RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT, N-3 EL/A, 1996-09-27

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
N-3 EL/A, 1996-09-27

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<PAGE>

As Filed with the Securities and Exchange Commission on
September 27, 1996.

Registration Nos. 333-03093
811-07615

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM N-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. 1
Post-Effective Amendment No. ___
and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 X
Amendment No. 1

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)

GREAT AMERICAN RESERVE INSURANCE COMPANY
(Name of Insurance Company)

11815 North Pennsylvania Street, Carmel, Indiana 46032
(Address of Insurance Company's Principal Executive Offices)
(Zip Code)

Karl W. Kindig, Esq.
Great American Reserve Insurance Company
11815 North Pennsylvania Street
Carmel, Indiana 46032
(Name and Address of Agent for Service)

Copies to:
Michael Berenson, Esq.
Ann B. Furman, Esq.
Jorden Burt Berenson & Johnson LLP
Suite 400 East
1025 Thomas Jefferson Street, N.W.
Washington, D. C. 20007-0805

Approximate Date of Proposed Public Offering: As soon as
practicable after the effective date of this Registration
Statement.

Pursuant to Rule 24f-2 under the Investment Company Act
of 1940, the Registrant declares that an indefinite amount of
<PAGE>

individual variable annuity contracts is being registered
under the Securities Act of 1933.

The Registrant hereby amends this Registration Statement
on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further
amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this
Registration Statement shall become effective on such date as
the Commission acting pursuant to said Section 8(a) shall
determine.
<PAGE>

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

CROSS REFERENCE TO ITEMS
REQUIRED BY RULE 495(a)

N-3 Item of Part A Caption in Prospectus

1. Cover Page

2. Definitions

3. Summary; Fee Table

4. Financial Statements

5. Great American Reserve Insurance Company;
The Separate Account; Investment
Objectives and Policies; Investment
Restrictions

6. Management

7. Charges and Deductions; Management

8. Description of the Contract; Separate
Account Voting Rights

9. Description of the Contract -- Annuity
Period

10. Description of the Contract -- Payment on
Death

11. Description of the Contract -- Purchase
Payments, Accumulation Provisions;
Distribution of Contracts

12. Description of the Contract --
Withdrawals, Suspension of Payments, Ten
Day Right to Review
<PAGE>

N-3 Item of Part A Caption in Prospectus (con d)

13. Federal Income Taxes

14. Legal Proceedings

15. Table of Contents of Statement of
Additional Information

Caption in Statement of
N-3 Item of Part B Additional Information

16. Cover Page

17. Table of Contents

18. General Information and History

19. Investment Policies and Techniques of the
Subaccounts; Investment Restrictions of
the Subaccounts

20. Board of Managers and Officers of the
Separate Account

21. Board of Managers and Officers of the
Separate Account; Custody

22. Portfolio Transactions and Brokerage

23. Determination of Accumulation Unit Value

24. Underwriter of the Contracts

25. Performance Information

26. Not Applicable

27. Financial Statements
<PAGE>

PART A

PROSPECTUS
<PAGE>

Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and
Exchange Commission. These securities man not be sold
nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This
prospectus shall not to the time the registration
statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or
qualification under the securities a laws of any such
State.
<PAGE>

SUBJECT TO COMPLETION, DATED SEPTEMBER 27, 1996

Rydex Advisor Variable Annuity Account

Great American Reserve Insurance Company

Administrative Office: 11815 North Pennsylvania Street,
Carmel, Indiana 46032
Phone: (317) 817-3700

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
FLEXIBLE PREMIUMS - NONPARTICIPATING

Offered through

PADCO Financial Services, Inc.
6116 Executive Boulevard, Rockville, Maryland 20852
Phone: (800) 820-0888

The variable annuity contract described in this
Prospectus (the "Contract") is designed to provide retirement
benefits for certain types of purchasers. This Contract is
intended for use by Contract Owners who intend to invest as
part of an asset allocation or market-timing investment
strategy advised by professional money managers. The
investment options available under the Contract involve
certain aggressive investment techniques, which may include
engaging in short sales and transactions in futures contracts
and options on securities, stock indexes, and futures
contracts. As discussed more fully below, these techniques
are specialized and involve risks that are not traditionally
associated with otherwise similar contracts.

Accumulation of the Contract values may be on either a
fixed or variable basis, or on a combination fixed and
variable basis. Accumulation on a variable basis is provided
by allocations to the Rydex Advisor Variable Annuity Account
(the "Separate Account"). Variable benefits are not
guaranteed and will vary according to investment performance.
Accumulation on a fixed basis is provided by allocations to
the General Account of Great American Reserve Insurance
Company. (See "The Fixed Account" on page __.) Annuity
payments are only available on a fixed basis. This Prospectus
describes only the Separate Account features of the Contract
except where specific reference is made to the Fixed Account.

The Separate Account is a segregated investment account
of Great American Reserve Insurance Company ("Great American
<PAGE>

Reserve"), and is comprised of eight investment portfolios
each of which is managed by PADCO Advisors II, Inc. ("PADCO").
Allocations to the Separate Account will be invested in the
separate investment portfolios ("Subaccounts") selected. You
bear the full investment risk with respect to the Separate
Account. Eight Subaccounts are currently available under the
Contract (one of which is available only under certain
circumstances, described below) with the following investment
objectives:

Subaccount Investment Objective

The Nova Subaccount To provide investment returns that
correspond to a specified percentage
of the performance of a benchmark for
common stock securities.

The Ursa Subaccount To provide investment results that
will inversely correlate to the
performance of a benchmark for common
stock securities.

The OTC Subaccount To attempt to provide investment
results that correspond to a
benchmark for over-the-counter
securities.
The Precious Metals To attempt to provide investment
Subaccount results that correspond to a
benchmark primarily for metals-
related securities.

The U.S. Government To provide investment results that
Bond correspond to a benchmark for U.S.
Subaccount Government securities.

The Juno Subaccount To provide total return before
expenses and costs that inversely
correlates to the price movements of
a benchmark for U.S. Treasury debt
instruments or futures contracts on a
specified debt instrument.

The Money Market To provide current income consistent
Subaccounts with stability of capital and
liquidity.

This Contract is designed to be used with asset
allocation advisory or market-timing investment services.
Providers of such services are engaged by you to make
allocation and transfer decisions on your behalf. A charge is
deducted for these services. You should consider whether this
Contract with such services is appropriate for your needs as
<PAGE>

well as the tax consequences related to such services (see
"Asset Allocation Advisory Services" and Federal Income
Taxes; Asset Allocation Advisory Fees").

Investments in the Money Market Subaccounts are neither
insured nor guaranteed by the U.S. Government.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus contains information about the Contract
and the Separate Account that a prospective Contract Owner
should know before investing. It should be read and retained
for future reference. Additional information about the
Contract and the Separate Account is contained in a Statement
of Additional Information, dated ______________, 1996, which
has been filed with the Securities and Exchange Commission and
is incorporated herein by reference. The Statement of
Additional Information is available without charge upon
request by writing to or calling PADCO Financial Services,
Inc. ("PFS"), at the above address or number. The table of
contents for the Statement of Additional Information is
included on page __ of this Prospectus.

The date of this Prospectus is _______________, 1996.

iii
<PAGE>

TABLE OF CONTENTS

Page Page

PART I Mortality and Expense
Risk Charge . . . . . . . I-
DEFINITIONS . . . . . . . . I- Asset Allocation Advisory
Fee . . . . . . . . . . . I-
FEE TABLE . . . . . . . . . I- Administrative Fee . . . . I-

FINANCIAL STATEMENTS . . . I- Investment Advisory Fee
and Other Expenses . . . I-
SUMMARY . . . . . . . . . . I- Subaccount Administration
Fee . . . . . . . . . . . I-
GREAT AMERICAN RESERVE Payments of Certain Charges
INSURANCE COMPANY . . . . I- and Deductions . . . . . . I-
Premium Taxes . . . . . . . I-
THE SEPARATE ACCOUNT . . . I-
DESCRIPTION OF THE
INVESTMENTS OF THE CONTRACT . . . . . . . . . I-
SUBACCOUNTS . . . . . . . I- Purchase Payments . . . . . I-
Eligible Investments . . I- Changing Financial
Investment Objectives . I- Advisors . . . . . . . . I-
The Nova Subaccount . . I- Accumulation Provisions . . I-
The Ursa Subaccount . . I- Accumulation Units . . . . I-
The OTC Subaccount . . . I- Value of an Accumulation
The Precious Metals Unit . . . . . . . . . . . I-
Subaccount . . . . . . . I- Valuation Periods . . . . . I-
The U.S. Government The Fixed Account . . . . . I-
Bond Subaccount . . . . I- Payment on Death . . . . . I-
The Juno Subaccount . . I- Beneficiary . . . . . . . . I-
The Money Market Ownership . . . . . . . . . I-
Subaccounts . . . . . . I- Account Transfers . . . . . I-
Special Risk Withdrawals . . . . . . . . I-
Considerations . . . . . I- Suspension or Deferral
Addition or Deletion of of Payments . . . . . . I-
Subaccounts . . . . . . I- Annuity Provisions . . . . I-
General . . . . . . . . . . I-
ASSET ALLOCATION ADVISORY Selection of Annuity Date and
SERVICES . . . . . . . . I- Annuity Options . . . . . I-
Change of Annuity Date or
CHARGES AND DEDUCTIONS . . I- Annuity Option . . . . . . I-
Withdrawal Charge . . . . . I- Annuity Options . . . . . . I-
FEDERAL INCOME TAXES . . . I-
Page General . . . . . . . . . . I-
Diversification . . . . . . I-
Minimum Annuity Payments I- Multiple Contracts . . . . I-
Proof of Age, Sex, and
Survival . . . . . . . . I- Contracts Owned by Non-
Notices and Elections . . . I- Natural Persons . . . . . I-
Amendment of Contract . . . I- Tax Treatment of
Ten-Day Right to Review . . I- Assignments . . . . . . . I-

iv
<PAGE>

Income Tax Withholding . . I- The Juno Subaccount . . . II-
Tax Treatment of Withdrawals - The Money Market
- Non-Qualified Subaccounts . . . . . . II-
Contracts . . . . . . . . I- The Benchmarks . . . . . II-
Qualified Plans . . . . . . I-
Tax Treatment of SPECIAL RISK
Withdrawals -- Qualified CONSIDERATIONS . . . . . II-
Contracts . . . . . . . . I- Portfolio Turnover . . . II-
Tax-Sheltered Annuities -- Tracking Error . . . . . II-
Withdrawal Limitations . . I- Aggressive Investment
Asset Allocation Advisory Techniques . . . . . . . II-
Fees . . . . . . . . . . . I-
INVESTMENT TECHNIQUES
SEPARATE ACCOUNT VOTING AND OTHER INVESTMENT
RIGHTS . . . . . . . . . . I- POLICIES . . . . . . . . II-

REPORTS TO CONTRACT
OWNERS . . . . . . . . . . I-

PERFORMANCE INFORMATION . . I-

DISTRIBUTION OF CONTRACTS . I-

STATE REGULATION . . . . . I-

Page

LEGAL PROCEEDINGS . . . . . I-

EXPERTS . . . . . . . . . . I-

REGISTRATION STATEMENT . . I-

LEGAL MATTERS . . . . . . . I-

PART II

THE SEPARATE ACCOUNT . . II-

INVESTMENT OBJECTIVES AND
POLICIES OF THE
SUBACCOUNTS . . . . . . II-
General . . . . . . . . . II-
The Nova Subaccount . . . II-
The Ursa Subaccount . . . II-

The OTC Subaccount . . . II-
The Precious Metals
Subaccount . . . . . . . II-
The U.S. Government Bond
Subaccount . . . . . . II-

v
<PAGE>

Page
PORTFOLIO TRANSACTIONS
AND BROKERAGE . . . . . II-

MANAGEMENT OF THE
SEPARATE ACCOUNT . . . . II-
Board of Managers . . . . II-
PADCO . . . . . . . . . . II-
PADCO Service Company, Inc. II-
Costs and Expenses . . . II-

TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL
INFORMATION . . . . . . II-

1
<PAGE>

PART I

No person has been authorized to give any information or
to make any representations other than those contained in this
Prospectus in connection with the offer contained in this
Prospectus and, if given or made, such information or repre-
sentation must not be relied upon as having been authorized.
This Prospectus does not constitute an offer of, or
solicitation of an offer to acquire, any variable annuity
contracts offered by this Prospectus in any jurisdiction to
anyone to whom it is unlawful to make such an offer or
solicitation in such jurisdiction.

DEFINITIONS

Accumulation Unit: An accounting unit of measure used to
compute the value of your interest in a Subaccount prior to
the Annuity Date. (See page __.)

Accumulation Unit Value: For any Valuation Period, the
current market value of the total assets of a Subaccount, less
liabilities, divided by the number of units of that Subaccount
outstanding.

Administrative Office: The office indicated on the cover
page of this Prospectus to which notices and purchase payments
must be sent. All sums payable to Great American Reserve
under the Contract are payable at the Administrative Office or
an address designated by Great American Reserve.

Age: The age of any Contract Owner or Annuitant on his
or her last birthday. For Joint Contract Owners, all
provisions which are based on age are based on the age of the
older of the Joint Contract Owners.

Annuitant: The named individual on whose continuation of
life under the Contract annuity payments may depend.

Annuity: A series of payments for life; or for life with
guaranteed periods; or for the installment refund period; or
for a certain period; or to a joint and surviving annuitant.

Annuity Date: The date on which annuity payments of the
Contract begin. (See page __.)

Beneficiary: The persons to whom payment is to be made
on the death of the Contract Owner.

Code: The Internal Revenue Code of 1986, as amended.

Contract: Theannuity contract offered by thisProspectus.

I-2
<PAGE>

Contract Date: The date a Contract is issued to a
Contract Owner.

Contract Owner: The person entitled to exercise all
rights under a Contract. This person is also referred to in
this Prospectus as "you." A Contract Owner may be a non-
natural person (e.g., a corporation, trust, or certain other
entities). (See page __.)

Contract Value: The sum of the amounts allocated to the
Fixed Account and the amounts allocated to the Separate
Account. (See page __.)

Financial Advisor: A registered investment adviser, or
an investment adviser who is excluded from registration with
the Securities and Exchange Commission, selected to provide
your asset allocation or market-timing investment advisory
services.

Fixed Account: The general account of Great American
Reserve which provides guaranteed values and periodically
adjusted interest rates.

Fixed Account Value: The value of the portion of your
Contract Value allocated to the Fixed Account.

Fixed Annuity: A series of periodic payments of
predetermined amounts beginning with the Annuity Date that do
not vary with investment experience.

General Account: The assets of Great American Reserve
with the exception of the Separate Account and other
segregated asset accounts.

Great American Reserve: Great American Reserve Insurance
Company.

Joint Contract Owner: If named, a person entitled to
exercise all rights under a Contract along with the Contract
Owner. Any Joint Contract Owner must be the spouse of the
Contract Owner.

Money Market Subaccounts: The Money Market I Subaccount
and the Money Market II Subaccount.

Nonqualified Contract: A Contract issued under a
nonqualified plan, which is not a Qualified Contract.

PADCO: PADCO Advisors II, Inc.

PFS: PADCO Financial Services, Inc.

I-3
<PAGE>

Purchase Payments: Premium payments made to Great
American Reserve under the terms of the Contract.

Qualified Contract: A Contract issued under a retirement
plan which receives favorable tax treatment under Sections
401(a), 403(a) and (b), 408, or 457, or any similar provision
of the Internal Revenue Code where pre-tax contributions are
accepted. (See page __.)

Separate Account: The segregated asset account that
Great American Reserve has established pursuant to the
provisions of the insurance code of the State of Texas, and
identified as the Rydex Advisor Variable Annuity Account.

Separate Account Value: The value of the portion of your
Contract Value allocated to the Separate Account.

Servicer: PADCO Service Company, Inc.

Subaccount: A segment of the Rydex Advisor Variable
Annuity Account consisting of a portfolio of investment
securities. (See page __.)

Transaction Cut-Off Time: The cut-off time on each
valuation day for all Separate Account trading activity,
including transfers and withdrawals. With respect to all
purchases and withdrawals, this time is 2:30 P.M., Eastern
Time. With respect to transfers for the Nova, Ursa, and OTC
Subaccounts, this time is 3:30 P.M., Eastern Time; for the
Precious Metals Subaccount, this time is 3:15 P.M., Eastern
Time; for the Bond and Juno Subaccounts, this time is 2:30
P.M., Eastern Time; and for the Money Market Subaccounts and
the Fixed Account, this time is 4:00 P.M., Eastern Time. For
transfers involving different transaction end times, the
earlier of the times indicated above applies. (See page __.)

Valuation Date: Each day the New York Stock Exchange
(the "NYSE") is open for business.

Valuation Period: The interval from one valuation day of
any Subaccount to the next valuation day, measured from the
time each day the Subaccount is valued. (See page __.)

Written Request: A request in writing, in a form
satisfactory to Great American Reserve.

I-4
<PAGE>

FEE TABLE

Contract Owner Transaction Expenses1/

Sales Load Imposed on Purchases . . . . . . . . . . . None

Withdrawal Charge (as a percentage of purchase payments)
First and Second Years Since Payment . . . . . . . . . 7%
Third Year Since Payment . . . . . . . . . . . . . . . 6%
Fourth Year Since Payment . . . . . . . . . . . . . . 5%
Fifth Year Since Payment . . . . . . . . . . . . . . . 4%
Sixth Year Since Payment . . . . . . . . . . . . . . . 3%
Seventh Year Since Payment . . . . . . . . . . . . . . 2%
Eighth Year or More Since Payment . . . . . . . . . . 0%

Surrender Fee . . . . . . . . . . . . . . . . . . . . None

Exchange Fee . . . . . . . . . . . . . . . . . . . . . None

Annual Contract Fee . . . . . . . . . . . . . . . . . None

Separate Account Annual Expenses (as a percentage of average
daily net assets in each Subaccount)

Mortality and Expenses Risk Charge . . . . . . . . . 1.25%

Administrative Fee . . . . . . . . . . . . . . . . . 0.15%

Asset Allocation Advisory Fee2/ . . . . . . . . . . . 1.75%

/ Premium taxes are not shown. Any premium tax due will be
deducted from purchase payments or from Contract Values
at a later date. Currently, state premium taxes range
from 0% to 3.5%.

/ Unless and until a ruling is obtained from the Internal
Revenue Service to permit the deduction of the Asset
Allocation Advisory Fee from your Contract, this fee will
not be deducted as a percentage of average daily net
assets in each Subaccount and you will be solely
responsible for the payment of the applicable asset
allocation advisory fee to your Financial Advisor. Upon
our receipt of the necessary regulatory approvals, you
will be notified of the commencement of the deduction of
this fee. (See "Asset Allocation Advisory Fee" at page
__.) The Asset Allocation Advisory Fee is not an expense
of the Money Market II Subaccount.

I-5
<PAGE>

<TABLE>
<CAPTION>
Subaccount Annual Expenses
<S> <C> <C> <C> <C>
Nova Ursa OTC Precious
Metals

Advisory Fees 0.75% 0.90% 0.75% 0.75%
Subaccount
Administration
Fees 0.25% 0.25% 0.20% 0.20%

Other Expenses
(after
reimbursement)3/ 0.40% 0.35% 0.45% 0.45%

Total Separate
Account Annual
Expenses (after
(reimbursement)3/ 4.55% 4.65% 4.55% 4.55%

</TABLE>

3/ PADCO has voluntarily agreed to reimburse each Subaccount for Other
Expenses in excess of those shown (up to the amount of the applicable
Advisory Fee) through June 30, 1997, and until such later date as PADCO
may determine. Other Expenses are based on estimates.

I-6
<PAGE>

<TABLE>
<CAPTION>
Subaccount Annual Expenses
<S> <C> <C> <C> <C>
Bond Juno Money Money
Market I Market II

Advisory Fees 0.50% 0.90% 0.50% 0.25%
Subaccount
Administration
Fees 0.20% 0.25% 0.20% 0

Other Expenses
(after
reimbursement)4/ 0.30% 0.35% 0.10% 0.10%

Total Separate
Account Annual
Expenses (after
(reimbursement)3/ 4.15% 4.65% 3.95% 1.75%

</TABLE>

4/ PADCO has voluntarily agreed to reimburse each Subaccount for Other
Expenses in excess of those shown (up to the amount of the applicable
Advisory Fee) through June 30, 1997, and until such later date as PADCO
may determine. Other Expenses are based on estimates.

I-7
<PAGE>

Examples

1. If you surrender your Contract, or if you annuitize, at
the end of the applicable period:

You would pay the following
expenses on a $1,000
investment, assuming 5% 1 year 3 years
annual return on assets:

The Nova Subaccount $116 $191
The Ursa Subaccount $117 $194

The OTC Subaccount $116 $191

The Precious Metals $116 $191
Subaccount
The Bond Subaccount $112 $179

The Juno Subaccount $117 $194
The Money Market I $110 $174
Subaccount

The Money Market II $ 88 $108
Subaccount

2. If you do not surrender at the end of the applicable
period:

You would pay the following
expenses on a $1,000
investment, assuming 5% 1 year 3 years
annual return on assets:
The Nova Subaccount $46 $137

The Ursa Subaccount $47 $140
The OTC Subaccount $46 $137

The Precious Metals $46 $137
Subaccount

The Bond Subaccount $42 $126
The Juno Subaccount $47 $140

The Money Market I $40 $120
Subaccount
The Money Market II $ 8 $ 54
Subaccount

I-8
<PAGE>

The purpose of the Fee Table is to assist you in
understanding the various costs and expenses that you will
bear directly or indirectly. The Examples should not be
considered a representation of future expenses and charges.
Actual expenses may be greater or less than those shown.
Similarly, the assumed 5% annual rate of return is not an
estimate or a guarantee of future investment performance. The
Examples include, as an expense, the asset allocation advisory
fee of 1.75%. However, deduction of this fee will not be
implemented unless and until the necessary regulatory
approvals are obtained. See "Charges and Deductions" at page
___.

FINANCIAL STATEMENTS

Financial statements for Great American Reserve can be
found in the Statement of Additional Information, copies of
which are available upon request and without charge. This
information may be obtained by writing or calling PFS at the
address or telephone number set forth on the cover page of
this Prospectus. No financial statements for the Separate
Account are included in the Statement of Additional
Information because the Separate Account had not commenced
operations at the date of this Prospectus.

SUMMARY

"You" refers to the Contract Owner. "We," "us," or
"Great American Reserve" refers to Great American Reserve
Insurance Company.

The Separate Account

The Separate Account is currently divided into eight
Subaccounts in which purchase payments under this Contract may
be invested. Initial purchase payments allocable to the
Separate Account will first be allocated to the Money Market I
Subaccount. During the first 14 days following the date of
issue of the Contract (the "Contract Date"), no transfers will
be allowed. Subsequently, transfers may only be made by your
Financial Advisor. Your Contract Value will reflect the
investment performance of your Subaccounts. (See "The
Separate Account" on page __, "Investments of the Subaccounts"
on page __, "Account Transfers" on page __ and "Asset
Allocation Advisory Services" on page __.)

I-9
<PAGE>

The eight Subaccounts, including the Money Market
Subaccounts, are managed by PADCO. (See "PADCO" in Part II of
this Prospectus.) The Money Market II Subaccount is
available only upon the death, resignation, or termination of
your Financial Advisor.

Retirement Plans

The Contract may currently be issued pursuant to
nonqualified retirement plans, individual retirement annuities
("IRAs"), or Section 403(b) Annuities ("TSAs").

Purchase Payments

The full amount of your purchase payments, less
applicable premium tax due, if any, will be invested.
However, certain charges and deductions will be made from your
Contract Value. (See "Charges and Deductions" on page __.)

The Contract permits purchase payments to be paid on a
flexible basis at any time in any amount meeting specified
minimum requirements. The minimum initial purchase payment
Great American Reserve will accept is $25,000. The minimum
subsequent purchase payment is $1,000. (See "Purchase
Payments" on page __.)

Charges and Deductions

Withdrawal Charge. A withdrawal charge is deducted in
the event of withdrawal of Contract Values, subject to certain
exceptions. If the withdrawal charge applies, it will equal a
specified percentage of each purchase payment paid under the
Contract within seven complete years prior to the date of
withdrawal. This charge permits Great American Reserve to
recover a portion of the sales expenses that it has incurred.
(See "Withdrawal Charge" on page __.)

Administrative Fee. Great American Reserve will deduct a
daily administrative fee equal to an annual rate of 0.15% of
the average daily net assets of each Subaccount. This charge
is made to reimburse Great American Reserve for expenses
related to administration of the Contracts. (See
"Administrative Fee" on page __.)

Mortality and Expense Risk Charge. Great American
Reserve will deduct a daily mortality and expense risk charge
equal to an annual rate of 1.25% of the average daily net
assets of each Subaccount. This charge is made to compensate
Great American Reserve for the risk of guaranteeing not to
increase the administrative fee regardless of actual
administrative costs and for the mortality guarantees Great

I-10
<PAGE>

American Reserve makes under the Contract. (See "Mortality
and Expense Risk Charge" on page __.)

Asset Allocation Advisory Fee. Upon receipt of a ruling
from the Internal Revenue Service, Great American Reserve will
deduct an asset allocation advisory fee equal to an annual
rate of 1.75% of the average daily net assets of each
Subaccount other than the Money Market II Subaccount (which
Subaccount is only available if no Financial Advisor is
performing services in relation to your Contract). This fee
will be deducted on a daily basis and paid quarterly to the
Financial Advisor who provides you with asset allocation
advisory services. (See "Asset Allocation Advisory Services"
at page _____ and Federal Income Taxes; Asset Allocation
Advisory Fees" at page ___.)

