor. Any piece of sales literature or other promotional material intended to be used by the Company which requires the permission of the Distributor prior to use will be furnished by Company to the Distributor, or its designee, at least ten (10) business days prior to its use. No such material will be used if the Distributor reasonably objects to such use within five (5) business days after receipt of such material. Nothing in this Section 4.2 will be construed as preventing the Company or its employees or agents from giving advice on investment in the Fund. 4.3. The Fund, the Adviser or the Distributor will furnish, or will cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material in which the Company or its Account is named, at least ten (10) business days prior to its use. No such material will be used if the Company reasonably objects to such use within five (5) business days after receipt of such material. 4.4. The Fund, the Adviser and the Distributor will not give any information or make any representations or statements on behalf of the Company or concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement, prospectus or statement of additional information for the Contracts, as such registration statement, prospectus and statement of additional information may be amended or supplemented from time to time, or in published reports for each Account or the Contracts which are in the public domain or approved by the Company for distribution to contractowners, or in sales literature or other material provided by the Company, except with permission of the Company. The Company agrees to respond to any request for approval on a prompt and timely basis. 4.5. The Fund will provide to the Company at least one complete copy of all registration statements, prospectuses, statements of additional information, reports, proxy statements, sales literature and other promotional materials, applications for exemptions, requests for no-action letters, and all amendments to any of the above, that relate to the Fund or its shares, contemporaneously with the filing of such document with the SEC, the NASD or other regulatory authority. 4.6. The Company will provide to the Fund at least one complete copy of all registration statements, prospectuses, statements of additional information, reports, solicitations for voting instructions, sales literature and other promotional materials, applications for exemptions, requests for no action letters, and all amendments to any of the above, that relate to the Contracts or each Account, contemporaneously with the filing of such document with the SEC, the NASD or other regulatory authority. -8- 4.7. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media, (e.g., on-line networks such as the Internet or other electronic messages), sales literature (i.e., any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisements, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all agents or employees, registration statements, prospectuses, statements of additional information, shareholder reports, and proxy materials and any other material constituting sales literature or advertising under the NASD rules, the 1933 Act or the 1940 Act. 4.8. The Fund and the Distributor hereby consent to the Company's use of the names ING Mutual Funds Management Co. LLC, ING Variable Insurance Trust, the portfolio names designated on Schedule B or other designated names as may be used from time to time in connection with the marketing of the Contracts, subject to the terms of Sections 4.1 and 4.2 of this Agreement. Such consent will terminate with the termination of this Agreement. ARTICLE V. Fees and Expenses ----------------- 5.1. The Fund, the Adviser and the Distributor will pay no fee or other compensation to the Company under this Agreement except pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses. The Fund may make Rule 12b-1 payments to the Company or to the underwriter for the Contracts if and in such amounts agreed to by the Fund in writing. 5.2. All expenses incident to performance by the Fund of this Agreement will be paid by the Fund to the extent permitted by law. The Fund will bear the expenses for the cost of registration and qualification of the Fund's shares; preparation and filing of the Fund's prospectus, statement of additional information and registration statement, proxy materials and reports; setting in type and printing proxy materials and reports by it to contractowners (including the costs of printing a Fund prospectus that constitutes an annual report); the preparation of all statements and notices required by any federal or state law; all taxes on the issuance or transfer of the Fund's shares; any expenses permitted to be paid or assumed by the Fund pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act; and all other expenses set forth in Article III of this Agreement. ARTICLE VI. Diversification and Qualification --------------------------------- 6.1. The Adviser will ensure that the Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable annuity contracts under the Internal Revenue Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will comply with Section 817(h) of the Internal Revenue Code and Treasury Regulation 1.817-5, as amended from time to time, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulation. In the event of a breach of this Article VI by the Fund, it will take all reasonable steps: (a) to notify the Company of such breach; and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Treasury Regulation 1.817-5. 6.2. The Fund represents that it is or will be qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code, and that it will make every effort to maintain such -9- qualification (under Subchapter M or any successor or similar provisions) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 6.3. The Company represents that the Contracts are currently, and at the time of issuance shall be, treated as life insurance or annuity insurance contracts, under applicable provisions of the Internal Revenue Code, and that it will make every effort to maintain such treatment, and that it will notify the Fund and the Distributor immediately upon having a reasonable basis for believing the Contracts have ceased to be so treated or that they might not be so treated in the future. The Company agrees that any prospectus offering a contract that is a "modified endowment contract" as that term is defined in Section 7702A of the Internal Revenue Code (or any successor or similar provision), shall identify such contract as a modified endowment contract. ARTICLE VII. Potential Conflicts ------------------- 7.1. The Fund Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contractowners of all separate accounts investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contractowners; or (f) a decision by an insurer to disregard the voting instructions of contractowners. The Fund Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. 7.2. The Company will report any potential or existing conflicts of which it is aware to the Fund Board. The Company will assist the Fund Board in carrying out its responsibilities under the Mixed and Shared Funding Exemptive Order, by providing the Fund Board with all information reasonably necessary for the Fund Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Fund Board whenever contractowner voting instructions are disregarded. 7.3. If it is determined by a majority of the Fund Board, or a majority of its disinterested members, that a material irreconcilable conflict exists, the Company and other Participating Insurance Companies shall, at their expense and to the extent reasonably practicable (as determined by a majority of the disinterested Fund Board members), take whatever steps are necessary to remedy or eliminate the irreconcilable material conflict, up to and including: (a) withdrawing the assets allocable to some or all of the separate accounts from the Fund or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Fund, or submitting the question whether such segregation should be implemented to a vote of all affected contractowners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contractowners, life insurance contractowners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contractowners the option of making such a change; and (b) establishing a new registered management investment company or managed separate account. -10- 7.4. If a material irreconcilable conflict arises because of a decision by the Company to disregard contractowner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Fund's election, to withdraw the Account's investment in the Fund and terminate this Agreement with respect to each Account; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Fund Board. Any such withdrawal and termination must take place within six (6) months after the Fund gives written notice that this provision is being implemented, and until the end of that six month period the Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the affected Account's investment in the Fund and terminate this Agreement with respect to such Account within six months after the Fund Board informs the Company in writing that it has determined that such decision has created an irreconcilable material conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Fund Board. Until the end of the foregoing six month period, the Fund shall continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Fund. 7.6. For purposes of Section 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Fund Board shall determine whether any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.3 to establish a new funding medium for the Contract if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the irreconcilable material conflict. In the event that the Fund Board determines that any proposed action does not adequately remedy any irreconcilable material conflict, then the Company will withdraw the Account's investment in the Fund and terminate this Agreement within six (6) months after the Fund Board informs the Company in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested members of the Fund Board. 7.7. If and to the extent the Mixed and Shared Funding Exemptive Order or any amendment thereto contains terms and conditions different from Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4, and 7.5 of this Agreement, then the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with the Mixed and Shared Funding Exemptive Order, and Sections 3.4, 3.5, 3.6, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in the Mixed and Shared Funding Exemptive Order or any amendment thereto. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Mixed and Shared Funding Exemptive Order, then (a) the Fund and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.5, 3.6, 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the -11- extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. Indemnification --------------- 8.1. Indemnification By the Company ------------------------------ (a) The Company agrees to indemnify and hold harmless the Fund, the Adviser, the Distributor, and each person, if any, who controls or is associated with the Fund, the Adviser or the Distributor within the meaning of such terms under the federal securities laws and any director, trustee, officer, partner, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including reasonable legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements: (1) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement, prospectus or statement of additional information for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated or necessary to make such statements not misleading in light of the circumstances in which they were made; provided that this agreement to indemnify will not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with written information furnished to the Company by the Fund, the Adviser or the Distributor for use in the registration statement, prospectus or statement of additional information for the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (2) arise out of or as a result of statements or representations by or on behalf of the Company or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund shares; or (3) arise out of any untrue statement or alleged untrue statement of a material fact contained in the Fund registration statement, prospectus, statement of additional information or sales literature or other promotional material of the Fund (or amendment or supplement) or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make such statements not misleading in light of the circumstances in which they were made, if such a statement or omission was made in reliance upon and in conformity with information furnished to the Fund by or on behalf of the Company or persons under its control; or (4) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or -12- (5) arise out of any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach by the Company of this Agreement; except to the extent provided in Sections 8.1(b) and 8.3 hereof. This indemnification will be in addition to any liability that the Company otherwise may have. (b) No party will be entitled to indemnification under Section 8.1(a) to the extent such loss, claim, damage, liability or litigation is due to the willful misfeasance, bad faith, or gross negligence in the performance of such party's duties under this Agreement, or by reason of such party's reckless disregard of its obligations or duties under this Agreement by the party seeking indemnification. (c) The Indemnified Parties promptly will notify the Company of the commencement of any litigation, proceedings, complaints or actions by regulatory authorities against them in connection with the issuance or sale of the Fund shares or the Contracts or the operation of the Fund. 8.2. Indemnification By the Adviser, the Fund and the Distributor ------------------------------------------------------------ (a) The Adviser, the Fund and the Distributor, in each case solely to the extent relating to such party's responsibilities hereunder, agree to indemnify and hold harmless the Company and each person, if any, who controls or is associated with the Company within the meaning of such terms under the federal securities laws and any director, trustee, officer, partner, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, expenses, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements: (1) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or statement of additional information for the Fund or sales literature or other promotional material of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated or necessary to make such statements not misleading in light of the circumstances in which they were made; provided that this agreement to indemnify will not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Adviser, the Distributor or the Fund by or on behalf of the Company for use in the registration statement, prospectus or statement of additional information for the Fund or in sales literature of the Fund (or any amendment or supplement thereto) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (2) arise out of or as a result of statements or representations or wrongful conduct of the Adviser, the Fund or the Distributor or persons under the control of the Adviser, the Fund or the Distributor respectively, with respect to the sale of the Fund shares; or -13- (3) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, statement of additional information or sales literature or other promotional material covering the Contracts (or any amendment or supplement thereto), or the omission or alleged omission to state therein a material fact required to be stated or necessary to make such statement or statements not misleading in light of the circumstances in which they were made, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company by the Adviser, the Fund or the Distributor or persons under the control of the Adviser, the Fund or the Distributor; or (4) arise as a result of any failure by the Fund, the Adviser or the Distributor to provide the services and furnish the materials under the terms of this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements and procedures related thereto specified in Article VI of this Agreement); or (5) arise out of or result from any material breach of any representation and/or warranty made by the Adviser, the Fund or the Distributor in this Agreement, or arise out of or result from any other material breach of this Agreement by the Adviser, the Fund or the Distributor; except to the extent provided in Sections 8.2(b) and 8.3 hereof. This indemnification will be in addition to any liability that the Fund, Adviser or the Distributor otherwise may have. (b) No party will be entitled to indemnification under Section 8.2(a) to the extent such loss, claim, damage, liability or litigation is due to the willful misfeasance, bad faith, or gross negligence in the performance of such party's duties under this Agreement, or by reason of such party's reckless disregard of its obligations or duties under this Agreement by the party seeking indemnification. (c) The Indemnified Parties will promptly notify the Adviser, the Fund and the Distributor of the commencement of any litigation, proceedings, complaints or actions by regulatory authorities against them in connection with the issuance or sale of the Contracts or the operation of the account. 8.3. Indemnification Procedure ------------------------- Any person obligated to provide indemnification under this Article VIII ("Indemnifying Party" for the purpose of this Section 8.3) will not be liable under the indemnification provisions of this Article VIII with respect to any claim made against a party entitled to indemnification under this Article VIII ("Indemnified Party" for the purpose of this Section 8.3) unless such Indemnified Party will have notified the Indemnifying Party in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim will have been served upon such Indemnified Party (or after such party will have received notice of such service on any designated agent), but failure to notify the Indemnifying Party of any such claim will not relieve the Indemnifying Party from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of the indemnification provision of this Article VIII, except to the extent that the failure to notify results in the failure of actual notice to the Indemnifying Party and such Indemnifying Party is damaged solely as a result of failure to give such notice. In case any such action is brought against the Indemnified Party, the -14- Indemnifying Party will be entitled to participate, at its own expense, in the defense thereof. The Indemnifying Party also will be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Indemnifying Party to the Indemnified Party of the Indemnifying Party's election to assume the defense thereof, the Indemnified Party will bear the fees and expenses of any additional counsel retained by it, and the Indemnifying Party will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation, unless: (a) the Indemnifying Party and the Indemnified Party will have mutually agreed to the retention of such counsel; or (b) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Indemnifying Party will not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there is a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party from and against any loss or liability by reason of such settlement or judgment. A successor by law of the parties to this Agreement will be entitled to the benefits of the indemnification contained in this Article VIII. The indemnification provisions contained in this Article VIII will survive any termination of this Agreement. 8.4 DISTRIBUTOR LIMITATION ON LIABILITY. Notwithstanding the foregoing, the Distributor shall not be liable to any party to this Agreement for lost profits, punitive, special, incidental, indirect or consequential damages. ARTICLE IX. Applicable Law -------------- 9.1 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware. 9.2 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, any Mixed and Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. If, in the future, the Mixed and Shared Funding Exemptive Order should no longer be necessary under applicable law, then Article VII shall no longer apply. ARTICLE X. Termination ----------- 10.1. This Agreement will terminate: (a) at the option of any party, with or without cause, with respect to some or all of the Designated Portfolios, upon sixty (60) days' advance written notice to the other parties or, if later, upon receipt of any required exemptive relief or orders from the SEC, unless otherwise agreed in a separate written agreement among the parties; or (b) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Designated Portfolio if shares of the Designated Portfolio are not reasonably available to meet the requirements of the Contracts as determined in good faith by the Company; or -15- (c) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Designated Portfolio in the event any of the Designated Portfolio's shares are not registered, issued or sold in accordance with applicable state and/or Federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by Company; or (d) at the option of the Fund, upon receipt of the Fund's written notice by the other parties, upon institution of formal proceedings against the Company by the NASD, the SEC, the insurance commission of any state or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, the administration of the Contracts, the operation of the Account, or the purchase of the Fund shares, provided that the Fund determines in its sole judgment, exercised in good faith, that any such proceeding would have a material adverse effect on the Company's ability to perform its obligations under this Agreement; or (e) at the option of the Company, upon receipt of the Company's written notice by the other parties, upon institution of formal proceedings against the Fund, Adviser or the Distributor by the NASD, the SEC, or any state securities or insurance department or any other regulatory body, provided that the Company determines in its sole judgment, exercised in good faith, that any such proceeding would have a material adverse effect on the Fund's or the Distributor's ability to perform its obligations under this Agreement; or (f) at the option of the Company, upon receipt of the Company's written notice by the other parties, if the Fund ceases to qualify as a Regulated Investment Company under Subchapter M of the Internal Revenue Code, or under any successor or similar provision, or if the Company reasonably and in good faith believes that the Fund may fail to so qualify; or (g) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Designated Portfolio if the Fund fails to meet the diversification requirements specified in Article VI hereof or if the Company reasonably and in good faith believes the Fund may fail to meet such requirements; or (h) at the option of any party to this Agreement, upon written notice to the other parties, upon another party's material breach of any provision of this Agreement which material breach is not cured within thirty (30) days of said notice; or (i) at the option of the Company, if the Company determines in its sole judgment exercised in good faith, that either the Fund, the Adviser or the Distributor has suffered a material adverse change in its business, operations or financial condition since the date of this Agreement or is the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Company, such termination to be effective sixty (60) days' after receipt by the other parties of written notice of the election to terminate; or (j) at the option of the Fund or the Distributor, if the Fund or the Distributor respectively, determines in its sole judgment exercised in good faith, that the Company has suffered a material adverse change in its business, operations or financial condition since the date of this Agreement or is the subject of material adverse publicity which is likely to have a material adverse impact upon the business and operations of the Fund or the Adviser, such termination to be effective sixty (60) days' after receipt by the other parties of written notice of the election to terminate; or -16- (k) at the option of the Company or the Fund upon receipt of any necessary regulatory approvals and/or the vote of the contractowners having an interest in the Account (or any subaccount) to substitute the shares of another investment company for the corresponding Designated Portfolio shares of the Fund in accordance with the terms of the Contracts for which those Designated Portfolio shares had been selected to serve as the underlying investment media. The Company will give sixty (60) days' prior written notice to the Fund of the date of any proposed vote or other action taken to replace the Fund's shares; or (l) at the option of the Company or the Fund upon a determination by a majority of the Fund Board, or a majority of the disinterested Fund Board members, that an irreconcilable material conflict exists among the interests of: (1) all contractowners of variable insurance products of all separate accounts; or (2) the interests of the Participating Insurance Companies investing in the Fund as set forth in Article VII of this Agreement; or (m) at the option of the Fund in the event any of the Contracts are not issued or sold in accordance with applicable federal and/or state law. Termination will be effective immediately upon such occurrence without notice. 10.2. NOTICE REQUIREMENT. No termination of this Agreement will be effective unless and until the party terminating this Agreement gives prior written notice to all other parties of its intent to terminate, which notice will set forth the basis for the termination. 