FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


(Mark One)
X     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the quarterly period                      June 30, 1998
ended

                                       OR

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

For the transaction period                          to
from

Commission file number

                   FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY (Exact name
                   of registrant as specified in its charter)

              New York                                 93-1225432
   (State or other jurisdiction of           (I.R.S. Employer Identification
   incorporation or organization)                        Number)

                                 125 Wolf Road,  Albany, New York 12205 (Address
                               of principal executive offices)
                                              (Zip Code)

                                            [518] 437-1816
                         (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes       X     No

As of June  30,  1998,  2,500  shares  of the  registrant's  common  stock  were
outstanding, all of which were owned by the registrant's parent company.

NOTE:    This Form 10-Q is filed by the registrant only as a consequence of
         the sale by the registrant of a market value adjusted annuity product.


<PAGE>


                                TABLE OF CONTENTS



                                                                            Page
                                                                       ---------
Part I     FINANCIAL INFORMATION

           Item 1  Financial Statements

                   Statements of Income                                     3

                   Balance Sheets                                           4

                   Statements of Cash Flows                                 5

                   Notes to Financial Statements                            6

           Item 2  Management's Discussion and Analysis of Financial        7
                   Condition and Results of Operations

Part II    OTHER INFORMATION

           Item 1  Legal Proceeding                                        9

           Item 6  Exhibits and Reports on Form 8-K                        9

           Signatures                                                     10

















                                    - 2 -


<PAGE>


PART I   FINANCIAL INFORMATION
ITEM 1   FINANCIAL STATEMENTS
-------------------------------------------------------------------------------

FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

STATEMENTS OF INCOME
(Dollars in Thousands)
-------------------------------------------------------------------------------
(Unaudited)                              Three         Period       Six Months
                                           Months         From
                                           Ended       April 4,       Ended
                                                          1997
                                          June 30,     [Inception]   June 30,
                                                           to
                                            1998       June 30,        1998
                                                         1997
                                         -----------   -----------  -----------
REVENUES:
  Premium and fee income               $        31  $             $        55
  Net investment income                        713            77          798
  Realized (losses) on investments             (16)                       (16)
                                         -----------   -----------  -----------
                                               728            77          837
                                         -----------   -----------  -----------
BENEFITS AND EXPENSES:
  Life & other policy benefits                  45                         45
  Interest paid or credited to                  91                         92
contractholders
  General and administrative expenses           39            13          129
                                         -----------   -----------  -----------

                                               175            13          266
                                         -----------   -----------  -----------

INCOME BEFORE INCOME TAXES                     553            64          571

PROVISION FOR INCOME TAXES:
   Current                                   1,212            22        1,239
   Deferred                                   (979)                      (998)
                                         -----------   -----------  -----------

                                               233            22          241
                                         -----------   -----------  -----------

NET INCOME                             $       320  $         42  $       330
                                         ===========   ===========  ===========


















See notes to financial statements.

                                     -3-


<PAGE>


FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

BALANCE SHEETS
(Dollars in Thousands)
-------------------------------------------------------------------------------

                                                      June 30,      December
                                                                       31,
ASSETS                                                  1998          1997
------
                                                     ------------  ------------
                                                     (Unaudited)
INVESTMENTS:
    Fixed maturities, available-for-sale, at fair  $     54,206  $      4,995
value
       (amortized cost $53,598 and $4,987)
    Short-term investments, available-for-sale           18,345           386
       (cost approximates fair value)
                                                     ------------  ------------

      Total Investments                                  72,551         5,381

Cash                                                      5,299         1,648
Deferred policy acquisition costs                           610
Investment income due and accrued                           333            24
Due from Parent Corporation                                  65
Other assets                                                 10             6
Deferred income taxes                                       922            50
Separate account assets                                  18,061         9,045
                                                     ------------  ------------

TOTAL ASSETS                                       $     97,851  $     16,154
                                                     ============  ============


LIABILITIES AND STOCKHOLDER'S EQUITY

POLICY BENEFIT LIABILITIES:
    Policy reserves                                $     50,150  $         84
    Policy and contract claims                               45

GENERAL LIABILITIES:
    Due to Parent Corporation                                             155
    Other liabilities                                    13,894           332
    Separate account liabilities                         18,061         9,045
                                                     ------------  ------------

      Total Liabilities                                  82,150         9,616
                                                     ------------  ------------

STOCKHOLDER'S EQUITY:
    Common stock, $1,000 par value,
       2,500 shares authorized, issued and                2,500         2,500
outstanding
    Additional paid-in capital                           12,600         4,000
    Accumulated other comprehensive income                  238             5
    Retained earnings                                       363            33
                                                     ------------  ------------

      Total Stockholder's Equity                         15,701         6,538
                                                     ------------  ------------

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY         $     97,851  $     16,154
                                                     ============  ============



See notes to financial statements.