Subaccount Administration Fee. Various Subaccount
administration fees, with maximum annual rates ranging from
0.20% to 0.25% of a Subaccount's average daily net assets,
also are payable by the Subaccounts (other than the Money
Market II Subaccount, which does not pay this fee) to PADCO
Service Company, Inc. (the "Servicer"), for expenses related
to asset allocation administrative services provided by the
Servicer under the Contracts. (See "Subaccount Administration
Fee" on page __.)

Investment Advisory Fee. Various investment advisory
fees, with maximum annual rates ranging from 0.25% to 0.90% of
the average daily net assets of the Subaccounts, are payable
by the Subaccounts to PADCO. The Subaccounts also bear
certain of the expenses incurred in their operations. (See
"Investment Advisory Fee and Other Expenses" on page __.)

Premium Taxes. Premium taxes or similar assessments
payable to any government entity may be deducted from purchase
payments or from Contract Values when paid by Great American
Reserve or at a later date. Currently, state premium taxes
range from 0% to 3.5%. (See "Premium Taxes" on page __.)

Asset Allocation Advisory Services

This Contract is sold only to Contract Owners who are
provided asset allocation or market-timing services by
investment advisers registered, or excluded from registration,
under the Investment Advisers Act of 1940, to whom the asset
allocation advisory fees are paid. Asset allocation advisory
services consist of making allocation and transfer decisions.
You are responsible for selecting and supervising your
Financial Advisor and must execute a power of attorney
authorizing your Financial Advisor to provide asset allocation
advisory services. In this regard, you may redeem your
Contract in whole or in part, but only your Financial Advisor

I-11
<PAGE>

may contact PADCO with allocation and transfer decisions.
PADCO or Great American Reserve must be provided with a copy
of a written power of attorney from each Contract Owner for
whom the Financial Advisor has been granted the power to
direct the allocation and transfer of funds under the
Contract. Neither Great American Reserve, PFS, nor PADCO
selects, supervises, or recommends any Financial Advisor to
you, nor does Great American Reserve, PFS or PADCO provide
asset allocation advice to you. Accordingly, neither Great
American Reserve, PFS, nor PADCO is responsible for any advice
provided by any Financial Advisor. There can be no assurance
that any Financial Advisor will be able to predict market
moves successfully. The Board of Managers of the Separate
Account (the "Managers") has not reviewed the qualifications
of any Financial Advisor and has not considered payments to
Financial Advisors in connection with its review of investment
advisory contracts for the Separate Account. (See "Asset
Allocation Advisory Services" at page __.)

Upon notification to PADCO of the death, termination, or
resignation of your Financial Advisor, your Separate Account
Value will immediately be transferred into the Money Market II
Subaccount. Great American Reserve will send you a notice not
more than five business days after receipt of information from
PADCO that no Financial Advisor is serving in relation to your
Contract. (See "Asset Allocation Advisory Fee" on page __ for
a description of the applicable procedures when your Financial
Advisor dies, resigns or has been terminated, and "Changing
Financial Advisors" on page __.)

Annuity Payments

Monthly annuity payments will start on the Annuity Date.
You may select the Annuity Date. You may also select an
annuity payment option. You may change your selections later.
(See "Change of Annuity Date or Annuity Option" on page __.)

If the net Contract Value at the Annuity Date is less
than $10,000 ($3,500 for Qualified Contracts), Great American
Reserve reserves the right to pay the Contract Value in a lump
sum in lieu of annuity payments. For further information
regarding the tax consequences of a lump sum payment, see
"Taxation of Distributions" on page __. If any annuity
payment would be less than $50, Great American Reserve may
change the frequency of payments to intervals that will result
in payments of at least $50. (See "Minimum Annuity Payments"
on page __.)

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<PAGE>

Account Transfers

All or part of your Contract Value may be transferred
among the Subaccounts (except the Money Market II Subaccount)
at any time and without charge prior to the Annuity Date.
Transfers to the Money Market II Subaccount are made only upon
notification to PADCO of the death, resignation, or
termination of your Financial Advisor. Transfers out of the
Money Market II Subaccount are subject to certain limitations.
Transfers to and from the Fixed Account are also permitted,
but are subject to certain limitations. (See "Account
Transfers" on page ___.)

Payment on Death

If the Contract Owner dies prior to the Annuity Date and
(i) the age of the Contract Owner at death is less than 76,
Great American Reserve will pay the greater of purchase
payments (less withdrawals) or Contract Value, or (ii) the age
of the Contract Owner at death is 76 or greater, Great
American Reserve will pay the Contract Value less any
applicable withdrawal charges. (See "Payment on Death" on
page __.)

Withdrawals

You may withdraw all or part of your accumulated Contract
Value prior to the Annuity Date. The amount withdrawn must be
at least $500. If your Contract is to continue in force, the
remaining Contract Value must be at least $10,000. A
withdrawal charge may be imposed. (See "Withdrawals" on page
__.) Withdrawals may be subject to a 10% penalty tax under
the Code (See "Taxation of Distributions" on page __).

Ten-Day Review Period

Within 10 days of your receipt of an issued Contract you
may return it to Great American Reserve for cancellation.
This period may be longer in certain states. (See "Ten Day
Right to Review" on page __.)

Special Risks

The strategies employed by a Contract Owner's Financial
Advisor may result in considerable assets moving in and out of
each Subaccount (except the Money Market II Subaccount).
Consequently, PADCO expects that each Subaccount will
generally experience significant portfolio turnover, which
will likely result in higher expenses, transaction costs, and

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<PAGE>

additional costs and may also adversely affect the ability of
the Subaccount to meet its investment objective. Each
Subaccount's investments will be managed without regard to
portfolio turnover rates. The Subaccounts (other than the
Money Market Subaccounts) also may engage in certain
aggressive investment techniques, which may include engaging
in short sales and transactions in futures contracts and
options on securities, stock indexes, and futures contracts.

Although liquidity risks are often inherent in market
timing arrangements, the Subaccounts have procedures designed
to maximize liquidity of the Subaccounts. In particular, the
Subaccounts use of futures contracts and options on
securities, stock indexes and futures contracts offer a highly
liquid, cost-effective method of investing in securities and
are an effective means by which to accommodate the massive
switching and high portfolio turnover rates that may result
from asset allocation and market timing investment strategies.
A discussion of the special risks associated with the
investment in the Subaccounts is provided under "Special Risk
Considerations" under "Investments of the Subaccounts" in Part
I and in Part II of this Prospectus. For further information
concerning the investment policies and strategies of the
Subaccounts, see "Investments of the Subaccounts" in Part I
and "Investment Objectives and Policies" and "Investment
Techniques and Other Policies" in Part II of this Prospectus
and "Investment Policies and Techniques of the Subaccounts" in
the Statement of Additional Information.

As of the date of this Prospectus, Great American Reserve
has pending a request for a letter ruling from the Internal
Revenue Service that asset allocation advisory fee payments to
Financial Advisors need not be treated as distributions to
Contract Owners subject to tax. There is no assurance that
such a ruling will be issued. Unless and until a letter
ruling is obtained, Great American Reserve would be required
to treat these payments as taxable distributions, which
amounts may be subject to adverse tax consequences, including
a 10% penalty tax on the taxable portion withdrawn if you are
under 59 1/2 years old. In addition, even if such a ruling is
issued, it is likely that you will have a taxable distribution
if your Financial Advisor credits back to you or anyone else
any portion of the asset allocation advisory fee. Contract
Owners should consult a competent tax advisor as to the tax
treatment of asset allocation advisory fees. The deduction of
asset allocation advisory fees, as a percentage of average
daily net assets in each Subaccount, will not be implemented
unless and until a favorable letter ruling is obtained from
the Internal Revenue Service. However, pending receipt of a
favorable letter ruling from the Internal Revenue Service,
Contract Owners (other than owners of annuities held under
retirement plans qualified under Section 401 or owners of

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<PAGE>

Section 403(b) tax sheltered annuities) may authorize Great
American Reserve to withdraw amounts from his or her Contract
Value for the purpose of remitting the asset allocation
advisory fee (1.75%) to his or her Financial Advisor.

GREAT AMERICAN RESERVE INSURANCE COMPANY

Great American Reserve, originally organized in 1937, is
principally engaged in the life insurance business in 47
states and the District of Columbia. Great American Reserve
is a stock company organized under the laws of the State of
Texas and a wholly-owned subsidiary of Conseco, Inc.
("Conseco"). The operations of Great American Reserve are
handled by Conseco. Conseco is a publicly-owned financial
services holding company, the principal operations of which
are the development, marketing and administration of
specialized annuity and life insurance products. Conseco is
located at 11825 N. Pennsylvania Street, Carmel, Indiana
46032.

All inquiries regarding the Separate Account, the
Contracts, or any related matter should be directed to Great
American Reserve's Administrative Office at the address and
telephone number shown on the cover page of this Prospectus.
The financial statements of Great American Reserve included in
the Statement of Additional Information should be considered
only as bearing upon the ability of Great American Reserve to
meet the obligations under the Contracts. Furthermore,
neither the assets of Conseco nor those of any company in the
Conseco group of companies other than Great American Reserve
support these obligations. As of December 31, 1995, Great
American Reserve had total assets of $2.8 billion and total
shareholder's equity of $442.6 million.

THE SEPARATE ACCOUNT

Great American Reserve established the Separate Account
on April 15, 1996, as a separate account under Texas law.
The Separate Account is registered with the Securities and
Exchange Commission (the "SEC") as a diversified open-end
management investment company pursuant to the provisions of
the Investment Company Act of 1940, as amended (the "1940
Act"), and meets the definition of "separate account" set
forth in the 1940 Act. The Separate Account's registration
under the 1940 Act does not involve any supervision by the SEC
of the investment practices or policies of any of the
Subaccounts of the Separate Account. The Managers are
responsible for the general supervision of the Separate

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<PAGE>

Account's business. While the assets of the Subaccounts are
Great American Reserve's property, the Subaccounts, as
segregated investment accounts of the Separate Account, are
not chargeable with liabilities arising out of any other
business that Great American Reserve may conduct. Obligations
of the Subaccounts, however, are obligations of Great American
Reserve. Income, gains, or losses, whether or not realized,
from assets allocated to each of the Subaccounts, in
accordance with the Contracts, are credited to or charged
against that Subaccount without regard to other income, gains,
or losses of Great American Reserve or any other Subaccount.
Great American Reserve does not guarantee the investment
performance of any Subaccount. The Separate Account has eight
separate Subaccounts. Each Subaccount has its own distinct
investment objective. There is, of course, no assurance that
any Subaccount will achieve its investment objective. A
discussion of each Subaccount s investment objective and
policies is provided below under "Investment Objectives and
Policies of the Subaccounts" and "Investment Techniques and
Other Investment Policies." The Contract Value prior to the
Annuity Date will vary with the performance of the Subaccounts
your Financial Advisor selects.

INVESTMENTS OF THE SUBACCOUNTS

Eligible Investments

Each Subaccount is a separate investment portfolio of the
Separate Account. Purchase payments allocated to a Subaccount
will be added to the assets of that Subaccount at Accumulation
Unit Value (without any fee or charge) and will be invested as
determined by PADCO.

All of your purchase payments allocable to the Separate
Account will first be allocated to the Money Market
Subaccounts. No transfers will be allowed for the first 14
days following the Contract Date. After this 14-day period,
transfers may only be made by your Financial Advisor. All or
part of your Contract Value may be transferred from one
Subaccount to another (except the Money Market II Subaccount)
at any time and without charge after the first 14 days
following the Contract Date. (See "Account Transfers" at page
___.)

A summary of the investment objectives of each Subaccount
follows. More detailed information, including risks of

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<PAGE>

investing in and deductions from and expenses paid out of the
assets of the Separate Account and of the Subaccounts, may be
found in Part II of this Prospectus. Part II of this
Prospectus should be read in full for a complete evaluation of
the Contract and related investment risks.

Investment Objectives

Each Subaccount has its own distinct investment
objective. There is, of course, no guarantee that any
Subaccount will achieve its investment objective. The
investment objectives of the Subaccounts and certain
investment restrictions are fundamental policies and may not
be changed without the affirmative vote of the majority of the
Contract Owners of that Subaccount. The investment objectives
of the Subaccounts are as follows:

The Nova Subaccount. The Nova Subaccount s investment
objective is to provide investment returns that correspond to
a specified percentage of the performance of a benchmark for
common stock securities selected from time to time by the
Managers. The Nova Subaccount's current benchmark is the
Standard & Poor s 500 Composite Stock Price Index (the
"S&P500 Index"), and the Nova Subaccount currently expects to
provide investment returns that correspond to 125% of the
performance of the S&P500 Index. In attempting to achieve its
objective, the Nova Subaccount expects that a substantial
portion of its assets usually will be devoted to investment
techniques including certain transactions in stock index
futures contracts, options on stock index futures contracts,
and options on securities and stock indexes. In contrast to
returns on a mutual fund that seeks to approximate the return
of the S&P500 Index, the Nova Subaccount should increase gains
to Contract Owners during periods when the prices of the
securities in the S&P500 Index are rising and increase losses
to Contract Owners during periods when such prices are
declining. Contract Owners in the Nova Subaccount could
experience substantial losses during sustained periods of
falling equity prices. The S&P500 Index is an unmanaged index
of common stocks comprised of 500 industrial, financial,
utility, and transportation companies. "Standard &
Poor's(R)," "S&P(R)," "S&P500(R)," "Standard & Poor's 500(R),"
and "500" are trademarks of McGraw-Hill, Inc. The Nova
Subaccount is not sponsored, endorsed, sold, or promoted by
Standard & Poor's Corporation and Standard & Poor's
Corporation makes no representation regarding the advisability
of investing in the Nova Subaccount through the Contract or
otherwise.

The Ursa Subaccount. The Ursa Subaccount s investment
objective is to provide investment results that will inversely
correlate to the performance of a benchmark for common stock

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<PAGE>

securities selected from time to time by the Managers. The
Ursa Subaccount's current benchmark is the S&P500 Index. The
Ursa Subaccount seeks to achieve this inverse correlation
result on each trading day. While a close correlation can be
achieved on any single trading day, the combined effects of
the reinvestment of the receipt of investment income and of
the compounding of successive changes in Accumulation Unit
Value can cause the percentage increase or decrease in the
Accumulation Unit Value of the Ursa Subaccount to diverge
significantly from the current inverse percentage decrease or
increase in the S&P500 Index. If the Ursa Fund achieved a
perfect inverse correlation for any single trading day, the
Accumulation Unit Value of the Ursa Subaccount would increase
for that day in direct proportion to any decrease in the level
of the S&P500 Index. Conversely, the Accumulation Unit Value
of the Ursa Subaccount would decrease for that day in direct
proportion to any increase in the level of the S&P500 Index
for that day. In seeking to achieve its objective, the Ursa
Subaccount primarily engages in short sales and certain
transactions in stock index futures contracts, options on
stock index futures contracts, and option on securities and
stock indexes. The Ursa Subaccount involves special risks not
traditionally associated with annuity contracts. Contract
Owners in the Ursa Subaccount may experience substantial
losses during sustained periods of rising equity prices. The
Ursa Subaccount is not sponsored, endorsed, sold, or promoted
by Standard & Poor's Corporation and Standard & Poor's
Corporation makes no representation regarding the advisability
of investing in the Ursa Subaccount through the Contract or
otherwise.

The OTC Subaccount. The investment objective of the OTC
Subaccount (the "OTC Subaccount") is to attempt to provide
investment results that correspond to the performance of a
benchmark for over-the-counter securities selected from time
to time by the Managers. The OTC Subaccount s current
benchmark is the NASDAQ 100 Index . The OTC Subaccount does
not aim to hold all of the 100 securities included on the
NASDAQ 100 Index. Instead, the OTC Subaccount intends to hold
representative securities included in the NASDAQ 100 Index or
other instruments which are expected to provide returns that
correspond to those of the NASDAQ 100 Index. The OTC
Subaccount may engage in transactions on stock index futures
contracts, options on stock index futures contracts, and
options on securities and stock indexes. The NASDAQ 100 Index
is a capitalization-weighted index composed of 100 of the
largest non-financial securities listed on the National
Association of Securities Dealers Automated Quotations
("NASDAQ") Stock Market. "NASDAQ(SM)," "NASDAQ 100(R)," and
"NASD(R)" are servicemarks and trademarks of the National
Association of Securities Dealers, Inc. ("NASD"). The OTC
Subaccount is not sponsored, endorsed, sold, or promoted by

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<PAGE>

the NASD and the NASD makes no representation regarding the
advisability of investing in the OTC Subaccount through the
Contract or otherwise.

The Precious Metals Subaccount. The investment objective
of the Precious Metals Subaccount (the "Metals Subaccount") is
to attempt to provide investment results that correspond to
the performance of a benchmark primarily for metals-related
securities selected from time to time by the Managers. The
Precious Metals Subaccount s current benchmark is the
Philadelphia Stock Exchange Gold/Silver Index (the "XAU
Index"). To achieve its objective, the Precious Metals
Subaccount invests in securities included in the XAU Index.
In addition, the Precious Metals Subaccount may invest in
other securities that are expected to perform in a manner that
will permit the Precious Metals Subaccount s performance to
track closely the XAU Index. The Precious Metals Subaccount
may invest in securities of foreign issuers. These securities
present certain risks not present in domestic investments and
expose the investor to general market conditions which differ
significantly from those in the United States. The XAU Index
is a capitalization-weighted index featuring nine widely-held
securities in the gold and silver mining and production
industry or companies investing in such mining and production
companies. "Philadelphia Stock Exchange(R)" and "PHLX(R)" are
trademarks of the Philadelphia Stock Exchange. The Precious
Metals Subaccount is not sponsored, endorsed, sold, or
promoted by the Philadelphia Stock Exchange and the
Philadelphia Stock Exchange makes no representation regarding
the advisability of investing in the Precious Metals
Subaccount through the Contract or otherwise.

The U.S. Government Bond Subaccount. The investment
objective of the U.S. Government Bond Subaccount (the "Bond
Subaccount") is to provide investment results that correspond
to the performance of a benchmark for U.S. Government
securities selected from time to time by the Managers. The
Bond Subaccount s current benchmark is 120% of the price
movement of the Current Long Treasury Bond (the "Long Bond"),
without consideration of interest paid. In attempting to
achieve its objective, the Bond Subaccount invests primarily
in obligations of the U.S. Treasury or obligations either
issued or guaranteed, as to principal and interest, by
agencies or instrumentalities of the U.S. Government ("U.S.
Government Securities"). The Bond Subaccount may engage in
transactions in futures contracts and options on futures
contracts on U.S. Treasury bonds. The Bond Subaccount also may
invest in U.S. Treasury zero coupon bonds.

The Juno Subaccount. The Juno Subaccount s investment
objective is to provide total return before expenses and costs
that inversely correlate to the price movements of a benchmark

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<PAGE>

for U.S. Treasury debt instruments or futures contracts on a
specified debt instrument selected from time to time by the
Managers. The Long Bond is the Juno Subaccount s current
benchmark. In seeking its objective, the Juno Subaccount will
employ certain investment techniques including engaging in
short sales and transactions in futures contracts and options
thereon. If the Juno Subaccount is successful in meeting its
objective, its total return before expenses and costs will
increase proportionally to any decreases in the price of the
Long Bond. Conversely, its total return before expenses and
cost will decrease proportionally to any increases in the
price of the Long Bond. Contract Owners with Contract Value
allocated to the Juno Subaccount may experience substantial
losses during periods of falling interest rates.

The Money Market Subaccounts. The investment objective
of each of the Money Market Subaccounts is to seek current
income consistent with stability of capital and liquidity. To
achieve its objective, each Money Market Subaccount invests
primarily in money market instruments which are issued or
guaranteed, as to principal and interest, by the U.S.
Government, its agencies or instrumentalities, as well as in
repurchase agreements collateralized fully by U.S. Government
Securities, and in bank money market instruments and
commercial paper.

Special Risk Considerations

The assets of the Subaccounts will be derived from
Contract Owners who use the Subaccounts as part of an asset
allocation or market-timing investment strategy pursuant to
advice received from professional money managers. In that
circumstance, Subaccount values may be transferred frequently
to take advantage of anticipated changes in market conditions.
The strategies employed by a Contract Owner's Financial
Advisor may result in considerable assets moving in and out of
the Subaccounts (except the Money Market II Subaccount).
Consequently, PADCO expects that the Subaccounts will
generally experience significant portfolio turnover, which
will likely cause higher expenses and additional costs and may
also adversely affect the ability of the Subaccount to meet
its investment objective. For further information concerning
the portfolio turnover of the Subaccounts, see "Special Risk
Considerations" in Part II of this Prospectus, and "Investment
Policies and Techniques of the Subaccounts" in the Statement
of Additional Information.

While PADCO does not expect that the returns over a year
will deviate adversely from the Subaccounts' respective
current benchmarks by more than ten percent, certain factors
may affect the ability to achieve this correlation. See
"Investment Objectives and Policies" and "Special Risk

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<PAGE>

Considerations" in Part II of this Prospectus for a discussion
of these factors.

The Subaccounts (other than the Money Market Subaccounts)
may engage in certain aggressive investment techniques, which
may include engaging in short sales and transactions in
futures contracts and options on securities, stock indexes,
and futures contracts. As discussed more fully under
"Investment Objectives and Policies," "Special Risk
Considerations," and "Investment Techniques and Other
Investment Policies" in Part II of this Prospectus, these
techniques are specialized and involve risks that are not
traditionally associated with similar contracts.

Addition or Deletion of Subaccounts

Great American Reserve may, at its discretion, no longer
make available any of the Subaccounts shown on the Contract
Schedule. Great American Reserve may also offer additional
new Subaccounts.

ASSET ALLOCATION ADVISORY SERVICES

This Contract is designed for use with asset allocation
or market-timing investment advisory services provided by a
Financial Advisor. You should carefully consider: (a) the
nature and quality of the asset allocation services or any
other services proposed to be rendered by your Financial
Advisor or a prospective Financial Advisor; (b) the business
relationships of your Financial Advisor or affiliates of that
Financial Advisor with any entity that may be authorized to
offer Contracts or services on Great American Reserve's behalf
or on behalf of any of its affiliates or of PADCO or its
affiliates; and (c) the effects on your Contract at any time
your Financial Advisor dies, resigns, or is terminated.

PADCO will transfer your Separate Account Value into the
Money Market II Subaccount when PADCO receives notice of the
death of your Financial Advisor, when PADCO receives notice
from you or your Financial Advisor terminating the
relationship, or when PADCO receives notice from either a
court of competent jurisdiction or an applicable regulatory
authority terminating such relationship. Great American
Reserve will send you a notice not more than five business
days after receipt of information from PADCO that no Financial
Advisor is serving in relation to your Contract. This notice
will include a reminder that you will be required to notify
PADCO of the name of your new Financial Advisor and that until
you designate a new Financial Advisor, you may (i) keep your
Separate Account Value in the Money Market II Subaccount until
you appoint a new Financial Advisor, (ii) transfer all or part

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<PAGE>

of your Separate Account Value to the Fixed Account and become
subject to the Fixed Account transfer restrictions, or (iii)
surrender your Contract, subject to applicable withdrawal
charges and tax penalties.

Once the necessary regulatory approval has been obtained
from the Internal Revenue Service to permit the deduction of
the asset allocation advisory fee from your Contract, Great
American Reserve's only responsibility with respect to asset
allocation services will be to collect and remit this fee to
the Financial Advisor through PFS. See "Charges and
Deductions; Asset
Allocation Advisory Fee" on page __. Neither Great American
Reserve, PFS, nor PADCO bears responsibility for, or liability
in relation to, the activities of any Financial Advisor. The
payment of the asset allocation advisory fee does not imply an
endorsement of any particular Financial Advisor by Great
American Reserve, PFS, or PADCO. Great American Reserve will
not knowingly pay a fee to a Financial Advisor that is an
affiliate of Great American Reserve or an affiliate of PADCO
unless and until Great American Reserve receives permission to
do so from the SEC and any other applicable regulatory
authorities.

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<PAGE>

CHARGES AND DEDUCTIONS

Withdrawal Charge

The withdrawal charge, when applicable, permits Great
American Reserve to recover a portion of its expenses relating
to the sale of the Contract. Great American Reserve may
assess a withdrawal charge against the purchase payments when
the payments are withdrawn. Subject to certain state
variations, the withdrawal charge will be a specified
percentage of the sum of the purchase payments paid within
seven years prior to the date of withdrawal, adjusted for any
prior withdrawals. There is no charge on withdrawals of (a)
purchase payments that have been in the Contract more than
seven complete Contract years or (b) free withdrawal amounts
described below. The length of time from receipt of a
purchase payment to the time of withdrawal determines the
withdrawal charge. For the purpose of calculating the
withdrawal charge, withdrawals will be deemed made first from
purchase payments on a first-in, first-out basis and then from
any gain.

No withdrawal charge is applicable in the event of the
death of the Contract Owner (if the age of the Contract Owner
at death is less than 76) or if payments are made under an
annuity option provided for under the Contract that begins at
least five years after the effective date of the Contract and
is paid under any life annuity option, or any option with
payments for a minimum of five years. The withdrawal charge
equals:

Complete Years
Withdrawal Charge Since Receipt of Payment

7% 0
7% 1
6% 2
5% 3
4% 4
3% 5
2% 6
0% 7 and thereafter

In addition, in certain states the following
circumstances further limit or reduce withdrawal charges: for
issue ages up to 56, there is no withdrawal charge made after
you attain age 67 and later; for issue ages 57 and later, any
otherwise applicable withdrawal charge will be multiplied by a
factor ranging from 0.9 to 0 for Contract years one through
10.

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<PAGE>

A Contract Owner may make one free withdrawal per
contract year from Contract Value of an amount up to 10% of
the Contract Value (as determined on the date of receipt of
the withdrawal request). Additional withdrawals in excess of
that amount in any Contract year during the period when any
withdrawal charge is applicable will be subject to the
appropriate charge as set forth above.