10.3. EFFECT OF TERMINATION. Notwithstanding any termination of this Agreement, the Fund and the Distributor will, at the option of the Company, continue to make available additional shares of the Fund pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement ( hereinafter referred to as "Existing Contracts.") . Specifically, without limitation, the owners of the Existing Contracts will be permitted to reallocate investments in the Portfolios (as in effect on such date), redeem investments in the Portfolios and/or invest in the Portfolios upon the making of additional purchase payments under the Existing Contracts. 10.4. SURVIVING PROVISIONS. Notwithstanding any termination of this Agreement, each party's obligations under Article VIII to indemnify other parties will survive and not be affected by any termination of this Agreement. In addition, each party's obligations under Section 12.7 will survive and not be affected by any termination of this Agreement. Finally, with respect to Existing Contracts, all provisions of this Agreement also will survive and not be affected by any termination of this Agreement. ARTICLE XI. Notices ------- 11.1. Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Fund: ING Variable Insurance Trust c/o Louis Citron 1475 Dunwoody Drive West Chester, PA 19380 If to the Company: Golden American Life Insurance Company c/o Myles Tashman -17- Executive Vice President and General Counsel 1475 Dunwoody Drive West Chester, PA 19380 If to Adviser: ING Mutual Funds Management Co. LLC c/o Louis Citron 1475 Dunwoody Drive West Chester, PA 19380 If to Distributor: ING Funds Distributor, Inc c/o Donald Brostrom 1475 Dunwoody Drive West Chester, PA 19380 ARTICLE XII. Miscellaneous ------------- 12.1. All persons dealing with the Fund must look solely to the property of the Fund for the enforcement of any claims against the Fund as neither the directors, trustees, officers, partners, employees, agents or shareholders assume any personal liability for obligations entered into on behalf of the Fund. No Portfolio or series of the Fund will be liable for the obligations or liabilities of any other Portfolio or series. 12.2. The Fund, the Adviser and the Distributor acknowledge that the identities of the customers of the Company or any of its affiliates, except for customers of the Adviser or its affiliates (collectively the "Company Protected Parties" for purposes of this Section 12.2), information maintained regarding those customers, and all computer programs and procedures or other information developed or used by the Company Protected Parties or any of their employees or agents in connection with the Company's performance of its duties under this Agreement are the valuable property of the Company Protected Parties. The Fund, the Adviser and the Distributor agree that if they come into possession of any list or compilation of the identities of or other information about the Company Protected Parties' customers, or any other information or property of the Company Protected Parties, other than such information as is publicly available or as may be independently developed or compiled by the Fund, the Adviser or the Distributor from information supplied to them by the Company Protected Parties' customers who also maintain accounts directly with the Fund, the Adviser or the Distributor, the Fund, the Adviser and the Distributor will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with the Company's prior written consent; or (b) as required by law or judicial process. The Company acknowledges that the identities of the customers of the Fund, the Adviser, the Distributor or any of their affiliates (collectively the "Adviser Protected Parties" for purposes of this Section 12.2), information maintained regarding those customers, and all computer programs and procedures or other information developed or used by the Adviser Protected Parties or any of their employees or agents in connection with the Fund's, the Adviser's or the Distributor's performance of their respective duties under this Agreement are the valuable property of the Adviser Protected Parties. The Company agrees that if it comes into possession of any list or compilation of the identities of or other information about the Adviser Protected Parties' customers, or any other information or property of the Adviser Protected Parties, other than such information as is publicly available or as may be independently developed or compiled by the Company from information supplied to them by the Adviser Protected Parties' customers who also maintain accounts directly with the Company, the Company will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with the Fund's, the Adviser's or the Distributor's prior written -18- consent; or (b) as required by law or judicial process. Each party acknowledges that any breach of the agreements in this Section 12.2 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate. 12.3. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.4. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together will constitute one and the same instrument. 12.5. If any provision of this Agreement will be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement will not be affected thereby. 12.6. This Agreement will not be assigned by any party hereto without the prior written consent of all the parties. 12.7. Each party to this Agreement will maintain all records required by law, including records detailing the services it provides. Such records will be preserved, maintained and made available to the extent required by law and in accordance with the 1940 Act and the rules thereunder. Each party to this Agreement will cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and will permit each other and such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Upon request by the Fund or the Distributor, the Company agrees to promptly make copies or, if required, originals of all records pertaining to the performance of services under this Agreement available to the Fund or the Distributor, as the case may be. The Fund agrees that the Company will have the right to inspect, audit and copy all records pertaining to the performance of services under this Agreement pursuant to the requirements of any state insurance department. Each party also agrees to promptly notify the other parties if it experiences any difficulty in maintaining the records in an accurate and complete manner. This provision will survive termination of this Agreement. 12.8. Each party represents that the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate or board action, as applicable, by such party and when so executed and delivered this Agreement will be the valid and binding obligation of such party enforceable in accordance with its terms. 12.9. The parties to this Agreement may amend the schedules to this Agreement from time to time to reflect changes in or relating to the Contracts, the Accounts or the Designated Portfolios of the Fund or other applicable terms of this Agreement. 12.10. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights. 12.11. The names "ING Variable Insurance Trust" and "Trustees of ING Variable Insurance Trust" refer respectively to the trust created and the Trustees, as trustees but not individually or personally, acting from time to time under a Declaration of Trust dated July 15, 1999 which is hereby referred to and a copy of which is at the principal office of the Fund. The obligations of "ING Variable -19- Insurance Trust" entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, Shareholders, or representatives of the Fund personally, but bind only the Trust Property, and all persons dealing with any class of Shares of the Fund must look solely to the Trust Property belonging to such class for the enforcement of any claims against the Fund. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below: GOLDEN AMERICAN LIFE INSURANCE COMPANY: By: /s/ David L. Jacobson ------------------------------------ Title: Senior Vice President --------------------------------- Date: April 25, 2000 ---------------------------------- ING VARIABLE INSURANCE TRUST: By: /s/ Louis S. Citron ------------------------------------ Title: Vice President --------------------------------- Date: April 25, 2000 ---------------------------------- ING MUTUAL FUNDS MANAGEMENT CO. LLC : By: /s/ Louis S. Citron ------------------------------------ Title: Senior Vice President and General Counsel --------------------------------- Date: April 25, 2000 ---------------------------------- ING FUNDS DISTRIBUTOR, Inc. By: /s/ Donald E. Brostrom ------------------------------------ Title: Chief Financial Officer and Treasurer --------------------------------- Date: April 25, 2000 ---------------------------------- -20- SCHEDULE A GOLDEN AMERICAN LIFE INSURANCE COMPANY CONTRACTS AND SEPARATE ACCOUNT(S) CONTRACT(S): Deferred Combination Variable and Fixed Annuity Contracts SEPARATE ACCOUNT(S): Separate Account B of Golden American Life Insurance Company SCHEDULE B ING VARIABLE INSURANCE TRUST DESIGNATED PORTFOLIOS PORTFOLIOS: ING International Equity Fund ING Global Brand Names Fund Schedule Date: April 28, 2000 -21- EX-99.B8K 8 ingvpt.txt ING VARIABLE PRODUCTS TRUST PART. AGREE PARTICIPATION AGREEMENT AMONG PILGRIM VARIABLE PRODUCTS TRUST AND ING PILGRIM INVESTMENTS, LLC AND GOLDEN AMERICAN LIFE INSURANCE COMPANY AND ING PILGRIM SECURITIES, INC. THIS AGREEMENT, made and entered into as of the 1st day of May, 2001, among Pilgrim Variable Products Trust (the "Trust") an open-ended management investment company and business trust organized under the laws of Massachusetts, ING Pilgrim Investments, LLC, (the "Advisor") a limited liability company organized under the laws the State of Delaware, Golden American Life Insurance Company (the "Company"), a life insurance company organized under the laws of the State of Delaware, on its own behalf and on behalf of each separate account of the Company as set forth on Schedule A hereto, as such Schedule may be amended from time to time (each such account hereinafter referred to as the "Account"), and ING Pilgrim Securities, Inc. (the "Distributor"), a corporation organized under the laws of the State of Delaware. WHEREAS, the Trust is an open-end diversified management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, the "Contracts") to be offered by insurance companies which have entered into Participation Agreements with the Trust and the Distributor (the "Participating Insurance Companies"); and WHEREAS, the units of beneficial interest in the Trust are divided into several series of shares, each designated a "Fund" and representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Trust may rely on an order ("ING Variable Insurance Trust, et al., Investment Company Act Rel. No. 24439 (May 3, 2000)) from the Securities and Exchange Commission ("SEC"), granting the variable annuity and variable life insurance separate accounts participating in the Trust exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the Investment Company Act of 1940, as amended (the "1940 Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance separate accounts of the Participating Insurance Companies (the "Mixed and Shared Funding Exemptive Order"); and WHEREAS, the Trust is registered as an open-end management investment company under the 1940 Act and the shares of each Fund are registered under the Securities Act of 1933, as amended (the "1933 Act"); and WHEREAS, the Adviser, which serves as the investment adviser to the Trust, is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended; WHEREAS, the Company represents herein that each Account is a duly organized, validly existing separate account, which was established by resolution of the Board of Directors of the Company; and WHEREAS, the Company has registered or will register each Account as a unit investment trust under the 1940 Act (if such registration is required) and has registered or will register certain of the Contracts under the 1933 Act and the 1940 Act and has gained the approval of any applicable state securities and insurance law authorities; and WHEREAS, the Distributor, which serves as the distributor to the Trust, is registered as a broker-dealer with the SEC under the Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in certain Funds listed in Schedule B hereto, as such Schedule may be amended from time to time ("Authorized Funds"), on behalf of each Account to fund certain of the Contracts and the Distributor is authorized to sell such shares to unit investment trusts such as each Account at net asset value; NOW, THEREFORE, in consideration of the promises herein, the Trust, the Adviser, the Company, and the Distributor agree as follows: ARTICLE I SALE OF TRUST SHARES 1.1. The Distributor agrees, subject to the Trust's rights under Section 1.2 and otherwise under this Agreement, to sell to the Company those Trust shares representing interests in Authorized Funds which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Trust or its designee of the order for the shares of the Trust. For purposes of this Section 1.1, the Company shall be the designee of the Trust for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice of such order by 10:00 a.m., Eastern time, on the next following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange ("NYSE") is open for trading and on which the Trust calculates its net asset value pursuant to the rules of the SEC. The initial Authorized Funds are set forth in Schedule B as such schedule is amended from time to time. 1.2. The Trust agrees to make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Trust calculates its net asset value pursuant to the rules of the SEC and the Trust shall use 2 reasonable efforts to calculate such net asset value on each day the NYSE is open for trading. Notwithstanding the foregoing, the Trustees of the Trust (the "Trustees") may refuse to sell shares of any Authorized Fund to the Company or any other person, or suspend or terminate the offering of shares of any Authorized Fund if such action is required by law or by regulatory authorities having jurisdiction over the Trust or if the Trustees determine, in the exercise of their fiduciary responsibilities, that to do so would be in the best interests of shareholders. 1.3. The Trust and the Distributor agree that shares of the Trust will be sold only to Participating Insurance Companies and their separate accounts and other persons who are permissible investors consistent with the Accounts meeting the requirements of Treas. Reg. 1.817-5. 1.4. The Trust shall redeem its shares in accordance with the terms of its then-current prospectus. For purposes of this Section 1.4, the Company shall be the designee of the Trust for receipt of requests for redemption from each Account and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice of such request for redemption by 10:00 a.m., Eastern time, on the next following Business Day. 1.5. The Company shall purchase and redeem the shares of Authorized Funds offered by the then-current prospectus and statement of additional information ("SAI") of the Trust in accordance with the provisions of such prospectus and SAI. 1.6. The Company shall pay for Trust shares on the next Business Day after an order to purchase Trust shares is made in accordance with the provisions of Article I hereof. Payment shall be in federal funds transmitted by wire. 1.7. Issuance and transfer of the Trust's shares will be by book entry only. Share certificates will not be issued to the Company or to any Account. Shares ordered from the Trust will be recorded as instructed by the Company to the Distributor in an appropriate title for each Account or the appropriate sub-account of each Account. 1.8. The Trust or the Distributor shall furnish prompt notice (by wire or telephone, followed by written confirmation) to the Company of the declaration of any income, dividends or capital gain distributions payable on the Trust's shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Authorized Fund shares in additional shares of that Authorized Fund. The Company reserves the right to revoke this election and to receive all such income dividends and capital gain distributions in cash. The Distributor shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.9. The Distributor shall make the net asset value per share for each Authorized Fund available to the Company on a daily basis as soon as reasonably practical after the Trust calculates its net asset value per share, and each of the Trust and the Distributor shall use its reasonable best efforts to make such net asset value per share available by 6:00 p.m., Eastern time, but in no event later than 7:00 p.m., Eastern time, each Business Day. 1.10. Any error in the calculation of the net asset value, dividend and capital gain information greater than or equal to $0.01 per share of the Trust's shares, shall be reported 3 immediately upon discovery to the Company. Any error of a lesser amount shall be corrected in the next Business Day's net asset value per share for the Trust. Any such notice will state for each day for which an error occurred, the incorrect price, the correct price and, to the extent communicated to the Trust's shareholders, the reason for the price change. The Company may send this notice or a derivation thereof (so long as such derivation is approved in advance by the Distributor) to contract owners or participants whose accounts are affected by the price change. The parties will negotiate in good faith to develop a reasonable method for effecting such adjustments. The Trust shall provide the Company, on behalf of the Account or the appropriate subaccount of each Account, with a prompt adjustment to the number of shares purchased or redeemed to reflect the correct share net asset value. For purposes of this Section 1.10, the Trust or the Distributor shall be liable to the Company for any amount the Company is required to pay to Contract owners or participants due to (i) an incorrect calculation of a Fund's daily net asset value, dividend rate, or capital gain distribution rate, in accordance with the Trust's procedures or (ii) incorrect or late reporting of the daily net asset value or capital gain distribution rate of an Authorized Fund, in accordance with the Trust's procedures, upon written notification by the Company, with supporting data, to the Trust, provided, however, that neither the Trust nor the Distributor shall be liable for any information provided to the Company pursuant to this Agreement which information is based on inaccurate information supplied by the Company to the Trust or any of its affiliates, or for any incorrect or late reporting because of acts of God or systems or mechanical failures over which the Trust, or the Distributor or the investment adviser to the Trust have no reasonable control; and provided further that the Distributor and Officers of the Trust shall in good faith discuss with the Company the bearing of any expenses described in (i) and (ii) above for which the Trust or Distributor are not liable under this provision. In addition, the Trust or the Distributor shall be liable to the Company for systems and out of pocket costs incurred by the Company in making a Contract owner's or a participant's account whole, if such costs or expenses are a result of the Trust's failure to provide timely or correct net asset values, dividend and capital gains or financial information, and if such information is not corrected by 4:00 p.m. Eastern time of the next business day after releasing such incorrect information. If a mistake is caused in supplying such information or confirmations, which results in a reconciliation with incorrect information, the amount required to make a Contract owner's or a participant's account whole shall be borne by the party providing the incorrect information, regardless of when the error is corrected. 1.11. The parties may agree to provide pricing information, execute orders and wire payments for purchases and redemptions through National Securities Clearing Corporation's Fund/SERV system in which case such activities will be governed by the provisions set forth in an Exhibit to this Agreement. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1. The Company represents and warrants that 4 (a) at all times during the term of this Agreement, the Contracts are or will be registered (except those Contracts which are not registered because they are properly exempt from registration under the 1933 Act or will be offered exclusively in transactions that are properly exempt from registration under the 1933 Act) under the 1933 Act and the 1940 Act; the Contracts will be issued and sold in compliance in all material respects with all applicable laws and the sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that it is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a separate account under applicable law and has registered or, prior to any issuance or sale of the Contracts, will register each Account (except those Accounts which have not been registered in proper reliance upon an exclusion from registration under the 1940 Act) as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts; (b) the Contracts are currently treated as endowment, annuity or life insurance contracts, under applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and that it will make every effort to maintain such treatment and that it will notify the Trust and the Underwriter immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. (c) the Company will use its best efforts to provide accurate and complete notices to the Trust of the purchase and/or redemption of Trust shares by each Account. 2.2. The Trust and the Adviser represent and warrant that (a) at all times during the term of this Agreement, Trust shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold by the Trust to the Company in compliance with all applicable laws, subject to the terms of Section 2.4 below, and the Trust is and shall remain registered under the 1940 Act. The Trust shall amend the Registration Statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Trust or the Adviser shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Trust or the Distributor in connection with their sale by the Trust to the Company and only as required by Section 2.4; (a) (b) each Authorized Fund is currently qualified as a Regulated Investment Company under Subchapter M of the Code, and that the Adviser will use its best efforts to maintain such qualification (under Subchapter M or any successor provision) and that it will notify the Company immediately upon having a reasonable basis for believing that an Authorized Fund has ceased to so qualify or that it might not so qualify in the future; and (c) in connection with payments by the Trust to finance distribution expenses of the Trust , such payments will be made only pursuant to a plan of distribution formulated under and in compliance with Rule 12b-1 under the 1940 Act and approved by the Trust's Board of Trustees.; and 5 (d) the Trust is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material respects with the 1940 Act. 2.3. The Distributor represents and warrants that (a) it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC; and (b) it will sell and distribute the Trust shares in accordance in all material respects with all applicable federal securities laws applicable to it, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act; and 2.4. Notwithstanding any other provision of this Agreement, the Trust shall be responsible for the registration and qualification of its shares and of the Trust itself under the laws of any jurisdiction only in connection with the sale of shares directly to the Company through the Distributor. The Trust shall not be responsible, and the Company shall take full responsibility, for determining any jurisdiction in which any qualification or registration of Trust shares or the Trust by the Trust may be required in connection with the sale of the Contracts or the indirect interest of any Contract in any shares of the Trust and advising the Trust thereof at such time and in such manner as is necessary to permit the Trust to comply. 2.5. The Trust makes no representation as to whether any aspect of its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states. 2.6. The Trust and the Distributor represent and warrant that all of their trustees, officers, employees, investment advisers, and other individuals/entities having access to the funds and/or securities of the Trust are and continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Trust in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid bond includes coverage for larceny and embezzlement and is issued by a reputable bonding company. ARTICLE III PROSPECTUSES AND PROXY STATEMENTS; VOTING 3.1. The Trust shall provide the Company with a sufficient quantity of its prospectus, SAI and any supplements to any of these materials once each year (or more frequently if these materials are amended), to be used in connection with the offerings and transactions contemplated by this Agreement. In addition, the Trust shall provide the Company with a sufficient quantity of its proxy materials that are required to be sent to Contract owners or participants. In lieu of the Trust providing the Company with printed copies of its prospectus, SAI, supplements and proxy materials, the Company shall have the right to request that the Trust transmit a copy of such materials in an electronic format (camera-ready copy), which the 6 Company may use to have such materials printed together with similar materials of other Account funding media that the Company or any distributor will distribute to existing or prospective Contract owners or participants. 