                                    - 4 -


<PAGE>


FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
-------------------------------------------------------------------------------
(Unaudited)                                            Six Months   Period
                                                                     From
                                                         Ended      April 4,
                                                                     1997
                                                        June 30,     [Inception]
                                                                         to
                                                          1998      June 30,
                                                                      1997
                                                       -----------  -----------

OPERATING ACTIVITIES:
    Net income                                      $         330 $       42
    Adjustments to reconcile net income to
      net cash provided by operating activities:
       Amortization of investments                            (16)        (5)
       Realized losses on disposal of investments              16
       Deferred income taxes                                 (997)
    Changes in assets and liabilities:
        Accrued interest and other receivables               (309)       (23)
        Life insurance and annuity reserves                   137
        Other, net                                         12,713         23
                                                       -----------  -----------
                 Net cash provided by operating            11,874         37
activities
                                                       -----------  -----------

INVESTING ACTIVITIES:
Proceeds from maturities and redemptions of fixed
maturity
   investments available-for-sale                          67,973
Purchases of fixed maturity investments                  (134,550)    (4,968)
available-for-sale
                                                       -----------  -----------

                  Net cash used in investing activities   (66,577)    (4,968)
                                                       -----------  -----------


FINANCING ACTIVITIES:
   Contract deposits, net of withdrawals                  49,974
   Due to Parent Corporation                                (220)          15
   Capital contributions                                   8,600        6,000
                                                       -----------  -----------

              Net cash provided by financing              58,354        6,015
activities
                                                       -----------  -----------

NET INCREASE IN CASH                                       3,651        1,084

CASH, BEGINNING OF YEAR                                    1,648            0
                                                       -----------  -----------

CASH, END OF PERIOD                                 $      5,299  $     1,084
                                                       ===========  ===========






See notes to financial statements.



                                    - 5 -


<PAGE>


FIRST GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS
------------------------------------------------------------------------------
(Amounts in Thousands)
(Unaudited)

1.    GENERAL

      First  Great-West  Life & Annuity  Insurance  Company  (the  Company) is a
      wholly-owned  subsidiary of Great-West  Life & Annuity  Insurance  Company
      (the Parent  Corporation).  The Company was  incorporated  as a stock life
      insurance company in the State of New York and was capitalized on April 4,
      1997. The Company was licensed as an insurance company in the State of New
      York on May 28, 1997.

      The  financial  statements  and related notes of First  Great-West  Life &
      Annuity  Insurance  Company (the Company) have been prepared in accordance
      with  generally  accepted  accounting  principles  applicable  to  interim
      financial  reporting  and  do not  include  all  of  the  information  and
      footnotes  required for complete financial  statements.  In the opinion of
      management,  all  adjustments  (consisting of normal  recurring  accruals)
      considered  necessary for a fair  presentation  have been included.  These
      financial  statements  should  be read in  conjunction  with  the  audited
      financial  statements  and notes  thereto for the year ended  December 31,
      1997.  The  results  of  operations  for  the  interim   periods  are  not
      necessarily  indicative  of the results  that may be expected for the year
      ended December 31, 1998.

      On June 19,  1998  the  Company  received  an  additional  paid-in-capital
      contribution of $8,600.

2.    NEW ACCOUNTING PRONOUNCEMENTS

      Effective  January 1, 1998,  the Company  adopted  Statement  of Financial
      Accounting  Standards (SFAS) No. 130,  "Reporting  Comprehensive  Income".
      This  Statement  establishes  new  rules  for  reporting  and  display  of
      comprehensive  income and its  components;  however,  the adoption of this
      Statement  had no  impact on the  Company's  net  income or  shareholders'
      equity.  This  Statement  requires  unrealized  gains  or  losses  on  the
      Company's  available-for-sale  securities,  which prior to  adoption  were
      reported  separately  in  shareholders'  equity,  to be  included in other
      comprehensive   income.   Prior  year  financial   statements   have  been
      reclassified to conform to the requirements of SFAS No. 130.

      In June 1998,  the  Financial  Accounting  Standards  Board (FASB)  issued
      Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for
      Derivative  Instruments  and  for  Hedging  Activities".   This  Statement
      provides a comprehensive  and consistent  standard for the recognition and
      measurement of derivatives and hedging activities. This Statement requires
      that all derivative financial instruments be recorded on the balance sheet
      at fair value. If the derivative is not designated as a hedging instrument
      changes in fair value are to be  recognized  in  earnings in the period of
      change. If certain conditions are met, a derivative may be designated as a
      hedge, in which case the accounting for a change in fair value will depend
      on the specific exposure being hedged. This Statement is effective for all
      fiscal quarters of fiscal years beginning after June 15, 1999, and earlier
      adoption is  encouraged.  The Company has not adopted this Statement as of
      June 30, 1998. Management estimates the effect of the change will not have
      a material affect on the Company's financial statements.

      During  the  three  and six  months  ended  June  30,  1998,  total  other
      comprehensive income amounted to $2 and $233, respectively.