Withdrawals which are authorized by you to remit the
asset allocation advisory fee to your Financial Advisor are
treated as free withdrawals, and are not counted toward the
10% limit, however, there may be certain adverse tax
consequences. (See "Federal Income Taxes--Asset Allocation
Advisory Fees" on page __.) In addition, with respect to any
Contract which is owned by a "charitable remainder unitrust"
or a "charitable remainder annuity trust" within the meaning
of Section 664(d) of the Code ("Charitable Remainder Trust"),
Great American Reserve may, in its discretion, permit an
additional free withdrawal necessary to fund required
distributions by the Charitable Remainder Trust in any
contract year. In order for a Charitable Remainder Trust to
qualify for such an increase, the trustee or trustees of the
Charitable Remainder Trust will be required to certify: (i)
that such trust is a bona fide "charitable remainder unitrust"
or a "charitable remainder annuity trust" within the meaning
of Section 664 of the Code, and that all amounts proposed to
be withdrawn will be used to make distributions required under
Section 664 of the Code for the year in which such amounts are
withdrawn or for a prior year; (ii) that the required
distribution exceeds the one free withdrawal of 10% of the
Contract Value which is permitted without a withdrawal charge;
and (iii) that the funds necessary to make the required
distribution could not otherwise be made available without
hardship to the trust or its beneficiaries. (See
"Withdrawals" on page __.)

Great American Reserve also reserves the right to reduce
the withdrawal charge under certain circumstances when sales
of Contracts are made to a trustee, employer, or similar party
pursuant to a retirement plan or similar arrangement for sales
of Contracts to a group of individuals if the program results
in a savings of sales expenses. The amount of reduction will
depend on such factors as the size of the group, the total
amount of purchase payments, and other factors that might tend
to reduce expenses incurred in connection with such sales.
This reduction will not be unfairly discriminatory to any
Contract Owner. For issue ages 76 or younger, no charge will
be imposed on any payment made due to death of the Contract
Owner. (See "Payment on Death" on page __.)

Great American Reserve's sales expenses relating to the
Contracts initially will be provided for out of its surplus.

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Withdrawal charges imposed on withdrawals from Contracts are
expected to recover only a portion of the sales expenses
relating to the Contract. Sales expenses not recovered
through the withdrawal charge will be recovered from Great
American Reserve's surplus.

Mortality and Expense Risk Charge

Great American Reserve assumes a mortality risk by virtue
of annuity rates in the Contract that cannot be changed.
Great American Reserve guarantees a minimum payment on the
death of the Contract Owner prior to the Annuity Date. (See
"Payment on Death" on page __.)

The expense risk Great American Reserve incurs is the
risk that the administrative fee, which is guaranteed not to
increase over the life of the Contract, will be insufficient
to cover Great American Reserve's actual expenses.

The mortality and expense risk charge, which is computed
and deducted on a daily basis from each Subaccount, is equal
to an annual rate of 1.25% of the daily net assets of each
Subaccount. If that amount is insufficient to cover the
actual cost of the mortality and expense risks, Great American
Reserve bears the loss. Conversely, if the amount proves more
than sufficient, the excess will be part of Great American
Reserve's surplus and can be used for any purpose including
payment of sales expenses not recovered through the withdrawal
charge.

Asset Allocation Advisory Fee

This Contract is sold only to Contract Owners who are
provided asset allocation or market-timing investment advisory
services by Financial Advisors to whom an asset allocation
advisory fee is paid equal to an annual rate of 1.75% of the
daily net assets of each Subaccount (except the Money Market
II Subaccount, which Subaccount is only available if no
Financial Advisor is performing services in relation to your
Contract). Upon receipt of a favorable ruling from the
Internal Revenue Service, Great American will deduct this fee
daily and remit quarterly to your Financial Advisor. If you
decide to change your Financial Advisor, you may select a new
Financial Advisor by executing a new power of attorney or
select one of the options discussed below. After PADCO
receives notification from you, your Financial Advisor, or a
court of competent jurisdiction or an applicable regulatory
authority of the death, resignation, or termination of your
Financial Advisor, it will (unless it concurrently receives

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the name of your new Financial Advisor), transfer all of your
Separate Account Value into the Money Market II Subaccount
where you will not be charged the asset allocation advisory
fee. Until you designate a new Financial Advisor, you may (i)
keep your Separate Account Value in the Money Market II
Subaccount, (ii) transfer all or part of your Separate Account
Value to the Fixed Account and become subject to Fixed Account
transfer restrictions (a maximum of 20% of the Fixed Account
Value may be transferred once in any six-month period), or
(iii) surrender your Contract, subject to applicable
withdrawal charges and tax penalties. PADCO maintains a list
of Financial Advisors, but does not recommend any particular
Financial Advisor. (See "Asset Allocation Advisory Fee" in
the "Federal Income Taxes" Section at page I-__).

Administrative Fee

Great American Reserve deducts an administrative fee from
each Subaccount to reimburse Great American Reserve for
administrative expenses. This charge is equal to an annual
rate of 0.15% of the daily net assets of each Subaccount. The
fee reimburses Great American Reserve for, among other
expenses, preparation of the Contracts, confirmations, annual
reports and statements, maintenance of Contract Owner records
and other Contract Owner servicing. This administrative fee
will not be deducted from the Fixed Account.

Investment Advisory Fee and Other Expenses

Each Subaccount pays investment advisory fees to PADCO.
Pursuant to an investment advisory agreement between the
Separate Account and PADCO, the Subaccounts pay PADCO fees at
an annual rate applied to the daily net assets of each
Subaccount. The Separate Account and the Subaccounts also
bear certain expenses incurred in their operations.
Information on the investment advisory fees and other expenses
payable by the Separate Account is set forth under "Management
of the Separate Account" in Part II of this Prospectus and
"Board of Managers of the Separate Account" in the Statement
of Additional Information.

Subaccount Administration Fee

The Subaccounts (other than the Money Market II
Subaccount) also pay Subaccount administration fees to the
Servicer. Pursuant to a subaccount administration agreement
between the Separate Account and the Servicer, the Subaccounts
pay Subaccount administration fees at an annual rate applied
to the daily net assets of each Subaccount. The Servicer
provides the Subaccounts with asset allocation administrative
services, including, among others, communications with
Financial Advisors (including receipt of and acting upon

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transfer requests), asset allocation bookkeeping,
determination of Accumulation Unit Values, and Subaccount
accounting services. Information on the Subaccount
administration fee payable by the Subaccounts is set forth
under "Management of the Separate Account" in Part II of this
Prospectus and "Board of Managers of the Separate Account" in
the Statement of Additional Information. The Money Market II
Subaccount does not pay any Subaccount administration fees.

Payments of Certain Charges and Deductions

The mortality and expense risk charge, the administrative
fee, the investment advisory fees, the asset allocation
advisory fee, and the Subaccount administration fee will be
computed for each day prior to the Annuity Date the Contract
is in force. The withdrawal charge will be deducted, when
applicable, from the Fixed Account and/or from each Subaccount
from which amounts are withdrawn.

Premium Taxes

Some states and municipalities impose a premium tax on
annuity purchase payments received by insurance companies.
These taxes may be deducted by Great American Reserve when
paid by Great American Reserve or at a later date. It is
currently Great American Reserve's practice to deduct premium
taxes at the time annuity payments begin or when amounts are
withdrawn. State premium taxes currently range from 0% to
3.5%.

Premium tax rates are subject to change by law,
administrative interpretations, or court decisions. Premium
tax amounts will depend on, among other things, your state of
residence, Great American Reserve's status within your state,
and the premium tax laws of your state.

DESCRIPTION OF THE CONTRACT

Purchase Payments

The minimum initial purchase payment for a Contract is
$25,000. The minimum subsequent purchase payment is $1,000.
Subsequent purchase payments may be paid at any time to the
Administrative Office. The maximum deposit without prior
approval from Great American Reserve is $500,000.

Application for a Contract or acceptance of the first
purchase payment is subject to Great American Reserve's
underwriting rules for such transactions. Great American
Reserve reserves the right to reject any application. A
properly-completed application that is accompanied by the

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initial purchase payment and all information necessary for the
processing of the application will be accepted within two
business days of Great American Reserve's receipt of the
properly- completed application (i.e., information sufficient
to permit Great American Reserve to determine to issue a
Contract). Great American Reserve may retain an initial
purchase payment for up to five business days while attempting
to obtain information sufficient to issue the Contract. If an
application is not completed properly and cannot be processed
and necessary information obtained within five business days,
Great American Reserve will inform you of the reasons for the
delay and offer to return your purchase payment unless you
consent to Great American Reserve retaining the initial
purchase payment until we have received the information we
require.

Changing Financial Advisors

You may change your Financial Advisor. However, prior to
a change taking effect the new Financial Advisor must satisfy
Great American Reserve and PADCO's requirements as set forth
in the Contract application and you must execute a new power
of attorney authorizing a Financial Advisor to provide asset
allocation advisory services with respect to your Contract.
Great American Reserve will notify you upon receipt of
notification from PADCO that PADCO has received notice
terminating the relationship, or if PADCO receives notice from
either a court of competent jurisdiction or the applicable
regulatory authority terminating such relationship. (See
"Asset Allocation Advisory Fee" on page _____.)

Accumulation Provisions

Accumulation Units

Purchase payments may be allocated to the Fixed Account
or the Separate Account. Initial purchase payments allocated
to the Separate Account will first be deposited in the Money
Market I Subaccount. During the first 14 days following the
Contract Date, no transfers are allowed. (See discussion
under "Eligible Investments" on page __.) After this 14-day
period, the Separate Account Value may be transferred to the
Subaccounts selected pursuant to instructions from the
Financial Advisor. Upon allocation, purchase payments are
converted into Accumulation Units for that Subaccount. The
number of Accumulation Units is determined by dividing the
amount allocated to the Subaccount by the dollar value of an
Accumulation Unit for that Subaccount for the Valuation Period
in which the purchase payment is received at Great American
Reserve's Administrative Office or, in the case of the initial
purchase payment in accordance with the procedures described

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above under "Purchase Payments." The number of Accumulation
Units will not change as a result of investment experience.

Value of an Accumulation Unit

For each Subaccount, the value of an Accumulation Unit
was arbitrarily set at $10 when the Subaccount was
established. The value of an Accumulation Unit may increase
or decrease from one Valuation Period to the next. The value
for any Valuation Period is determined by dividing the current
market value of total Subaccount assets, less liabilities, by
the total number of units of that Subaccount outstanding.

Valuation Periods

A Valuation Period is the interval from one valuation day
of any Subaccount to the next valuation day, measured from the
time each day the Subaccount is valued.

The Fixed Account

In addition to providing for the allocation of purchase
payments to the Separate Account, the Contract also provides
for allocation of purchase payments and transfer of Contract
Values to the Fixed Account, which accumulate at a guaranteed
interest rate and become part of Great American Reserve's
General Account. Fixed Annuity Cash Values increase based on
interest rates that may change from time to time. Great
American Reserve guarantees that it will credit daily interest
of at least 3% on an annual basis, compounded annually.
Purchase payments and transfers to the Fixed Account become
part of the general account of Great American Reserve. The
gains achieved or losses suffered by the Subaccounts have no
effect on the Fixed Account. The mortality and expense risk
charge, administrative fee, investment advisory fees, asset
allocation advisory fee, and the Subaccount administration
fee, discussed above are not deducted from the Fixed Account.
The interests of Contract Owners arising from the allocation
of purchase payments or the transfer of Contract Values to the
Fixed Account are not registered under the Securities Act of
1933. Great American Reserve's general account is not
registered as an investment company under the Investment
Company Act of 1940. Accordingly, the Fixed Account values
are not subject to the provisions that would apply if
registration under those acts were required.

Great American Reserve has been advised that the staff of
the SEC has not reviewed the disclosures in this Prospectus
that relate to the Fixed Account. Disclosures regarding the
Fixed Account and Great American Reserve's general account,
however, may be subject to certain generally applicable
provisions of the Federal securities laws relating to the

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accuracy and completeness of statements made in the
Prospectus.

Payment on Death

If a Contract Owner, or any Joint Contract Owner, dies
prior to the Annuity Date, Great American Reserve will pay to
the Beneficiary, upon receipt of due proof of death, the death
benefit representing the Contract Owner's interest in the
Contract. Upon the death of any Joint Contract Owner, the
surviving Joint Contract Owner, if any, will be treated as the
Beneficiary. The death benefit is the greater of the Contract
Value or the Purchase Payments on the date due proof of death
(as specified in your Contract) is received at Great American
Reserve's Administrative Office (minus any applicable
withdrawal charge if the age of the Contract Owner at death is
76 or greater). Upon Great American Reserve's receipt of
notification of a Contract Owner's death, the Separate Account
Value under the Contract will be transferred to the Money
Market II Subaccount. (See "Asset Allocation Advisory
Services" on page _____.) Payment will be in a lump sum
unless an annuity option is chosen. A Beneficiary other than
the surviving spouse of the deceased Contract Owner may choose
only an annuity option providing for full payout within five
years of death, or for the life or within the life expectancy
of the Beneficiary. The life or life expectancy option
generally must be chosen within one year of the Contract
Owner's death. If the surviving spouse of a deceased Contract
Owner is the beneficiary, he or she may choose to continue the
Contract in force after the Contract Owner's death. If so,
the surviving spouse must execute a new power of attorney in
order to appoint a Financial Advisor to provide asset
allocation advisory services. (For information regarding the
tax consequences of a lump sum annuity payment, see "Taxation
of Distributions" on page __.)

If the Contract Owner, or any Joint Contract Owner, who
is not the Annuitant, dies after the Annuity Date, any
remaining payments under the Annuity Option elected will
continue at least as rapidly as under the method of
distribution in effect at such Contract Owner's or Joint
Contract Owner's death. Upon the death of any Contract Owner
during the Annuity Period, the Beneficiary becomes the
Contract Owner. Upon the death of any Joint Contract Owner
during the Annuity Period, the surviving Joint Contract Owner,
if any, will be treated as the Primary Beneficiary. Any other
Beneficiary designation on record at the time of death will be
treated as a Contingent Beneficiary.

If the Contract Owner is not the Annuitant and the
Annuitant dies prior to the Annuity Date, the Contract will
continue in force on the same terms and the Contract Owner

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<PAGE>

shall thereafter be the Annuitant, unless another person is
designated by the Contract Owner to Great American Reserve's
Administrative Office within 30 days. If the Contract Owner
is not an individual, this paragraph shall not apply and the
first paragraph of this section shall apply as if the
Annuitant were the Contract Owner.

If the Annuitant dies after the Annuity Date, any
guaranteed amounts remaining unpaid will continue to be paid
pursuant to the annuity option in force at the date of death,
unless the Beneficiary chooses to receive the present value of
the remaining guaranteed payments in a lump sum. (See
"Annuity Provisions" on page __.)

Beneficiary

The Beneficiary and any Contingent Beneficiary are named
in the application. Unless the Beneficiary has been
irrevocably designated, the Beneficiary may be changed upon
written request to Great American Reserve's Administrative
Office. If acceptable to Great American Reserve, a change of
Beneficiary will take effect as of the date signed, unless
Great American Reserve has already acted in reliance on the
prior status. The estate or heirs of a Beneficiary who dies
before the annuity payment is due have no rights under the
Contract. If no Beneficiary survives when the annuity payment
is due, payment will be made to the Contract Owner's estate.

Ownership

The Contract Owner is the person entitled to all rights
under the Contract. The Annuitant is the Contract Owner
unless otherwise designated in the application or by
endorsement. No contingent owner may be named. Ownership of
the Contract may be transferred to a new Contract Owner. A
transfer of ownership must be in writing and a new power of
attorney to appoint a Financial Advisor must be executed.
These documents must be received by Great American Reserve's
Administrative Office before the transfer of ownership becomes
effective. Such a transfer of ownership does not affect a
designation of Beneficiary. Contracts may not be assigned,
pledged, or transferred, unless permitted by law. A
collateral assignment does not change contract ownership. The
rights of a collateral assignee have priority over the rights
of a Beneficiary. Any assignment may have adverse tax
consequences. You should consult a competent tax adviser
before making any such designations, transfers, or
assignments.

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<PAGE>

Account Transfers

Before the Annuity Date, Separate Account Value may be
transferred from one Subaccount (except the Money Market II
Subaccount) to another Subaccount (except the Money Market II
Subaccount) and/or to the Fixed Account. The Contract allows
an unlimited number of Subaccount transfers so long as a
Financial Advisor is performing services under the Contract.
Without the services of a Financial Advisor, your Separate
Account Value will be automatically transferred into the Money
Market II Subaccount, where you will not be charged an asset
allocation advisory fee. Until you designate a new Financial
Advisor, you may (i) keep your Separate Account Value in the
Money Market II Subaccount, (ii) transfer all or part of your
Separate Account Value to the Fixed Account and become subject
to Fixed Account transfer restrictions (a maximum of 20% of
the Fixed Account Value may be transferred once in any six-
month period), or (iii) surrender your Contract, subject to
applicable withdrawal charges and tax penalties. PADCO
maintains a list of Financial Advisors, but does not recommend
any particular Financial Advisor. (See "Asset Allocation
Advisory Fee" in the "Federal Income Taxes" Section at page I-
__).

Transfers may be made in writing or by telephone only
from your Financial Advisor directed to PADCO. By authorizing
PADCO to accept telephone transfer instructions, a Contract
Owner agrees to accept and be bound by the conditions and
procedures established by PADCO from time to time. PADCO has
instituted reasonable procedures to confirm that any
instructions communicated by telephone are genuine. All
telephone calls will be recorded, and the caller will be asked
to produce personalized data prior to PADCO's initiating any
transfer requests by telephone. Additionally, as with other
transactions, you will receive a written confirmation of your
transfer. If reasonable procedures are employed, neither
Great American Reserve, PFS, nor PADCO will be liable for
following telephone instructions which it reasonably believes
to be genuine. Transfer requests must be made by your
Financial Advisor acting pursuant to a power-of-attorney.

Transfer requests received by PADCO before 2:30 P.M.,
Eastern Time, with respect to the Bond and Juno Subaccounts,
before 3:15 P.M., Eastern Time, with respect to the Precious
Metals Subaccount, before 3:30 P.M., Eastern Time, with
respect to the Nova, Ursa, and OTC Subaccounts, and before
4:00 P.M., Eastern Time, with respect to the Money Market
Subaccounts and the Fixed Account will be initiated at the
close of business that day. For transfers involving different
transaction cut-off times, the earlier of these times applies.
Any request received later than these times will be initiated
at the close of business on the next business day.

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Withdrawals

Prior to the earlier of the Annuity Date or the death of
the Annuitant, you may withdraw all or part of your Contract
Value upon written request, less any charges. You may make
one free withdrawal per Contract year from Contract Value of
an amount up to 10% of the Contract Value (as determined on
the date of receipt of the requested withdrawal). There is no
charge on withdrawals of (a) purchase payments that have been
in the Contract more than seven complete Contract years or (b)
free withdrawal amounts described above. (See "Charges and
Deductions; Withdrawal Charge" and "Charges and Deductions;
Asset Allocation Advisory Fee.") A Contract Owner's election
to withdraw must be in writing. The election must be received
by Great American Reserve prior to the Annuity Date. Under
certain Qualified Plans, withdrawals by Contract Owners prior
to age
59 1/2 may be restricted and the consent of your spouse may be
required.

On receipt of a Contract Owner's election, Great American
Reserve will cancel the number of Accumulation Units necessary
to equal the dollar amount of the withdrawal plus any
applicable withdrawal charge. (See "Charges and Deductions"
on page __.) When making a partial withdrawal, the Contract
Owner must specify the Subaccounts from which the withdrawal
is to be made. Any withdrawals to remit the asset allocation
advisory fee to your Financial Advisor, if permitted, will be
deducted from the Subaccount with the largest balance.
Withdrawals and related charges will be based on values for
the Valuation Period in which the election (and the Contract,
if required) are received by written request at Great American
Reserve's Administrative Office. Withdrawal elections
received before 2:30 P.M., Eastern Time, will be initiated at
the close of business that day. The amount requested from a
Subaccount may not exceed the value of that Subaccount less
any applicable withdrawal charge.

A partial withdrawal must be at least $500, and the
remaining Contract Value must be at least $10,000 ($3,500 for
Qualified Contracts); otherwise Great American Reserve
reserves the right to treat the partial withdrawal as a total
withdrawal of the Contract Value. Payment of withdrawals may
be deferred (see "Suspension of Payments" below and "Federal
Income Taxes" on page __).

Suspension of or Deferral of Payments

Payment of withdrawals will normally be made within seven
days of Great American Reserve's receipt of a written request
for withdrawal. However, Great American Reserve reserves the
right to suspend or defer any withdrawal payment or transfer

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<PAGE>

of values if: (a) the NYSE, the Chicago Board of Trade (the
"CBOT"), or the Chicago Mercantile Exchange (the "CME"), as
appropriate, is closed (other than customary weekend and
holiday closings); (b) trading on the NYSE, the CBOT, or the
CME, as appropriate, is restricted; (c) an emergency
(including severe weather conditions) exists such that it is
not reasonably practical to dispose of securities held in the
Subaccounts or to determine the value of their assets; or (d)
the SEC by order so permits for the protection of security
holders. Conditions described in events (b) and (c) generally
will be decided by, or in accordance with, rules of the SEC.

Annuity Provisions

General

Annuity payments will be made to the Annuitant unless you
specify otherwise in writing. The Contract Owner may or may
not be the Annuitant. The choice is made by the Contract
Owner in the application.

Selection of Annuity Date and Annuity Options

You may select the Annuity Date and an annuity option in
the application. The Annuity Date may not be later than the
first day of the next month after the Annuitant's 90th
birthday or the maximum date permitted under state law. If
the issue age is 85 or greater, the Annuity Date may not be
later than the fifth Contract year. If no Annuity Date is
selected, then the latest possible Annuity Date will be
assumed. (For Qualified Contracts, the Annuity Date generally
may not be later than April 1 of the year after the year in
which the Annuitant attains age 70 1/2).

Change of Annuity Date or Annuity Option

You may change the Annuity Date or the annuity option
upon written notice received at Great American Reserve's
Administrative Office at least 30 days prior to the current
Annuity Date.

Annuity Options

You may select any one of the following annuity options
which currently are available on a fixed basis only or any
other option satisfactory to you and Great American Reserve.

First Option--Life Annuity. An Annuity payable monthly
during the lifetime of the Annuitant and ceasing with the last
monthly payment due prior to the death of the Annuitant. This
option offers a greater level of monthly payments than the
second option, since there is no minimum number of payments

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guaranteed (nor a provision for a death benefit payable to a
Beneficiary). It would be possible under this option to
receive only one annuity payment if the Annuitant died prior
to the due date of the second annuity payment. This option is
generally not available for Contract Owners annuitizing over
the age of 85.

Second Option--Life Annuity With Guaranteed Periods. An
Annuity payable monthly during the lifetime of the Annuitant
with the guarantee that if, at the death of the Annuitant,
payments have been made for less than 5, 10 or 20 years, as
elected, annuity payments will be continued during the
remainder of such period to the Beneficiary designated by the
Contract Owner. If no Beneficiary is designated, Great
American Reserve will, in accordance with the Contract
provisions, pay in a lump sum to the Annuitant's estate the
present value, as of the date of death, of the number of
guaranteed annuity payments remaining after that date,
computed on the basis of the assumed net investment rate used
in determining the first monthly payment. See "Determination
of Amount of the First Monthly Variable Annuity Payment"
below.

Because it provides a specified minimum number of annuity
payments, this option results in somewhat lower payments per
month than the First Option.

Third Option--Installment Refund Life Annuity. Payments
are made for the installment refund period, which is the time
required for the sum of the payments to equal the amount
applied, and thereafter for the life of the payee.

Fourth Option--Payments for a Fixed Period. Payments are
made for the number of years selected, which may be from three
through 20. Should the Annuitant die before the specified
number of monthly payments is made, the remaining payments
will be commuted and paid to the designated Beneficiary in a
lump sum payment.

Fifth Option--Joint and Survivor Annuity. Great American
Reserve will make monthly payments during the joint lifetime
of the Annuitant and a joint Annuitant. Payments will
continue during the lifetime of the surviving Annuitant and
will be computed on the basis of 100%, 50%, or 66 % of the
Annuity payment (or limits) in effect during the joint
lifetime.

Minimum Annuity Payments

Annuity payments will be made monthly. However, if any
payment would be less than $50, Great American Reserve may
change the frequency so payments are at least $50 each. If

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the net Contract Value to be applied at the Annuity Date is
less than $10,000 ($3,500 for Qualified Contracts), Great
American Reserve reserves the right to pay such amount in a
lump sum. For information regarding the tax consequences of a
lump sum payment, see "Taxation of Distributions" on page __.

Proof of Age, Sex, and Survival

Great American Reserve may require proof of age, sex, or
survival of any person upon whose continuation of life annuity
payments depend.

Notices and Elections

All notices and elections under the Contract must be in
writing, signed by the proper party, and be received at Great
American Reserve's Administrative Office to be effective,
except that account transfers may be made by telephone
pursuant to procedures specified above (see "Account
Transfers" at page __). Great American Reserve is not
responsible for the validity of any notices or elections. If
acceptable to Great American Reserve, notices or elections
relating to beneficiaries and ownership will take effect as of
the date signed unless Great American Reserve has already
acted in reliance on the prior status.

Amendment of Contract

At any time, Great American Reserve may amend the
Contract as required to make it conform with any law,
regulation, or ruling issued by any government agency to which
the Contract is subject.