3.2. The Trust's prospectus shall state that the SAI for the Trust is available from the Trust, and the Trust shall provide the SAI free of charge to any owner of a Contract or to any prospective Contract owner who requests the SAI. Distributor and Trust, as appropriate, agree to provide to Company with as many copies of the SAI as reasonably requested by Company. 3.3. The Trust, at its expense, shall provide the Company with copies of its reports to shareholders, proxy material and other communications to shareholders in such quantity as the Company shall reasonably require for distribution to the Contract owners or participants. The Company shall respond to requests for documents regarding the Trust in a manner that is consistent with SEC rules, including, but not limited to, Item 1(b) of Form N-1A, which requires requested documents to be sent within three (3) business days from the date of request. 3.4. The Company shall vote all Trust shares as required by law and the Mixed and Shared Funding Exemptive Order. The Company reserves the right to vote Trust shares held in any separate account in each Company's own right, to the extent permitted by law and the Mixed and Shared Funding Exemptive Order. The Company shall be responsible for assuring that each of its separate accounts participating in the Trust calculates voting privileges in a manner consistent with all legal requirements and the Mixed and Shared Funding Exemptive Order. 3.5. The Trust will comply with all applicable provisions of the 1940 Act requiring voting by shareholders. ARTICLE IV SALES MATERIAL AND INFORMATION 4.1. Without limiting the scope or effect of Section 4.2 hereof, the Company shall furnish, or shall cause to be furnished, to the Distributor each piece of sales literature or other promotional material (as defined hereafter) or a representative sample thereof in which the Trust, its investment adviser or the Distributor is named at least 15 days prior to its use. No such material shall be used if the Distributor objects to such use within five (5) Business Days after receipt of such material. 4.2. The Company shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Trust shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in annual or semi-annual reports or proxy statements for the Trust, or in sales literature or other promotional material approved by the Trust or its designee or by the Distributor, except with the written permission of the Trust or the Distributor or the designee of either or as is required by law. 4.3. The Distributor or its designee shall furnish, or shall cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material prepared by the Distributor in which the Company and/or the Company's Account is named at least 15 days 7 prior to its use. No such material shall be used if the Company or its designee object to such use within five (5) Business Days after receipt of such material. 4.4. Neither the Trust nor the Distributor shall give any information or make any representations on behalf of the Company or concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners or participants, or in sales literature or other promotional material approved by the Company or its designee, except with the written permission of the Company or as is required by law. 4.5. For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or other public media), sales literature (i.e. any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all registered representatives. 4.6 The Trust will provide to the Company at least one complete copy of all registration statements, prospectuses, statements of additional information, reports, proxy statements, sales literature and other promotional materials, notices and exemptive orders related to applications for exemptive relief from the requirements of the federal securities laws, and all amendments to any of the above, that relate to the Trust or its shares, promptly after the filing of such document with the SEC, the NASD or other regulatory authority. 4.7 The Company will provide to the Trust at least one complete copy of all registration statements, prospectuses, statements of additional information, reports, proxy statements, sales literature and other promotional materials, notices and exemptive orders related to applications for exemptive relief from the requirements of the federal securities laws, and all amendments to any of the above, that relate to the Trust or its shares, promptly after the filing of such document with the SEC, the NASD, or other regulatory authority. ARTICLE V FEES AND EXPENSES 5.1. If the Trust or any Authorized Fund adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to finance distribution expenses, or a plan under which the Trust or any Authorized Fund shall support services rendered to shareholders or contract owners subject to obtaining any required exemptive orders or other regulatory approvals, the Trust or Distributor may make payments to the Company or to the underwriter for the Account if and in such amounts agreed to by the parties in writing. 8 5.2. All expenses incident to performance by the Trust under this Agreement shall be paid by the Trust to the extent permitted by law. The Trust shall bear the expenses for the cost of registration and qualification of the Trust's shares, preparation and filing of the Trust's prospectus and registration statement, proxy materials and reports, setting the prospectus and shareholder reports in type, setting in type and printing the proxy materials, and the preparation of all statements and notices required by any federal or state law, in each case as may reasonably be necessary for the performance by it of its obligations under this Agreement. All expenses incident to the solicitation and tabulation of the Trust's proxy materials will be paid by the Trust, including postage. 5.3. The Trust shall pay for the cost of typesetting and printing periodic fund reports to shareholders, prospectuses, prospectus supplements, statements of additional information and other materials that are required by law to be sent to Contract owners or participants, as well as the cost of distributing such materials. The Company shall pay for the cost of printing the Trust's prospectuses and statements of additional information and for the distribution thereof for prospective Contract owners or participants. Each party shall be provided with such supporting data as may reasonably be requested for determining expenses under this Article V. ARTICLE VI DIVERSIFICATION 6.1 The Trust will invest its assets to cause each Authorized Fund to maintain a diversified pool of investments that would, if such Fund were a segregated asset account, satisfy the diversification requirements of Treasury Reg. ss.1.817-5(b)(1) or (2). In the event of a breach of this Article VI by the Trust, it will take all reasonable steps: (a) to notify the Company of such breach; and (b) to adequately diversify the Trust so as to achieve compliance within the grace period afforded by Treasury Regulation 1.817-5. ARTICLE VII POTENTIAL CONFLICTS 7.1. The Trustees will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the Contract owners or participants of all separate accounts investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance, tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Authorized Fund are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners or participants; or (f) a decision by an insurer to disregard the voting instructions of Contract owners or participants. The Trust shall promptly inform the Company if the Trustees determine that a material irreconcilable conflict exists and the implications thereof. 7.2. The Company will report any potential or existing conflicts of which it is aware to the Trustees. The Company will assist the Trustees in carrying out their responsibilities under 9 the Mixed and Shared Funding Exemptive Order, by providing the Trustees with all information reasonably necessary for the Trustees to consider any issues raised. This responsibility includes, but is not limited to, an obligation by the Company to inform the Trustees whenever Contract owner voting instructions are disregarded. 7.3. If it is determined by a majority of the Trustees, or a majority of the disinterested Trustees, that a material irreconcilable conflict exists, the Company shall to the extent reasonably practicable (as determined by a majority of the disinterested Trustees), take, at the Company's expense (but only if the Trustees determine that the Company is responsible for causing or creating said conflict, said conflict is caused by operation of law or said conflict is the result of some other cause outside the control of the Trust or any of the Participating Insurance Companies), whatever steps are necessary to remedy or eliminate the material irreconcilable conflict, up to and including: (1) withdrawing the assets allocable to some or all of the separate accounts from the Trust or any Authorized Fund thereof and reinvesting such assets in a different investment medium, including (but not limited to) another series of the Trust, or submitting the question whether such segregation should be implemented to a vote of all affected Contract owners or participants and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners or participants, life insurance contract owners or participants, or variable contract owners or participants of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected Contract owners or participants the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 7.4. If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Trust's election, to withdraw the affected Account's investment in one or more portfolios of the Trust and terminate this Agreement with respect to such Account; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. No charge or penalty shall be imposed as a result of such withdrawal. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented, and until the end of that six month period, the Distributor and Trust shall, to the extent permitted by law and any exemptive relief previously granted to the Trust, continue to accept and implement orders of the Company for the purchase (and redemption) of shares of the Trust. 7.5. If a material irreconcilable conflict arises because of a particular state insurance regulator's decision applicable to the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, then the Company may be required, at the Trust's direction, to withdraw the affected Account's investment in one or more Authorized Funds of the Trust; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented, unless a shorter period is required by law, and until the end of the foregoing six month period (or such shorter period if required by law), the 10 Distributor and Trust shall, to the extent permitted by law and any exemptive relief previously granted to the Trust, continue to accept and implement orders by that Company for the purchase (and redemption) of shares of the Trust. No charge or penalty will be imposed as a result of such withdrawal. 7.6. For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested Trustees shall determine whether any proposed action adequately remedies any material irreconcilable conflict. Neither the Trust nor the Distributor shall be required to establish a new funding medium for the Contracts, nor shall the Company be required to do so, if an offer to do so has been declined by vote of a majority of Contract owners or participants materially adversely affected by the material irreconcilable conflict. In the event that the Trustees determine that any proposed action does not adequately remedy any material irreconcilable conflict, then the Company will withdraw the Account's investment in one or more Authorized Funds of the Trust and terminate this Agreement within six (6) months (or such shorter period as may be required by law or any exemptive relief previously granted to the Trust) after the Trustees inform the Company in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested Trustees. No charge or penalty will be imposed as a result of such withdrawal. 7.7. The responsibility to take remedial action in the event of the Trustees' determination of a material irreconcilable conflict and the obligation of the Company set forth in this Article VII shall be carried out with a view only to the interests of Contract owners or participants. 7.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Mixed and Shared Funding Exemptive Order, then (a) the Trust and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 7.1, 7.2, 7.3, 7.4 and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in the Mixed and Shared Funding Exemptive Order or any amendment thereto. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Mixed and Shared Funding Exemptive Order, then (a) the Trust and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, , 7.1., 7.2, 7.3, 7.4, and 7.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. 11 ARTICLE VIII INDEMNIFICATION The Company has reviewed the Mixed and Shared Funding Exemption Order and hereby assumes all obligations referred to therein which are required, including, without limitation, the obligation to provide reports, material or data as the Trustees may request, as conditions to such order, to be assumed or undertaken by the Company. 8.1. Indemnification by the Company 8.1. (a).The Company shall indemnify and hold harmless the Trust, the Distributor and the Adviser, and each of the Trustees, directors of the Distributor or the Adviser, officers, employees or agents of the Trust, the Distributor or the Adviser, and each person, if any, who controls the Trust, Adviser or the Distributor within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company which consent may not be unreasonably withheld) or litigation expenses (including reasonable legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Trust's shares or the Contracts or the performance by the parties of their obligations hereunder and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in a registration statement, prospectus or SAI for the Contracts or contained in the Contracts or sales literature for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Trust for use in the registration statement, prospectus or SAI for the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or (ii) arise out of or as a result of written statements or representations (other than statements or representations contained in the Trust's registration statement or prospectus, or in sales literature for Trust shares not supplied by the Company, or persons under its control) or wrongful conduct of the Company or its agents or employees or persons under its control, with respect to the sale or distribution of the Contracts or Trust shares; or 12 (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, or sales literature of the Trust or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon information furnished to the Trust or the Distributor by or on behalf of the Company; or (iv) arise out of or result from any breach of any material representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1(c) hereof. 8.1. (b) The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party to the extent such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement or to the Trust, whichever is applicable. 8.1. (c) The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), on the basis of which the Indemnified Party should reasonably know of the availability of indemnity hereunder in respect of such claim but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at the Company's expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the Indemnified Party named in the action. After notice from the Company to such Indemnified Party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1. (d) The Distributor shall promptly notify the Company of the commencement of any litigation or proceedings against the Trust or the Distributor in connection with the issuance or sale of the Trust Shares or the Contracts or the operation of the Trust. 8.1. (e) The provisions of this Section 8.1 shall survive any termination of this Agreement. 8.2. Indemnification by the Adviser and Distributor 13 8.2. (a) The Adviser and the Distributor (as between them, in relation to each party's responsibilities hereunder) shall indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act and any director, officer, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser or Distributor which consent may not be unreasonably withheld) or litigation expenses (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Trust's shares or the Contracts or the performance by the parties of their obligations hereunder and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in a registration statement, prospectus, or SAI for the Trust or the sales literature for the Trust prepared by the Trust or Distributor (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Distributor or Trust by or on behalf of the Company for use in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or (ii) arise out of or as a result of written statements or representations (other than statements or representations contained in the registration statement, prospectus, SAI or sales literature for the Contracts not supplied by the Distributor or persons under its control) of the Adviser, the Distributor or persons under its control, with respect to the sale or distribution of the Contracts or Trust shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, SAI or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Distributor; or (iv) arise out of or result from any breach of any material representation and/or warranty made by the Adviser, the Distributor or the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Adviser, the Distributor or the Trust; as limited by and in accordance with the provisions of Sections 8.2(b) and 8.2(c) hereof. 14 8.2. (b) The Adviser and Distributor shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company or the Account, whichever is applicable. 8.2. (c) The Adviser and Distributor shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Adviser or Distributor, as the case may be, in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent) on the basis of which the Indemnified Party should reasonably know of the availability of indemnity hereunder in respect of such claim, but failure to notify the Adviser or Distributor of any such claim shall not relieve the Adviser or Distributor from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Adviser and Distributor will be entitled to participate, at its own expense, in the defense thereof. The Adviser or Distributor also shall be entitled to assume the defense thereof, with counsel satisfactory to the Indemnified Party named in the action. After notice from the Adviser or Distributor to such Indemnified Party of the Adviser's or Distributor's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Adviser or Distributor will not be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2. (d) The Company shall promptly notify the Distributor, the Adviser, and the Trust of the commencement of any litigation or proceedings against it or any of its officers or directors, in connection with the issuance or sale of the Contracts or the operation of each Account. 8.2. (e) The provisions of this Section 8.2 shall survive any termination of this Agreement. ARTICLE IX APPLICABLE LAW 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Mixed and 15 Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X TERMINATION 10.1. This Agreement shall terminate: (a) at the option of any party, with respect to some or all of the Authorized Funds, upon sixty (60) days' advance written notice to the other parties; or (b) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Authorized Portfolio if shares of the Designated Portfolio are not reasonably available to meet the requirements of the Contracts as reasonably determined in good faith by the Company; or (c) at the option of the Company, upon receipt of the Company's written notice by the other parties, with respect to any Authorized Portfolio in the event any of the Authorized Portfolio's shares are not registered, issued or sold in accordance with applicable state and/or Federal law or such law precludes the use of such shares as the underlying investment media of the Contracts issued or to be issued by Company; or (d) at the option of the Trust or the Distributor in the event that formal administrative proceedings are instituted against the Company by the NASD, the SEC, any State Insurance Commissioner or any other regulatory body regarding the Company's duties under this Agreement or related to the sales of the Contracts, with respect to the operation of any Account, or the purchase of the Trust shares, provided, however, that the Trust or the Distributor determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Company to perform its obligations under this Agreement; or (e) at the option of the Company in the event that formal administrative proceedings are instituted against the Trust, the Adviser, or Distributor by the NASD, the SEC, or any state securities or insurance department or any other regulatory body in respect of the sale of shares of the Trust to the Company, provided, however, that the Company determines in its sole judgment exercised in good faith, that any such administrative proceedings will have a material adverse effect upon the ability of the Trust, the Adviser, or Distributor to perform its obligations under this Agreement; or (f) with respect to any Account, upon requisite vote of the Contract owners or participants having an interest in such Account (or any subaccount) or by order of the SEC to substitute the shares of another investment company for the corresponding Authorized Fund shares of the Trust in accordance with the terms of the Contracts for which those Authorized Fund shares had been selected to serve as the underlying investment media. The Company will give 60 days' prior written notice to the Trust of the date of any proposed vote or order of substitution to replace the Trust's shares; 16 (g) with respect to any Authorized Fund, upon 30 days' advance written notice from the Distributor to the Company, upon a decision by the Distributor to cease offering shares of the Trust for sale; or (h) at the option of any party to this Agreement, upon written notice to the other parties, upon another party's material breach of any provision of this Agreement which material breach is not cured within thirty (30) days of said notice. 10.2. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 10.1 (a) may be exercised for any reason or for no reason. 10.3. No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties to this Agreement of its intent to terminate, which notice shall set forth the basis for such termination. Such prior written notice shall be given in advance of the effective date of termination as required by this Article X. 10.4. Notwithstanding any termination of this Agreement, subject to Sections 1.2 and 10.5 of this Agreement, the Trust and the Distributor shall, at the option of the Company, continue to make available additional shares of the Trust pursuant to the terms and conditions of this Agreement, for all Contracts in effect as of the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, subject to Sections 1.2 and 10.5 of this Agreement, the owners or participants of the Existing Contracts shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 10.4 shall not apply to any termination under Article VII and the effect of such Article VII termination shall be governed by Article VII of this Agreement. 10.5. If any party terminates this Agreement with respect to any Authorized Fund pursuant to the provisions under Article X, the Agreement shall nevertheless continue in effect as to any shares of the Trust that are outstanding as of the date of such termination (the "Initial Termination Date"). This continuation shall extend to the earlier of (a) the date as of which an Account no longer owns shares of the affected Authorized Fund or (b) the date (the "Final Termination Date") as of 180 days following the Initial Termination Date, or, at the Distributor's option, such later date as is necessary for the Company to obtain a substitution order from the SEC, the application for which the Company will diligently pursue. ARTICLE XI NOTICES Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. 17 If to the Trust: Pilgrim Variable Products Trust 7337 East Doubletree Ranch Road Scottsdale, AZ 85258-2034 Attn: Kimberly A. Anderson If to the Adviser: ING Pilgrim Investments, LLC 7337 East Doubletree Ranch Road Scottsdale, AZ 85258 Attn: Kimberley A. Anderson If to the Distributor: ING Pilgrim Securities, Inc. 7337 East Doubletree Ranch Road Scottsdale, AZ 85258-2034 Attn: Kimberly A. Anderson If to the Company: Myles R. Tashman, Executive Vice President, General Counsel and Secretary Golden American Life Insurance Company 1475 Dunwoody Drive West Chester, PA 19380 ARTICLE XII MISCELLANEOUS 12.1. A copy of the Agreement and Declaration of Trust is on file with the Secretary of State of the State of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually and that the obligations of or arising out of this instrument, including without limitation Article VI, are not binding upon any of the Trustees or shareholders individually but binding only upon the assets and property of the Trust. 