                                    - 6 -


<PAGE>


    ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

                                               Six Months     Period From
                                                 Ended        April 4,
                                                                 1997
                                                June 30,      [Inception]
                                                                   to
             Operating Summary (Thousands)        1998         June 30,
                                                                 1997
                                               ------------   ------------

             Premiums and fee income        $       55     $
             Net investment income                 798             77
             Realized (losses) on                  (16)
             investments
                                               ------------   ------------
                  Total Revenues                   837             77

             Total benefits and expenses           266             13
             Income tax expense                    241             22
                                                              ------------
                                               ============
                  Net income                $      330     $       42
                                               ============   ============


                                                June 30,       December
                                                                  31,
             Balance Sheet (Thousands)            1998           1997
                                               ------------   ------------

             Investment assets              $   72,551     $    5,381
             Separate account assets            18,061          9,045
             Total assets                       97,851         16,154
             Total policyholder liabilities     82,150          9,616
             Total shareholder's equity         15,701          6,538


      The following  discussion addresses the financial condition of the Company
      as of June 30, 1998,  compared with December 31, 1997,  and its results of
      operations  for the quarter and six months ended June 30,  1998,  compared
      with  the  same  periods  last  year.  The  discussion  should  be read in
      conjunction with the Management's Discussion and Analysis section included
      in the Company's report on Form 10-K for the year-ended  December 31, 1997
      to which the reader is directed for additional information.

      During the six months ended June 30, 1998 the Company sold one $50 million
      single premium  Bank-owned Life Insurance (BOLI) policy.  The remainder of
      the sales have been individual  variable annuites sold through a marketing
      agreement  with Charles  Schwab & Co. The  contributions  received for the
      variable annuities included in the Separate Account are over $7.6 million.

      There were no sales of fixed income  annuities  without  significant  life
      contingencies during the six months ended June 30, 1998. The net income of
      $330 thousand reflects fees associated with variable business,  investment
      income on surplus  less the  operating  expenses  associated  with the new
      operations.

      In the months ahead, the Company will continue to focus its efforts on new
      sales while continuing to develop other products for submission to the New
      York Department of Insurance for approval.







                                    - 7 -


<PAGE>


      General  Account  Investments - The Company's  investment  strategies  and
      portfolios  are intended to match the duration of the related  liabilities
      and provide  sufficient cash flow to meet obligations  while maintaining a
      competitive  rate  of  return.   The  duration  of  these  investments  is
      monitored,  and  investment  purchases  and  sales are  executed  with the
      objective of having  adequate  funds  available  to satisfy the  Company's
      maturing liabilities.

      It is management's philosophy that the portfolio of fixed maturities be of
      high  quality.  The  fixed  maturities  in  the  Company's  portfolio  are
      generally rated by external rating agencies,  and if not externally rated,
      are rated by the Company on a basis believed to be similar to that used by
      rating agencies. The credit rating on the fixed maturity portfolio at June
      30, 1998 is AAA.

      During the six months ended June 30, 1998, net  unrealized  gains on fixed
      maturities   included   in   stockholders'   equity,   which   is  net  of
      policyholder-related  amounts and deferred income taxes, increased surplus
      by $233 resulting in accumulated other comprehensive income of $238.

      Liquidity  and Capital  Resources - Liquidity for the Company has remained
      strong as evidenced by significant amounts of cash. Generally, the Company
      has met its operating  requirements by maintaining  appropriate  levels of
      liquidity in its investment portfolio.

      The Company's  capital  resources  represent funds available for long-term
      business  commitments  and  primarily  consist  of  stockholder's  equity.
      Capital resources  provide  protection for policyholders and the financial
      strength to support the  underwriting  of insurance  risks,  and allow for
      continued  business  growth.  The amount of capital  resources that may be
      needed is  determined  by the  Company's  senior  management  and Board of
      Directors,  as well  as by  regulatory  requirements.  The  allocation  of
      resources to new long-term business  commitments is designed to achieve an
      attractive  return,  tempered  by  considerations  of risk and the need to
      support the Company's existing business.



























                                    - 8 -


<PAGE>


Part II     OTHER INFORMATION

      Item 1      Legal Proceedings

            There are no material pending legal proceedings to which the Company
            is a party or of which any of their property is the subject.

      Item 6      Exhibits and Reports on Form 8-K

            (a)   Index to Exhibits

                   Exhibit         Title                Page
                   Number
                   -------------   ------------------   ------------

                   27              Financial Data       11
                                    Schedule

            (b)   Reports on Form 8-K

                  No  reports  on Form 8-K have been  filed  during  the  second
            quarter of 1998.


































                                    - 9 -


<PAGE>


SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned  thereunto
duly authorized.


                              FIRST GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY



DATE:                          BY:
                                                   /s/
       ------------------------      ------------------------------------------
                                     Glen R. Derback, Vice President &
                                     Treasurer
                                     (Duly authorized officer & chief
                                     accounting Officer)







































                                    - 10 -