Ten-Day Right to Review

Within 10 days of your receipt of an issued Contract you
may cancel the Contract by returning it to Great American
Reserve for cancellation. Great American Reserve deems this
period as ending 14 days after the Contract Date. This period
may be longer in certain states, as required. If the Contract
is returned under the terms of the Ten Day Right to Review,
Great American Reserve will refund either the Contract Value
or all your purchase payments within seven days in compliance
with State requirements, if any. Any amounts refunded in
excess of your Contract Value will be at Great American
Reserve's expense, not the expense of the Subaccounts.

FEDERAL INCOME TAXES

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<PAGE>

THE FOLLOWING DESCRIPTION IS BASED UPON GREAT AMERICAN
RESERVE'S UNDERSTANDING OF CURRENT FEDERAL INCOME TAX LAW
APPLICABLE TO ANNUITIES IN GENERAL. GREAT AMERICAN RESERVE
CANNOT PREDICT THE PROBABILITY THAT ANY CHANGES IN SUCH LAWS
WILL BE MADE. PURCHASERS ARE CAUTIONED TO SEEK COMPETENT TAX
ADVICE REGARDING THE TAXATION OF THE CONTRACTS. GREAT
AMERICAN RESERVE DOES NOT GUARANTEE THE TAX STATUS OF THE
CONTRACTS. PURCHASERS BEAR THE COMPLETE RISK THAT THE
CONTRACTS MAY NOT BE TREATED AS "ANNUITY CONTRACTS" UNDER
FEDERAL INCOME TAX LAWS. IT SHOULD BE FURTHER UNDERSTOOD THAT
THE FOLLOWING DISCUSSION IS NOT EXHAUSTIVE AND THAT SPECIAL
RULES NOT DESCRIBED IN THIS PROSPECTUS MAY BE APPLICABLE IN
CERTAIN SITUATIONS. MOREOVER, NO ATTEMPT HAS BEEN MADE TO
CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.

Asset Allocation Advisory Fees

An asset allocation advisory fee is not commonly found in
other variable annuities, so the income tax treatment of the
payment of the asset allocation advisory fee to a Financial
Advisor is not based on long-standing practice, but rather on
Great American Reserve's understanding of the law. The
Internal Revenue Service has previously issued favorable
letter rulings only with respect to certain contracts that
were being used in conjunction with Section 403(b) annuities.
Moreover, the Internal Revenue Service is not required to
treat the asset allocation advisory fee in the same way it has
treated other investment advisory fees in similar letter
rulings.

Pre-retirement distributions can disqualify a pension
plan, because such distributions are inconsistent with the
purpose of such a plan which is to provide a retirement
income, or a Section 403(b) tax-sheltered annuity, because
Section 403(b)(11) of the Code prohibits distributions from
such annuities under the circumstances described above. You
should consult with a competent tax counselor regarding the
use of the Contract in relation to such retirement plans.
Great American Reserve cannot take any responsibility for the
tax consequences resulting from additional or alternative
payment arrangements that may be made in relation to a
Contract used in or used in connection with such retirement
plans.

As of the date of this Prospectus, Great American Reserve
is requesting a letter ruling from the Internal Revenue
Service that payments to Financial Advisors need not be
treated as distributions to Contract Owners subject to tax.
There is no assurance that such a ruling will be issued. In
addition, even if such a ruling is issued, it is likely that
you will have a taxable distribution if your Financial Advisor
credits back to you or a related person any portion of the

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asset allocation advisory fee. Unless and until a favorable
letter ruling is obtained, Great American Reserve will be
required to treat asset allocation advisory fees paid from the
Contract as taxable distributions to the Contract Owner
subject to the 10% penalty tax if applicable. Great American
Reserve will take all steps which it believes are required in
relation to the reporting and withholding requirements under
the Code in connection with such payments. Contract Owners
should consult a competent tax adviser as to the tax treatment
of asset allocation advisory fees.

General

Section 72 of the Code governs the taxation of annuities
in general. A Contract Owner is not taxed on increases in the
value of a Contract until distribution occurs, either in the
form of a lump sum payment or as annuity payments under the
Annuity Option selected. For a lump sum payment received as a
total withdrawal (total surrender), the recipient is taxed on
the portion of the payment that exceeds the Contract Owner's
"investment in the Contract." For Non-Qualified Contracts,
the investment in the Contract is generally the Purchase
Payments, while for Qualified Contracts the investment in the
Contract may be zero. The taxable portion of the lump sum
payment is taxed at ordinary income tax rates.

For annuity payments, a portion of each payment in excess
of an exclusion amount is includible in taxable income. The
exclusion amount for payments based on a fixed annuity option
is determined by multiplying the payment by the ratio that the
investment in the Contract (adjusted for any period certain or
refund feature) bears to the expected return under the
Contract. Payments received after the investment in the
Contract has been recovered (i.e., when the total of the
excludible amounts equals the investment in the Contract) are
fully taxable. The taxable portion is taxed at ordinary
income tax rates. Contract Owners, Annuitants and
Beneficiaries under the Contracts should seek competent
financial advice about the tax consequences of any
distributions.

Great American Reserve is taxed as a life insurance
company under the Code. For federal income tax purposes, the
Separate Account is not a separate entity from Great American
Reserve and its operations form a part of Great American
Reserve.

Diversification

Section 817(h) of the Code imposes certain
diversification standards on the underlying assets of variable
annuity contracts. The Code provides that a variable annuity

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contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments
are not, in accordance with regulations prescribed by the
United States Treasury Department ("Treasury Department"),
adequately diversified. Disqualification of the Contract as
an annuity contract would result in the imposition of federal
income tax on the Contract Owner with respect to any earnings
allocable to the Contract prior to the receipt of payments
under the Contract. The Code contains a safe harbor provision
which provides that annuity contracts such as the Contracts
meet the diversification requirements if, as of the end of
each quarter, the underlying assets meet the diversification
standards for a regulated investment company and no more than
fifty-five percent (55%) of the total assets consist of cash,
cash items, U.S. Government securities, and securities of
other regulated investment companies. PADCO intends to manage
each of the Subaccounts in a manner that ensures that the
underlying investments of each Subaccount will remain
"adequately diversified" in accordance with the
diversification requirements of Section 817(h) of the Code.

On March 2, 1989, the Treasury Department issued
Regulations (Treas. Reg. Section 1.817-5), which established
diversification requirements for the investment portfolios
underlying variable contracts such as the Contract. The
Regulations amplify the diversification requirements for
variable contracts set forth in the Code and provide an
alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be
adequately diversified if: (1) no more than 55% of the value
of the total assets of the subaccount is represented by any
one investment; (2) no more than 70% of the value of the total
assets of the subaccount is represented by any two
investments; (3) no more than 80% of the value of the total
assets of the subaccount is represented by any three
investments; and (4) no more than 90% of the value of the
total assets of the subaccount is represented by any four
investments.

The Code provides that, for purposes of determining
whether or not the diversification standards imposed on the
underlying assets of variable contracts by Section 817(h) of
the Code have been met, each United States government agency
or instrumentality shall be treated as a separate issuer.

The Treasury Department has indicated that guidelines may
be issued concerning the extent to which variable annuity
contract owners may direct their investments to particular
divisions of a separate account. It is possible that if and
when such guidelines are issued, the Contract may need to be
modified to comply with such guidelines. For these reasons,
Great American Reserves the right to modify the Contract as

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necessary to prevent the Contract Owner from being considered
the owner of the assets of the Separate Account.

Multiple Contracts

The Code provides that multiple non-qualified annuity
contracts which are issued within a calendar year to the same
contract owner by one company or its affiliates are treated as
one annuity contract for purposes of determining the tax
consequences of any distribution. Such treatment may result
in adverse tax consequences including more rapid taxation of
the distributed amounts from such combination of contracts.
Contract Owners should consult a tax adviser prior to
purchasing more than one non-qualified annuity contract in any
calendar year.

Contracts Owned by Non-Natural Persons

Under Section 72(u) of the Code, the investment earnings
on premiums paid for the Contracts generally will be taxed
currently to the Contract Owner if the Contract Owner is a
non-natural person (e.g., a corporation, a trust, or certain
other entities). Such Contracts generally will not be treated
as annuities for federal income tax purposes. However, this
treatment is not applied to Contracts which are held by (a) a
trust or other entity as agent for a natural person; (b)
Qualified Plans; or (c) the estate of a decedent by reason of
the death of the decedent. Additionally, this treatment is
not applied to a Contract which is a qualified funding asset
for a structured settlement under Section 130(d) of the Code.
If the Contract Owner is a charitable remainder trust (a
CRT"), it is probable that the CRT will not be treated as
holding the Contract as an agent for a natural person. A CRT
is generally exempt from federal income tax, but the
provisions of Section 72(u) of the Code may affect the
computation and taxation of the distributions to the income
beneficiary. Purchasers should consult their own tax counsel
or other adviser before purchasing a Contract to be owned by a
non-natural person.

Tax Treatment of Assignments

An assignment or pledge of all or any portion of a
Contract may be treated as a taxable event. Any gain in the
Contract subsequent to the assignment may also be treated as
taxable income in the year in which it is earned. Contract
Owners should therefore consult competent tax advisers should
they wish to assign or pledge their Contracts.

Income Tax Withholding

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Section 3405(a) of the Code generally requires the payor
of certain "designated distributions" from (i) any pension,
profit-sharing, stock bonus, or other deferred compensation
plan, (ii) IRA, or (iii) annuity contract to withhold certain
taxes from its payments. Generally, amounts are withheld from
periodic payments at the same rate as wages and at the rate of
10% from non-periodic payments. If the payment of asset
allocation advisory fees are treated as distributions, but are
not treated as eligible rollover distributions, then such
distributions would be considered non-periodic payments and
subject to withholding at a rate of 10%. Subject to certain
exceptions, some of which are discussed immediately below,
Contract Owners may elect not to have such withholding apply
to designated distributions.

Effective January 1, 1993, certain distributions from
retirement plans qualified under Section 401 and 403(b)
annuity contracts which are not directly rolled over to
another eligible retirement plan or individual retirement
account or individual retirement annuity, are subject to a
mandatory 20% withholding for Federal income tax. The 20%
withholding requirement generally does not apply to: a) a
series of substantially equal payments made at least annually
for the life or life expectancy of the participant or joint
and last survivor expectancy of the participant and a
designated beneficiary or for a specified period of 10 years
or more; or b) distributions which are required minimum
distributions; or c) the portion of the distributions not
includible in gross income (i.e., return of after-tax
contributions).

If the payment of asset allocation advisory fees from
retirement plans qualified under Section 401 and Section
403(b) annuity contracts are treated as distributions, then
Great American Reserve believes that the payment of such fees
will be treated as "eligible rollover distributions," which
are subject to mandatory 20% withholding.

Furthermore, payments from Section 457 plans are wages
subject to mandatory regular income tax withholding, rather
than the pension withholding rules described above.

Participants should consult their own tax counsel or
other tax advisor regarding withholding requirements.

Tax Treatment of Withdrawals -- Non-Qualified Contracts

Section 72 of the Code governs treatment of distributions
from annuity contracts. It generally provides that if the
Contract Value exceeds the aggregate purchase payments made,
any amount withdrawn will be treated as coming first from the
earnings and then, only after the income portion is exhausted,

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as coming from the principal. Withdrawn earnings are
includible in gross income. It further provides that a ten
percent (10%) penalty generally will apply to the income
portion of any distribution. However, the penalty is not
imposed on amounts received: (a) on or after the taxpayer
reaches age 59 1/2; (b) after the death of the Contract Owner;
(c) if the taxpayer is totally disabled (as defined in Section
72(m)(7) of the Code); (d) in a series of substantially equal
periodic payments made not less frequently than annually for
the life (or life expectancy) of the taxpayer or for the joint
lives (or joint life expectancies) of the taxpayer and his or
her Beneficiary; or (e) which are allocable to purchase
payments made prior to August 14, 1982.

Qualified Plans

The Contracts offered by this Prospectus are designed to
be suitable for use under various types of qualified plans.
Generally, participants in a qualified plan are not taxed on
increases to the value of the contributions to the plan until
a distribution occurs, regardless of whether the plan assets
are held under an annuity contract. Taxation of the
participants in each qualified plan varies with the type of
plan and the terms and conditions of each specific plan.
Contract Owners, Annuitants and Beneficiaries are cautioned
that benefits under a qualified plan may be subject to the
terms and conditions of the plan regardless of the terms and
conditions of the Contract issued pursuant to the plan. Some
retirement plans are subject to distribution and other
requirements that are not incorporated into Great American
Reserve's administrative 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. Following
are general descriptions of the types of qualified plans,
although, at the present time, the Contract only is issued to
Tax-Sheltered Annuities and Individual Retirement Accounts.
The tax rules presented here are not exhaustive and are for
general informational purposes only. The tax rules regarding
qualified plans are very complex and will have differing
applications depending on individual facts and circumstances.
Each purchaser should obtain competent tax advice prior to
purchasing a Contract issued under a qualified plan.

Generally, Contracts issued pursuant to qualified plans
are not transferable except upon surrender or annuitization.
Various penalty and excise taxes may apply to contributions or
distributions made in violation of applicable limitations.
Furthermore, certain withdrawal penalties and restrictions may
apply to surrenders from Qualified Contracts. (See "Tax
Treatment of Withdrawals -- Qualified Contracts ".)

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A. Tax-Sheltered Annuities. Section 403(b) of the Code
permits the purchase of "tax-sheltered annuities" by public
schools and certain charitable, educational scientific
organizations described in Section 501(c)(3) of the Code.
These qualifying employers may make contributions to the
Contracts for the benefit of their employees. Such
contributions are not includible in the gross income of the
employees until the employees receive distributions from the
Contracts. The amount of contributions to the tax-sheltered
annuity is limited to certain maximums imposed by the Code.
Furthermore, the Code sets forth additional restrictions
governing such items as transferability, distributions,
nondiscrimination and withdrawals. (See "Tax Treatment of
Withdrawals-Qualified Contracts " and "Tax Sheltered
Annuities-Withdrawal Limitations" below.) Any employee should
obtain competent tax advice as to the suitability of such an
investment.

B. Individual Retirement Annuities. Section 408(b) of
the Code permits eligible individuals to contribute to an
individual retirement program known as an "Individual
Retirement Annuity" ("IRA"). Under applicable limitations,
certain amounts may be contributed to an IRA which will be
deductible from the individual's gross income. These IRAs are
subject to limitations on eligibility, contributions,
transferability and distributions. (See "Tax Treatment of
Withdrawals--Qualified Contracts" below.) Under certain
conditions, distributions from other IRAs and other qualified
plans may be rolled over or transferred on a tax-deferred
basis into an IRA. Sales of Contracts for use with IRAs are
subject to special requirements imposed by the Code, including
the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of
Contracts to be qualified as Individual Retirement Annuities
should obtain competent tax advice as to the tax treatment
suitability of such an investment.

C. Qualified Pension and Profit-Sharing Plans for
Corporations and Self-Employed Individuals. Sections 401(a)
and 403(a) of the Code permit employers to establish various
types of retirement plans for employees, and permit self-
employed individuals to establish retirement plans for
themselves and their employees which qualify for special
federal income tax treatment. These retirement plans may
permit the purchase of the Qualified Contracts to provide
benefits under the plans. The Code sets forth restrictions on
contributions and distributions which depend on the design of
the specific plan. Any purchaser should obtain competent tax
advice as to the suitability of such an investment.

D. Section 457 Plans. Section 457 of the Code provides
for certain deferred compensation plans which qualify for

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special federal income tax treatment and which may be offered
with respect to service for state governments, local
governments, political subdivisions, agencies,
instrumentalities, certain affiliates of such entities, and
tax exempt organizations. The plans may permit participants
to specify the form of investment for their deferred
compensation account. All investments are owned by the
sponsoring employer and are subject to the claims of the
general creditors of the employer. The Code sets forth
restrictions on contributions and distributions which depend
on the design of the specific plan. Any purchaser should
obtain competent tax advice as to the suitability of such an
investment.

Tax Treatment of Withdrawals -- Qualified Contracts

In the case of a withdrawal under a Qualified Contract
other than a Section 457 Plan, a ratable portion of the amount
received is taxable, generally based on the ratio of the
individual's cost basis to the individual's total accrued
benefit under the retirement plan. Special tax rules may be
available for certain distributions from a Qualified Contract.
Section 72(t) of the Code imposes a 10% penalty tax on the
taxable portion of any distribution from qualified plans,
including Contracts issued and qualified under Code Sections
403(b) (Tax-Sheltered Annuities) and 408(b) (Individual
Retirement Annuities). To the extent amounts are not
includible in gross income because they have been rolled over
to an IRA or to another eligible qualified plan, no tax
penalty will be imposed. The tax penalty will not apply to
the following distributions: (a) if any distribution is made
on or after the date on which the Contract Owner or Annuitant
(as applicable) reaches age 59 1/2; (b) distributions
following the death or disability of the Contract Owner or
Annuitant (as applicable) (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (c) after separation
from service, distributions that are part of substantially
equal periodic payments made not less frequently than annually
for the life (or life expectancy) of the Contract Owner or
Annuitant (as applicable) or the joint lives (or joint life
expectancies) of such Contract Owner or Annuitant (as
applicable) and his or her designated Beneficiary; (d)
distributions to an Contract Owner or Annuitant (as
applicable) who has separated from service after he or she has
attained age 55; (e) distributions made to the Contract Owner
or Annuitant (as applicable) to the extent such distributions
do not exceed the amount allowable as a deduction under Code
Section 213 to the Contract Owner or Annuitant (as applicable)
for amounts paid during the taxable year for medical care; and
(f) distributions made to an alternate payee pursuant to a
qualified domestic relations order. The exceptions stated in
(d), (e) and (f) above do not apply in the case of an

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Individual Retirement Annuity. The exception stated in (c)
above applies to an Individual Retirement Annuity without the
requirement that there be a separation from service.

Generally, distributions from a qualified plan must
commence no later than April 1 of the calendar year, following
the year in which the employee attains age 70 1/2. Required
distributions must be made over a period not exceeding the
life expectancy of the individual or the joint lives or life
expectancies of the individual and his or her designated
beneficiary. If the required minimum distributions are not
made, a 50% penalty tax is imposed as to the amount not
distributed. In addition, distributions in excess of $150,000
per year may be subject to an additional 15% excise tax unless
an exemption applies.

Tax-Sheltered Annuities -- Withdrawal Limitations

Section 403(b)(11) of the Code limits the withdrawal of
amounts attributable to contributions made pursuant to a
salary reduction agreement to circumstances only on or after
the Contract Owner: (1) attains age 59 1/2; (2) separates
from service; (3) dies; (4) becomes disabled (within the
meaning of Section 72(m)(7) of the Code); or (5) in the case
of hardship. However, withdrawals for hardship are restricted
to the portion of the Contract Owner's Contract Value which
represents contributions made by the Contract Owner and does
not include any investment results. The limitations on
withdrawals became effective on January 1, 1989 and apply only
to salary reduction contributions made after December 31,
1988, to income attributable to such contributions and to
income attributable to amounts held as of December 31, 1988.
The limitations on withdrawals do not affect transfers between
certain qualified plans. Contract Owners should consult their
own tax counsel or other tax adviser regarding any
distributions.

SEPARATE ACCOUNT VOTING RIGHTS

Prior to the Annuity Date, Contract Owners participating
in the Separate Account will have certain voting rights with
respect to (i) the election of the Managers, (ii) the removal
of such members and of officers of the Separate Account
elected or appointed by the Managers, (iii) the ratification
of the selection by the Managers of independent public
accountants for the Separate Account and the termination of
the employment of such accountants, (iv) the adoption,
amendment, termination, or continuation of any agreement

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<PAGE>

providing for investment advisory services to the Separate
Account, (v) the change in the fundamental investment policies
of a Subaccount, (vi) the alteration, amendment, or repeal of
the rules and regulations adopted for the Separate Account,
and (vii) the approval of any acts, transactions, or other
agreements that may be submitted to a Contract Owner vote by
the Managers. Such voting rights are provided for in the rules
and regulations adopted by the Managers and are subject to
alteration or elimination by the Managers or by vote of the
Contract Owners, if permitted by applicable law.

The person having the voting interest under a Contract is
the Contract Owner. The number of votes entitled to be cast
by a Contract Owner having an interest in the Separate Account
is equal to the number of Accumulation Units credited to his
or her Contract. The number of Accumulation Units for which
voting instructions may be given will be determined as of a
date chosen by Great American Reserve, not more than 90 days
prior to the meeting of the Contract Owners of the Separate
Account, as applicable.

Each person having a voting interest in a Subaccount will
receive periodic reports relating to the Subaccounts in which
he or she has an interest, including proxy materials and a
form with which to give voting instructions.

REPORTS TO CONTRACT OWNERS

Great American Reserve will mail you at least annually
prior to the Annuity Date a report containing any information
that may be required by any applicable law or regulation and a
statement showing your current number of Accumulation Units,
the value per Accumulation Unit, and your total Contract
Value. You will also receive annual and semi-annual reports
of the Separate Account.

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<PAGE>

PERFORMANCE INFORMATION

Performance information for the Subaccounts may appear
from time to time in advertisements or sales literature.
Performance information reflects only the performance of a
hypothetical investment in the Subaccounts during the
particular time period on which the calculations are based.
Performance information will include yield, effective yield,
and average annual total return quotations reflecting the
deduction of all applicable charges for recent one-year and,
when applicable, five- and 10-year periods and, where less
than 10 years, for the period subsequent to the date each
Subaccount first became available for investment. Additional
total return quotations may be made that do not reflect a
surrender charge deduction (assuming no surrender at the end
of the illustrated period). Performance information may be
shown by means of schedules, charts, or graphs. Past
performance information is based on historical earnings and is
not intended to indicate future performance. See "Performance
Information," "Calculation of Return Quotations," and
"Information on Computation of Yield" in the Statement of
Additional Information for a description of the methods used
to determine total return and yield information for the
Subaccounts.

DISTRIBUTION OF CONTRACTS

PFS, 6116 Executive Boulevard, Rockville, Maryland 20852,
is the principal underwriter of the Contracts. PFS is a
broker-dealer registered under the Securities Exchange Act of
1934, as amended (the "1934 Act"), and a member of the
National Association of Securities Dealers, Inc. Sales of the
Contracts will be made by authorized broker-dealers and their
registered representatives, including registered
representatives of PFS. These registered representatives are
also Great American Reserve's licensed insurance agents. See
"Underwriter of the Contracts" in the Statement of Additional
Information for more information.

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STATE REGULATION

Great American Reserve is subject to the laws of the
State of Texas governing insurance companies and to the
regulations of the Texas Insurance Department (the "Insurance
Department"). An annual statement in the prescribed form is
filed with the Insurance Department each year covering Great
American Reserve's operation for the preceding year and its
financial condition as of the end of such year. Regulation by
the Insurance Department includes periodic examination to
determine Great American Reserve's contract liabilities and
reserves so that the Insurance Department may certify that
these items are correct. Great American Reserve's books and
accounts are subject to review by the Insurance Department at
all times. A full examination of Great American Reserve's
operations is conducted periodically by the National
Association of Insurance Commissioners. Such regulation does
not, however, involve any supervision of management or Great
American Reserve's investment practices or policies. In
addition, Great American Reserve is subject to regulation
under the insurance laws of other jurisdictions in which it
operates.

LEGAL PROCEEDINGS

There are no legal proceedings to which the Separate
Account is a party or to which the assets of the Separate
Account is subject. Neither Great American Reserve, PADCO nor
PFS is involved in any litigation that is of material
importance in relation to their total assets or that relates
to the Separate Account.

EXPERTS

The financial statements of Great American Reserve
Insurance Company included in the Statement of Additional
Information have been audited by Coopers & Lybrand LLP,
Indianapolis, Indiana, independent certified public
accountants, whose reports thereon appear elsewhere therein,
and have been included in reliance on the reports of Coopers &
Lybrand LLP, given upon their authority as experts in
accounting and auditing. No financial statements for the
Separate Account are included in the Statement of Additional
Information because the Separate Account had not commenced
operations at the date of this Prospectus.

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REGISTRATION STATEMENT

A registration statement has been filed with the SEC
under the Securities Act of 1933, as amended, with respect to
the variable portion of the Contracts. This Prospectus does
not contain all information set forth in the registration
statement, its amendments, and exhibits, to all of which
reference is made for further information concerning the
Separate Account, Great American Reserve, and the Contract.
Statements contained in this Prospectus as to the content of
the Contract and other legal instruments are summaries. For a
complete statement of the terms thereof, reference is made to
such instruments as filed.

LEGAL MATTERS

Legal matters involving the applicability of the Federal
securities laws have been reviewed by Jorden Burt Berenson &
Johnson LLP, Suite 400 East, 1025 Thomas Jefferson Street,
N.W., Washington, D. C. 20007, and, the validity of the
Contracts under state law has been passed upon by Karl W.
Kindig, Esquire, Great American Reserve Insurance Company,
11815 North Pennsylvania Street, Carmel, Indiana 46032.

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PART II

THE SEPARATE ACCOUNT

The Separate Account is an open-end management investment
company with eight diversified separate Subaccounts. The
Subaccounts are designed for Contract Owners who intend to
invest in the Subaccounts as part of an asset allocation or
market-timing investment strategy. Except for the Money
Market Subaccounts, each Subaccount is intended to provide
investment exposure with respect to a particular segment of
the securities markets. Each of these Subaccounts seeks
investment results that correspond over time to a specified
benchmark. The Subaccounts may be used independently or in
combination with each other as part of an overall investment
strategy. Additional Subaccounts may be created from time to
time.

The following are the Subaccounts and their investment
objectives:

Subaccount Investment Objective

The Nova Subaccount To provide investment returns that
correspond to a specified percentage
of the performance of a benchmark for
common stock securities.