12.2. The Trust, the Adviser and the Distributor acknowledge that the identities of the customers of the Company or any of its affiliates (collectively the "Company Protected Parties" for purposes of this Section 12.2), information maintained regarding those customers, and all computer programs and procedures or other information developed or used by the Company Protected Parties or any of their employees or agents in connection with the Company's performance of its duties under this Agreement are the valuable property of the Company Protected Parties. The Trust, the Adviser and the Distributor agree that if they come into possession of any list or compilation of the identities of or other information about the Company Protected Parties' customers, or any other information or property of the Company Protected Parties, other than such information as is publicly available or as may be independently developed or compiled by the Trust, the Adviser or the Distributor from information supplied to them by the Company Protected Parties' customers who also maintain accounts directly with the Trust, the Adviser or the Distributor, the Trust, the Adviser and the Distributor will hold such 18 information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with the Company's prior written consent; or (b) as required by law or judicial process. The Company acknowledges that the identities of the customers of the Trust, the Adviser, the Distributor or any of their affiliates (collectively the "Adviser Protected Parties" for purposes of this Section 12.2), information maintained regarding those customers, and all computer programs and procedures or other information developed or used by the Adviser Protected Parties or any of their employees or agents in connection with the Trust's, the Adviser's or the Distributor's performance of their respective duties under this Agreement are the valuable property of the Adviser Protected Parties. The Company agrees that if it comes into possession of any list or compilation of the identities of or other information about the Adviser Protected Parties' customers, or any other information or property of the Adviser Protected Parties, other than such information as is publicly available or as may be independently developed or compiled by the Company from information supplied to them by the Adviser Protected Parties' customers who also maintain accounts directly with the Company, the Company will hold such information or property in confidence and refrain from using, disclosing or distributing any of such information or other property except: (a) with the Trust's, the Adviser's or the Distributor's prior written consent; or (b) as required by law or judicial process. Each party acknowledges that any breach of the agreements in this Section 12.2 would result in immediate and irreparable harm to the other parties for which there would be no adequate remedy at law and agree that in the event of such a breach, the other parties will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate. 12.1. The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 12.2. This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 12.3. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 12.4. This Agreement will not be assigned by any party hereto without the prior written consent of all the parties. 12.5. Each party to this Agreement will maintain all records required by law, including records detailing the services it provides. Such records will be preserved, maintained and made available to the extent required by law and in accordance with the 1940 Act and the rules thereunder. Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the Securities and Exchange Commission, the NASD and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Upon request by the Trust or the Distributor, the Company agrees to promptly make copies or, if required, originals of all records pertaining to the performance of services under this Agreement available to the Trust or the Distributor, as the case may be. The Trust agrees that the Company will have the right to inspect, audit and copy 19 all records pertaining to the performance of services under this Agreement pursuant to the requirements of any state insurance department. Each party also agrees to promptly notify the other parties if it experiences any difficulty in maintaining the records in an accurate and complete manner. This provision will survive termination of this Agreement. 12.6. The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 12.7. Notwithstanding any other provision of this Agreement, the obligations of the Trust and the Distributor are several and, without limiting in any way the generality of the foregoing, neither such party shall have any liability for any action or failure to act by the other party, or any person acting on such other party's behalf. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below. PILGRIM VARIABLE PRODUCTS TRUST BY ITS AUTHORIZED OFFICER, /s/ Michael Roland -------------------------------------------- NAME: Michael Roland TITLE: Senior Vice President ING PILGRIM INVESTMENTS, LLC BY ITS AUTHORIZED OFFICER, /s/ Michael Roland -------------------------------------------- NAME: Michael Roland TITLE: GOLDEN AMERICAN LIFE INSURANCE COMPANY BY ITS AUTHORIZED OFFICER, /s/ David L. Jacobson -------------------------------------------- NAME: David L. Jacobson TITLE: Senior Vice President ING PILGRIM SECURITIES, INC. BY ITS AUTHORIZED OFFICER, /s/ Michael Roland -------------------------------------------- NAME: Michael Roland TITLE: 20 Schedule A ---------- Separate Accounts Accounts: - --------- Separate Account B of Golden American Life Insurance Company A-1 Schedule B ---------- PILGRIM VARIABLE PRODUCTS TRUST Authorized Funds - ---------------- Pilgrim VP MagnaCap Portfolio Pilgrim VP Research Enhanced Index Portfolio Pilgrim VP Growth Opportunities Portfolio Pilgrim VP MidCap Opportunities Portfolio Pilgrim VP Growth + Value Portfolio Pilgrim VP SmallCap Opportunities Portfolio Pilgrim VP International Value Portfolio Pilgrim VP High Yield Bond Portfolio Pilgrim VP Worldwide Growth Portfolio Pilgrim VP International SmallCap Growth Portfolio Pilgrim VP International Portfolio Pilgrim VP Emerging Countries Portfolio Pilgrim VP Growth and Income Portfolio Pilgrim VP LargeCap Growth Portfolio Pilgrim VP Financial Services Portfolio Pilgrim VP Convertible Portfolio B-1 NSCC EXHIBIT ------------ Effective Date: May 1, 2001 PROCEDURES FOR PRICING AND ORDER/SETTLEMENT THROUGH NATIONAL SECURITIES CLEARING CORPORATION'S MUTUAL FUND PROFILE SYSTEM AND MUTUAL FUND SETTLEMENT, ENTRY AND REGISTRATION VERIFICATION SYSTEM 1. As provided in Section 1.11 of the Participation Agreement, the parties hereby agree to provide pricing information, execute orders and wire payments for purchases and redemptions of Fund shares through National Securities Clearing Corporation ("NSCC") and its subsidiary systems as follows: (a) Distributor or the Funds will furnish to the Company or its affiliate through NSCC's Mutual Fund Profile System ("MFPS") (1) the most current net asset value information for each Fund, (2) a schedule of anticipated dividend and distribution payment dates for each Fund, which is subject to change without prior notice, ordinary income and capital gain dividend rates on the Fund's ex-date, and (4) in the case of fixed income funds that declare daily dividends, the daily accrual or the interest rate factor. All such information shall be furnished to the Company or its affiliate by 6:30 p.m. Eastern Time on each business day that the Fund is open for business (each a "Business Day") or at such other time as that information becomes available. Changes in pricing information will be communicated to both NSCC and the Company or its affiliate. (b) Upon receipt of Fund purchase, exchange and redemption instructions for acceptance as of the time at which a Fund's net asset value is calculated as specified in such Fund's prospectus ("Close of Trading") on each Business Day ("Instructions"), and upon its determination that there are good funds with respect to Instructions involving the purchase of Shares, the Company or its affiliate will calculate the net purchase or redemption order for each Fund. Orders for net purchases or net redemptions derived from Instructions received by the Company or its affiliate prior to the Close of Trading on any given Business Day will be sent to the Defined Contribution Interface of NSCC's Mutual Fund Settlement, Entry and Registration Verification System ("Fund/SERV") by 5:00 a.m. Eastern Time on the next Business Day. Subject to the Company's or its affiliate's compliance with the foregoing, the Company or its affiliate will be considered the agent of the Distributor and the Funds, and the Business Day on which Instructions are received by the Company or its affiliate in proper form prior to the Close of Trading will be the date as of which shares of the Funds are deemed purchased, exchanged or redeemed pursuant to such Instructions. Instructions received in proper form by the Company or its affiliate after the Close of Trading on any given Business Day will be treated as if received on the next following Business Day. Dividends and capital gains distributions will be automatically reinvested at net asset value in accordance with the Fund's then current prospectuses. (c) The Company or its affiliate will wire payment for net purchase orders by the Fund's NSCC 1 of 2 Firm Number, in immediately available funds, to an NSCC settling bank account designated by the Company or its affiliate no later than 5:00 p.m. Eastern time on the same Business Day such purchase orders are communicated to NSCC. For purchases of shares of daily dividend accrual funds, those shares will not begin to accrue dividends until the day the payment for those shares is received. (d) NSCC will wire payment for net redemption orders by Fund, in immediately available funds, to an NSCC settling bank account designated by the Company or its affiliate, by 5:00 p.m. Eastern Time on the Business Day such redemption orders are communicated to NSCC, except as provided in a Fund's prospectus and statement of additional information. (e) With respect to (c) or (d) above, if Distributor does not send a confirmation of the Company's or its affiliate's purchase or redemption order to NSCC by the applicable deadline to be included in that Business Day's payment cycle, payment for such purchases or redemptions will be made the following Business Day. (f) If on any day the Company or its affiliate or Distributor is unable to meet the NSCC deadline for the transmission of purchase or redemption orders, it may at its option transmit such orders and make such payments for purchases and redemptions directly to Distributor or to the Company or its affiliate, as applicable, as is otherwise provided in the Agreement. (g) These procedures are subject to any additional terms in each Fund's prospectus and the requirements of applicable law. The Funds reserve the right, at their discretion and without notice, to suspend the sale of shares or withdraw the sale of shares of any Fund. 2. The Company or its affiliate, Distributor and clearing agents (if applicable) are each required to have entered into membership agreements with NSCC and met all requirements to participate in the MFPS and Fund/SERV systems before these procedures may be utilized. Each party will be bound by the terms of their membership agreement with NSCC and will perform any and all duties, functions, procedures and responsibilities assigned to it and as otherwise established by NSCC applicable to the MFPS and Fund/SERV system and the Networking Matrix Level utilized. 3. Except as modified hereby, all other terms and conditions of the Agreement shall remain in full force and effect. Unless otherwise indicated herein, the terms defined in the Agreement shall have the same meaning as in this Exhibit. 2 of 2 EX-99.B8L 9 pioneer.txt PIONEER PART. AGREE. PARTICIPATION AGREEMENT AMONG PIONEER VARIABLE CONTRACTS TRUST, GOLDEN AMERICAN LIFE INSURANCE COMPANY PIONEER INVESTMENT MANAGEMENT, INC. AND PIONEER FUNDS DISTRIBUTOR, INC. THIS AGREEMENT, made and entered into as of the thirteenth day of July, 2001, by and among PIONEER VARIABLE CONTRACTS TRUST, a Delaware business trust (the "Trust"), GOLDEN AMERICAN LIFE INSURANCE COMPANY, a Delaware life insurance company (the "Company") on its own behalf and on behalf of each of the segregated asset accounts of the Company set forth in Schedule A hereto, as may be amended from time to time (the "Accounts"), PIONEER INVESTMENT MANAGEMENT, INC., a Delaware corporation ("PIM") and Pioneer Funds Distributor, Inc. ("PFD"), a corporation organized under the laws of The Commonwealth of Massachusetts. WHEREAS, the Trust is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"), and its shares are registered or will be registered under the Securities Act of 1933, as amended (the "1933 Act"); WHEREAS, shares of beneficial interest of the Trust are divided into several series and classes of shares, each series being designated a "Portfolio" and representing an interest in a particular managed pool of securities and other assets; WHEREAS, the Trust is available to act as the investment vehicle for separate accounts established for variable life insurance policies and/or variable annuity contracts to be offered by insurance companies, including Company, which have entered into participation agreements with the Trust (the "Participating Insurance Companies"); WHEREAS, the Trust has obtained an order from the Securities and Exchange Commission (the "SEC"), dated July 9, 1997 (File No. 812-10494) (the "Mixed and Shared Funding Exemptive Order") granting Participating Insurance Companies and variable annuity and variable life insurance separate accounts exemptions from the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance companies that may or may not be affiliated with one another and qualified pension and retirement plans ("Qualified Plans"); WHEREAS, PIM is duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and any applicable state securities law, and is the Trust's investment adviser; WHEREAS, the Company will issue certain variable annuity and/or variable life insurance contracts (individually, the "Contract" or, collectively, the "Contracts") which, if required by applicable law, will be registered under the 1933 Act; WHEREAS, the Accounts are duly organized, validly existing segregated asset accounts, established by resolution of the Board of Directors of the Company, to set aside and invest assets attributable to the aforesaid variable annuity and/or variable life insurance contracts that are allocated to the Accounts (the Contracts and the Accounts covered by this Agreement, and each corresponding Portfolio covered by this Agreement in which the Accounts may invest, is specified in Schedule A attached hereto as may be modified from time to time); WHEREAS, the Company has registered or will register the Accounts as unit investment trusts under the 1940 Act (unless exempt therefrom); WHEREAS, the Portfolios offered by the Trust to the Company and the Accounts are set forth on Schedule A attached hereto; WHEREAS, PFD is registered as a broker-dealer with the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD") and is authorized to sell shares of the Portfolios to unit investment trusts such as the Accounts; WHEREAS, Directed Services, Inc. ("Policy Underwriter"), the underwriter for the variable annuity and the variable life policies, is registered as a broker-dealer with the SEC under the 1934 Act and is a member in good standing of the NASD; and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in one or more of the Portfolios specified in Schedule A attached hereto (the "Shares") on behalf of the Accounts to fund the Contracts, and PFD intends to sell such Shares to the Accounts at net asset value; NOW, THEREFORE, in consideration of their mutual promises, the Trust, PIM, PFD and the Company agree as follows: ARTICLE I. SALE OF TRUST SHARES 1.1. PFD and the Company agree to provide pricing information, execute orders and wire payments for purchases and redemptions of Fund shares as set forth in this Article I until such time as they mutually agree to utilize the National Securities Clearing Corporation ("NSCC"). Upon such mutual agreement, PFD and the Company agree to provide pricing information, execute orders and wire payments for purchases and redemptions of Fund shares through NSCC and its subsidiary systems as set forth in Exhibit I. 1.2 PFD agrees to sell to the Company those Shares which the Accounts order in accordance with the terms of this Agreement (based on orders placed by Contract owners or participants on that Business Day, as defined below) and which are available for purchase by such Accounts. Each such order will be executed on a daily basis at the net asset value next computed after receipt by the Trust or its designee of the order for the Shares. For purposes of this Section 1.2, the Company shall be the designee of the Trust for receipt of such orders from Contract owners or participants and receipt by such designee shall constitute receipt by the Trust; provided that the Trust or its designee receives written notice of such orders by the time the Trust ordinarily -2- calculates its net asset value as described from time to time in the Trust's prospectus (which as of the date of this Agreement is 4:00 p.m. New York time on such Business Day). The Company shall provide written (or facsimile) notice to PFD of a net purchase of Fund shares by 9:00 a.m. New York time on the following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange, Inc. (the "NYSE") is open for trading and on which the Trust calculates its net asset value pursuant to the rules of the SEC. 1.3. PFD agrees to make the Shares available for purchase at the applicable net asset value per share by the Company and the Accounts on those days on which the Trust calculates its net asset value in accordance with the rules of the SEC. Notwithstanding the foregoing, the Board of Trustees of the Trust (the "Board") may refuse to sell any Shares to the Company and the Accounts, or suspend or terminate the offering of the Shares to the Company and the Accounts if such action is required by law or by regulatory authorities having jurisdiction over PIM, PFD or the Trust or is, in the sole discretion of the Board acting in good faith and in light of its fiduciary duties under federal and any applicable state laws, in the best interest of the Shareholders of such Portfolio. 1.4. The Trust and PFD will sell Trust shares only to Participating Insurance Companies and Qualified Plans which have agreed to participate in the Trust to fund their Separate Accounts and/or Qualified Plans all in accordance with the requirement of Section 817(h) of the Internal Revenue Code, as amended (the "Code") and the Treasury regulations thereunder. The Company will not resell the Shares except to the Trust or its agents. 1.5. The Trust agrees, upon the Company's request, to redeem for cash, any full or fractional Shares held by the Accounts (based on orders placed by Contract owners on that Business Day). Each such redemption request shall be executed on a daily basis at the net asset value next computed after receipt by the Trust or its designee of the request for redemption. For purposes of this Section 1.5, the Company shall be the designee of the Trust for receipt of requests for redemption from Contract owners or participants and receipt by such designee shall constitute receipt by the Trust; provided that the Trust or its designee receives written notice of such request for redemption by the time the Trust ordinarily calculates its net asset value as described from time to time in the Trust's prospectus (which as of the date of this Agreement is 4:00 p.m. New York time on such Business Day). The Company shall provide written (or facsimile) notice to PFD of a net redemption of Fund shares no later than 9:00 a.m. New York time on the following Business Day. 1.6. Each purchase, redemption and exchange order placed by the Company shall be placed separately for each Portfolio and shall not be netted with respect to any Portfolio. However, with respect to payment of the purchase price by the Company and of redemption proceeds by the Trust, the Company and the Trust shall net purchase and redemption orders with respect to each Portfolio and shall transmit one net payment for all of the Portfolios in accordance with Section 1.7 hereof. 1.7. In the event of net purchases, the Company shall pay for the Shares by 4:00 p.m. New York time on the next Business Day after an order to purchase the Shares is made in accordance with the provisions of Section 1.2. hereof. Company shall transmit all such payments in federal funds by wire. If payment in federal funds for any purchase is not received or is received by the Trust after 4:00 p.m. on such Business Day, the Company shall promptly, upon the Trust's request, reimburse the Trust for any charges, costs, fees, interest or other expenses incurred by the Trust in connection with any advances to, or borrowings or overdrafts by, the Trust, or any similar -3- expenses (including the cost of and any loss incurred by the Trust in unwinding any purchase of securities by the Trust) incurred by the Trust as a result of portfolio transactions effected by the Trust based upon such purchase request. In the event of net redemptions, the Trust ordinarily shall pay and transmit the proceeds of redemptions of Shares by 4:00 p.m. New York time on the same Business Day on which the netredemption order is received from the Company in accordance with Section 1.5. hereof, although the Trust reserves the right to postpone the date of payment or satisfaction upon redemption consistent with Section 22(e) of the 1940 Act and any rules pomulgated thereunder. Payments for net redemptions shall be in federal funds transmitted by wire. If payment in federal funds for any net redemption is not received or is received by the Company after 4:00 p.m. on such Business Day, the Trust shall promptly, upon the Company's request, reimburse the Company for any charges, costs, fees, interest or other expenses incurred by the Company in connection with any advances to, or borrowings or overdrafts by, the Company, or any similar expenses incurred by the Company as a result of its payment of redemption proceeds to Contract owners or participants prior to receiving the redemption proceeds from the Trust. 1.8. Issuance and transfer of the Shares will be by book entry only. Stock certificates will not be issued to the Company or the Accounts. The Shares ordered from the Trust will be recorded in an appropriate title for the Accounts or the appropriate subaccounts of the Accounts. 1.9. The Trust shall furnish notice (by wire or telephone, followed by written confirmation) no later than 7:00 p.m. New York time on the ex-dividend date to the Company of any dividends or capital gain distributions payable on the Shares. The Company hereby elects to receive all such dividends and distributions as are payable in cash or Shares on a Portfolio's Shares in additional Shares of that Portfolio. The Trust shall notify the Company by the end of the next following Business Day of the number of Shares so issued as payment of such dividends and distributions. 1.10. The Trust or its custodian shall make the net asset value per share for each Portfolio available to the Company on each Business Day as soon as reasonably practical after the net asset value per share is calculated and shall use its best efforts to make such net asset value per share available by 6:00 p.m. New York time, but will in no event provide such net asset value later than 7:00 p.m. New York time absent extraordinary circumstances. In the event of extraordinary circumstances resulting in an anticipated delay past 7:00 p.m., the Trust or its custodian shall notify the Company no later than 7:00 p.m. of such anticipated delay. In the event of an error in the computation of a Portfolio's net asset value per share ("NAV") or any dividend or capital gain distribution (each, a "pricing error"), PIM or the Trust shall notify the Company as soon as possible after the discovery of the error. Such notification may be verbal, but shall be confirmed promptly in writing in accordance with Article XII of this Agreement. A pricing error shall be corrected in accordance with the Trust's internal policies and procedures. If an adjustment is necessary to correct a material error that occurred through no fault of the Company and such adjustment has caused Contract owners to receive less than the number of Shares or redemption proceeds to which they are entitled, the number of Shares of the applicable Account will be adjusted and the amount of any underpayments will be paid by the Trust or PIM to the Company for crediting of such amounts to the Contract owners' accounts. Upon notification by PIM of any overpayment due to a material error, the Company shall promptly remit to the Trust or PIM, as appropriate, any overpayment that has not been paid to Contract owner; however, PIM acknowledges that the Company does not intend to seek additional payments form any Contract owner who, because of a pricing error, may have underpaid for units of interest credited to his/her account. The costs of correcting such adjustments shall be borne by the Trust or PIM unless the Company is at fault in which case such costs shall be borne -4- by the Company. Specifically for the purposes of this Section 1.10, PIM shall indemnify and hold the Company harmless, from the effective date of this Agreement, against any amount the Company is required to pay to Contract owners or participants due to: (i) an incorrect calculation of a Portfolio's daily net asset value, dividend rate, or capital gains distribution rate or (ii) incorrect or late reporting of the daily net asset value, dividend rate, or capital gain distribution rate of a Portfolio, upon written notification by the Company, with supporting data, to PIM. In addition, PIM shall be liable to the Company for reasonable systems and out of pocket costs incurred by the Company in making a Contract owner's or a participant's account whole, if such costs or expenses are a result of PIM's failure to provide timely or correct net asset values, dividend and capital gains or financial information and if such information is not corrected by 4:00 p.m. New York time of the next business day after releasing such incorrect information provided the incorrect NAV as well as the correct NAV for each day that the error occurred is provided. If a mistake is caused in supplying such information or confirmations, which results in a reconciliation with incorrect information, the amount required to make a Contract owner's or a participant's account whole shall be borne by the party providing the incorrect information, regardless of when the error is corrected. ARTICLE II. CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS 2.1. The Company represents and warrants that the Contracts are or will be registered under the 1933 Act or are exempt from or not subject to registration thereunder, and that the Contracts will be issued, sold, and distributed in compliance in all material respects with all applicable state and federal laws, including without limitation the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act. The Company further represents and warrants that it (i) is an insurance company duly organized and in good standing under applicable law; (ii) has legally and validly established each Account as a segregated asset account under applicable law; (iii) has registered or, prior to any issuance or sale of the Contracts, will register the Accounts as unit investment trusts in accordance with the provisions of the 1940 Act (unless exempt therefrom) to serve as segregated investment accounts for the Contracts, and (iv) will maintain such registration for so long as any Contracts are outstanding. The Company shall amend the registration statements under the 1933 Act for the Contracts and the registration statements under the 1940 Act for the Accounts from time to time as required in order to effect the continuous offering of the Contracts or as may otherwise be required by applicable law. The Company shall register and qualify the Contracts for sales in accordance with the securities laws of the various states only if and to the extent deemed necessary by the Company. At the time the Company is required to deliver the Trust's prospectus or statement of additional information to a purchaser of Shares in accordance with the requirements of federal or state securities laws, the Company shall distribute to such Contract purchasers the then current Trust prospectus, as supplemented. 