The Ursa Subaccount To provide investment results that
will inversely correlate to the
performance of a benchmark for common
stock securities.

The OTC Subaccount To attempt to provide investment
results that correspond to the
performance of a benchmark for over-
the-counter securities.
The Precious Metals To attempt to provide investment
Subaccount results that correspond to the
performance of a benchmark primarily
for metals-related securities.

The U.S. Government To provide investment results that
Bond correspond to the performance of a
Subaccount benchmark for U.S. Government
securities.

The Money Market To provide current income consistent
Subaccounts with stability of capital and
liquidity.

The Subaccounts (other than the Money Market Subaccounts)
may engage in certain aggressive investment techniques, which
include short sales and transactions in options and futures
contracts. Contract Owners invested in the Nova Subaccount
may experience substantial losses during sustained periods of
falling equity prices, while Contract Owners invested in the
Ursa Subaccount and the Juno Subaccount may experience
substantial losses during sustained periods of rising equity
prices and declining interest rates respectively. Because of
the inherent risks in any investment, there can be no
assurance that any Subaccount s investment objective will be
achieved. See "Investment Objectives and Policies" at page
___.

None of the Subaccounts alone constitutes a balanced
investment plan, and certain of the Subaccounts involve
special risks not traditionally associated with variable
annuity contracts. The nature of the Subaccounts generally
will result in significant portfolio turnover which would
likely cause higher expenses and additional costs. The
Separate Account is not intended for Contract Owners whose
principal objective is current income or preservation of
capital and may not be a suitable investment for persons who
intend to follow an "invest and hold" strategy. See "Special
Risk Considerations" at page ___.

PADCO, headquartered at 6116 Executive Boulevard,
Rockville, Maryland 20852, provides the Subaccounts with
investment advisory services pursuant to an investment
advisory agreement, dated ______________, 1996. PADCO was
incorporated in the State of Maryland on July 5, 1994, and has
not previously served as an investment adviser to a registered
investment company. An investment adviser affiliated with
PADCO currently provides investment advisory services to an
open-end management investment company (the "Rydex Series
Trust") that consists of seven publicly-available no-load
mutual funds having, as of April 1, 1996, aggregate net assets
in excess of $750 million.

This Part II of the Prospectus sets forth information
relating to the Separate Account, particularly information on
the investment objectives, policies, and restrictions of the
Subaccounts and on PADCO. Additional information concerning
the Separate Account and the Subaccounts is also contained in
the Statement of Additional Information.

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<PAGE>

INVESTMENT OBJECTIVES AND POLICIES
OF THE SUBACCOUNTS

General

The Subaccounts are designed for Contract Owners who
intend to follow an asset allocation or market-timing
investment strategy. Except for the Money Market Subaccounts,
each Subaccount is intended to provide investment exposure
with respect to a particular segment of the securities
markets. These Subaccounts seek investment results that
correspond over time to a specified "benchmark." The
Subaccounts may be used independently or in combination with
each other as part of an overall investment strategy.
Additional Subaccounts may be created from time to time.

Fundamental securities analysis is not generally used by
PADCO in seeking to correlate with the respective benchmarks.
Rather, PADCO primarily uses statistical and technical
analysis to determine the investments the Subaccount makes and
techniques it employs. While PADCO attempts to minimize any
"tracking error" (that statistical measure of the difference
between the investment results of a Subaccount and the
performance of its benchmark), certain factors will tend to
cause the Subaccount's investment results to vary from a
perfect correlation to its benchmark. PADCO does not expect
that the Subaccounts' total returns will vary adversely from
their respective current benchmarks by more than ten percent
over a year. See "Special Risk Considerations." It is the
policy of these Subaccounts to pursue their investment
objectives regardless of market conditions, to remain nearly
fully invested, and not to take defensive positions.

The investment objectives and certain investment
restrictions of the Subaccounts are fundamental policies and
may not be changed without the affirmative vote of the
majority of the Contract Owners of that Subaccount. All other
investment policies of the Subaccounts not specified as
fundamental (including the benchmarks of the Subaccounts) may
be changed by the Managers of the Separate Account without the
approval of Contract Owners.

None of the Subaccounts will invest 25% or more of the
value of the Subaccount s total assets in the securities of
one or more issuers conducting their principal business
activities in the same industry; except, that to the extent
that the benchmark index selected for a particular Subaccount
is concentrated in a particular industry, that Subaccount will
be concentrated in that industry, but will not otherwise be
concentrated.

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<PAGE>

The Managers may consider changing a Subaccount s
benchmark (to the extent permitted) if, for example, the
current benchmark is unavailable; the Managers believe the
current benchmark no longer serves the investment needs of a
majority of Contract Owners or another benchmark better serves
their needs; or the financial or economic environment makes it
difficult for the Subaccount s investment results to
correspond sufficiently to the Subaccount's current benchmark.
If believed appropriate, the Managers may specify a benchmark
for a Subaccount that is "leveraged" or proprietary. Of
course, there can be no assurance that a Subaccount will
achieve its objective.

The Nova Subaccount

The investment objective of the Nova Subaccount is to
provide investment returns that correspond to a specified
percentage of the performance of a benchmark for common stock
securities selected from time to time by the Managers. The
Nova Subaccount's current benchmark is the S&P500 Index, and
the Nova Subaccount currently expects to provide investment
returns that correspond to 125% of the performance of the
S&P500 Index. In attempting to achieve its objective, the
Nova Subaccount expects that a substantial portion of its
assets usually will be devoted to employing certain investment
techniques. These techniques include engaging in certain
transactions in stock index futures contracts, options on
stock index futures contracts, and options on securities and
stock indexes. Under the techniques in which the Nova
Subaccount engages, the Nova Subaccount will generally incur a
loss if the price of the underlying security or index
decreases between the date of the employment of the technique
and the date on which the Nova Subaccount terminates the
position. The amount of any gain or loss on an investment
technique may be affected by any purchase payment or amounts
in lieu of dividends or interest income the Nova Subaccount
pays or receives as the result of the transaction. The Nova
Subaccount may also invest in shares of individual securities
which are expected to track the Nova Fund s benchmark.

In contrast to returns on a mutual fund that seeks to
approximate the return of the S&P500 Index, the Nova
Subaccount should increase gains to Contract Owners invested
in the Nova Fund during periods when the prices of the
securities in the S&P500 Index are rising and increase losses
to Contract Owners invested in the Nova Fund during periods
when they are declining. Contract Owners invested in the Nova
Subaccount could experience substantial losses during
sustained periods of falling equity prices.

The Ursa Subaccount

II-4
<PAGE>

The Ursa Subaccount's investment objective is to provide
investment results that will inversely correlate to the
performance of a benchmark for common stock securities
selected from time to time by the Managers. The S&P500 Index
is the Ursa Subaccount's current benchmark. The Ursa
Subaccount seeks to achieve this inverse correlation result on
each trading day. While a close correlation can be achieved
on any single trading day, the combined effects of the
reinvestment of the receipt of investment income and of the
compounding of successive changes in Accumulation Unit Value
can cause the percentage increase or decrease in the
Accumulation Unit Value of the Ursa Subaccount to diverge
significantly from the concurrent inverse percentage decrease
or increase in the S&P500 Index.

If the Ursa Subaccount achieved a perfect inverse
correlation for any single trading day, the Accumulation Unit
Value of the Ursa Subaccount would increase for that day in
direct proportion to any decrease in the level of the S&P500
Index. Conversely, the Accumulation Unit Value of the Ursa
Subaccount would decrease for that day in direct proportion to
any increase in the level of the S&P500 Index for that day.
For example, if the S&P500 Index were to increase by 1% by the
close of business on a particular trading day, Contract Owners
invested in the Ursa Subaccount would experience a loss in
Accumulation Unit Value of approximately 1% for that day.
Conversely, if the S&P500 Index were to decrease by 1% by the
close of business on a particular trading day, Contract Owners
invested in the Ursa Subaccount would experience a gain in
Accumulation Unit Value of approximately 1% for that day.

Even if there is a perfect inverse correlation between
the Ursa Subaccount and the S&P500 Index, however, the
symmetry between the changes in the S&P500 Index and the
changes in the Accumulation Unit Value in the Ursa Subaccount
can be significantly altered over time by a compounding
effect. Thus, if the Ursa Subaccount achieved a perfect
inverse correlation with the S&P500 Index on every trading day
over an extended period, and if there were a significant
decrease in the level of the S&P500 Index during that period,
there would be a compounding effect with the result that the
Accumulation Unit Value of the Ursa Subaccount for that period
should generally increase by a percentage that is slightly
greater than the percentage of decrease in the level of the
S&P500 Index. Conversely, if a perfect inverse correlation
were maintained over an extended period and if there were a
significant increase in the level of the S&P500 Index over
that period, then there would be a compounding effect with the
result that the percentage decrease in the Accumulation Unit
Value of the Ursa Subaccount for that period should generally
decrease by a percentage that is slightly less than the

II-5
<PAGE>

percentage increase in the level of the S&P500 Index for that
period.

The compounding effect discussed above will be reinforced
to the extent that the reinvested net investment income of the
Ursa Subaccount exceeds the reinvested dividend income taken
into account in the computation of the S&P500 Index.
Conversely, if the reinvested income taken into account in the
computation of the S&P500 Index exceeds the Ursa Subaccount's
investment income, that excess will partially offset the
effect of the compounding factor.

The Ursa Subaccount involves special risks not
traditionally associated with annuity contracts, and intends
to pursue its investment objective regardless of market
conditions and does not intend to take defensive positions in
anticipation of rising equity prices. Consequently, Contract
Owners invested in the Ursa Subaccount may experience
substantial losses during sustained periods of rising equity
prices.

In pursuing its investment objective, the Ursa Subaccount
generally does not invest in traditional securities, such as
common stock of operating companies. Rather, the Ursa
Subaccount employs certain investment techniques, including
engaging in short sales and in certain transactions in stock
index futures contracts, options on stock index futures
contracts, and options on securities and stock indexes. Under
these techniques, the Ursa Subaccount will generally incur a
loss if the price of the underlying security or index
increases between the date of the employment of the technique
and the date on which the Ursa Subaccount terminates the
position. The Ursa Subaccount will generally realize a gain
if the underlying security or index declines in price between
those dates. The amount of any gain or loss on an investment
technique may be affected by any purchase payment or amounts
in lieu of dividends or interest the Ursa Subaccount pays or
receives as the result of the transaction.

The OTC Subaccount

The investment objective of the OTC Subaccount is to
attempt to provide investment results that correspond to the
performance of a benchmark for over-the-counter securities.
The OTC Subaccount's current benchmark is the NASDAQ 100
Index. The OTC Subaccount does not aim to hold all of the 100
securities included in the NASDAQ 100 Index. Instead, the OTC
Subaccount intends to hold representative securities included
in the NASDAQ 100 Index or other instruments which PADCO
believes will provide returns that correspond to those of the
NASDAQ 100 Index. The OTC Subaccount may engage in
transactions on stock index futures contracts, options on

II-6
<PAGE>

stock index futures contracts, and options on securities and
stock indexes.

Companies whose securities are traded on the over-the-
counter ("OTC") markets generally are smaller market-
capitalization or newer companies than those listed on the New
York Stock Exchange (the "NYSE") or the American Stock
Exchange (the "AMEX"). OTC companies often have limited
product lines, or relatively new products or services, and may
lack established markets, depth of experienced management, or
financial resources and the ability to generate funds. The
securities of these companies may have limited marketability
and may be more volatile in price than securities of larger-
capitalized or more well-known companies. Among the reasons
for the greater price volatility of securities of certain
smaller OTC companies are the less certain growth prospects of
comparably smaller firms, the lower degree of liquidity in the
OTC markets for such securities, and the greater sensitivity
of smaller-capitalized companies to changing economic
conditions than larger-capitalized, exchange-traded
securities. Conversely, because many of these OTC securities
may be overlooked by investors and undervalued in the
marketplace, there is potential for significant capital
appreciation.

The Precious Metals Subaccount

The investment objective of the Precious Metals
Subaccount is to attempt to provide investment results that
correspond to the performance of a benchmark primarily for
metals-related securities selected from time to time by the
Managers. The Precious Metals Subaccount s current benchmark
is the Philadelphia Stock Exchange Gold/Silver Index (the
"XAU Index"). To achieve its objective, the Precious Metals
Subaccount invests in securities included in the XAU Index.
In addition, the Precious Metals Subaccount may invest in
other securities that are expected to perform in a manner that
will assist the Precious Metals Subaccount s performance to
track closely the XAU Index.

Metals-related investments are considered speculative and
are influenced by a host of world-wide economic, financial,
and political factors. Historically, the prices of gold and
precious metals have been subject to wide price movements
caused by political as well as economic factors, and,
accordingly, prices of equity securities of companies involved
in the precious metals-related industry have been volatile.
Such fluctuation and volatility may be due to changes in
inflation or in expectations regarding inflation in various
countries, the availability of supplies of such precious
metals and minerals, changes in industrial and commercial
demand, metal and mineral sales by governments, central banks,

II-7
<PAGE>

or international agencies, investment speculation, monetary
and other economic policies of various governments, and
governmental restrictions on the private ownership of certain
precious metals and minerals. Such price volatility in
precious metals prices will have a similar effect on the
Precious Metals Subaccount's Accumulation Unit prices. The
Precious Metals Subaccount may invest in other securities that
are expected to perform in a manner that will assist the
Precious Metals Subaccount s performance to closely track the
XAU Index.

The Precious Metals Subaccount may invest up to 5% of its
assets in securities of foreign issuers other than American
Depository Receipts traded in U.S. dollars on United States
exchanges. These securities present certain risks not present
in domestic investments and expose the investor to general
market conditions which differ significantly from those in the
United States. Securities of foreign issuers may be affected
by the strength of foreign currencies relative to the U.S.
dollar or by political or economic developments in foreign
countries. Foreign companies may not be subject to accounting
standards or governmental regulations comparable to those that
affect United States companies, and there may be less public
information about the operations of foreign companies.
Foreign securities also may be subject to foreign government
taxes that could reduce the yield on such securities.

The U.S. Government Bond Subaccount

The investment objective of the Bond Subaccount is to
provide investment results that correspond to the performance
of a benchmark for U.S. Government Securities selected from
time to time by the Managers. The Bond Subaccount s current
benchmark is 120% of the price movement of the Current Long
Treasury Bond (the "Long Bond"), without consideration of
interest paid. In attempting to achieve this objective, the
Bond Subaccount invests primarily in obligations of the U.S.
Treasury or obligations either issued or guaranteed, as to
principal and interest, by agencies or instrumentalities of
the U.S. Government ("U.S. Government Securities"). U.S.
Government Securities are obligations of the U.S. Treasury or
obligations either issued or guaranteed, as to principal and
interest, by agencies or instrumentalities of the U.S.
Government.

The Bond Subaccount also may engage in transactions in
futures contracts and options on futures contracts on U.S.
Treasury bonds. The Bond Subaccount also may invest in U.S.
Treasury zero coupon bonds. While U.S. Government Securities
provide substantial protection against credit risk, investment
in those securities do not protect against price changes due
to changing interest rate levels and, as such, the unit price

II-8
<PAGE>

of the Bond Subaccount is not guaranteed and will fluctuate
over time. Accordingly, the return of the Bond Subaccount
should move inversely with movements in prevailing interest
rates on the Long Bond. The Subaccount intends to adjust its
portfolio each time the Long Bond is issued (currently twice
yearly) in an attempt to track the price movement of the
newly-issued Long Bond. See "The Benchmarks."

The Juno Subaccount

The Juno Subaccount s investment objective is to provide
total return before expenses and costs that inversely
correlates to the price movements of a benchmark debt
instrument or futures contract on a specified debt instrument
selected from time to time by the Managers. The Long Bond has
been designated as the Juno Subaccount s current benchmark.
In attempting to achieve its objective, the Subaccount intends
to devote its assets primarily to employing certain investment
techniques, including engaging in short sales on U.S. Treasury
bonds and engaging in transactions in futures contracts on
U.S. Treasury bonds and options on such contracts to produce
synthetic short positions. These techniques are highly
specialized and involve certain risks not traditionally
associated with variable annuity contracts. Under these
techniques, the Subaccount will generally incur a loss if the
price of the underlying security or futures contract increases
between the date of the employment of the technique and the
date on which the Subaccount terminates the position. The
Subaccount will generally realize a gain if the underlying
security or futures contract declines in price between those
dates.

If the Juno Subaccount is successful in meeting its
objective, the Juno Subaccount s total return before expenses
and costs will increase proportionally to any decreases in the
price of the Long Bond. Conversely, the Juno Subaccount s
total return before expenses and costs will decrease
proportionally to any increases in the price of the Long Bond.
For this purpose, costs include the Subaccount s "carrying
cost" in maintaining short positions. When entering an actual
or synthetic short position on the Long bond, the Subaccount
must effectively pay interest equal to interest accrued on the
underlying U.S. Treasury bond. The difference, if any,
between the interest effectively paid by the Subaccount on its
short positions and any interest earned by the Subaccount on
its assets is the Subaccount s carrying cost.

The interest rate on a U.S. Treasury bond is set at the
time the particular bond is issued and does not change for the
maturity of the bond so that the interest paid on the bond is
constant throughout the life of the bond. The price at which
a previously-issued U.S. Treasury bond can be bought and sold

II-9
<PAGE>

in the open market, however, does change. The market value of
U.S. Treasury bonds rises when interest rates in general
decrease and falls when interest rates in general increase.
Accordingly, if the Juno Subaccount is successful in meeting
its investment objective, the Subaccount s total return should
rise with increases in interest rates and fall with decreases
in interest rates. Contract Owners invested in the Juno
Subaccount may experience substantial losses during periods of
falling interest rates.

The Money Market Subaccounts

The investment objective of each of the Money Market
Subaccounts is to seek to provide current income consistent
with stability of capital and liquidity. Each Money Market
Subaccount seeks to achieve its objectives by investing in
U.S. Government Securities, including money market instruments
which are issued or guaranteed, as to principal and interest,
by the U.S. Government, its agencies or instrumentalities, as
well as in repurchase agreements collateralized fully by U.S.
Government Securities. An investment in a Money Market
Subaccount is neither insured nor guaranteed by the U.S.
Government.

Each Money Market Subaccount may invest in securities
that take the form of participation interests in, and may be
evidenced by deposit or safekeeping receipts for, any of the
foregoing securities. Participation interests are pro rata
interests in U.S. Government Securities; and instruments
evidencing deposit or safekeeping are documentary receipts for
such original securities held in custody by others.

Each Money Market Subaccount also may purchase bank money
market instruments, including certificates of deposit, time
deposits, bankers' acceptances, and other short-term
obligations issued by United States banks which are members of
the Federal Reserve System. Certificates of deposit are
negotiable certificates evidencing the obligation of a bank to
repay funds deposited with the bank for a specified period of
time. Time deposits are non-negotiable deposits maintained in
a banking institution for a specified period of time (in no
event longer than seven days) at a stated interest rate. Time
deposits which may be held by a Money Market Subaccount will
not benefit from insurance from the Bank Insurance Fund or the
Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation. Investments in time deposits
and certificates of deposits are limited to domestic banks
that have total assets in excess of one billion dollars.
Bankers' acceptances are credit instruments evidencing the
obligation of a bank to a draft drawn on the bank by a
customer of the bank. These credit instruments reflect the
obligation both of the bank and of the drawer to pay the face

II-10
<PAGE>

amount of the instrument upon maturity. Other short-term bank
obligations in which a Money Market Subaccount may invest
include uninsured, direct obligations of a bank that bear
fixed, floating, or variable interest rates.

Each Money Market Subaccount also may invest in
commercial paper, including corporate notes. These
instruments are short-term obligations issued by banks and
corporations that have maturities ranging from two to 270
days. Each commercial paper instrument may be backed only by
the credit of the issuer or may be backed by some form of
credit enhancement, typically in the form of a guarantee by a
commercial bank. Investments in commercial paper and other
short-term promissory notes issued by corporations (including
variable and floating rate instruments) must be rated at the
time of purchase "A-2" or better by Standard & Poor's Ratings
Group, "Prime-2" or better by Moody's Investors Service, Inc.
("Moody's"), "F-2" or better by Fitch Investors Service, Inc.
("Fitch"), "Duff 2" or better by Duff & Phelps Credit Rating
Co. ("Duff"), or "A2" or better by IBCA, Inc., or, if not
rated by Standard & Poor's Ratings Group, Moody's, Fitch,
Duff, or IBCA, Inc., must be determined by PADCO Advisors II,
Inc. ("PADCO"), the Separate Account's investment adviser, to
be of comparable quality pursuant to guidelines approved by
the managers of the Separate Account (the "Managers"). Please
refer to Appendix A to the Statement of Additional Information
for more detailed information concerning commercial paper
ratings.

Each Money Market Subaccount also may make limited
investments in guaranteed investment contracts ("GICs") issued
by United States insurance companies. A Money Market
Subaccount will purchase a GIC only when PADCO has determined,
under guidelines established by the Managers of the Separate
Account, that the GIC presents minimal credit risks to the
Money Market Subaccount and is of comparable quality to
instruments that are rated "high quality" by certain
nationally-recognized statistical rating organizations.

Money market instruments are generally described as
short-term debt obligations having maturities of 13 months or
less. Yields on such instruments are very sensitive to short-
term lending conditions. The principal value of such
instruments tends to decline as interest rates rise and
conversely tends to rise as interest rates decline. In
addition, there is an element of risk in money market
instruments that the issuer may become insolvent and may not
make timely payment of interest and principal obligations.

The Benchmarks

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<PAGE>

The S&P500 Index. Standard & Poor's Corporation chooses
the 500 stocks comprising the S&P500 Index on the basis of
market values and industry diversification. Most of the
stocks in the S&P500 Index are issued by the 500 largest
companies, in terms of the aggregate market value of their
outstanding stock, and such companies are generally listed on
the NYSE. Additional stocks that are not among the 500
largest market value stocks are included in the S&P500 Index
for diversification purposes. Standard & Poor's Corporation
will not be a sponsor of, or in any other way affiliated
with, the Subaccounts.

The NASDAQ 100 Index. The NASDAQ 100 Index is a
capitalization-weighted index composed of 100 of the largest
non-financial securities listed on the NASDAQ Stock Market.
The index was created in 1985.

The XAU Index. The XAU Index is a capitalization-
weighted index featuring nine widely-held securities in the
gold and silver mining and production industry or companies
investing in such mining and production companies. The XAU
Index was set to an initial value of 100 in January 1979. The
following issuers are currently included in the XAU Index:
Barrick Gold Corp.; ASA Limited; Battle Mountain Gold Co.;
Echo Bay Mines Limited; Hecla Mining Co.; Homestake Mining
Co.; Newmont Mining Corp.; Placer Dome Inc.; and Pegasus Gold
Inc. While the majority of these companies are based in North
America, these companies generally also have operations in
countries based outside North America.

The Long Bond. The Long Bond is the U.S. Treasury bond
with the longest maturity. Currently, the longest maturity of
a U.S. Treasury bond is 30 years. At this time, the 30-year
U.S. Treasury bond is issued twice yearly. In the future, the
U.S. Treasury may change the number of times each year that
the Long Bond is issued.

SPECIAL RISK CONSIDERATIONS

Contract Owners should consider the special factors
discussed below that are associated with the investment
policies of the Subaccounts in determining the appropriateness
of investing in the Subaccounts.

Portfolio Turnover

PADCO expects that the assets of the Subaccounts will be
derived from Contract Owners who intend to invest in the
Subaccounts as part of an asset allocation investment

II-12
<PAGE>

strategy. These Contract Owners are likely to exchange their
Accumulation Units of a particular Subaccount for Accumulation
Units in other Subaccounts frequently pursuant to the exchange
policy of the Separate Account, in order to attempt to take
advantage of anticipated changes in market conditions (see
"Investments of the Subaccounts; Addition and Deletion of
Subaccounts" in Part I of this Prospectus). The strategies
employed by Contract Owners invested in the Subaccounts may
result in considerable assets moving in and out of the
Subaccounts. Consequently, PADCO expects that the Subaccounts
will generally experience significant portfolio turnover,
which will likely cause higher expenses and additional costs
and may also adversely affect the ability of a Subaccount to
meet its investment objective. Because each Subaccount's
portfolio turnover rate to a great extent will depend on the
purchase, redemption, and exchange activity of the
Subaccount's Contract Owners, it is very difficult to estimate
what the Subaccount's actual turnover rate generally will be.
Pursuant to the formula prescribed by the SEC, the portfolio
turnover rate for each Subaccount is calculated without regard
to securities, including options and futures contracts, having
a maturity of less than one year. The Nova Subaccount, the
Ursa Subaccount, and the Juno Subaccount typically hold most
of their investments in short-term options and futures
contracts, which, therefore, are excluded for purposes of
computing portfolio turnover.

A higher portfolio turnover rate would likely involve
correspondingly greater brokerage commissions and other
expenses which would be borne by a Subaccount, and would
directly reduce the return to a Contract Owner from an
investment in the Subaccount. Furthermore, a Subaccount's
portfolio turnover level may adversely affect the ability of
the Subaccount to achieve its investment objective. For
further information concerning the portfolio turnover of the
Subaccounts, see "Investment Policies and Techniques" in the
Statement of Additional Information.

Tracking Error

While PADCO does not expect that the Subaccounts' returns
over a year will deviate adversely from their respective
benchmarks by more than ten percent, several factors may
affect their ability to achieve this correlation. Among these
factors are: (1) Subaccount expenses, including brokerage
(which may be increased by high portfolio turnover); (2) less
than all of the securities in the benchmark being held by a
Subaccount and securities not included in the benchmark being
held by a Subaccount; (3) an imperfect correlation between the
performance of instruments held by a Subaccount, such as
futures contracts and options, and the performance of the
underlying securities in the cash market; (4) bid-ask spreads

II-13
<PAGE>

(the effect of which may be increased by portfolio turnover);
(5) holding instruments traded in a market that has become
illiquid or disrupted; (6) Subaccount Accumulation Unit prices
being rounded to the nearest cent; (7) changes to the
benchmark index that are not disseminated in advance; or (8)
the need to conform a Subaccount s portfolio holdings to
comply with investment restrictions or policies or regulatory
or tax law requirements.

Aggressive Investment Techniques

Each of the Subaccounts (other than the Money Market
Subaccounts) may engage in certain aggressive investment
techniques which may include engaging in short sales and
transactions in futures contracts and options on securities,
securities indexes, and futures contracts. These techniques
are specialized and involve risks that are not traditionally
associated with variable annuity contracts. The Separate
Account expects that the Nova Subaccount, the Ursa Subaccount,
and the Juno Subaccount will primarily use these techniques in
seeking to achieve their objectives and that a significant
portion (up to 100%) of the assets of these Subaccounts will
be held in high-grade liquid debt in a segregated account by
these Subaccounts as "cover" for these investment techniques.

Participation in the options or futures markets by a
Subaccount involves investment risks and transaction costs to
which the Subaccount would not be subject absent the use of
these strategies. Risks inherent in the use of options,
futures contracts, and options on futures contracts include:
(1) adverse changes in the value of such instruments; (2)
imperfect correlation between the price of options and futures
contracts and options thereon and movements in the price of
the underlying securities, index, or futures contracts; (3)
the fact that the skills needed to use these strategies are
different from those needed to select portfolio securities;
and (4) the possible absence of a liquid secondary market for
any particular instrument at any time. For further
information regarding these investment techniques, see
"Investment Techniques and Other Investment Policies" in this
Part II of the Prospectus.

INVESTMENT TECHNIQUES AND OTHER
INVESTMENT POLICIES

Futures Contracts and Options Thereupon

The Nova Subaccount and the OTC Subaccount may purchase
stock index futures contracts as a substitute for a comparable
market position in the underlying securities. The Ursa
Subaccount may sell stock index futures contracts. The Bond

II-14
<PAGE>

Subaccount may purchase futures contracts on U.S. Government
Securities as a substitute for a comparable market position in
the cash market. The Juno Subaccount may sell futures
contracts on U.S. Government Securities.

A futures contract obligates the seller to deliver (and
the purchaser to take delivery of) the specified commodity on
the expiration date of the contract. A stock index futures
contract obligates the seller to deliver (and the purchaser to
take) an amount of cash equal to a specific dollar amount
times the difference between the value of a specific stock
index at the close of the last trading day of the contract and
the price at which the agreement is made. No physical
delivery of the underlying stocks in the index is made. It is
the practice of holders of other futures contracts to close
out their positions on or before the expiration date by use of
offsetting contract positions and physical delivery is thereby
avoided.

The Nova Subaccount and the OTC Subaccount may purchase
call options and write (sell) put options, and the Ursa
Subaccount may purchase put options and write call options, on
stock index futures contracts. The Bond Subaccount may
purchase call options and write put options on U.S. Government
Securities futures contracts and the Juno Subaccount may write
call options
and purchase put options on futures contracts on U.S.
Government Securities.

When a Subaccount purchases a put or call option on a
futures contract, the Subaccount pays a purchase payment for
the right to sell or purchase the underlying futures contract
for a specified price upon exercise at any time during the
option period. By writing a put or call option on a futures
contract, a Subaccount receives a purchase payment in return
for granting to the purchaser of the option the right to sell
to or buy from the Subaccount the underlying futures contract
for a specified price upon exercise at any time during the
option period.

Whether a Subaccount realizes a gain or loss from futures
activities depends generally upon movements in the underlying
commodity. The extent of the Subaccount s loss from an
unhedged short position in futures contracts or from writing
call options on futures contracts is potentially unlimited.
The Subaccounts may engage in related closing transactions
with respect to options on futures contracts. The Subaccounts
will only engage in transactions in futures contracts and
options thereupon that are traded on a United States exchange
or board of trade. In addition to the uses set forth
hereunder, each Subaccount may also engage in futures and
futures options transactions in order to hedge or limit the

II-15
<PAGE>

exposure of its position to create a synthetic money market
position.

The Subaccounts may purchase and sell futures contracts,
index futures contracts, and options thereon only to the
extent that such activities would be consistent with the
requirements of Section 4.5 of the regulations under the
Commodity Exchange Act promulgated by the Commodity Futures
Trading Commission (the "CFTC Regulations"), under which each
of these Subaccounts would be excluded from the definition of
a "commodity pool operator." Under Section 4.5 of the CFTC
Regulations, a Subaccount may engage in futures transactions,
either for "bona fide hedging" purposes, as this term is
defined in the CFTC Regulations, or for non-hedging purposes
to the extent that the aggregate initial margins and purchase
payments required to establish such non-hedging positions do
not exceed 5% of the liquidation value of the Subaccount s
portfolio. In the case of an option on futures contracts that
is "in-the-money" at the time of purchase (i.e., the amount by
which the exercise price of the put option exceeds the current
market value of the underlying security or the amount by which
the current market value of the underlying security exceeds
the exercise price of the call option), the in-the-money
amount may be excluded in calculating this 5% limitation.

When a Subaccount purchases or sells a stock index
futures contract, or sells an option thereon, the Subaccount
"covers" its position. To cover its position, a Subaccount
may maintain with its custodian bank (and mark to market on a
daily basis) a segregated account consisting of cash or high-
quality liquid debt instruments, including U.S. Government
Securities or repurchase agreements secured by U.S. Government
Securities, that, when added to any amounts deposited with a
futures commission merchant as margin, are equal to the market
value of the futures contract or otherwise "cover" its
position. If the Subaccount continues to engage in the
described securities trading practices and properly segregates
assets, the segregated account will function as a practical
limit on the amount of leverage which the Subaccount may
undertake and on the potential increase in the speculative
character of the Subaccount s outstanding portfolio
securities. Additionally, such segregated accounts will
generally assure the availability of adequate funds to meet
the obligations of the Subaccount arising from such investment
activities.

A Subaccount may cover its long position in a futures
contract by purchasing a put option on the same futures
contract with a strike price (i.e., an exercise price) as high
or higher than the price of the futures contract, or, if the
strike price of the put is less than the price of the futures
contract, the Subaccount will maintain in a segregated account

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<PAGE>

cash or high-grade liquid debt securities equal in value to
the difference between the strike price of the put and the
price of the future. A Subaccount may also cover its long
position in a futures contract by taking a short position in
the instruments underlying the futures contract, or by taking
positions in instruments the prices of which are expected to
move relatively consistently with the futures contract. A
Subaccount may cover its short position in a futures contract
by taking a long position in the instruments underlying the
futures contract, or by taking positions in instruments the
prices of which are expected to move relatively consistently
with the futures contract.

A Subaccount may cover its sale of a call option on a
futures contract by taking a long position in the underlying
futures contract at a price less than or equal to the strike
price of the call option, or, if the long position in the
underlying futures contract is established at a price greater
than the strike price of the written call, the Subaccount will
maintain in a segregated account cash or high-grade liquid
debt securities equal in value to the difference between the
strike price of the call and the price of the future. A
Subaccount may also cover its sale of a call option by taking
positions in instruments the prices of which are expected to
move relatively consistently with the call option. A
Subaccount may cover its sale of a put option on a futures
contract by taking a short position in the underlying futures
contract at a price greater than or equal to the strike price
of the put option, or, if the short position in the underlying
futures contract is established at a price less than the
strike price of the written put, the Subaccount will maintain
in a segregated account cash or high-grade liquid debt
securities equal in value to the difference between the strike
price of the put and the price of the future. A Subaccount
may also cover its sale of a put option by taking positions in
instruments the prices of which are expected to move
relatively consistently with the put option.

Although the Subaccounts intend to sell futures contracts
only if there is an active market for such contracts, no
assurance can be given that a liquid market will exist for any
particular contract at any particular time. Many futures
exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading
day. Once the daily limit has been reached in a particular
contract, no trades may be made that day at a price beyond
that limit or trading may be suspended for specified periods
during the day. Futures contract prices could move to the
limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures
positions and potentially subjecting a Subaccount to
substantial losses. If trading is not possible, or a

II-17
<PAGE>

Subaccount determines not to close a futures position in
anticipation of adverse price movements, the Subaccount will
be required to make daily cash payments of variation margin.
The risk that the Subaccount will be unable to close out a
futures position will be minimized by entering into such
transactions on a national exchange with an active and liquid
secondary market.

Index Options Transactions

The Nova Subaccount, the OTC Subaccount, and the Precious
Metals Subaccount may purchase call options and write (sell)
put options, and the Ursa Subaccount may purchase put options
and write call options, on stock indexes. All of the
Subaccounts may write and purchase put and call options on
stock indexes in order to hedge or limit the exposure of their
positions.

A stock index fluctuates with changes in the market
values of the stocks included in the index. Options on stock
indexes give the holder the right to receive an amount of cash
upon exercise of the option. Receipt of this cash amount will
depend upon the closing level of the stock index upon which
the option is based being greater than (in the case of a call)
or less than (in the case of a put) the exercise price of the
option. The amount of cash received, if any, will be the
difference between the closing price of the index and the
exercise price of the option, multiplied by a specified dollar
multiple. The writer (seller) of the option is obligated, in
return for the purchase payments received from the purchaser
of the option, to make delivery of this amount to the
purchaser. Unlike the options on securities discussed below,
all settlements of index options transactions are in cash.

Some stock index options are based on a broad market
index such as the S&P500 Index, the NYSE Composite Index, or
the AMEX Major Market Index, or on a narrower index such as
the Philadelphia Stock Exchange Over-the-Counter Index.
Options currently are traded on the Chicago Board Options
Exchange (the "CBOE"), the AMEX, and other exchanges
(collectively, the "Exchanges"). Purchased over-the-counter
options and the cover for written over-the-counter options
will be subject to the respective Subaccount s 15% limitation
on investment in illiquid securities. See "Illiquid
Securities," below.

Each of the Exchanges has established limitations
governing the maximum number of call or put options on the
same index which may be bought or written (sold) by a single
investor, whether acting alone or in concert with others
(regardless of whether such options are written on the same or
different Exchanges or are held or written on one or more

II-18
<PAGE>

accounts or through one or more brokers). Under these
limitations, option positions of all investment companies
advised by the same investment adviser are combined for
purposes of these limits. Pursuant to these limitations, an
Exchange may order the liquidation of positions and may impose
other sanctions or restrictions. These position limits may
restrict the number of listed options which a Subaccount may
buy or sell.

Index options are subject to substantial risks, including
the risk of imperfect correlation between the option price and
the value of the underlying securities comprising the stock
index selected and the risk that there might not be a liquid
secondary market for the option. Because the value of an index
option depends upon movements in the level of the index rather
than the price of a particular stock, whether a Subaccount
will realize a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of
stock prices in the stock market generally or, in the case of
certain indexes, in an industry or market segment, rather than
upon movements in the price of a particular stock. Whether a
Subaccount will realize a profit or loss by the use of options
on stock indexes will depend on movements in the direction of
the stock market generally or of a particular industry or
market segment. This requires different skills and techniques
than are required for predicting changes in the price of
individual stocks. A Subaccount will not enter into an option
position that exposes the Subaccount to an obligation to
another party, unless the Subaccount either (i) owns an
offsetting position in securities or other options and/or (ii)
maintains with the Subaccount s custodian bank (and marks-to-
market on a daily basis) a segregated account consisting of
cash, U.S. Government Securities, or other liquid high-grade
debt securities that, when added to the purchase payments
deposited with respect to the option, are equal to the market
value of the underlying stock index not otherwise covered.

Options on Securities

The Nova Subaccount, the OTC Subaccount, and Precious
Metals Subaccount may buy call options and write (sell) put
options on securities, and the Ursa Subaccount may buy put
options and write call options on securities. By buying a
call option, a Subaccount has the right, in return for a
purchase payment paid during the term of the option, to buy
the securities underlying the option at the exercise price.
By writing a call option and receiving a purchase payment, a
Subaccount becomes obligated during the term of the option to
deliver the securities underlying the option at the exercise
price if the option is exercised. By buying a put option, a
Subaccount has the right, in return for a purchase payment
paid during the term of the option, to sell the securities

II-19
<PAGE>

underlying the option at the exercise price. By writing a put
option, a Subaccount becomes obligated during the term of the
option to purchase the securities underlying the option at the
exercise price. The Subaccounts will only write options that
are traded on recognized securities exchanges.

When writing call options on securities, a Subaccount may
cover its position by owning the underlying security on which
the option is written. Alternatively, the Subaccount may
cover its position by owning a call option on the underlying
security, on a unit for unit basis, which is deliverable under
the option contract at a price no higher than the exercise
price of the call option written by the Subaccount or, if
higher, by owning such call option and depositing and
maintaining in a segregated account cash or liquid high-grade
debt securities equal in value to the difference between the
two exercise prices. In addition, a Subaccount may cover its
position by depositing and maintaining in a segregated account
cash or liquid high-grade debt securities equal in value to
the exercise price of the call option written by the
Subaccount. When a Subaccount writes a put option, the
Subaccount will have and maintain on deposit with its
custodian bank cash or liquid high-grade debt securities
having a value equal to the exercise value of the option. The
principal reason for a Subaccount to write call options on
stocks held by the Subaccount is to attempt to realize,
through the receipt of purchase payments, a greater return
than would be realized on the underlying securities alone.

If a Subaccount that writes an option wishes to terminate
the Subaccount s obligation, the Subaccount may effect a
"closing purchase transaction." The Subaccount accomplishes
this by buying an option of the same series as the option
previously written by the Subaccount. The effect of the
purchase is that the writer s position will be canceled by the
Options Clearing Corporation. However, a writer may not
effect a closing purchase transaction after the writer has
been notified of the exercise of an option. Likewise, a
Subaccount which is the holder of an option may liquidate its
position by effecting a "closing sale transaction." The
Subaccount accomplishes this by selling an option of the same
series as the option previously purchased by the Subaccount.
There is no guarantee that either a closing purchase or a
closing sale transaction can be effected. If any call or put
option is not exercised or sold, the option will become
worthless on its expiration date.

A Subaccount will realize a gain (or a loss) on a closing
purchase transaction with respect to a call or a put option
previously written by the Subaccount if the purchase payment,
plus commission costs, paid by the Subaccount to purchase the
call or put option to close the transaction is less (or

II-20
<PAGE>

greater) than the purchase payment, less commission costs,
received by the Subaccount on the sale of the call or the put
option. The Subaccount also will realize a gain if a call or
put option which the Subaccount has written lapses
unexercised, because the Subaccount would retain the purchase
payment.

A Subaccount will realize a gain (or a loss) on a closing
sale transaction with respect to a call or a put option
previously purchased by the Subaccount if the purchase
payment, less commission costs, received by the Subaccount on
the sale of the call or the put option to close the
transaction is greater (or less) than the purchase payment,
plus commission costs, paid by the Subaccount to purchase the
call or the put option. If a put or a call option which the
Subaccount has purchased expires out-of-the-money, the option
will become worthless on the expiration date, and the
Subaccount will realize a loss in the amount of the purchase
payment paid, plus commission costs.

Although certain securities exchanges attempt to provide
continuously liquid markets in which holders and writers of
options can close out their positions at any time prior to the
expiration of the option, no assurance can be given that a
market will exist at all times for all outstanding options
purchased or sold by a Subaccount. If an options market were
to become unavailable, the Subaccount would be unable to
realize its profits or limit its losses until the Subaccount
could exercise options it holds, and the Subaccount would
remain obligated until options it wrote were exercised or
expired.

Because option purchase payments paid or received by a
Subaccount are small in relation to the market value of the
investments underlying the options, buying and selling put and
call options can be more speculative than investing directly
in common stocks.

Short Sales

The Ursa Subaccount and the Juno Subaccount also may
engage in short sales transactions under which the Subaccount
sells a security it does not own. To complete such a
transaction, the Subaccount must borrow the security to make
delivery to the buyer. The Subaccount then is obligated to
replace the security borrowed by purchasing the security at
the market price at the time of replacement. The price at
that time may be more or less than the price at which the
security was sold by the Subaccount. Until the security is
replaced, the Subaccount is required to pay to the lender
amounts equal to any dividends or interest which accrue during
the period of the loan. To borrow the security, the

II-21
<PAGE>

Subaccount also may be required to pay a purchase payment,
which would increase the cost of the security sold. The
proceeds of the short sale will be retained by the broker, to
the extent necessary to meet the margin requirements, until
the short position is closed out.

Until the Ursa Subaccount or Juno Subaccount closes its
short position or replaces the borrowed security, the
Subaccount will: (a) maintain a segregated account containing
cash or liquid high grade debt securities at such a level that
the amount deposited in the account plus the amount deposited
with the broker as collateral will equal the current value of
the security sold short, or (b) otherwise cover the
Subaccount s short position.

U.S. Government Securities

The Bond Subaccount and the Money Market Subaccounts may
invest in U.S. Government Securities in pursuit of their
investment objectives, while all of the Subaccounts, except
for the Money Market Subaccounts, may invest in U.S.
Government Securities as "cover" for the investment techniques
these Subaccounts employ as part of a cash reserve or for
liquidity purposes.

U.S. Treasury securities are backed by the full faith and
credit of the U.S. Treasury. U.S. Treasury securities differ
only in their interest rates, maturities, and dates of
issuance. Treasury Bills have maturities of one year or less.
Treasury Notes have maturities of one to ten years, and
Treasury Bonds generally have maturities of greater than ten
years at the date of issuance. Yields on short-,
intermediate-, and long-term U.S. Government Securities are
dependent on a variety of factors, including the general
conditions of the money and bond markets, the size of a
particular offering, and the maturity of the obligation. Debt
securities with longer maturities tend to produce higher
yields and are generally subject to potentially greater
capital appreciation and depreciation than obligations with
shorter maturities and lower yields. The market value of U.S.
Government Securities generally varies inversely with changes
in market interest rates. An increase in interest rates,
therefore, would generally reduce the market value of a
Subaccount s portfolio investments in U.S. Government
Securities, while a decline in interest rates would generally
increase the market value of a Subaccount s portfolio
investments in these securities.

Certain U.S. Government Securities are issued or
guaranteed by agencies or instrumentalities of the U.S.
Government including, but not limited to, obligations of U.S.

II-22
<PAGE>

Government agencies or instrumentalities such as the Federal
National Mortgage Association, the Government National
Mortgage Association, the Small Business Administration, the
Export-Import Bank, the Federal Farm Credit Administration,
the Federal Home Loan Banks, Banks for Cooperatives (including
the Central Bank for Cooperatives), the Federal Land Banks,
the Federal Intermediate Credit Banks, the Tennessee Valley
Authority, the Export-Import Bank of the United States, the
Commodity Credit Corporation, the Federal Financing Bank, the
Student Loan Marketing Association, and the National Credit
Union Administration.

Some obligations issued or guaranteed by agencies or
instrumentalities of the U.S. Government are backed by the
full faith and credit of the U.S. Treasury. Such agencies and
instrumentalities may borrow funds from the U.S. Treasury.
However, no assurances can be given that the U.S. Government
will provide such financial support to the obligations of the
other U.S. Government agencies or instrumentalities in which a
Subaccount invests, since the U.S. Government is not obligated
to do so. These other agencies and instrumentalities are
supported by either the issuer s right to borrow, under
certain circumstances, an amount limited to a specific line of
credit from the U.S. Treasury, the discretionary authority of
the U.S. Government to purchase certain obligations of an
agency or instrumentality, or the credit of the agency or
instrumentality itself.

U.S. Government Securities may be purchased at a
discount. Such securities, when held to maturity or retired,
may include an element of capital gain.

Repurchase Agreements

U.S. Government Securities include repurchase agreements
secured by U.S. Government Securities. Under a repurchase
agreement, a Subaccount purchases a debt security and
simultaneously agrees to sell the security back to the seller
at a mutually agreed-upon future price and date, normally one
day or a few days later. The resale price is greater than the
purchase price, reflecting an agreed-upon market interest rate
during the purchaser s holding period. While the maturities
of the underlying securities in repurchase transactions may be
more than one year, the term of each repurchase agreement will
always be less than one year. A Subaccount will enter into
repurchase agreements only with member banks of the Federal
Reserve System or primary dealers of U.S. Government
Securities. PADCO will monitor the creditworthiness of each
of the firms which is a party to a repurchase agreement with
any of the Subaccounts. In the event of a default or
bankruptcy by the seller, the Subaccount will liquidate those
securities (whose market value, including accrued interest,

II-23
<PAGE>

must be at least equal to 100% of the dollar amount invested
by the Subaccount in each repurchase agreement) held under the
applicable repurchase agreement, which securities constitute
collateral for the seller s obligation to pay. However,
liquidation could involve costs or delays and, to the extent
proceeds from the sales of these securities were less than the
agreed-upon repurchase price, the Subaccount would suffer a
loss. A Subaccount also may experience difficulties and incur
certain costs in exercising its rights to the collateral and
may lose the interest the Subaccount expected to receive under
the repurchase agreement. Repurchase agreements usually are
for short periods, such as one week or less, but may be
longer. It is the current policy of the Subaccounts to treat
repurchase agreements that do not mature within seven days as
illiquid for the purposes of their investment policies.

Zero Coupon Bonds

The Bond and Juno Subaccounts may invest in U.S. Treasury
zero coupon securities. Unlike regular U.S. Treasury bonds
which pay semi-annual interest, U.S. Treasury zero coupon
bonds do not generate semi-annual coupon payments. Instead,
zero coupon bonds are purchased at a substantial discount from
the maturity value of such securities, and this discount is
amortized as interest income over the life of the security.
Zero coupon U.S. Treasury issues originally were created by
government bond dealers who bought U.S. Treasury bonds and
issued receipts representing an ownership interest in the
interest coupons or in the principal portion of the bonds.
Subsequently, the U.S. Treasury began directly issuing zero
coupon bonds with the introduction of "Separate Trading of
Registered Interest and Principal of Securities" (or
"STRIPS"). While zero coupon bonds eliminate the reinvestment
risk of regular coupon issues, that is, the risk of
subsequently investing the periodic interest payments at a
lower rate than that of the security held, zero coupon bonds
fluctuate much more sharply than regular coupon-bearing bonds.
Thus, when interest rates rise, the value of zero coupon bonds
will decrease to a greater extent than will the value of
regular bonds having the same interest rate.

Reverse Repurchase Agreements

The Ursa Subaccount, the Juno Subaccount, and the Money
Market Subaccounts each may also use reverse repurchase
agreements as part of the Subaccount s investment strategy.
Reverse repurchase agreements involve sales by the Subaccount
of portfolio assets concurrently with an agreement by the
Subaccount to repurchase the same assets at a later date at a
fixed price. Generally, the effect of such a transaction is
that the Subaccount can recover all or most of the cash
invested in the portfolio securities involved during the term

II-24
<PAGE>

of the reverse repurchase agreement, while the Subaccount will
be able to keep the interest income associated with those
portfolio securities. Such transactions are advantageous only
if the interest cost to the Subaccount of the reverse
repurchase transaction is less than the cost of obtaining the
cash otherwise. Opportunities to achieve this advantage may
not always be available, and the Subaccounts intend to use the
reverse repurchase technique only when it will be to the
Subaccount s advantage to do so. Each Subaccount will
establish a segregated account with the Separate Account s
custodian bank in which the Subaccount will maintain cash or
cash equivalents or other portfolio securities equal in value
to the Subaccount s obligations in respect of reverse
repurchase agreements.

Borrowing

Each Subaccount may borrow money to facilitate management
of the Subaccount s portfolio by enabling the Subaccount to
meet transfer or withdrawal requests when the liquidation of
portfolio instruments would be inconvenient or
disadvantageous. Such borrowing is not for investment
purposes and will be repaid by the borrowing Subaccount
promptly.

As required by the 1940 Act, a Subaccount must maintain
continuous asset coverage (total assets, including assets
acquired with borrowed funds, less liabilities exclusive of
borrowings) of 300% of all amounts borrowed. If, at any time,
the value of the Subaccount s assets should fail to meet this
300% coverage test, the Subaccount, within three days (not
including Sundays and holidays), will reduce the amount of the
Subaccount s borrowings to the extent necessary to meet this
300% coverage. Maintenance of this percentage limitation may
result in the sale of portfolio securities at a time when
investment considerations otherwise indicate that it would be
disadvantageous to do so.

In addition to the foregoing, the Subaccounts are
authorized to borrow money from a bank as a temporary measure
for extraordinary or emergency purposes in amounts not in
excess of 5% of the value of the Subaccount s total assets.
This borrowing is not subject to the foregoing 300% asset
coverage requirement. The Subaccounts are authorized to
pledge portfolio securities as PADCO deems appropriate in
connection with any borrowings.

When-Issued and Delayed-Delivery Securities

The Subaccounts may purchase securities on an when-issued
or delayed-delivery basis (i.e., delivery and payment can take
place a month or more after the date of the transaction).

II-25
<PAGE>

These securities are subject to market fluctuation and no
interest accrues to the purchaser during this period. At the
time a Subaccount makes the commitment to purchase securities
on a when-issued or delayed-delivery basis, the Subaccount
will record the transaction and thereafter reflect the value,
each day, of that security in determining the Subaccount's
Accumulation Unit Value. A Subaccount will not purchase
securities on a when-issued or delayed-delivery basis if, as a
result, more than 15% (10% with respect to each of the Money
Market Subaccounts) of the Subaccount s net assets would be so
invested.