2.2. The Company represents and warrants that the Contracts are currently and at the time of issuance will be treated as life insurance, endowment or annuity contracts under applicable provisions of the Code, that it will maintain such treatment and that it will notify the Trust or PIM immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.3. The Company represents and warrants that Policy Underwriter, the underwriter for the individual variable annuity contracts and the variable life policies, is a member in good standing of the NASD and is a registered broker-dealer with the SEC. The Company represents and warrants -5- that the Company and Policy Underwriter will sell and distribute such contracts and policies in accordance in all material respects with all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act and state insurance law suitability requirements. 2.4. The Trust represents and warrants that the Shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance in compliance with the laws of Delaware and that the Trust is and shall remain registered under the 1940 Act. The Trust shall amend the registration statement for its Shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its Shares. The Trust shall register and qualify the Shares for sale in accordance with the laws of the various states only if and to the extent deemed necessary by the Trust. 2.5. The Trust represents that it is lawfully organized and validly existing under the laws of the State of Delaware. The Trust further represents that it has adopted a pursuant to Rule 12b-1 under the 1940 Act and imposes an asset-based charge to finance its distribution expenses with respect to the Class II shares of certain of the Trust's Portfolios as permitted by applicable law and regulation. 2.6. PFD represents and warrants that it is a member in good standing of the NASD and is registered as a broker-dealer with the SEC. PFD represents that it will sell and distribute the Shares in accordance in all material respects with all applicable state and federal securities laws, including without limitation the 1933 Act, the 1934 Act, and the 1940 Act. 2.7. PIM represents and warrants that it is and shall remain duly registered as an investment adviser under the Investment Advisers Act of 1940, as amended. 2.8. No less frequently than annually, the Company shall submit to the Board such reports, material or data as the Board may reasonably request so that it may carry out fully the obligations imposed upon it by the conditions contained in the Mixed and Shared Funding Exemptive Order pursuant to which the SEC has granted exemptive relief to permit mixed and shared funding. 2.9. The Trust and PIM represent and warrant that all of their respective officers, employees, investment advisers, and other individuals or entities dealing with the money and/or securities of the Trust are, and shall continue to be at all times, covered by one or more blanket fidelity bonds or similar coverage for the benefit of the Trust in an amount not less than the minimal coverage required by Rule 17g-1 under the 1940 Act or related provisions as may be promulgated form time to time. The aforesaid bonds shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. The Company represents and warrants that all of its respective officers, employees, and other individuals or entities employed or controlled by the Company dealing with the money and/or securities of the Trust are, and shall continue to be at all times, covered by a blanket fidelity bond or similar coverage in an amount deemed appropriate by the Company. The aforesaid bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. The Company agrees that any amounts received under such bond relating to a claim arising under this Agreement will be held by the Company for the benefit of the Trust. The Company agrees to make all reasonable efforts to maintain such bond and agrees to notify the Trust and PIM in writing in the event such coverage terminates. -6- 2.10. The Company represents and warrants, for purposes other than diversification under Section 817 of the Code, that the Contracts are currently at the time of issuance and, assuming the Trust meets the requirements of Article VI, will be treated as annuity contracts under applicable provisions of the Code, and that it will make every effort to maintain such treatment and that it will notify the Trust, PFD and PIM immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. In addition, the Company represents and warrants that each Account is a "segregated asset account" and that interests in the Account are offered exclusively through the purchase of or transfer into a "variable contract" within the meaning of such terms under Section 817 of the Code and the regulations thereunder. The Company will use every effort to continue to meet such definitional requirements, and it will notify the Trust, PFD and PIM immediately upon having a reasonable basis for believing that such requirements have ceased to be met or that they might not be met in the future. The Company represents and warrants that it will not purchase Trust shares with assets derived from tax-qualified retirement plans except, indirectly, through Contracts purchased in connection with such plans. ARTICLE III. PROSPECTUS AND PROXY STATEMENTS; VOTING 3.1. At least annually, the Trust or its designee shall provide the Company, free of charge, with as many copies of the current prospectus (describing only the Portfolios listed in Schedule A hereto) for the Shares as the Company may reasonably request for distribution to existing Contract owners whose Contracts are funded by such Shares. The Trust or its designee shall provide the Company, at the Company's expense, with as many copies of the current prospectus for the Shares as the Company may reasonably request for distribution to prospective purchasers of Contracts. If requested by the Company in lieu thereof, the Trust or its designee shall provide such documentation (including a "camera ready" copy of the new prospectus as set in type or, at the request of the Company, as a diskette in the form sent to the financial printer) and other assistance as is reasonably necessary in order for the parties hereto once each year (or more frequently if the prospectus for the Shares is supplemented or amended) to have the prospectus for the Contracts and the prospectus for the Shares printed together in one document; the expenses of such printing to be apportioned between (a) the Company and (b) the Trust or its designee in proportion to the number of pages of the Contract and Shares' prospectuses, taking account of other relevant factors affecting the expense of printing, such as covers, columns, graphs and charts; the Trust or its designee to bear the cost of printing the Trust's prospectus portion of such document for distribution to owners of existing Contracts funded by the Shares and the Company to bear the expenses of printing the portion of such document relating to the Accounts; provided, however, that the Company shall bear all printing expenses of such combined documents where used for distribution to prospective purchasers or to owners of existing Contracts not funded by the Shares. In the event that the Company requests that the Trust or its designee provides the Trust's prospectus in a "camera ready," diskette format or other mutually agreed upon format, the Trust shall be responsible for providing the prospectus in the format in which it or PIM is accustomed to formatting prospectuses and shall bear the expense of providing the prospectus in such format (e.g., typesetting expenses), and the Company shall bear the expense of adjusting or changing the format to conform with any of its prospectuses, subject to PIM's approval which shall not be unreasonably withheld. 3.2. The prospectus for the Shares shall state that the statement of additional information for the Shares is available from the Trust or its designee. The Trust or its designee, at its expense, shall print and provide such statement of additional information to the Company (or a master -7- of such statement suitable for duplication by the Company) for distribution to any owner of a Contract funded by the Shares. The Trust shall also provide such statement of additional information to the Company in a mutually agreed upon electronic format. The Trust or its designee, at the Company's expense, shall print and provide such statement to the Company (or a master of such statement suitable for duplication by the Company) for distribution to a prospective purchaser who requests such statement or to an owner of a Contract not funded by the Shares. 3.3. The Trust or its designee shall provide the Company free of charge copies, if and to the extent applicable to the Shares, of the Trust's proxy materials, reports to Shareholders and other communications to Shareholders in such quantity as the Company shall reasonably require for distribution to Contract owners. The cost of distributing such documents shall be borne the Trust or its designee. 3.4 The Trust or PIM will provide the Company with as much notice as is reasonably practicable of any proxy solicitation for any Portfolio, and of any material change in the Trust's registration statement, particularly any change resulting in change to the registration statement or prospectus or statement of additional information for any Account. The Trust and PIM will cooperate with the Company so as to enable the Company to solicit proxies from Contract owners or to make changes to its prospectus, statement of additional information or registration statement, in an orderly manner. The Trust and PIM will make reasonable efforts to attempt to have changes affecting Contract prospectuses become effective simultaneously with the annual updates for such prospectuses. In addition, the Trust or its designee shall bear the reasonable expense of all of the Company's costs associated with a proxy for the Trust, including proxy preparation, group authorization letters, programming for tabulation and necessary materials (including postage). 3.5. The Trust hereby notifies the Company that it may be appropriate to include in the prospectus pursuant to which a Contract is offered disclosure regarding the potential risks of mixed and shared funding. 3.6. If and to the extent required by law, the Company shall: (a) solicit voting instructions from Contract owners; (b) vote the Shares in accordance with instructions received from Contract owners; and (c) vote the Shares for which no instructions have been received in the same proportion as the Shares of such Portfolio for which instructions have been received from Contract owners; so long as and to the extent that the SEC continues to interpret the 1940 Act to require pass through voting privileges for variable contract owners. The Company will in no way recommend action in connection with or oppose or interfere with the solicitation of proxies for the Shares held for such Contract owners. The Company reserves the right to vote shares held in any segregated asset account in its own right, to the extent permitted by law. Participating Insurance Companies shall be responsible for assuring that each of their separate accounts holding Shares calculates voting privileges in the manner required by the Mixed and Shared Funding Exemptive Order. The Trust and PIM will notify the Company of any changes of interpretations or amendments to the Mixed and Shared Funding Exemptive Order. -8- ARTICLE IV. SALES MATERIAL AND INFORMATION 4.1. The Company shall furnish, or shall cause to be furnished, to PFD or its designee, each piece of sales literature or other promotional material in which the Trust, PIM, any other investment adviser to the Trust, or any affiliate of PIM are named, at least five (5) Business Days prior to its use. No such material shall be used if PFD or its designee reasonably objects to such use within five (5) Business Days after receipt of such material. PFD or its designee shall notify the Company within five (5) Business Days of receipt of its approval or disapproval of such materials. 4.2. The Company shall not make any representation on behalf of the Trust, PIM, any other investment adviser to the Trust or any affiliate of PIM and shall not give any information on behalf of the Trust, PIM, any other investment adviser to the Trust, or any affiliate of PIM or concerning the Trust or any other such entity in connection with the sale of the Contracts other than the information contained in the registration statement, prospectus or statement of additional information for the Shares, as such registration statement, prospectus and statement of additional information may be amended or supplemented from time to time, or in reports or proxy statements for the Trust, or in sales literature or other promotional material approved by the Trust, PIM, PFD or their respective designees, except with the permission of the Trust, PIM or their respective designees. The Trust, PIM, PFD or their respective designees each agrees to respond to any request for approval on a prompt and timely basis. The Company shall adopt and implement procedures reasonably designed to ensure that information concerning the Trust, PIM, PFD or any of their affiliates which is intended for use only by brokers or agents selling the Contracts (i.e., information that is not intended for distribution to Contract owners or prospective Contract owners) is so used, and neither the Trust, PIM, PFD nor any of their affiliates shall be liable for any losses, damages or expenses relating to the improper use of such broker only materials. 4.3. PFD shall furnish, or shall cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material in which the Company and/or the Accounts is named, at least five (5) Business Days prior to its use. No such material shall be used if the Company or its designee reasonably objects to such use within five (5) Business Days after receipt of such material. The Company shall notify PFD within five (5) Business Days of receipt of its approval or disapproval of such materials. 4.4. The Trust, PIM and PFD shall not give any information or make any representations on behalf of the Company or concerning the Company, the Accounts, or the Contracts in connection with the sale of the Contracts other than the information or representations contained in a registration statement, prospectus, or statement of additional information for the Contracts, as such registration statement, prospectus and statement of additional information may be amended or supplemented from time to time, or in reports for the Accounts, or in sales literature or other promotional material approved by the Company or its designee, except with the permission of the Company. The Company or its designee agrees to respond to any request for approval on a prompt and timely basis. The parties hereto agree that this Section 4.4. is neither intended to designate nor otherwise imply that PIM is an underwriter or distributor of the Contracts. 4.5. The Trust shall provide, or shall cause to be provided, to the Company at least one complete copy of all registration statements, prospectuses, statements of additional information, -9- reports, proxy statements, sales literature and other promotional materials, and all amendments to any of the above, that relate to the Trust or its Shares, prior to or contemporaneously with the filing of such document with the SEC or other regulatory authorities. The Company shall provide, or cause to be provided, for approval by the Trust, the form of any disclosure that it intends to use in any registration statements, prospectuses, statements of additional information, and all amendments to any of the above, that relate to the use of the Portfolios of the Trust as investment options under the Contracts. 4.6. For purpose of this Article IV and Article VIII, the phrase "sales literature or other promotional material" includes but is not limited to advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone, electronic messages or tape recording, videotape display, signs or billboards, motion pictures, or other public media, including, for example, on-line networks such as the Internet or other electronic media), and sales literature (such as brochures, electronic messages, circulars, reprints or excerpts or any other advertisement, sales literature, or published articles), distributed or made generally available to customers or the public, educational or training materials or communications distributed or made generally available to some or all agents or employees, and shareholder reports, proxy materials (including solicitations for voting instructions) and any other material constituting sales literature or advertising under the NASDR Conduct Rules, the 1933 Act or the 1940 Act. However, such phrase "sales literature or other promotional material" shall not include any material that simply lists the names of Portfolios of the Trust in a list of investment options. 4.7. At the request of any party to this Agreement, each other party will make available to the other party's independent auditors and/or representative of the appropriate regulatory agencies, all records, data, and access to operating procedures that may be reasonably requested in connection with compliance and regulatory requirements related to the Agreement or any party's obligations under this Agreement. 4.8 Subject to the terms of Sections 4.1 and 4.2 of this Agreement, the Trust (and its Portfolios), PIM and PFD hereby each consents in connection with the marketing of the Contracts to the Company's use of their names or other identifying marks, including Pioneer Investments(R) and Pioneer's sail logo, in connection with the marketing of the Contracts. The Trust, PIM or PFD or their affiliates may withdraw this authorization as to any particular use of any such name or identifying mark at any time: (i) upon a reasonable determination that such use would have a material adverse effect on its reputation or marketing efforts or its affiliates or (ii) if any of the Portfolios of the Trust cease to be available through the Company. Except as set forth in the previous sentence, the Company will not cause or permit, without prior written permission, the use, description or reference to a Pioneer party's name, or to the relationship contemplated in this Agreement, in any advertisement, or promotional materials or activities, including without limitation, any advertisement or promotional materials published, distributed, or made available, or any activity conducted through, the Internet or any other electronic medium. ARTICLE V. Fees and Expenses 5.1. Neither the Trust, PIM nor PFD shall pay any fee or other compensation to the Company under this Agreement, other than pursuant to Schedule B attached hereto, and the Company shall pay no fee or other compensation to the Trust, PIM or PFD under this Agreement. -10- Notwithstanding the foregoing, the parties hereto will bear certain expenses under the provisions of this Agreement and shall reimburse other parties for expenses initially paid by one party but allocated to another party. In addition, nothing herein shall prevent the parties hereto from otherwise agreeing to perform, and arranging for appropriate compensation for, other services relating to the Trust and/or to the Accounts pursuant to this Agreement. 5.2. The Trust or its designee shall bear the expenses for the cost of registration and qualification of the Shares under all applicable federal and state laws, including preparation and filing of the Trust's registration statement, and payment of filing fees and registration fees; preparation and filing of the Trust's proxy materials and reports to Shareholders; setting in type and printing its prospectus and statement of additional information (to the extent provided by and as determined in accordance with Article III above); setting in type and printing the proxy materials and reports to Contract owners and participants (to the extent provided by and as determined in accordance with Article III above); the preparation of all statements and notices required of the Trust by any federal or state law with respect to its Shares; all taxes on the issuance or transfer of the Shares; and the costs of distributing the Trust's prospectuses, reports to Shareholders and proxy materials to owners of Contracts and participants funded by the Shares and any expenses permitted to be paid or assumed by the Trust pursuant to a plan, if any, under Rule 12b-1 under the 1940 Act. The Trust shall not bear any expenses of marketing the Contracts. 5.3. The Company shall bear the expenses of distributing the Shares' prospectus or prospectuses in connection with new sales of the Contracts. The Company shall bear all expenses associated with the registration, qualification, and filing of the Contracts under applicable federal securities and state insurance laws; the cost of preparing, printing and distributing the Contract prospectus and statement of additional information; and the cost of preparing, printing and distributing annual individual account statements for Contract owners as required by state insurance laws. 5.4. The Company agrees to provide certain administrative services, specified in Schedule B attached hereto, in connection with the arrangements contemplated by this Agreement. The parties intend that the services referred to in this Section 5.4 be recordkeeping, shareholder communication, and other transaction facilitation and processing, and related administrative serves and are not the services of an underwriter or principal underwriter of the Trust and the Company is not an underwriter for Shares within the meaning of the 1933 Act. ARTICLE VI. DIVERSIFICATION AND RELATED LIMITATIONS 6.1. The Trust and PIM represent and warrant that each Portfolio of the Trust in which an Account invests will meet the diversification requirements of Section 817(h)(1) of the Code and Treas. Reg. 1.817-5, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts, as they may be amended from time to time (and any revenue rulings, revenue procedures, notices, and other published announcements of the Internal Revenue Service interpreting these sections), as if those requirements applied directly to each such Portfolio. 6.2. The Trust and PIM represent that each Portfolio will elect to be qualified as a Regulated Investment Company under Subchapter M of the Code and that they will maintain such qualification (under Subchapter M or any successor or similar provision). -11- 6.3. No Shares of the Trust will be sold directly to the general public. ARTICLE VII. POTENTIAL MATERIAL CONFLICTS 7.1. The Trust agrees that the Board, constituted with a majority of disinterested trustees, will monitor each Portfolio of the Trust for the existence of any material irreconcilable conflict between the interests of the variable annuity contract owners and the variable life insurance policy owners of the Company and/or affiliated companies ("contract owners") investing in the Trust. A material irreconcilable conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority; (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretive letter, or any similar action by insurance, tax or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners or by contract owners of different Participating Insurance Companies; or (f) a decision by a Participating Insurance Company to disregard the voting instructions of contract owners. The Board shall have the sole authority to determine if a material irreconcilable conflict exists, and such determination shall be binding on the Company only if approved in the form of a resolution by a majority of the Board, or a majority of the disinterested trustees of the Board. The Board will give prompt notice of any such determination to the Company. 