Lending of Portfolio Securities

The Subaccounts may lend portfolio securities to brokers,
dealers, and financial institutions, provided that cash equal
to at least 100% of the market value of the securities loaned
is deposited by the borrower with the lending Subaccount and
is maintained each business day in a segregated account
pursuant to applicable regulations. While such securities are
on loan, the borrower will pay the lending Subaccount any
income accruing thereon, and the Subaccount may invest the
cash collateral in portfolio securities, thereby earning
additional income. A Subaccount will not lend its portfolio
securities if such loans are not permitted by the laws or
regulations of any state in which the Contracts are sold and
will not lend more than 33 % of the value of the Subaccount s
total assets, except that each of the Money Market Subaccounts
will not lend more than 10% of its total assets. Loans of
portfolio securities are subject to termination by the lending
Subaccount on four business days' notice, or by the borrower
on one day's notice. Borrowed securities must be returned
when the loan is terminated. Any gain or loss in the market
price of the borrowed securities which occurs during the term
of the loan inures to the lending Subaccount. A lending
Subaccount may pay reasonable finders, borrowers,
administrative, and custodial fees in connection with a loan.

Investments in Other Investment Companies

The Subaccounts (other than the Bond Subaccount and the
Money Market Subaccounts) may invest in the securities of
another investment company (the "acquired company") provided
that the Subaccount, immediately after such purchase or
acquisition, does not own in the aggregate: (i) more than 3%
of the total outstanding voting stock of the acquired company;
(ii) securities issued by the acquired company having an
aggregate value in excess of 5% of the value of the total
assets of the Subaccount; or (iii) securities issued by the
acquired company and all other investment companies (other
than Treasury stock of the Subaccount) having an aggregate
value in excess of 10% of the value of the total assets of the

II-26
<PAGE>

Subaccount. The Bond Subaccount and the Money Market
Subaccounts may invest in the securities of other investment
companies only as part of a merger, reorganization, or
acquisition, subject to the requirements of the 1940 Act.

If a Subaccount invests in, and, thus, is a shareholder
of, another investment company, the Subaccount s Contract
Owners will indirectly bear the Subaccount s proportionate
share of the fees and expenses paid by such other investment
company, including advisory fees, in addition to both the
advisory fees payable directly by the Subaccount to PADCO and
the other expenses that the Subaccount bears directly in
connection with the Subaccount s own operations.

Illiquid Securities

While none of the Subaccounts anticipates doing so, each
Subaccount may purchase illiquid securities, including
securities that are not readily marketable. A Subaccount will
not invest more than 15% (10% with respect to each of the
Money Market Subaccounts) of the Subaccount s net assets in
illiquid securities. Each Subaccount will adhere to a more
restrictive limitation on the Subaccount s investment in
illiquid securities as required by the insurance laws of those
jurisdictions where Contracts are sold. The term "illiquid
securities" for this purpose means securities that cannot be
disposed of within seven days in the ordinary course of
business at approximately the amount at which the Subaccount
has valued the securities. Under the current guidelines of
the SEC staff, illiquid securities also are considered to
include, among other securities, purchased over-the-counter
options, certain cover for over-the-counter options,
repurchase agreements with maturities in excess of seven days,
and certain securities whose disposition is restricted under
the Federal securities laws. The Subaccount may not be able
to sell illiquid securities when PADCO considers it desirable
to do so or may have to sell such securities at a price that
is lower than the price that could be obtained if the
securities were more liquid. In addition, the sale of
illiquid securities also may require more time and may result
in higher dealer discounts and other selling expenses than
does the sale of securities that are not illiquid. Illiquid
securities also may be more difficult to value due to the
unavailability of reliable market quotations for such
securities, and investment in illiquid securities may have an
adverse impact on Accumulation Unit Value.

Cash Reserve

As a cash reserve or for liquidity purposes, each
Subaccount may temporarily invest all or part of its assets in
cash or cash equivalents, which include, but are not limited

II-27
<PAGE>

to, short-term money market instruments, U.S. Government
Securities, certificates of deposit, banker s acceptances, or
repurchase agreements secured by U.S. Government Securities.

PORTFOLIO TRANSACTIONS AND
BROKERAGE

Subject to policies established by the Managers, PADCO
determines which securities to purchase and sell for each
Subaccount, selects brokers and dealers to effect the
transactions, and negotiates commissions. PADCO expects that
the Subaccounts may execute brokerage or other agency
transactions through registered broker-dealers, for a
commission, in conformity with the 1940 Act, the Securities
Exchange Act of 1934, as amended, and the rules and
regulations thereunder. In placing orders for portfolio
transactions, PADCO's policy is to obtain the most favorable
price and efficient execution available. Brokerage
commissions are normally paid on exchange-traded securities
transactions and on options and futures transactions, as well
as on common stock transactions. In order to obtain the
brokerage and research services described below, a higher
commission may sometimes be paid.

When selecting broker-dealers to execute portfolio
transactions, PADCO considers many factors, including the rate
of commission or size of the broker-dealer s "spread," the
size and difficulty of the order, the nature of the market for
the security, the willingness of the broker-dealer to
position, the reliability, financial condition, general
execution and operational capabilities of the broker-dealer,
and the research, statistical and economic data furnished by
the broker-dealer to PADCO. Conversely, broker-dealers which
supply research may be selected for execution of transactions
for such other accounts, while the data may be used by PADCO
in providing investment advisory services to the Subaccounts.

MANAGEMENT OF THE SEPARATE ACCOUNT

Board of Managers

Although the assets of the Separate Account are the
property of Great American Reserve, certain responsibilities
and powers with respect to the Separate Account have been
conferred upon the Managers of the Separate Account in order
to comply with applicable provisions of the 1940 Act. Those
responsibilities and powers are: (i) to approve the Separate
Account's investment advisory agreement and its continuance;
(ii) to select the Separate Account's independent public
accountants; (iii) to recommend changes in the fundamental

II-28
<PAGE>

investment policies of the Subaccount for approval by Contract
Owners and to make changes in non-fundamental investment
policies of the Subaccounts; (iv) to review periodically the
investment portfolios of the Subaccounts to ascertain that the
Subaccounts are being managed in accordance with the
investment objectives and policies of the Subaccounts; (v) to
make findings or determinations contemplated for an investment
company's board of directors by the 1940 Act or rules or
interpretations thereunder; and (vi) to approve agreements,
acts, or transactions respecting the Separate Account that are
submitted to the Separate Account by Great American Reserve.
The identity and principal occupations of the initial members
of the Managers appointed by Great American Reserve and
certain officers of the Separate Account elected or appointed
by the Managers are set forth in the Statement of Additional
Information.

PADCO

As discussed above, PADCO provides the Subaccounts in the
Separate Account investment advice. PADCO is a Maryland
corporation with offices at 6116 Executive Boulevard, Suite
400, Rockville, Maryland 20852. PADCO was incorporated in the
State of Maryland on July 5, 1994. Albert P. Viragh, Jr., the
Chairman of the Board and the President of PADCO, owns a
controlling interest in PADCO and in PADCO Advisors, Inc.
("PADCO I"), an affiliated person of PADCO that serves as the
investment adviser to Rydex Series Trust, a registered
investment company. From 1985 until the incorporation of
PADCO I, Mr. Viragh was a Vice President of Money Management
Associates ("MMA"), a Maryland-based registered investment
adviser. From 1992 to June 1993, Mr. Viragh was the portfolio
manager of The Rushmore Nova Portfolio, a series of The
Rushmore Fund, Inc., an investment company managed by MMA.
From 1989 to 1992, Mr. Viragh was the Vice President of Sales
and Marketing for The Rushmore Fund, Inc. Since 1993, Mr.
Viragh has served as the Chairman of the Board and the
President of PADCO I, a Maryland corporation with offices at
6116 Executive Boulevard, Suite 400, Rockville, Maryland
20852. Since January 1994, Mr. Viragh has served as the
portfolio manager for the Ursa Fund, a series of Rydex Series
Trust. Mr. Viragh received his bachelor s degree in Business
Administration from Spring Hill College, of Mobile, Alabama,
in 1964.

The portfolio manager for the Nova Subaccount is Thomas
Michael, who joined PADCO in March 1994. Since March 1994,
Mr. Michael has served as the portfolio manager for the Nova
Fund, a series of Rydex Series Trust. From 1992 to February
1994, Mr. Michael was a financial markets analyst at Cedar
Street Investment Management Co., of Chicago, Illinois, an
institutional consulting firm specializing in developing

II-29
<PAGE>

hedging and speculative strategies in stock index futures
contracts and U.S. Treasury bond futures contracts. From 1989
to 1991, Mr. Michael was the Director of Research for
Chronometrics, Inc., of Chicago, Illinois, a registered
commodity trading adviser and was responsible for managing the
firm s proprietary, on-line trading model for twelve financial
futures contracts. Mr. Michael received his bachelor of arts
degree in Geology from Colgate University, of Hamilton, New
York, in 1974.

The portfolio manager for the OTC Subaccount and the Bond
Subaccount is Terry Apple, who joined PADCO in January 1994.
Since January 1994, Mr. Apple has served as the portfolio
manager for the Rydex OTC Fund and the Rydex U.S. Government
Bond Fund, each a series of Rydex Series Trust. From 1992 to
December 1993, Mr. Apple was employed by MMA and was the
Director of Investments for The Rushmore Fund, Inc. From 1985
to 1991, Mr. Apple was a Vice President and the Director of
Technical Research for Cale Futures, Inc. ( Cale"), of Hilton
Head, South Carolina, a registered commodity trading adviser,
and managed Multitech Partners, a commodity pool advised by
Cale. Mr. Apple received his bachelor s degree in Business
Administration from Baylor University, of Waco, Texas, in
1964.

The portfolio manager of the Ursa Subaccount, the
Precious Metals Subaccount, the Juno Subaccount, and the Money
Market Subaccounts is Michael P. Byrum. Mr. Byrum has served
as the portfolio manager for the Rydex Precious Metals Fund
since December 1993, the Juno Fund since March 1995, and the
Rydex U.S. Government Money Market Fund since December 1993
(each of these mutual funds is a series of Rydex Series
Trust). Prior to July 1993, Mr. Byrum worked for one year as
an investor representative with MMA. Mr. Byrum s
responsibilities at MMA included brokerage solicitation and
investor relations. Mr. Byrum received his bachelor s degree
in Business Administration from Miami University, of Oxford,
Ohio, in 1992.

Pursuant to an investment advisory agreement between the
Separate Account and PADCO, dated __________________, 1996
(the "PADCO Advisory Agreement"), subject to the general
supervision and control of the Separate Account's Board of
Managers and the officers of the Separate Account, and in
conformity with the stated investment objectives, policies,
and restrictions of the Separate Account, PADCO will manage
the investment and reinvestment of the assets of each of the
Subaccounts and determine the composition of assets of each
Subaccount, including the purchase, retention, and disposition
of securities and other investments. Under the PADCO Advisory
Agreement, the Subaccounts each pay PADCO a fee at an
annualized rate, based on the average daily net assets of each

II-30
<PAGE>

respective Subaccount, of 0.75% for the Nova Subaccount, the
OTC Subaccount, and the Precious Metals Subaccount, 0.90% for
the Ursa Subaccount and the Juno Subaccount, 0.50% for the
Bond Subaccount and the Money Market I Subaccount, and 0.25%
for the Money Market II Subaccount. The advisory fee paid by
each of the Nova Subaccount, the OTC Subaccount, the Precious
Metals Subaccount, the Juno Subaccount, and the Ursa
Subaccount, is higher than the advisory fee paid by most other
investment companies.

PADCO bears all costs associated with providing these
advisory services to the Subaccounts and the expenses of the
Managers who are affiliated persons of PADCO. Additional
information concerning the PADCO Advisory Agreement and PADCO
is set forth in the Statement of Additional Information.

PADCO Service Company, Inc.

As discussed above, the Subaccounts (other than the Money
Market II Subaccount) are provided Contract Owner services,
including, among others, asset allocation administrative
services, Financial Advisor communications (including receipt
of and acting upon transfer requests), asset allocation
bookkeeping, determination of Accumulation Unit Values, and
portfolio accounting services, by PADCO Service Company, Inc.
(the "Servicer"), a Maryland corporation with offices at 6116
Executive Boulevard, Suite 400, Rockville, Maryland 20852,
subject to the general supervision and control of the Managers
and the officers of the Separate Account, and pursuant to a
Subaccount administration agreement between the Separate
Account and the Servicer, dated _______________, 1996. The
Servicer is wholly-owned by Albert P. Viragh, Jr., who is the
Chairman of the Board of Managers and the President of the
Separate Account and the sole controlling person and majority
owner of PADCO. The Servicer was incorporated in the State of
Maryland on October 6, 1993.

Pursuant to the Subaccount Administration Agreement, each
Subaccount (other than the Money Market II Subaccount) pays
the Servicer a fee at an annualized rate, based on the average
daily net assets for that Subaccount, of 0.25% for the Nova,
Ursa, and Juno Subaccounts, and 0.20% for the OTC, Precious
Metals, Bond, and Money Market I Subaccounts. The Servicer
provides these Subaccounts with all required Subaccount
administrative services, including, without limitation, office
space, equipment, and personnel; clerical and general back
office services; asset allocation bookkeeping, internal
accounting, and secretarial services; and the determination of
Accumulation Unit Values. The Servicer pays all fees and
expenses that are directly related to the services provided by
the Servicer to these Subaccounts; each Subaccount reimburses
the Servicer for all fees and expenses incurred by the

II-31
<PAGE>

Servicer which are not directly related to the services the
Servicer provides to the Subaccount under the Subaccount
Administration Agreement. Additional information concerning
the Subaccount Administration Agreement and the Servicer is
set forth in the Statement of Additional Information.

The Money Market II Subaccount does not pay any
Subaccount administration fee.

Costs and Expenses

Each Subaccount bears all expenses of its operations
other than those assumed by PADCO or the Servicer. Subaccount
expenses include: the advisory fee; the Subaccount
administration fee; custodian and accounting fees and
expenses; legal and auditing fees; securities valuation
expenses; fidelity bonds and other insurance premiums;
expenses of preparing and printing prospectuses,
confirmations, proxy statements, and Contract Owner reports
and notices; registration fees and expenses; proxy and annual
meeting expenses, if any; all Federal, state, and local taxes
(including, without limitation, stamp, excise, income, and
franchise taxes); organizational costs; and non-interested
Managers fees and expenses; the costs and expenses of
surrendering Accumulation Units of a Subaccount; fees and
expenses paid to any securities pricing organization; dues and
expenses associated with membership in any mutual fund or
insurance organization; and costs for incoming telephone WATTS
lines. In addition, each of the eight Subaccounts pays an
equal portion of the fees and expenses for attendance at
Manager meetings to the Managers who are not affiliated with
or interested persons of PADCO or Great American Reserve.

Great American Reserve and PADCO have advanced the
organizational expenses of the Separate Account. These costs,
which are approximately $5,000 per Money Market Subaccount and
$95,180 per the remaining six Subaccounts, will be reimbursed
by each Subaccount, and each Subaccount will amortize these
costs over a five year period from the date the Subaccount
commences operations.

II-32
<PAGE>

TABLE OF CONTENTS
STATEMENT OF ADDITIONAL INFORMATION
Page

GENERAL INFORMATION AND HISTORY . . . . . . . . . . . . . . .

INVESTMENT POLICIES AND TECHNIQUES OF THE SUBACCOUNTS . . . .
General . . . . . . . . . . . . . . . . . . . . . . . .
Options Transactions . . . . . . . . . . . . . . . . . .
Foreign Securities . . . . . . . . . . . . . . . . . . .
Repurchase Agreements . . . . . . . . . . . . . . . . .
Borrowing . . . . . . . . . . . . . . . . . . . . . . .
When-Issued and Delayed-Delivery Securities . . . . . .
Portfolio Turnover . . . . . . . . . . . . . . . . . . .

INVESTMENT RESTRICTIONS OF THE SUBACCOUNTS . . . . . . . . .

BOARD OF MANAGERS OF THE SEPARATE ACCOUNT . . . . . . . . . .
Managers . . . . . . . . . . . . . . . . . . . . . . . .
Other Officers of PADCO . . . . . . . . . . . . . . . .
PADCO . . . . . . . . . . . . . . . . . . . . . . . . .

PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . .

DETERMINATION OF ACCUMULATION UNIT VALUES . . . . . . . . . .

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . .

UNDERWRITER OF THE CONTRACTS . . . . . . . . . . . . . . . .

INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . .

CUSTODY . . . . . . . . . . . . . . . . . . . . . . . . . . .

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . .

APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . .

II-33
<PAGE>

PART B

STATEMENT OF ADDITIONAL INFORMATION
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

, 1996

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
of

GREAT AMERICAN RESERVE INSURANCE COMPANY
Administrative Office Address: 11815 North Pennsylvania

Street, Carmel, Indiana 46032
Phone: (800) 888-4918

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT

FLEXIBLE PREMIUMS -- NONPARTICIPATING

Offered through

PADCO Financial Services, Inc.

Address: 6116 Executive Boulevard, Rockville, Maryland 20852
Phone: (800) 820-0888

Purchase payments for the variable annuity contract
described in the Prospectus (the "Contract") will be allocated
to the Rydex Advisor Variable Annuity Account (the "Separate
Account"), a segregated investment account of Great American
Reserve Insurance Company ("Great American Reserve"), unless
allocation to Great American Reserve's Fixed Account is
selected. Initial purchase payments allocated to the Separate
Account will first be placed in the Money Market I Subaccount
for the 14 days following the date of issue (the "Contract
Date"). You bear the full investment risk with respect to the
Separate Account.

This Statement of Additional Information is not a
prospectus and should be read in conjunction with the
Prospectus of the Separate Account, dated , 1996.
The Prospectus may be obtained without charge by writing or
calling PADCO Financial Services, Inc., at the addresses or
phone numbers set forth above.
<PAGE>

TABLE OF CONTENTS
STATEMENT OF ADDITIONAL INFORMATION
Page

GENERAL INFORMATION AND HISTORY . . . . . . . . . . . . . . B-

INVESTMENT POLICIES AND TECHNIQUES OF THE SUBACCOUNTS . . . B-
General . . . . . . . . . . . . . . . . . . . . . . . B-
Options Transactions . . . . . . . . . . . . . . . . . B-
Foreign Securities . . . . . . . . . . . . . . . . . . B-
Repurchase Agreements . . . . . . . . . . . . . . . . B-
Borrowing . . . . . . . . . . . . . . . . . . . . . . B-
When-Issued and Delayed-Delivery Securities . . . . . B-
Portfolio Turnover . . . . . . . . . . . . . . . . . . B-

INVESTMENT RESTRICTIONS OF THE SUBACCOUNTS . . . . . . . . B-

BOARD OF MANAGERS OF THE SEPARATE ACCOUNT . . . . . . . . . B-
Managers . . . . . . . . . . . . . . . . . . . . . . . B-
Other Officers of PADCO . . . . . . . . . . . . . . . B-
PADCO . . . . . . . . . . . . . . . . . . . . . . . . B-

PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . B-

DETERMINATION OF ACCUMULATION UNIT VALUES . . . . . . . . . B-

PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . B-

UNDERWRITER OF THE CONTRACTS . . . . . . . . . . . . . . . B-

INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . B-

CUSTODY . . . . . . . . . . . . . . . . . . . . . . . . . . B-

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . B-

APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . B-

B-2
<PAGE>

GENERAL INFORMATION AND HISTORY

Great American Reserve, originally organized in 1937, is
principally engaged in the life insurance business in 47
states and the District of Columbia. Great American Reserve
is a stock company organized under the laws of the State of
Texas and a wholly-owned subsidiary of Conseco, Inc.
("Conseco"). The operations of Great American Reserve are
handled by Conseco. Conseco is a publicly-owned financial
services holding company, the principal operations of which
are in the development, marketing, and administration of
specialized annuity and life insurance products. Conseco is
located at 11825 N. Pennsylvania Street, Carmel, Indiana
46032.

The Separate Account was established by Great American
Reserve.

INVESTMENT POLICIES AND TECHNIQUES
OF THE SUBACCOUNTS

The following discussion supplements the discussion under
"Investment Objectives and Policies of the Subaccounts" and
"Investment Techniques and Other Investment Policies" in Part
II of the Prospectus.

General

Set forth below is further information relating to the
Subaccounts. Portfolio investment advice is provided to each
Subaccount by PADCO Advisors II, Inc. ("PADCO"), a Maryland
corporation with offices at 6116 Executive Boulevard, Suite
400, Rockville, Maryland 20852. The investment strategies of
the Subaccounts discussed below, and as discussed in the
Separate Account's Prospectus, may be used by a Subaccount if,
in the opinion of PADCO, these strategies will be advantageous
to the Subaccount. A Subaccount is free to reduce or
eliminate the Subaccount's activity in any of those areas
without changing the Subaccount's fundamental investment
policies. There is no assurance that any of these strategies
or any other strategies and methods of investment available to
a Subaccount will result in the achievement of the
Subaccount's objectives.

Options Transactions

The Nova Subaccount, The OTC Subaccount, and the Precious
Metals Subaccount may buy call options and write (sell) put
options on securities, and the Ursa Subaccount may buy put
options and write call options on securities for the purpose
of realizing the Subaccount's investment objective. By

B-3
<PAGE>

writing a call option on securities, a Subaccount becomes
obligated during the term of the option to sell the securities
underlying the option at the exercise price if the option is
exercised. By writing a put option, a Subaccount becomes
obligated during the term of the option to purchase the
securities underlying the option at the exercise price if the
option is exercised.

During the term of the option, the writer may be assigned
an exercise notice by the broker-dealer through whom the
option was sold. The exercise notice would require the writer
to deliver, in the case of a call, or take delivery of, in the
case of a put, the underlying security against payment of the
exercise price. This obligation terminates upon expiration of
the option, or at such earlier time that the writer effects a
closing purchase transaction by purchasing an option covering
the same underlying security and having the same exercise
price and expiration date as the one previously sold. Once an
option has been exercised, the writer may not execute a
closing purchase transaction. To secure the obligation to
deliver the underlying security in the case of a call option,
the writer of a call option is required to deposit in escrow
the underlying security or other assets in accordance with the
rules of the Options Clearing Corporation (the "OCC"), an
institution created to interpose itself between buyers and
sellers of options. The OCC assumes the other side of every
purchase and sale transaction on an exchange and, by doing so,
gives its guarantee to the transaction.

Foreign Securities

The Precious Metals Subaccount may invest in issuers
located outside the United States. These purchases may be
made by purchasing American Depository Receipts ("ADRs"),
"ordinary shares," or "New York shares" in the United States.
ADRs are dollar-denominated receipts representing interests in
the securities of a foreign issuer, which securities may not
necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are
receipts typically issued by United States banks and trust
companies which evidence ownership of underlying securities
issued by a foreign corporation. Generally, ADRs in registered
form are designed for use in domestic securities markets and
are traded on exchanges or over-the-counter in the United
States. Ordinary shares are shares of foreign issuers that
are traded abroad and on a United States exchange. New York
shares are shares that a foreign issuer has allocated for
trading in the United States. ADRs, ordinary shares, and New
York shares all may be purchased with and sold for U.S.
dollars, which protects the Precious Metals Subaccount from
the foreign settlement risks described below.

B-4
<PAGE>

Investing in foreign companies may involve risks not
typically associated with investing in United States
companies. The value of securities denominated in foreign
currencies, and of dividends from such securities, can change
significantly when foreign currencies strengthen or weaken
relative to the U.S. dollar. Foreign securities markets
generally have less trading volume and less liquidity than
United States markets, and prices in some foreign markets can
be very volatile. Many foreign countries lack uniform
accounting and disclosure standards comparable to those that
apply to United States companies, and it may be more difficult
to obtain reliable information regarding a foreign issuer's
financial condition and operations. In addition, the costs of
foreign investing, including withholding taxes, brokerage
commissions, and custodial fees, generally are higher than for
United States investments.

Investing in companies located abroad carries political
and economic risks distinct from those associated with
investing in the United States. Foreign investments may be
affected by actions of foreign governments adverse to the
interests of United States Contract Owners, including the
possibility of expropriation or nationalization of assets,
confiscatory taxation, restrictions on United States
investment, or on the ability to repatriate assets or to
convert currency into U.S. dollars. There may be a greater
possibility of default by foreign governments or foreign-
government sponsored enterprises. Investments in foreign
countries also involve a risk of local political, economic, or
social instability, military action or unrest, or adverse
diplomatic developments.

At the present time, there are five major producers and
processors of gold bullion and other precious metals and
minerals. In order of magnitude, these producers and
processors are: the Republic of South Africa, the former
republics of the former Soviet Union, Canada, the United
States, and Australia. Political and economic conditions in
several of these countries may have a direct effect on the
mining, distribution, and price of precious metals and
minerals, and on the sales of central bank gold holdings,
particularly in the case of South Africa and the former
republics of the former Soviet Union. South African mining
stocks represent a special risk in view of the history of
political unrest in that country. Besides that factor,
various government bodies such as the South African Ministry
of Mines and the Reserve Bank of South Africa exercise
regulatory authority over mining activity and the sale of
gold. The policies of these South African government bodies
in the future could be detrimental to the Precious Metals
Subaccount's objectives.

B-5
<PAGE>

Repurchase Agreements

As discussed in the Separate Account's Prospectus, each
of the Subaccounts may enter into repurchase agreements with
financial institutions. The Subaccounts each follow certain
procedures designed to minimize the risks inherent in such
agreements. These procedures include effecting repurchase
transactions only with large, well-capitalized and well-
established financial institutions whose condition will be
continually monitored by PADCO. In addition, the value of the
collateral underlying the repurchase agreement will always be
at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of
a default or bankruptcy by a selling financial institution, a
Subaccount will seek to liquidate such collateral. However,
the exercising of each Subaccount's right to liquidate such
collateral could involve certain costs or delays and, to the
extent that proceeds from any sale upon a default of the
obligation to repurchase were less than the repurchase price,
the Subaccount could suffer a loss. The investments of each
of the Subaccounts in repurchase agreements, at times, may be
substantial when, in the view of the appropriate Subaccount
Advisor, liquidity or other considerations so warrant.