7.2. The Company agrees that it will be responsible for assisting the Board in carrying out its responsibilities under the conditions set forth in the Trust's exemptive application pursuant to which the SEC has granted the Mixed and Shared Funding Exemptive Order by providing the Board, as it may reasonably request, with all information necessary for the Board to consider any issues raised and agrees that it will be responsible for promptly reporting any potential or existing conflicts of which it is aware to the Board including, but not limited to, an obligation by the Company to inform the Board whenever contract owner voting instructions are disregarded. The Company also agrees that, if a material irreconcilable conflict arises, it will at its own cost remedy such conflict up to and including (a) withdrawing the assets allocable to some or all of the Accounts from the Trust or any Portfolio and reinvesting such assets in a different investment medium, including (but not limited to) another Portfolio of the Trust, or submitting to a vote of all affected contract owners whether to withdraw assets from the Trust or any Portfolio and reinvesting such assets in a different investment medium and, as appropriate, segregating the assets attributable to any appropriate group of contract owners (e.g., annuity contract owners, life insurance owners or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to any of the affected contract owners the option of segregating the assets attributable to their contracts or policies, and (b) establishing a new registered management investment company and segregating the assets underlying the Contracts, unless a majority of Contract owners materially adversely affected by the conflict have voted to decline the offer to establish a new registered management investment company. 7.3. A majority of the disinterested trustees of the Board shall determine whether any proposed action by the Company adequately remedies any material irreconcilable conflict. In the event that the Board determines that any proposed action does not adequately remedy any material irreconcilable conflict, the Company will withdraw from investment in the Trust each of the Accounts designated by the disinterested trustees and terminate this Agreement within six (6) -12- months after the Board informs the Company in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required to remedy any such material irreconcilable conflict as determined by a majority of the disinterested trustees of the Board. 7.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Trust's election, to withdraw the Account's investment in the Trust and terminate this Agreement; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the Trust's independent trustees. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented, and until the end of that six-month period PFD and the Trust shall continue to accept and implement orders by the Company for the purchase and redemption of shares of the Trust. 7.5. If a material irreconcilable conflict arises because a particular state insurance regulator's decision applicable to the Company conflicts with the majority of other state regulators, then the Company will withdraw the Account's investment in the Trust and terminate this Agreement within six (6) months after the Trust's Board informs the Company in writing that it has determined that such decision has created a material irreconcilable conflict; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Trust's Board. Until the end of the foregoing six (6) month period, the Trust and PFD shall continue to accept and implement orders by the Company for the purchase and redemption of shares of the Trust. 7.6 For purposes of Sections 7.3 through 7.6 of this Agreement, a majority of the disinterested members of the Board shall determine whether any proposed action adequately remedies any material irreconcilable conflict, but in no event will the Trust be required to establish a new funding medium for the Contracts. The Company shall not be required by Section 7.2 to establish a new funding medium for the contracts if an offer to do so has been declined by vote of a majority of Contract owners affected by the material irreconcilable conflict. In the event that the Board determines that any proposed action does not adequately remedy any material irreconcilable conflict, then the Company will withdraw the Account's investment in the Trust and terminate this Agreement within six (6) months after the Board informs the Company in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the independent trustees. 7.7. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Mixed and Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Mixed and Shared Funding Exemptive Order, then (a) the Trust and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rule 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.5, 3.6, 7.1, 7.2, 7.3 and 7.7 of this Agreement shall continue in effect only to the extent -13- that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. ARTICLE VIII. INDEMNIFICATION 8.1. Indemnification by the Company The Company agrees to indemnify and hold harmless the Trust, PIM, PFD, any affiliates of PIM, and each of their respective directors, trustees, officers and each person, if any, who controls the Trust or PIM within the meaning of Section 15 of the 1933 Act, and any agents or employees of the foregoing (each an "Indemnified Party," or collectively, the "Indemnified Parties" for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or expenses (including reasonable counsel fees) to which any Indemnified Party may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements: (a) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus or statement of additional information for the Contracts or contained in the Contracts or sales literature or other promotional material for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this Agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reasonable reliance upon and in conformity with information furnished to the Company or its designee by or on behalf of the Trust, PIM or PFD for use in the registration statement, prospectus or statement of additional information for the Contracts or in the Contracts or sales literature or other promotional material (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Shares; or (b) arise out of or as a result of statements or representations not supplied by the Company or its designee, or persons under its control (other than statements or representations contained in the Trust's registration statement, prospectus, statement of additional information or in sales literature or other promotional material of the Trust and on which the Company has reasonably relied) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Shares; or (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus, statement of additional information, or sales literature or other promotional literature of the Trust, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was -14- made in reliance upon information furnished to the Trust by or on behalf of the Company; or (d) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company; or (e) arise as a result of any failure by the Company to perform any of its obligations under this Agreement; as limited by and in accordance with the provisions of this Article VIII. 8.2. Indemnification by PIM and PFD PIM and PFD agree to indemnify and hold harmless the Company and Policy Underwriter and each of their trustees and officers and each person, if any, who controls the Company or Policy Underwriter within the meaning of Section 15 of the 1933 Act, and any agents or employees of the foregoing (each an "Indemnified Party," or collectively, the "Indemnified Parties" for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Trust) or expenses (including reasonable counsel fees) to which any Indemnified Party may become subject under any statute, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Shares or the Contracts and: (a) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement, prospectus, statement of additional information or sales literature or other promotional material of the Trust (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reasonable reliance upon and in conformity with information furnished to the Trust, PIM, PFD or their respective designees by or on behalf of the Company for use in the registration statement, prospectus or statement of additional information for the Trust or in sales literature or other promotional material for the Trust (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Shares; or (b) arise out of or as a result of statements or representations (other than statements or representations contained in the Contract's registration statement, prospectus, statement of additional information or in sales literature or other promotional material for the Contracts not supplied by the Trust, PIM, PFD or any of their respective designees or persons under their respective control and on which any such entity has reasonably relied) or wrongful conduct of the Trust, PIM, PFD or persons under their control, with respect to the sale or distribution of the Contracts or Shares; or -15- (c) arise out of any untrue statement or alleged untrue statement of a material fact contained in the registration statement, prospectus, statement of additional information, or sales literature or other promotional literature of the Accounts or relating to the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Trust, PIM or PFD; or (d) arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement (including a failure, whether unintentional or in good faith or otherwise, to comply with the diversification requirements specified in Article VI of this Agreement) or arise out of or result from any other material breach of this Agreement by the Trust; or (e) arise out of or result from the materially incorrect or untimely calculation or reporting of the daily net asset value per share or dividend or capital gain distribution rate; or (f) arise as a result of any failure by PIM or PFD to perform any of their respective obligations under this Agreement; as limited by and in accordance with the provisions of this Article VIII. 8.3. In no event shall the Trust, PIM or PFD be liable under the indemnification provisions contained in this Agreement to any individual or entity, including without limitation, the Company, or any Participating Insurance Company or any Contract owner, with respect to any losses, claims, damages, liabilities or expenses that arise out of or result from (i) a breach of any representation, warranty, and/or covenant made by the Company hereunder or by any Participating Insurance Company under an agreement containing substantially similar representations, warranties and covenants; (ii) the failure by the Company or any Participating Insurance Company to maintain its segregated asset account (which invests in any Portfolio) as a legally and validly established segregated asset account under applicable state law and as a duly registered unit investment trust under the provisions of the 1940 Act (unless exempt therefrom); or (iii) the failure by the Company or any Participating Insurance Company to maintain its variable annuity and/or variable life insurance contracts (with respect to which any Portfolio serves as an underlying funding vehicle) as life insurance, endowment or annuity contracts under applicable provisions of the Code. 8.4. Neither the Company, the Trust, PIM nor PFD shall be liable under the indemnification provisions contained in this Agreement with respect to any losses, claims, damages, liabilities or expenses to which an Indemnified Party would otherwise be subject by reason of such Indemnified Party's willful misfeasance, willful misconduct, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement. 8.5. Promptly after receipt by an Indemnified Party under this Section 8.5. of notice of commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this section, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it -16- from any liability which it may have to any Indemnified Party otherwise than under this section. In case any such action is brought against any Indemnified Party, and it notified the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, assume the defense thereof, with counsel satisfactory to such Indemnified Party. After notice from the indemnifying party of its intention to assume the defense of an action, the Indemnified Party shall bear the expenses of any additional counsel obtained by it, and the indemnifying party shall not be liable to such Indemnified Party under this section for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation. 8.6. A successor by law of the parties to this Agreement shall be entitled to the benefits of the indemnification contained in this Article VIII. The indemnification provisions contained in this Article VIII shall survive any termination of this Agreement. ARTICLE IX. APPLICABLE LAW 9.1. This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts. 9.2. This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Mixed and Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE X. NOTICE OF FORMAL PROCEEDINGS OR LITIGATION The Trust, PIM, PFD and the Company agree that each such party shall promptly notify the other parties to this Agreement, in writing, of the institution of any formal proceedings brought against such party or its designees by the NASD, the SEC, or any insurance department or any other regulatory body regarding such party's duties under this Agreement or related to the sale of the Contracts, the operation of the Accounts, or the purchase of the Shares. Each of the parties further agrees promptly to notify the other parties of the commencement of any litigation or proceeding against it or any of its respective officers, directors, trustees, employees or 1933 Act control persons in connection with this Agreement, the issuance or sale of the Contracts, the operation of the Accounts, or the sale or acquisition of Shares. The indemnification provisions contained in this Article X shall survive any termination of this Agreement. ARTICLE XI. TERMINATION 11.1. This Agreement shall terminate with respect to the Accounts, or one, some, or all Portfolios: (a) at the option of any party upon three (3) months' advance written notice delivered to the other parties; provided, however, that such notice shall not be given earlier than three (3) months following the date of this Agreement; or -17- (b) at the option of the Company to the extent that the Shares of Portfolios are not reasonably available to meet the requirements of the Contracts or are not "appropriate funding vehicles" for the Contracts, as reasonably determined by the Company. Without limiting the generality of the foregoing, the Shares of a Portfolio would not be "appropriate funding vehicles" if, for example, such Shares did not meet the diversification or other requirements referred to in Article VI hereof; or if the Company would be permitted to disregard Contract owner voting instructions pursuant to Rule 6e-2 or 6e-3(T) under the 1940 Act. Prompt notice of the election to terminate for such cause and an explanation of such cause shall be furnished to the Trust by the Company; or (c) at the option of the Trust, PIM or PFD upon institution of formal proceedings against the Company by the NASD, the SEC, or any insurance department or any other regulatory body regarding the Company's duties under this Agreement or related to the sale of the Contracts, the operation of the Accounts, or the purchase of the Shares; provided that the party terminating this Agreement under this provision shall give notice of such termination to the other parties to this Agreement; or (d) at the option of the Company upon institution of formal proceedings against the Trust by the NASD, the SEC, or any state securities or insurance department or any other regulatory body regarding the duties of the Trust, PIM or PFD under this Agreement or related to the sale of the Shares; provided that the party terminating this Agreement under this provision shall give notice of such termination to the other parties to this Agreement; or (e) at the option of the Company, the Trust, PIM or PFD upon receipt of any necessary regulatory approvals and/or the vote of the Contract owners having an interest in the Accounts (or any subaccounts) to substitute the shares of another investment company for the corresponding Portfolio Shares in accordance with the terms of the Contracts for which those Portfolio Shares had been selected to serve as the underlying investment media. The Company will give thirty (30) days' prior written notice to the Trust of the Date of any proposed vote or other action taken to replace the Shares; or (f) at the option of the Trust, PIM or PFD by written notice to the Company, if any one or all of the Trust, PIM or PFD respectively, shall determine, in their sole judgment exercised in good faith, that the Company has suffered a material adverse change in its business, operations, financial condition, or prospects since the date of this Agreement or is the subject of material adverse publicity; or (g) at the option of the Company by written notice to the Trust, PIM or PFD, if the Company shall determine, in its sole judgment exercised in good faith, that the Trust, PIM or PFD has suffered a material adverse change in this business, operations, financial condition or prospects since the date of this Agreement or is the subject of material adverse publicity; or (h) at the option of any party to this Agreement, upon another unaffiliated party's material breach of any provision of or representation contained in this. -18- 11.2. The notice shall specify the Portfolio or Portfolios, Contracts and, if applicable, the Accounts as to which the Agreement is to be terminated. 11.3. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 11.1(a) may be exercised for cause or for no cause. 11.4. Except as necessary to implement Contract owner initiated transactions, or as required by state insurance laws or regulations, the Company shall not redeem the Shares attributable to the Contracts (as opposed to the Shares attributable to the Company's assets held in the Accounts), and the Company shall not prevent Contract owners from allocating payments to a Portfolio that was otherwise available under the Contracts, until thirty (30) days after the Company shall have notified the Trust of its intention to do so. 11.5. Notwithstanding any termination of this Agreement, the Trust and PFD shall, at the option of the Company, continue for a period not exceeding six (6) months to make available additional shares of the Portfolios pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (the "Existing Contracts"), except as otherwise provided under Article VII of this Agreement; provided, however, that in the event of a termination pursuant to Section 11.1. (c), (f) or (h), the Trust, PIM and PFD shall at their option have the right to terminate immediately all sales of Shares to the Company. Specifically, without limitation, the owners of the Existing Contracts shall be permitted to transfer or reallocate investment under the Contracts, redeem investments in any Portfolio and/or invest in the Trust upon the making of additional purchase payments under the Existing Contracts. 11.6 Notwithstanding any termination of this Agreement, each party's obligations under Article VIII to indemnify the other parties shall survive and not be affected by any termination of this Agreement. In addition, with respect to Existing Contracts, all provisions of this Agreement shall also survive and not be affected by any termination of this Agreement ARTICLE XII. NOTICES Any notice shall be sufficiently given when sent by registered or certified mail, overnight courier or facsimile to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other party. If to the Trust: Pioneer Variable Contracts Trust c/o Hale and Dorr 60 State Street Boston, Massachusetts 02109 Attn: Joseph P. Barri, Secretary If to the Company: Golden American Life Insurance Company 1475 Dunwoody Drive -19- West Chester, PA 19380 Attn: Myles R. Tashman , Executive Vice President If to PIM: Pioneer Investment Management, Inc. 60 State Street Boston, Massachusetts 02109 Attn: Elizabeth A. Watson, Senior Counsel If to PFD: Pioneer Funds Distributor, Inc. 60 State Street Boston, Massachusetts 02109 Attn: William A. Misata, Senior Vice President ARTICLE XIII. MISCELLANEOUS 13.1. Subject to the requirement of legal process and regulatory authority, each party hereto shall treat as confidential all information reasonably identified as confidential in writing by any party hereto and, except as permitted by this Agreement or as otherwise required by applicable law or regulation, shall not disclose, disseminate or utilize such other confidential information without the express written consent of the affected party until such time as it may come into the public domain. Notwithstanding anything to the contrary in this Agreement, in addition to and not in lieu of other provisions in this Agreement: (a) "Confidential Information: includes without limitation all information regarding the customers of the Company, the Trust, PIM, PFD or any of their subsidiaries, affiliates or licensees; or the accounts, account numbers, names, addresses, social security numbers or any other personal identifier of such customers; or any information derived therefrom. (b) Neither the Company, the Trust, PIM or PFD may disclose Confidential Information for any purpose other than to carry out the purpose for which Confidential Information was provided to the Company, the Trust, PIM or PFD as set forth in this Agreement; and the Company, the Trust, PIM and PFD agree to cause their employees, agents and representatives, or any other party to whom the Company, the Trust, PIM or PFD may provide access to or disclose Confidential Information to limit the use and disclosure of Confidential Information to that purpose. (c) The Company, the Trust, PIM and PFD agree to implement appropriate measures designed to ensure the security and confidentiality of Confidential Information, to protect such information against any anticipated threats or hazards to the security and integrity of such information, and to protect against unauthorized access to, or use of, Confidential Information that could result in substantial harm or inconvenience to any of the customers of the Company or any of its subsidiaries, -20- affiliates or licensees; the Company, the Trust, PIM and PFD further agree to cause all their respective agents, representatives or subcontractors, or any other party to whom they provide access to or disclose Confidential Information, to implement appropriate measures to meet the objectives set forth in this Section 13.1. 13.2. ____ The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 13.3. ____ This Agreement may be executed simultaneously in one or more counterparts, each of which taken together shall constitute one and the same instrument. 13.4. ____ If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 13.5. ____ The Schedule attached hereto, as modified from time to time, is incorporated herein by reference and is part of this Agreement. 13.6. ____ Each party hereto shall cooperate with each other party in connection with inquiries by appropriate governmental authorities (including without limitation the SEC, the NASD, and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. 13.7. ____ The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 13.8. ____ A copy of the Trust's Certificate of Trust is on file with the Secretary of State of Delaware. The Company acknowledges that the obligations of or arising out of this instrument are not binding upon any of the Trust's trustees, officers, employees, agents or shareholders individually, but are binding solely upon the assets and property of the Trust in accordance with its proportionate interest hereunder. The Company further acknowledges that the assets and liabilities of each Portfolio are separate and distinct and that the obligations of or arising out of this instrument are binding solely upon the assets or property of the Portfolio on whose behalf the Trust has executed this instrument. The Company also agrees that the obligations of each Portfolio hereunder shall be several and not joint, in accordance with its proportionate interest hereunder, and the Company agrees not to proceed against any Portfolio for the obligations of another Portfolio. 13.9. ____ Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in a forum jointly selected by the relevant parties (but if applicable law requires some other forum, then, such other forum) in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 13.10. ___ This Agreement of any of the rights and obligations hereunder may not be assigned by any party without the prior written consent of all parties hereto. -21- 13.11. ___ The Trust, PIM and PFD agree that the obligations assumed by the Company shall be limited in any case to the Company and its assets and neither the Trust, PIM nor PFD shall seek satisfaction of any such obligation from the shareholders of Company, the directors, officers, employees or agents of the Company, or any of them. 13.12. ___ No provision of the Agreement may be deemed or construed to modify or supersede any contractual rights, duties, or indemnifications, as between PIM and the Trust and PFD and the Trust. 13.13. ___ This Agreement, including any Schedules hereto, may be amended only by a written instrument executed by each party hereto. -22- IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified above. GOLDEN AMERICAN LIFE INSURANCE COMPANY By its authorized officer, By: /s/David L. Jacobson ---------------------- David L. Jacobson, Senior Vice President Date: PIONEER VARIABLE CONTRACTS TRUST, on behalf of the Portfolios By its authorized officer and not individually, By: /s/Joseph P. Barri -------------------- Joseph P. Barri Secretary Date: PIONEER INVESTMENT MANAGEMENT, INC. By its authorized officer, By: /s/Daniel T. Geraci -------------------- Daniel T. Geraci President and Chief Executive Officer Date: -23- SCHEDULE A Accounts, Contracts and Portfolios Subject to the Participation Agreement -------------------------------------- As of November 26, 2001 ======================================== ========================================== =========================================== Name of Separate Account and Date Contracts Funded Portfolios and Established by Board of Directors by Separate Account Class of Shares Available to Contracts ======================================== ========================================== =========================================== ======================================== ========================================== =========================================== Variable Annuity Account B, established SmartDesign Variable Annuity Pioneer Fund VCT Portfolio July 14, 1988 (Class II) SmartDesign Advantage Variable Annuity Pioneer Small Company VCT Portfolio (Class II) - ---------------------------------------- ------------------------------------------ ------------------------------------------- ======================================== ========================================== =========================================== Variable Annuity Account B, established GoldenSelect Access Variable Annuity Pioneer Fund VCT Portfolio July 14, 1988 (Class II) GoldenSelect DVA Plus Variable Annuity Pioneer Fund Mid Cap Value VCT Portfolio GoldenSelect ES II Variable Annuity (Class II) GoldenSelect Landmark Variable Annuity GoldenSelect Premium Plus Variable Annuity GoldenSelect Galaxy Premium Plus Variable Annuity - ---------------------------------------- ------------------------------------------ ------------------------------------------- ======================================== ========================================== =========================================== Variable Annuity Account B, established Retirement Solutions ING Rollover Variable Pioneer Fund VCT Portfolio July 14, 1988 Annuity (Class II) Pioneer Equity Income VCT Portfolio (Class II) Pioneer Mid Cap Value VCT Portfolio (Class II) - ---------------------------------------- ------------------------------------------ -------------------------------------------
-24- SCHEDULE B FEES TO THE COMPANY - ------------------- 1. Administrative Services ----------------------- Administrative services to Contract owners and participants shall be the responsibility of the Company and shall not be the responsibility of the Trust or PFD. The Company will provide properly registered and licensed personnel and any systems needed for all Contract owners servicing and support - for both fund and annuity and life insurance information and questions, including: |X| Communicate all purchase, withdrawal, and exchange orders it receives from its customers to PFD; |X| Respond to Contract owner and participant inquires; |X| Delivery of both Trust and Contract prospectuses as required under applicable law; |X| Entry of initial and subsequent orders; |X| Transfer of cash to Portfolios; |X| Explanations of Portfolio objectives and characteristics; |X| Entry of transfers between Portfolios; |X| Portfolio balance and allocation inquires; and |X| Provide information to Trust's proxy vendor to enable vendor to mail Trust proxies. 2. Administrative Service Fees --------------------------- For the administrative services set forth above, PIM or any of its affiliates shall pay a servicing fee based on the annual rate of 0.25% of the average aggregate net daily assets invested in the Class I Shares of the Portfolios and 0.25% of the average aggregate net daily assets invested in the Class II Shares of the Portfolios through the Accounts at the end of each calendar quarter. Such payments will be made to the Company within thirty (30) days after the end of each calendar quarter. Such fees shall be paid quarterly in arrears. Each payment will be accompanied by a statement showing the calculation of the fee payable to the Company for the quarter and such other supporting data as may be reasonably requested by the Company. The Company will calculate the asset balance on each day on which the fee is to be paid pursuant to this Agreement with respect to each Portfolio for the purpose of reconciling its calculation of average aggregate net daily assets with PIM's calculation. Annually (as of 12/31) or upon reasonable request of PIM, Company will provide PIM a statement showing the number of subaccounts in each Class of Shares of each Portfolio as of the most recent calendar quarter end. 3. 12b-1 Distribution Related Fees (Class II Shares Only) ------------------------------------------------------ In accordance with the Portfolios' plans pursuant to Rule 12b-1 under the Investment Company Act of 1940, PFD will make payments to the Company at an annual rate of 0.25% of the average daily net assets invested in the Class II shares of the Portfolios through the Accounts in each calendar quarter. PFD will make such payments to the Company within thirty (30) days after the end of each calendar quarter. Each payment will be accompanied by a statement showing the calculation of the fee payable to the Company for the quarter and such other supporting data as may be reasonably requested by the Company. The 12b-1 distribution related fees will be paid to the Company for as long as the Accounts own any Shares of a Portfolio and (i) distribution services are being provided pursuant to this Agreement and (ii) a 12b-1 plan is in effect with respect to such Portfolio. -26- EXHIBIT I TO PARTICIPATION AGREEMENT Procedures for Pricing and Order/Settlement Through National Securities Clearing Corporation's Mutual Fund Profile System and Mutual Fund Settlement, Entry and Registration Verification System 1. As provided in Section 1.1 of the Participation Agreement, the parties hereby agree to provide pricing information, execute orders and wire payments for purchases and redemptions of Fund shares through National Securities Clearing Corporation ("NSCC") and its subsidiary systems as follows: (a) Distributor or the Funds will furnish to Company or its affiliate through NSCC's Mutual Fund Profile System ("MFPS") (1) the most current net asset value information for each Fund, (2) a schedule of anticipated dividend and distribution payment dates for each Fund, which is subject to change without prior notice, ordinary income and capital gain dividend rates on the Fund's ex-date, and (3) in the case of fixed income funds that declare daily dividends, the daily accrual or the interest rate factor. All such information shall be furnished to Company or its affiliate by 6:30 p.m. Eastern Time on each business day that the Fund is open for business (each a "Business Day") or at such other time as that information becomes available. Changes in pricing information will be communicated to both NSCC and Company. (b) Upon receipt of Fund purchase, exchange and redemption instructions for acceptance as of the time at which a Fund's net asset value is calculated as specified in such Fund's prospectus ("Close of Trading") on each Business Day ("Instructions"), and upon its determination that there are good funds with respect to Instructions involving the purchase of Shares, Company or its affiliate will calculate the net purchase or redemption order for each Fund. Orders for net purchases or net redemptions derived from Instructions received by Company or its affiliate prior to the Close of Trading on any given Business Day will be sent to the Defined Contribution Interface of NSCC's Mutual Fund Settlement, Entry and Registration Verification System ("Fund/SERV") by 5:00 a.m. Eastern Time on the next Business Day. Subject to Company's or its affiliate's compliance with the foregoing, Company or its affiliate will be considered the agent of the Distributor and the Funds, and the Business Day on which Instructions are received by Company or its affiliate in proper form prior to the Close of Trading will be the date as of which shares of the Funds are deemed purchased, exchanged or redeemed pursuant to such Instructions. Instructions received in proper form by Company or its affiliate after the Close of Trading on any given Business Day will be treated as if received on the next following Business Day. Dividends and capital gains distributions will be automatically reinvested at net asset value in accordance with the Fund's then current prospectuses. (c) Company or its affiliate will wire payment for net purchase orders by the Fund's NSCC Firm Number, in immediately available funds, to an NSCC settling bank account designated by Company or its affiliate no later than 5:00 p.m. Eastern time on the same Business Day such purchase orders are communicated to NSCC. For purchases of shares of daily dividend accrual funds, those shares will not begin to accrue dividends until the day the payment for those shares is received. (d) NSCC will wire payment for net redemption orders by Fund, in immediately available funds, to an NSCC settling bank account designated by Company or its affiliate, by 5:00 p.m. Eastern Time on the Business Day such redemption orders are communicated to NSCC, except as -27- provided in a Fund's prospectus and statement of additional information. (e) With respect to (c) or (d) above, if Distributor does not send a confirmation of Company's or its affiliate's purchase or redemption order to NSCC by the applicable deadline to be included in that Business Day's payment cycle, payment for such purchases or redemptions will be made the following Business Day. (f) If on any day Company or its affiliate, or Distributor is unable to meet the NSCC deadline for the transmission of purchase or redemption orders, it may at its option transmit such orders and make such payments for purchases and redemptions directly to Distributor or Company or its affiliate, as applicable, as is otherwise provided in the Agreement. (g) These procedures are subject to any additional terms in each Fund's prospectus and the requirements of applicable law. The Funds reserve the right, at their discretion and without notice, to suspend the sale of shares or withdraw the sale of shares of any Fund. 2. Company or its affiliate, Distributor and clearing agents (if applicable) are each required to have entered into membership agreements with NSCC and met all requirements to participate in the MFPS and Fund/SERV systems before these procedures may be utilized. Each party will be bound by the terms of their membership agreement with NSCC and will perform any and all duties, functions, procedures and responsibilities assigned to it and as otherwise established by NSCC applicable to the MFPS and Fund/SERV system and the Networking Matrix Level utilized. 3. Except as modified hereby, all other terms and conditions of the Agreement shall remain in full force and effect. Unless otherwise indicated herein, the terms defined in the Agreement shall have the same meaning as in this Exhibit. -28- EX-99.B8M 10 ingpart.txt ING PARTNERS PART. AGREE. FUND PARTICIPATION AGREEMENT BETWEEN PORTFOLIO PARTNERS, INC., GOLDEN AMERICAN LIFE INSURANCE COMPANY AND AETNA LIFE INSURANCE AND ANNUITY COMPANY Golden American Life Insurance Company (the "Company"), Portfolio Partners, Inc. (the "Fund") and Aetna Life Insurance and Annuity Company (the "Adviser") hereby agree to an arrangement whereby the Fund shall be made available to serve as underlying investment media for Variable Annuity or Variable Life Contracts ("Contracts") to be issued by the Company. 1. Establishment of Accounts; Availability of Fund. ----------------------------------------------- (a) The Company represents that it has established Separate Account B and may establish such other accounts as may be set forth in Schedule A attached hereto and as may be amended from time to time with the mutual consent of the parties hereto (the "Accounts"), each of which is a separate account under Delaware Insurance law, and has registered or will register each of the Accounts (except for such Accounts for which no such registration is required) as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"), to serve as an investment vehicle for the Contracts. Each Contract provides for the allocation of net amounts received by the Company to an Account for investment in the shares of one of more specified open-end management investment companies available through that Account as underlying investment media. Selection of a particular investment management company and changes therein from time to time are made by the participant or Contract owner, as applicable under a particular Contract. (b) The Fund and the Adviser represent and warrant that the investments of the series of the Fund (each designated a "Portfolio") specified in Schedule B attached hereto (as may be amended from time to time with the mutual consent of the parties hereto) will at all times be adequately diversified within the meaning of Section 817(h) of the Internal Revenue Service Code of 1986, as amended (the "Code"), and the Regulations thereunder, and that at all times while this agreement is in effect, all beneficial interests will be owned by one or more insurance companies 1 or by any other party permitted under Section 1.817-5(f)(3) of the Regulations promulgated under the Code or by the successor thereto, or by any other party permitted under a Revenue Ruling or private letter ruling granted by the Internal Revenue Service. 2. Pricing Information; Orders; Settlement. --------------------------------------- (a) The Fund will make Fund shares available to be purchased by the Company, and will accept redemption orders from the Company, on behalf of each Account at the net asset value applicable to each order on those days on which the Fund calculates its net asset value (a "Business Day"). Fund shares shall be purchased and redeemed in such quantity and at such time determined by the Company to be necessary to meet the requirements of those Contracts for which the Fund serve as underlying investment media, provided, however, that the Board of Trustees of the Fund (hereinafter the "Trustees") may upon reasonable notice to the Company, refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Trustees, acting in good faith and in the best interests of the shareholders of any Portfolio and is acting in compliance with their fiduciary obligations under federal and/or any applicable state laws. (b) The Fund will provide to the Company closing net asset value, dividend and capital gain information at the close of trading each day that the New York Stock Exchange (the "Exchange" is open (each such day a "Business Day"), and in no event later than 7:00 p.m. Eastern Standard time on such Business Day. The Company will send via facsimile or electronic transmission to the Fund or its specified agent orders to purchase and/or redeem Fund shares by 10:00 a.m. Eastern Standard Time the following business day. Payment for net purchases will be wired by the Company to an account designated by the Fund to coincide with the order for shares of the Fund. (c) The Fund hereby appoints the Company as its agent for the limited purpose of accepting purchase and redemption orders for Fund shares relating to the Contracts from Contract owners or participants. Orders from Contract owners or participants received from any distributor of the Contracts (including affiliates of the Company) by the Company, acting as agent for the Fund, prior to the close of the Exchange on any given 2 business day will be executed by the Fund at the net asset value determined as of the close of the Exchange on such Business Day, provided that the Fund receives written (or facsimile) notice of such order by 10 a.m. Eastern Standard Time on the next following Business Day. Any orders received by the Company acting as agent on such day but after the close of the Exchange will be executed by the Fund at the net asset value determined as of the close of the Exchange on the next business day following the day of receipt of such order, provided that the Fund receives written (or facsimile) notice of such order by 10 a.m. Eastern Standard Time within two days following the day of receipt of such order. (d) Payments for net redemptions of shares of the Fund will be wired by the Fund to an account designated by the Company. Payments for net purchases of the Fund will be wired by the Company to an account designated by the Fund on the same Business Day the Company places an order to purchase Fund shares. Payments shall be in federal funds transmitted by wire. (e) In lieu of applicable provisions set forth in paragraphs 2(a) through 2(d) above, the parties may agree to provide pricing information, execute orders and wire payments for purchases and redemptions through National Securities Clearing Corporation's Fund/SERV system in which case such activities will be governed by the provisions set forth in an Exhibit to this Agreement. (f) Each party has the right to rely on information or confirmations provided by the other party (or by any affiliate of the other party), and shall not be liable in the event that an error is a result of any misinformation supplied by the other party. (g) The Company agrees to purchase and redeem the shares of the Portfolios named in Schedule B offered by the then current prospectus and statement of additional information of the Fund in accordance with the provisions of such prospectus and statement of additional information. The Company shall not permit any person other than a Contract owner or Participant to give instructions to the Company which would require the Company to redeem or exchange shares of the Fund. This provision shall not be construed to prohibit the Company from substituting shares of another fund, as permitted by law. 3 3. Expenses. --------- (a) Except as otherwise provided in this Agreement, all expenses incident to the performance by the Fund under this Agreement shall be paid by the Fund, including the cost of registration of Fund shares with the Securities and Exchange Commission (the "SEC") and in states where required. The Fund and Adviser shall pay no fee or other compensation to the Company under this Agreement, and the Company shall pay no fee or other compensation to the Fund or Adviser, except as provided herein and in Schedule C attached hereto and made a part of this Agreement as may be amended from time to time with the mutual consent of the parties hereto. All expenses incident to performance by each party of its respective duties under this Agreement shall be paid by that party, unless otherwise specified in this Agreement. (b) The Fund or the Adviser shall provide to the Company Post Script files of periodic fund reports to shareholders and other materials that are required by law to be sent to Contract owners. In addition, the Fund or the Adviser shall provide the Company with a sufficient quantity of its prospectuses, statements of additional information and any supplements to any of these materials, to be used in connection with the offerings and transactions contemplated by this Agreement. In addition, the Fund shall provide the Company with a sufficient quantity of its proxy material that is required to be sent to Contract owners. The Adviser shall be permitted to review and approve the typeset form of such material prior to such printing provided such material has been provided by the Adviser to the Company within a reasonable period of time prior to typesetting. (c) In lieu of the Fund's or Adviser's providing printed copies of prospectuses, statements of additional information and any supplements to any of these materials, and periodic fund reports to shareholders, the Company shall have the right to request that the Fund transmit a copy of such materials in an electronic format (Post Script files), which the Company may use to have such materials printed together with similar materials of other Account funding media that the Company or any distributor will distribute to existing or prospective Contract owners or participants. 4 4. Representations. --------------- (a) The Company agrees that it and its agents shall not, without the written consent of the Fund or the Adviser, make representations concerning the Fund, or its shares except those contained in the then current prospectuses and in current printed sales literature approved by or deemed approved by the Fund or the Adviser. (b) The Fund and Adviser represent and warrant that (i) they have examined and tested their systems and made reasonable inquiry of their business partners and other entities with whom they conduct business with respect to Year 2000 problems and (ii) their ability to perform their obligations under this Agreement will not be interrupted or disrupted as a result of any business interruptions or other business problems relating to specific dates or days before, during and after the Year 2000. 5. Termination. ----------- This agreement shall terminate as to the sale and issuance of new Contracts: (a) at the option of either the Company, the Adviser or the Fund, upon sixty days advance written notice to the other parties; (b) at the option of the Company, upon one week advance written notice to the Adviser and the Fund, if Fund shares are not available for any reason to meet the requirement of Contracts as determined by the Company. Reasonable advance notice of election to terminate shall be furnished by Company; (c) at the option of either the Company, the Adviser or the Fund, immediately upon institution of formal proceedings against the broker-dealer or broker-dealers marketing the Contracts, the Account, the Company, the Fund or the Adviser by the National Association of Securities Dealers, Inc. (the "NASD"), the SEC or any other regulatory body; (d) upon the determination of the Accounts to substitute for the Fund's shares the shares of another investment company in accordance with the terms of the applicable Contracts. The Company will give 60 days 5 written notice to the Fund and the Adviser of any decision to replace the Fund's' shares; (e) upon assignment of this Agreement, unless made with the written consent of all other parties hereto; (f) if Fund shares are not registered, issued or sold in conformance with Federal law or such law precludes the use of Fund shares as an underlying investment medium for Contracts issued or to be issued by the Company. Prompt notice shall be given by the appropriate party should such situation occur. 6. Continuation of Agreement. ------------------------- Termination as the result of any cause listed in Section 5 shall not affect the Fund's obligation to furnish its shares to Contracts then in force for which its shares serve or may serve as the underlying medium unless such further sale of Fund shares is prohibited by law or the SEC or other regulatory body, or is determined by the Fund's Board to be necessary to remedy or eliminate an irreconcilable conflict pursuant to Section 10 hereof. 7. Advertising Materials; Filed Documents. -------------------------------------- (a) Advertising and sales literature with respect to the Fund prepared by the Company or its agents for use in marketing its Contracts will be submitted to the Fund or its designee for review before such material is submitted to any regulatory body for review. No such material shall be used if the Fund or its designee reasonably object to such use in writing, transmitted by facsimile within two business days after receipt of such material. (b) The Fund will provide additional copies of its financials as soon as available to the Company and at least one complete copy of all registration statements, prospectuses, statements of additional information, annual and semi-annual reports, proxy statements and all amendments or supplements to any of the above that relate to the Fund promptly after the filing of such document with the SEC or other regulatory authorities. At the Adviser's request, the Company will provide to the Adviser at least one complete copy of all registration statements, prospectuses, statements of additional information, annual and semi-annual reports, proxy statements, and all amendments or 6 supplements to any of the above that relate to the Account promptly after the filing of such document with the SEC or other regulatory authority. (c) The Fund or the Adviser will provide via Excel spreadsheet diskette format or in electronic transmission to the Company at least quarterly portfolio information necessary to update Fund profiles with seven business days following the end of each quarter. (d) The Fund will reimburse the Company for any incorrect information provided to the Company under this Section as provided for in Schedule C. 8. Proxy Voting. ------------ (a) The Company shall provide pass-through voting privileges on Fund shares held by registered separate accounts to all Contract owners and participants to the extent the SEC continues to interpret the 1940 Act as requiring such privileges. The Company shall provide pass-through voting privileges on Fund shares held by unregistered separate accounts to all Contract owners. (b) The Company will distribute to Contract owners and participants, as appropriate, all proxy material furnished by the Fund and will vote Fund shares in accordance with instructions received from such Contract owners and participants. If and to the extent required by law, the Company, with respect to each group Contract and in each Account, shall vote Fund shares for which no instructions have been received in the same proportion as shares for which such instructions have been received. The Company and its agents shall not oppose or interfere with the solicitation of proxies for Fund shares held for such Contract owners and participants. 9. Indemnification. --------------- (a) The Company agrees to indemnify and hold harmless the Fund and the Adviser, and its directors, officers, employees, agents and each person, if any, who controls the Fund or its Adviser within the meaning of the Securities Act of 1933 (the "1933 Act") against any losses, claims, damages or 7 liabilities to which the Fund or any such director, officer, employee, agent, or controlling person may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, prospectus or sales literature of the Company or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or arise out of or as a result of conduct, statements or representations (other than statements or representations contained in the prospectuses or sales literature of the Fund) of the Company or its agents, with respect to the sale and distribution of Contracts for which Fund shares are the underlying investment. The Company will reimburse any legal or other expenses reasonably incurred by the Fund or any such director, officer, employee, agent, investment adviser, or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon (i) an untrue statement or omission or alleged omission made in such Registration Statement or prospectus in conformity with written materials furnished to the Company by the Fund specifically for use therein or (ii) the willful misfeasance, bad faith, or gross negligence by the Fund or Adviser in the performance of its duties or the Fund's or Adviser's reckless disregard of obligations or duties under this Agreement or to the Company, whichever is applicable. This indemnity agreement will be in addition to any liability which Company may otherwise have. (b) The Fund and the Adviser agree to indemnify and hold harmless the Company and its directors, officers, employees, agents and each person, if any, who controls the Company within the meaning of the 1933 Act against any losses, claims, damages or liabilities to which the Company or any such director, officer, employee, agent or controlling person may become subject, under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, prospectuses or sales literature of the Fund or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or material fact required to be stated therein or necessary to make the statements therein not misleading. The Fund will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, employee, agent, or controlling 8 person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Fund will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or omission or alleged omission made in such Registration Statement or prospectuses which are in conformity with written materials furnished to the Fund by the Company specifically for use therein. (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 10. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish to, assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. 10. Potential Conflicts. ------------------- (a) The Company has received a copy of an application for exemptive relief, as amended, filed by the Fund on and with the SEC and the order issued by the SEC dated December 21, 1998 (File No. 812-11196) in response thereto (the "Mixed and Shared Funding Exemptive Order"). The Company has reviewed the conditions to the requested relief set forth in such application for exemptive relief. As set forth in such application, the Board of Directors of Fund (the "Board") will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contractholders of all separate accounts ("Participating Companies") investing in the Fund. An irreconcilable material conflict may arise for a variety of reasons, including: (i) an action by any state insurance regulatory authority; (ii) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, 9 private letter ruling, no-action or interpretative letter, or any similar actions by insurance, tax or securities regulatory authorities; (iii) an administrative or judicial decision in any relevant proceeding; (iv) the manner in which the investments of any portfolio are being managed; (v) a difference in voting instructions given by variable annuity contractholders and variable life insurance contractholders; or (vi) a decision by an insurer to disregard the voting instructions of contractholders. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. (b) The Company will report any potential or existing conflicts of which it is aware to the Board. The Company will assist the Board in carrying out its responsibilities under the Shared Funding Exemptive Order by providing the Board with all information reasonably necessary for the Board to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Board whenever contractholder voting instructions are disregarded. (c) If a majority of the Board, or a majority of its disinterested Board members, determines that a material irreconcilable conflict exists with regard to contractholder investments in a Fund, the Board shall give prompt notice to all Participating Companies. If the Board determines that the Company is responsible for causing or creating said conflict, the Company shall at its sole cost and expense, and to the extent reasonably practicable (as determined by a majority of the disinterested Board members), take such action as is necessary to remedy or eliminate the irreconcilable material conflict. Such necessary action may include but shall not be limited to: (i) withdrawing the assets allocable to the Account from the Fund and reinvesting such assets in a different investment medium or submitting the question of whether such segregation should be implemented to a vote of all affected contractholders and as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Companies) that votes in favor of such segregation, or offering to the affected contractholders the option of making such a change; and/or 10 (ii)establishing a new registered management investment company or managed separate account. (d) If a material irreconcilable conflict arises as a result of a decision by the Company to disregard its contractholder voting instructions and said decision represents a minority position or would preclude a majority vote by all of its contractholders having an interest in the Fund, the Company at its sole cost, may be required, at the Board's election, to withdraw an Account's investment in the Fund and terminate this Agreement; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested members of the Board. (e) For the purpose of this Section 10, a majority of the disinterested Board members shall determine whether or not any proposed action adequately remedies any irreconcilable material conflict, but in no event will the Fund be required to establish a new funding medium for any Contract. The Company shall not be required by this Section 11 to establish a new funding medium for any Contract if an offer to do so has been declined by vote of a majority of the Contract owners or participants materially adversely affected by the irreconcilable material conflict. 11. Miscellaneous. ------------- (a) Amendment and Waiver. Neither this Agreement, nor any provision hereof, may be amended, waived, discharged or terminated orally, but only by an instrument in writing signed by all parties hereto. (b) Notices. All notices and other communications hereunder shall be given or made in writing and shall be delivered personally, or sent by telex, telecopier or registered or certified mail, postage prepaid, return receipt requested, or recognized overnight courier service to the party or parties to whom they are directed at the following addresses, or at such other addresses as may be designated by notice from such party to all other parties. To the Company: Golden American Life Insurance Company 1475 Dunwoody Drive West Chester, PA 19380 Attention: Myles R. Tashman 11 To the Fund: Portfolio Partners, Inc. 151 Farmington Avenue Hartford, CT 06156 Attn: Megan L. Dunphy, Counsel Any notice, demand or other communication given in a manner prescribed in this subsection (b) shall be deemed to have been delivered on receipt. (c) Successors and Assigns. This agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. (d) Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any party hereto may execute this Agreement by signing any such counterpart. (e) Severability. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. (f) Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto and supersedes all prior agreement and understandings relating to the subject matter hereof. (g) Governing Law. This Agreement shall be governed and interpreted in accordance with the laws of the State of Connecticut. (h) It is understood by the parties that this Agreement is not an exclusive arrangement in any respect. (i) The terms of this Agreement and the Schedules thereto will be held confidential by each party except to the extent that either party or its counsel may deem it necessary to disclose such terms. 12 12. Limitation on Liability of Directors, etc. ------------------------------------------ This agreement has been executed on behalf of the Fund by the undersigned officer of the Fund in his or her capacity as an officer of the Fund. The obligations of this agreement shall be binding upon the assets and property of the Fund only and shall not be binding on any Director, officer or shareholder of the Fund individually. IN WITNESS WHEREOF, the undersigned have executed this Agreement by their duly authorized officers effective as of the 13th day of July, 2001. GOLDEN AMERICAN LIFE INSURANCE COMPANY By: /s/Myles R. Tashman ----------------------------- Name: Myles R. Tashman Title: Executive Vice President PORTFOLIO PARTNERS, INC. By: /s/Laurie M. Tillinghast -------------------------------- Name: Laurie M. Tillinghast Title: President AETNA LIFE INSURANCE AND ANNUITY COMPANY By: /s/Laurie M. Tillinghast -------------------------------- Name: Laurie M. Tillinghast Title: Vice President 13 SCHEDULE A (For any future separate accounts - See Section 1(a) 14 SCHEDULE B (List of portfolios available--See Section 1(b)) PPI MFS Capital Opportunities Portfolio - Service Class Effective 12/31/01: PPI Alger Aggressive Growth - Service Class PPI Alger Growth Portfolio - Service Class PPI Brinson Tactical Asset Allocation Portfolio - Service Class PPI Goldman Sachs(R) Capital Growth Portfolio - Service Class PPI MFS Research Growth Portfolio - Service Class PPI OpCap Balanced Value Portoflio - Service Class PPI Salomon Brothers Capital Portfolio - Service Class PPI Salomon Brothers Investors Value Portfolio - Service Class PPI Scudder International Growth Portfolio - Service Class PPI T.Rowe Price Growth Equity Portfolio - Service Class 15 SCHEDULE C The following costs, expenses and reimbursements will be paid by the party indicated: 1. For purposes of Sections 2 and 7, the Fund or the Adviser shall be liable to the Company for any amount the Company is required to pay to Contract owners or participants due to (i) an incorrect calculation of a Fund's daily net asset value, dividend rate, or capital gain distribution rate or (ii) incorrect or late reporting of the daily net asset value, capital gain distribution rate of a Fund, upon written notification by the Company, with supporting data, to the Adviser. In addition, the Fund or the Adviser shall be liable to the Company for systems and out of pocket costs incurred by the Company in making a Contract owner's or a participant's account whole, if such costs or expenses are a result of the Fund's failure to provide timely or correct net asset values, dividend and capital gains or financial information and if such information is not corrected by 4pm EST of the next business day after releasing such incorrect information provided the incorrect NAV as well as the correct NAV for each day that the error occurred is provided. If a mistake is caused in supplying such information or confirmations, which results in a reconciliation with incorrect information, the amount required to make a Contract owner's or a Participant's account whole shall be borne by the party providing the incorrect information, regardless of when the error is corrected. 2. For purposes of Section 3, the Fund or the Adviser shall pay for the cost of typesetting and printing periodic fund reports to existing shareholders, prospectuses, prospectus supplements, statements of additional information and other materials that are required by law to be sent to existing Contract owners or participants, as well as the cost of distributing such materials. The Company shall pay for the cost of prospectuses and statements of additional information and the distribution thereof for prospective Contract owners or participants. Each party shall be provided with such supporting data as may reasonably be requested for determining expenses under Section 3. 3. The Fund shall pay all expenses in connection with the provision to the Company of a sufficient quantity of its proxy material under Section 3. The cost associated with proxy preparation, group authorization letters, programming for tabulation and necessary materials (including postage) will be paid by the Fund. 16 NSCC EXHIBIT ------------ PROCEDURES FOR PRICING AND ORDER/SETTLEMENT THROUGH NATIONAL SECURITIES CLEARING CORPORATION'S MUTUAL FUND PROFILE SYSTEM AND MUTUAL FUND SETTLEMENT, ENTRY AND REGISTRATION VERIFICATION SYSTEM As provided in Section 2(e) of the Participation Agreement, the parties hereby agree to provide pricing information, execute orders and wire payments for purchases and redemptions of Fund shares through National Securities Clearing Corporation ("NSCC") and its subsidiary systems as follows: Distributor or the Funds will furnish to the Company or its affiliate through NSCC's Mutual Fund Profile System ("MFPS") (1) the most current net asset value information for each Fund, (2) a schedule of anticipated dividend and distribution payment dates for each Fund, which is subject to change without prior notice, ordinary income and capital gain dividend rates on the Fund's ex-date, and (4) in the case of fixed income funds that declare daily dividends, the daily accrual or the interest rate factor. All such information shall be furnished to the Company or its affiliate by 6:30 p.m. Eastern Time on each business day that the Fund is open for business (each a "Business Day") or at such other time as that information becomes available. Changes in pricing information will be communicated to both NSCC and the Company or its affiliate. Upon receipt of Fund purchase, exchange and redemption instructions for acceptance as of the time at which a Fund's net asset value is calculated as specified in such Fund's prospectus ("Close of Trading") on each Business Day ("Instructions"), and upon its determination that there are good funds with respect to Instructions involving the purchase of Shares, the Company or its affiliate will calculate the net purchase or redemption order for each Fund. Orders for net purchases or net redemptions derived from Instructions received by the Company or its affiliate prior to the Close of Trading on any given Business Day will be sent to the Defined Contribution Interface of NSCC's Mutual Fund Settlement, Entry and Registration Verification System ("Fund/SERV") by 5:00 a.m. Eastern Time on the next Business Day. Subject to the Company's or its affiliate's compliance with the foregoing, the Company or its affiliate will be considered the agent of the Distributor and the Funds, and the Business Day on which Instructions are received by the Company or its affiliate in proper form prior to the Close of Trading will be the date as of which shares of the Funds are deemed purchased, exchanged or redeemed pursuant to such Instructions. Instructions received in proper form by the Company or its affiliate after the Close of Trading on any given Business Day will be treated as if received on the next following Business Day. Dividends and capital 17 gains distributions will be automatically reinvested at net asset value in accordance with the Fund's then current prospectuses. The Company or its affiliate will wire payment for net purchase orders by the Fund's NSCC Firm Number, in immediately available funds, to an NSCC settling bank account designated by the Company or its affiliate no later than 5:00 p.m. Eastern time on the same Business Day such purchase orders are communicated to NSCC. For purchases of shares of daily dividend accrual funds, those shares will not begin to accrue dividends until the day the payment for those shares is received. NSCC will wire payment for net redemption orders by Fund, in immediately available funds, to an NSCC settling bank account designated by the Company or its affiliate, by 5:00 p.m. Eastern Time on the Business Day such redemption orders are communicated to NSCC, except as provided in a Fund's prospectus and statement of additional information. With respect to (c) or (d) above, if Distributor does not send a confirmation of the Company's or its affiliate's purchase or redemption order to NSCC by the applicable deadline to be included in that Business Day's payment cycle, payment for such purchases or redemptions will be made the following Business Day. If on any day the Company or its affiliate or Distributor is unable to meet the NSCC deadline for the transmission of purchase or redemption orders, it may at its option transmit such orders and make such payments for purchases and redemptions directly to Distributor or to the Company or its affiliate, as applicable, as is otherwise provided in the Agreement. These procedures are subject to any additional terms in each Fund's prospectus and the requirements of applicable law. The Funds reserve the right, at their discretion and without notice, to suspend the sale of shares or withdraw the sale of shares of any Fund. 2. The Company or its affiliate, Distributor and clearing agents (if applicable) are each required to have entered into membership agreements with NSCC and met all requirements to participate in the MFPS and Fund/SERV systems before these procedures may be utilized. Each party will be bound by the terms of their membership agreement with NSCC and will perform any and all duties, functions, procedures and responsibilities assigned to it and as otherwise established by NSCC applicable to the MFPS and Fund/SERV system and the Networking Matrix Level utilized. 18 3. Except as modified hereby, all other terms and conditions of the Agreement shall remain in full force and effect. Unless otherwise indicated herein, the terms defined in the Agreement shall have the same meaning as in this Exhibit. 19 EX-99.B8R 11 ingpartam.txt AMEND TO ING PARTNERS PART. AGREE AMENDMENT TO PARTICIPATION AGREEMENT AMONG PORTFOLIO PARTNERS, INC., AETNA LIFE INSURANCE AND ANNUITY COMPANY, AND GOLDEN AMERICAN LIFE INSURANCE COMPANY This Amendment is dated as of the 1st day of September, 2001 by and between Portfolio Partners, Inc. (to be renamed ING Partners, Inc. effective May 1, 2002) (the "Fund"), Aetna Life Insurance and Annuity Company (to be renamed ING Life Insurance and Annuity Company effective May 1, 2002) (the "Adviser"), Aetna Investment Services, LLC (to be renamed ING Financial Advisers, LLC, effective May 1, 2002) (the "Distributor") and Golden American Life Insurance Company (the "Company") (collectively, the "Parties"). WHEREAS, the Parties entered into a Participation Agreement on July 13, 2001 (the "Agreement"); WHEREAS, the Parties desire to amend said Agreement in the manner hereinafter set forth; NOW THEREFORE, the parties hereby amend the Agreement in the following form: 1. By replacing the existing Schedule B with the Schedule B attached hereto. 2. All of the other provisions contained in the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their duly authorized signatories as of the date and year first above written. Portfolio Partners, Inc. By: /s/Laurie M. Tillinghast --------------------------- Name: Laurie M. Tillinghast Title: President Aetna Life Insurance and Annuity Company By: /s/Laurie M. Tillinghast --------------------------- Name: Laurie M. Tillinghast Title: Vice President Golden American Life Insurance Company By: /s/Myles Tashman --------------------------- Name: Myles Tashman Title: Executive Vice President 2 SCHEDULE B PORTFOLIO PARTNERS, INC. DESIGNATED PORTFOLIOS Effective 9/1/2001: MFS Capital Opportunities Portfolio - Initial class MFS Emerging Equities Portfolio - Initial class MFS Research Portfolio - Initial class Scudder International Growth Portfolio - Initial class T. Rowe Price Growth Equity Portfolio - Initial class Effective 1/1/2002: MFS Capital Opportunities Portfolio - Adviser and Service classes MFS Emerging Equities Portfolio - Adviser and Service classes MFS Research Portfolio - Adviser and Service classes Scudder International Growth Portfolio - Adviser and Service classes T. Rowe Price Growth Equity Portfolio - Adviser and Service classes Alger Growth Portfolio - Initial, Adviser and Service classes Alger Aggressive Growth Portfolio - Initial, Adviser and Service classes Brinson Tactical Asset Allocation Portfolio - Initial, Adviser and Service classes DSI Enhanced Index Portfolio - Initial, Adviser and Service classes Goldman Sachs(R) Capital Growth Portfolio - Initial, Adviser and Service classes OpCap Balanced Value Portfolio - Initial, Adviser and Service classes Salomon Brothers Investors Value Portfolio - Initial, Adviser and Service classes Salomon Brothers Capital Portfolio - Initial, Adviser and Service classes Effective 5/1/2002: American Century Small Cap Value Portfolio - Initial, Adviser and Service classes Baron Small Cap Growth Portfolio - Initial, Adviser and Service classes JPMorgan Mid Cap Value Portfolio - Initial, Adviser and Service classes MFS Global Growth Portfolio - Initial, Adviser and Service classes PIMCO Total Return Portfolio - Initial, Adviser and Service classes Van Kampen Comstock Portfolio - Initial, Adviser and Service classes - -------- *Goldman Sachs(R) is a registered service mark of Goldman, Sachs & Co., and it is used by agreement with Goldman, Sachs & Co. 3 EX-99.B9 12 kjsopinionltrn4.txt OPINION AND CONSENT OF COUNSEL ING KIMBERLY J. SMITH Executive Vice President, General Counsel and Assistant Secretary April 29, 2002 Members of the Board of Directors Golden American Life Insurance Company 1475 Dunwoody Drive West Chester, PA 19380-1478 Gentlemen: In my capacity as Executive Vice President and Assistant Secretary of Golden American Life Insurance Company (the "Company"), I have examined the form of Registration Statement on Form N-4 to be filed by you with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of an indefinite number of units of interest in Separate Account B of the Company (the "Account"). I am familiar with the proceedings taken and proposed to be taken in connection with the authorization, issuance and sale of units. Based upon my examination and upon my knowledge of the corporate activities relating to the Account, it is my opinion that: (1) The Company was organized in accordance with the laws of the State of Delaware and is a duly authorized stock life insurance company under the laws of Delaware and the laws of those states in which the Company is admitted to do business; (2) The Account is a validly established separate investment account of the Company; (3) Under Delaware law, the portion of the assets to be held in the Account equals the reserve and other liabilities for variable benefits under variable annuity contracts to be issued by the Account, and such assets are not chargeable with liabilities arising out of any other business the Company conducts; (4) The units and the variable annuity contracts will, when issued and sold in the manner described in the registration statement, be legal and binding obligations of the Company and will be legally and validly issued, fully paid, and non-assessable. I hereby consent to the filing of this opinion as an exhibit to the registration statement and to the reference to my name under the heading "Legal Matters" in the prospectus contained in said registration statement. In giving this consent I do not thereby admit that I come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the Rules and Regulations of the Securities and Exchange Commission thereunder. Sincerely, /s/Kimberly J. Smith - --------------------- 1475 Dunwoody Drive Tel: 610-425-3427 West Chester, PA 19380-1478 Fax: 610-425-3735 EX-99.B10A 13 eyconsent.txt ERNST & YOUNG CONSENT Exhibit 10(a) - Consent of Ernst and Young LLP, Independent Auditors We consent to the reference to our firm under the captions "Independent Auditors" and "Experts" and to the use of our report dated March 15, 2002, with respect to the consolidated financial statements of Golden American Life Insurance Company, and to the use of our report dated February 15, 2002, with respect to the financial statements of Golden American Life Insurance Company Separate Account B, included in Post-Effective Amendment No. 1 to the Registration Statement under the Securities Act of 1933 (Form N-4 No. 333-63692) and related Prospectus of Golden American Life Insurance Company Separate Account B. Our audits (to which the date of our report is March 15, 2002) also included the financial statement schedules of Golden American Life Insurance Company included in Item 24(a)(2). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. /s/Ernst and Young LLP Atlanta, Georgia April 24, 2002 -----END PRIVACY-ENHANCED MESSAGE-----