Borrowing

The Nova Subaccount and the Bond Subaccount do not
presently, but may in the future, borrow money, including
borrowing for investment purposes. Borrowing for investment
is known as leveraging. Leveraging investments, by purchasing
securities with borrowed money, is a speculative technique
which increases investment risk, but also increases investment
opportunity. Since substantially all of a Subaccount s assets
will fluctuate in value, whereas the interest obligations on
borrowings may be fixed, the Accumulation Unit Value of the
Subaccount will increase more when the Subaccount s portfolio
assets increase in value and decrease more when the
Subaccount s portfolio assets decrease in value than would
otherwise be the case. Moreover, interest costs on borrowings
may fluctuate with changing market rates of interest and may
partially offset or exceed the returns on the borrowed funds.
Under adverse conditions, the Nova Subaccount and the Bond
Subaccount might have to sell portfolio securities to meet
interest or principal payments at a time investment
considerations would not favor such sales. The Nova
Subaccount and the Bond Subaccount intend to use leverage
during periods when PADCO believes that the respective
Subaccount s investment objective would be furthered.

When-Issued and Delayed-Delivery Securities

B-6
<PAGE>

As discussed in the Separate Account's Prospectus, each
Subaccount, from time to time, in the ordinary course of
business, may purchase securities on a when-issued or delayed-
delivery basis, (i.e., delivery and payment can take place
between a month and 120 days after the date of the
transaction). At the time of delivery of the securities, the
value of the securities may be more or less than the purchase
price. The Subaccount will also establish a segregated
account with the Subaccount's custodian bank in which the
Subaccount will maintain cash or cash equivalents or other
portfolio securities equal in value to commitments for such
when-issued or delayed-delivery securities.

Portfolio Turnover

As discussed in the Separate Account's prospectus, PADCO
anticipates that owners of the Contract ("Contract Owners")
whose purchase payments are being allocated to the
Subaccounts, as part of an asset allocation or market-timing
investment strategy, will frequently transfer amounts
allocated under the Contract ("Contract Values") among the
Subaccounts (other than the Money Market II Subaccount).
Because each Subaccount's portfolio turnover rate to a great
extent will depend on the purchase, withdrawal, and exchange
activity of the Subaccount's Contract Owners, it is very
difficult to estimate what the Subaccount's actual turnover
rate will be in the future.

"Portfolio Turnover Rate" is defined under the rules of
the Securities and Exchange Commission (the "SEC") as the
value of the securities purchased or securities sold,
excluding all securities whose maturities at time of
acquisition were one year or less, divided by the average
monthly value of such securities owned during the year. Based
on this definition, instruments with remaining maturities of
less than one year are excluded from the calculation of
portfolio turnover rate. Instruments excluded from the
calculation of portfolio turnover generally would include the
futures contracts and option contracts in which the
Subaccounts invest since such contracts generally have a
remaining maturity of less than one year. All instruments
held by a Subaccount during a specified period may have a
remaining maturity of less than one year in which case the
portfolio turnover rate for that period, under the definition,
would be equal to zero. However, because of the nature of the
Subaccounts, as described above, it is anticipated that their
portfolio turnover will be unusually high.

B-7
<PAGE>

INVESTMENT RESTRICTIONS OF THE
SUBACCOUNTS

As described in the section of the Prospectus entitled
"Investment Objectives and Policies," each of the Subaccounts
has adopted certain investment restrictions as fundamental
policies which cannot be changed without the approval of the
holders of a "majority" of the outstanding units of interest
in the Subaccount ("Accumulation Units"), as defined in the
Investment Company Act of 1940, as amended (the "1940 Act").
As relevant, the term "majority" is defined in the 1940 Act as
the lesser of: (i) 67% or more of Subaccount Accumulation
Units present at a meeting of Contract Owners, if the holders
of more than 50% of the outstanding Accumulation Units of the
Subaccount are present or represented by proxy; or (ii) more
than 50% of the outstanding Subaccount Accumulation Units.
For purposes of the following limitations, all percentage
limitations apply immediately after a purchase or initial
investment. Any subsequent change in a particular percentage
resulting from fluctuations in value does not require the
elimination of any security from a Subaccount's portfolio.
Policies 1 to 19 below are fundamental investment policies of
each affected Subaccount and may not be changed without a vote
of the Contract Owners with Contract Value allocated to the
Subaccount.

The following restriction is applicable to all
Subaccounts:

A Subaccount shall not:

1. Purchase the securities of any issuer if the
purchase would cause more than 5% of the value of
the Subaccount's total assets to be invested in the
securities of any one issuer (excluding U.S.
Government Securities) or cause more than 10% of the
voting securities of the issuer to be held by the
Subaccount, except that up to 25% of the value of
each Subaccount's total assets may be invested
without regard to these restrictions.

2. Invest 25% or more of the value of the Subaccount's
total assets in the securities of one or more
issuers conducting their principal business
activities in the same industry; except that the
Precious Metals Subaccount will invest 25% or more
of the value of the Precious Metals Subaccount's
total assets in the securities in the metals-related
and minerals-related industries; and except, that to
the extent that the benchmark index selected for a
particular Subaccount is concentrated in a
particular industry, that Subaccount will be

B-8
<PAGE>

concentrated in that industry, but will not
otherwise be concentrated. This limitation does not
apply to investments or obligations of the U.S.
Government or any of its agencies or
instrumentalities.

B-9
<PAGE>

The following restrictions are applicable to all
Subaccounts other than the Money Market Subaccounts:

A Subaccount shall not:

3. Lend any security or make any other loan if, as a
result, more than 33 % of the value of the
Subaccount's total assets would be lent to other
parties, except (i) through the purchase of a
portion of an issue of debt securities in accordance
with the Subaccount's investment objective,
policies, and limitations, or (ii) by engaging in
repurchase agreements with respect to portfolio
securities, or (iii) through the loans of portfolio
securities provided the borrower maintains
collateral equal to at least 100% of the value of
the borrowed security and marked-to-market daily.

4. Underwrite securities of any other issuer.

5. Purchase, hold, or deal in real estate or oil and
gas interests, although the Subaccount may purchase
and sell securities that are secured by real estate
or interests therein and may purchase mortgage-
related securities and may hold and sell real estate
acquired for the Subaccount as a result of the
ownership of securities.

6. Issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act) (including the
amount of senior securities issued but excluding
liabilities and indebtedness not constituting senior
securities), except that the Subaccount may issue
senior securities in connection with transactions in
options, futures, options on futures, and other
similar investments, and except as otherwise
permitted herein and in Investment Restriction Nos.
6, 8, 9, 10, 11, and 12, as applicable to the
Subaccount.

7. Pledge, mortgage, or hypothecate the Subaccount's
assets, except to the extent necessary to secure
permitted borrowings and to the extent related to
the deposit of assets in escrow in connection with
(i) the writing of covered put and call options,
(ii) the purchase of securities on a forward-
commitment or delayed-delivery basis, and (iii)
collateral and initial or variation margin
arrangements with respect to currency transactions,
options, futures contracts, including those relating
to indexes, and options on futures contracts or
indexes.

B-10
<PAGE>

8. Invest in commodities except that (i) the Subaccount
may purchase and sell futures contracts, including
those relating to securities, currencies, indexes,
and options on futures contracts or indexes and
currencies underlying or related to any such futures
contracts, and purchase and sell currencies (and
options thereon) or securities on a forward-
commitment or delayed-delivery basis, and (ii) the
Precious Metals Subaccount may invest in precious
metals and precious minerals.

The following restriction is applicable to the Ursa
Subaccount, the OTC Subaccount, the Precious Metals
Subaccount, the Juno Subaccount, and the Money Market
Subaccounts:

A Subaccount shall not:

9. Borrow money, except (i) as a temporary measure for
extraordinary or emergency purposes and then only in
amounts not in excess of 5% of the value of the
Subaccount's total assets from a bank or (ii) in an
amount up to one-third of the value of the
Subaccount's total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio instruments.
This provision is not for investment leverage but
solely to facilitate management of the portfolio by
enabling the Subaccount to meet redemption requests
when the liquidation of portfolio instruments would
be inconvenient or disadvantageous. The Juno
Subaccount shall not make purchases while borrowing
in excess of 5% of the value of its total assets.
For purposes of this limitation, Subaccount assets
invested in reverse repurchase agreements are
included in the amounts borrowed.

The following restriction is applicable to the Nova
Subaccount, the OTC Subaccount, the Precious Metals
Subaccount, and the Bond Subaccount:

A Subaccount shall not:

10. Make short sales of portfolio securities or purchase
any portfolio securities on margin, except for
short-term credits necessary for the clearance of
transactions. The deposit or payment by the
Subaccount of initial or variation margin in
connection with futures or options transactions is
not considered to be a securities purchase on
margin. The Subaccount may engage in short sales
if, at the time of the short sale, the Subaccount

B-11
<PAGE>

owns or has the right to acquire an equal amount of
the security being sold at no additional cost
("selling against the box"); except that the Bond
Subaccount may not engage in short sales against the
box.

The following restriction is applicable to the Nova
Subaccount and the Bond Subaccount:

A Subaccount shall not:

11. Borrow money, except the Subaccount may borrow money
(i) from a bank in an amount not in excess of 33 %
of the total value of the Subaccount's assets
(including the amount borrowed) less the
Subaccount's liabilities (not including the
Subaccount's borrowings), and (ii) for temporary
purposes in an amount not in excess of 5% of the
total value of the Subaccount's assets.

The following restriction is applicable to the Ursa
Subaccount and the Juno Subaccount:

A Subaccount shall not:

12. Make short sales of portfolio securities or maintain
a short position unless at all times when a short
position is open (i) the Subaccount maintains a
segregated account with the Subaccount's custodian
to cover the short position in accordance with the
position of the SEC or (ii) the Subaccount owns an
equal amount of such securities or securities
convertible into or exchangeable, without payment of
any further consideration, for securities of the
same issue as, and equal in amount to, the
securities sold short.

The following restrictions are applicable to the Money
Market Subaccounts:

A Subaccount shall not:

13. Make loans to others except through the purchase of
qualified debt obligations, loans of portfolio
securities and entry into repurchase agreements.

14. Lend the Subaccount's portfolio securities in excess
of 15% of the Subaccount's total assets. Any loans
of the Subaccount's portfolio securities will be
made according to guidelines established by the
Board of Managers of the Separate Account, including
maintenance of cash collateral of the borrower equal

B-12
<PAGE>

at all times to the current market value of the
securities loaned.

15. Issue senior securities, except as permitted by the
Subaccount's investment objectives and policies.

16. Write or purchase put or call options.

17. Invest in securities of other investment companies,
except as these securities may be acquired as part
of a merger, consolidation, acquisition of assets,
or plan of reorganization.

18. Mortgage, pledge, or hypothecate the Subaccount's
assets except to secure permitted borrowings. In
those cases, the Subaccount may mortgage, pledge, or
hypothecate assets having a market value not
exceeding the lesser of the dollar amounts borrowed
or 10% of the value of total assets of the
Subaccount at the time of the borrowing.

19. Make short sales of portfolio securities or purchase
any portfolio securities on margin, except for
short-term credits necessary for the clearance of
transactions.

The Managers have adopted additional investment
restrictions for each Subaccount. These restrictions are not
fundamental investment policies, but rather are operating
policies of each Subaccount, as indicated, and may be changed
by the Managers without Contract Owner approval. With respect
to each of the Subaccounts, except as otherwise indicated,
these additional investment restrictions adopted by the
Managers, to date, are as follows:

1. The Subaccount will not invest in warrants.

2. The Subaccount will not invest in real estate
limited partnerships.

3. The Subaccount will not invest in mineral leases;
except that the Precious Metals Subaccount may
invest in mineral leases although the Precious
Metals Subaccount does not presently intend to
invest in such leases.

In addition, none of the Subaccounts presently intends:

1. To enter into currency transactions; except that the
Precious Metals Subaccount may enter into currency
transactions although the Precious Metals Subaccount

B-13
<PAGE>

does not presently intend to enter into such
transactions.

2. To purchase illiquid securities. If in the future,
a Subaccount does purchase illiquid securities, the
Subaccount will not invest more than 15% of its
assets in illiquid securities; except that each of
the Money Market Subaccounts will not invest more
than 10% of its assets in illiquid securities. Each
Subaccount will adhere to a more restrictive
limitation on the Subaccount's investment in
illiquid securities as required by the insurance
laws of those jurisdictions where Subaccount
Accumulation Units are offered for sale.

3. To purchase and sell real property (including
limited partnership interests), to purchase and sell
securities that are secured by real estate or
interests therein, to purchase mortgage-related
securities, or to hold and sell real estate acquired
for the Subaccount as a result of the ownership of
securities.

If a percentage restriction is adhered to at the time of
an investment, a later increase or decrease in the
investment's percentage of the value of the Subaccount's total
assets resulting from a change in such values or assets will
not constitute a violation of the percentage restriction.

BOARD OF MANAGERS
OF THE SEPARATE ACCOUNT

The Board of Managers of the Separate Account (the
"Managers") are responsible for the general supervision of the
Separate Account's business. The day-to-day operations of the
Separate Account are the responsibilities of the Separate
Account's officers. The names, addresses, and ages of the
Managers of the Separate Account and the officers of PADCO,
together with information as to their principal business
occupations during the past five years, are set forth below.
Fees and expenses for non-interested Managers will be paid by
the Separate Account.

Managers

Albert P. Viragh, Jr. (54)*

Chairman of the Board of Managers of the Separate
Account; Chairman of the Board, President, and Treasurer
of PADCO Advisors II, Inc., investment adviser to the
Separate Account, 1996 to present; Chairman of the Board

B-14
<PAGE>

of Trustees and President of Rydex Series Trust, a
registered investment company; Chairman of the Board,
President, and Treasurer of PADCO Advisors, Inc.,
investment adviser to Rydex Series Trust, 1993 to
present; portfolio manager of the Ursa Fund, a series of
Rydex Series Trust, 1994 to present; Chairman of the
Board, President, and Treasurer of PADCO Service Company,
Inc., shareholder and transfer agent servicer to the
Separate Account, 1993 to present; Chairman of the Board,
President, and Treasurer of PADCO Financial Services,
Inc., a registered broker-dealer firm, and the Separate
Account's principal underwriter, 1996 to present; Vice
President of Rushmore Investment Advisors Ltd., a
registered investment adviser, 1985 to 1993. Address:
6116 Executive Boulevard, Suite 400, Rockville, Maryland
20852.

Corey A. Colehour (50)

Manager of the Separate Account; Trustee of Rydex Series
Trust, 1993 to present; Senior Vice President of
Marketing of Schield Management Company, a registered
investment adviser, 1985 to present. Address: 6116
Executive Boulevard, Suite 400, Rockville, Maryland
20852.

J. Kenneth Dalton (54)

Manager of the Separate Account; Trustee of Rydex Series
Trust, 1995 to present; Mortgage Banking Consultant and
Investor, The Dalton Group, April 1995 to present;
President, CRAM Mortgage Group, Inc. 1966 to April 1995.
Address: 6116 Executive Boulevard, Suite 400, Rockville,
Maryland 20852.

Roger Somers (51)

Manager of the Separate Account; Trustee of Rydex Series
Trust, 1993 to present; President, Arrow Limousine, 1963
to present. Address: 6116 Executive Boulevard, Suite
400, Rockville, Maryland 20852.

B-15
<PAGE>

L. Gregory Gloeckner (42)*

Manager of the Separate Account; Senior Vice President,
Conseco, Inc., October 1994 to present; Vice President,
Continuum, August to October 1994; Vice President,
Variable Product Administration, Monarch Life Insurance
Company and First Variable Life Company, 1993 to 1994;
self-employed consultant from 1991 to 1993; and Vice
President, Beneficial Standard Life Insurance Company,
1989 to 1991. Address: 11815 North Pennsylvania Street,
Carmel, Indiana 46032.

_________________________

* This Manager is deemed to be an "interested person" of
the Separate Account, within the meaning of Section
2(a)(19) of the 1940 Act, because this person is
affiliated with PADCO, as described herein.

Other Officers of PADCO

Timothy P. Hagan (52)

Treasurer and Vice President of the Separate Account;
Vice President of PADCO; Treasurer and Vice President of
Rydex Series Trust, 1993 to present; Employee of PADCO
Service Company, Inc., 1993 to present; President and
Director of Rushmore Services, Inc., a registered
transfer agent, 1981 to 1993. Address: 6116 Executive
Boulevard, Suite 400, Rockville, Maryland 20852.

Robert M. Steele (37)

Secretary and Vice President of the Separate Account;
Vice President of PADCO; Secretary and Vice President of
Rydex Series Trust, 1995 to present; Vice President of
PADCO Advisors, Inc., 1994 to present; Vice President of
The Boston Company, Inc., an institutional money
management firm, 1987 to 1994. Address: 6116 Executive
Boulevard, Suite 400, Rockville, Maryland 20852.

Messrs. Colehour, Dalton, and Somers, comprise the Audit
Committee of the Managers. The Audit Committee reviews, and
reports to the Managers on the scope and results of, the
Separate Account's audits and related matters.

The Separate Account pays each Manager who is not an
interested person of the Separate Account and Great American
Reserve a fee of $__________ per year plus $________ per
meeting attended and reimbursement for actual out-of-pocket
expenses relating to attendance at meetings.

B-16
<PAGE>

PADCO

PADCO, which has its office at 6116 Executive Boulevard,
Suite 400, Rockville, Maryland 20852, provides the
Subaccounts with investment advisory services. PADCO was
incorporated in the State of Maryland on July 5, 1994. Albert
P. Viragh, Jr., the Chairman of the Board of Managers of the
Separate Account and the President of PADCO, owns a
controlling interest in PADCO.

Under an investment advisory agreement with PADCO, dated
___________________, 1996, PADCO serves as the investment
adviser for each Subaccount and provides investment advice to
the Subaccounts and oversees the day-to-day operations of the
Subaccounts, subject to direction and control by the Managers.
Pursuant to the advisory agreement with PADCO, the Subaccounts
pay PADCO the following fees at an annual rate based on the
average daily Accumulation Units for each respective
Subaccount, as set forth below:

Nova Subaccount 0.75%
Ursa Subaccount 0.90%
OTC Subaccount 0.75%
Precious Metals Subaccount 0.75%
Bond Subaccount 0.50%
Juno Subaccount 0.90%
Money Market I Subaccount 0.50%
Money Market II Subaccount 0.25%

PADCO manages the investment and the reinvestment of the
assets of each of the Subaccounts, in accordance with the
investment objectives, policies, and limitations of the
Subaccount, subject to the general supervision and control of
the Managers. PADCO bears all costs associated with providing
these advisory services and the expenses of the Managers of
the Separate Account who are affiliated with or interested
persons of PADCO. In addition, PADCO has voluntarily agreed
to reimburse each Subaccount (up to the amount of the
applicable advisory fee) through June 30, 1997, and until such
later date as PADCO may determine, for other expenses incurred
by the Subaccount so that the total annual expenses, including
advisory fees, for the respective Subaccounts do not exceed
4.55% for the Nova Subaccount, 4.65% for the Ursa Subaccount,
4.55% for the OTC Subaccount, 4.55% for the Precious Metals
Subaccount, 4.15% for the Bond Subaccount, 4.65% for the Juno
Subaccount, 3.95% for the Money Market I Subaccount, and 1.75%
for the Money Market II Subaccount.

PORTFOLIO TRANSACTIONS AND BROKERAGE

B-17
<PAGE>

Subject to the general supervision by the Managers, PADCO
is responsible for decisions to buy and sell securities for
each of the Subaccounts, the selection of brokers and dealers
to effect the transactions, and the negotiation of brokerage
commissions, if any. PADCO expects that the Subaccounts may
execute brokerage or other agency transactions through
registered broker-dealers, for a commission, in conformity
with the 1940 Act, the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.

PADCO, and its affiliates (collectively, the "PADCO
Advisors") may serve as investment managers to a number of
clients, including other investment companies. It is the
practice of the PADCO Advisors to cause purchase and sale
transactions to be allocated among the Subaccounts and others
whose assets the PADCO Advisors manage as the PADCO Advisors
deem equitable. The main factors considered by the PADCO
Advisors in making such allocations among the Subaccounts and
other client accounts of the PADCO Advisors are the respective
investment objectives, the relative size of portfolio holdings
of the same or comparable securities, the availability of cash
for investment, the size of investment commitments generally
held, and the opinions of the person(s) responsible, if any,
for managing the portfolios of the Subaccounts and the other
client accounts.

The policy of each Subaccount regarding purchases and
sales of securities for the Subaccount's portfolio is that
primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions.
Consistent with this policy, when securities transactions are
effected on a stock exchange, each Subaccount's policy is to
pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible
commissions are paid in all circumstances. Each Subaccount
believes that a requirement always to seek the lowest possible
commission cost could impede effective portfolio management
and preclude the Subaccount and the PADCO Advisors from
obtaining a high quality of brokerage and research services.
In seeking to determine the reasonableness of brokerage
commissions paid in any transaction, the PADCO Advisors rely
upon their experience and knowledge regarding commissions
generally charged by various brokers and on their judgment in
evaluating the brokerage and research services received from
the broker effecting the transaction. Such determinations are
necessarily subjective and imprecise, as in most cases an
exact dollar value for those services is not ascertainable.

Purchases and sales of obligations of the U.S. Treasury,
or obligations either issued or guaranteed, as to principal
and interest, by agencies or instrumentalities of the U.S.
Government ("U.S. Government Securities"), are normally

B-18
<PAGE>

transacted through issuers, underwriters, or major dealers in
U.S. Government Securities acting as principals. Such
transactions are made on a net basis and do not involve
payment of brokerage commissions. The cost of securities
purchased from an underwriter usually includes a commission
paid by the issuer to the underwriters; transactions with
dealers normally reflect the spread between bid and asked
prices.

In seeking to implement a Subaccount's policies, the
PADCO Advisors effect transactions with those brokers and
dealers whom the PADCO Advisors believe provide the most
favorable prices and are capable of providing efficient
executions. If the PADCO Advisors believe such prices and
executions are obtainable from more than one broker or dealer,
the PADCO Advisors may give consideration to placing portfolio
transactions with those brokers and dealers who also furnish
research and other services to the Subaccount or the PADCO
Advisors. Such services may include, but are not limited to,
any one or more of the following: information as to the
availability of securities for purchase or sale; statistical
or factual information or opinions pertaining to investment;
wire services; and appraisals or evaluations of portfolio
securities.

If the broker-dealer providing these additional services
is acting as a principal for its own account, no commissions
would be payable. If the broker-dealer is not a principal, a
higher commission may be justified, at the determination of
the PADCO Advisors, for the additional services.

The information and services received by the PADCO
Advisors from brokers and dealers may be of benefit to the
PADCO Advisors in the management of accounts of some of the
PADCO Advisors' other clients and may not in all cases benefit
a Subaccount directly. While the receipt of such information
and services is useful in varying degrees and would generally
reduce the amount of research or services otherwise performed
by the PADCO Advisors and thereby reduce the PADCO Advisors'
expenses, this information and these services are of
indeterminable value and the advisory fees paid to the PADCO
Advisors are not reduced by any amount that may be
attributable to the value of such information and services.

DETERMINATION OF ACCUMULATION UNIT VALUES

The current market values of the Accumulation Units (the
"Accumulation Unit Values") for each of the Subaccounts are
determined each day on which the New York Stock Exchange (the
"NYSE") is open for business. Currently, the NYSE is closed
on weekends and on the following holidays: (i) New Year s Day,

B-19
<PAGE>

President s Day, Good Friday, Memorial Day, July Fourth, Labor
Day, Thanksgiving Day, and Christmas Day; and (ii) the
preceding Friday when any one of those holidays falls on a
Saturday or the subsequent Monday when any one of those
holidays falls on a Sunday. Accumulation Unit Values will be
determined at 4:00 P.M. Eastern Time for the Nova, Ursa,
Precious Metals, OTC and each of the Money Market Subaccounts
and at 3:00 P.M. Eastern Time for the Bond and Juno
Subaccounts.

For purposes of determining the Accumulation Unit Value
of a Subaccount, options and futures contracts will be valued
15 minutes after the 4:00 P.M., Eastern Time, close of trading
on the NYSE, except that U.S. Treasury bond options and
futures contracts traded on the CBOT will be valued at 3:00
P.M., Eastern Time, the close of trading of that exchange.
Options on securities and indices purchased by a Subaccount
generally are valued at their last bid price in the case of
exchange-traded options or, in the case of options traded in
the OTC market, the average of the last bid price as obtained
from two or more dealers unless there is only one dealer, in
which case that dealer s price is used. The value of a
futures contract equals the unrealized gain or loss on the
contract that is determined by marking the contract to the
current settlement price for a like contract acquired on the
day on which the futures contract is being valued. The value
of options on futures contracts is determined based upon the
current settlement price for a like option acquired on the day
on which the option is being valued. A settlement price may
not be used for the foregoing purposes if the market makes a
limit move with respect to a particular commodity.

OTC securities held by a Subaccount shall be valued at
the last sales price or, if no sales price is reported, the
mean of the last bid and asked price is used. The portfolio
securities of a Subaccount that are listed on a national
exchange or foreign stock exchange are taken at the last sales
price of such securities on that exchange; if no sales price
is reported, the mean of the last bid and asked price is used.
For valuation purposes, all assets and liabilities initially
expressed in foreign currency values will be converted into
U.S. dollar values at the mean between the bid and the offered
quotations of such currencies against U.S. dollars as last
quoted by any recognized dealer. If such quotations are not
available, the rate of exchange will be determined in good
faith by the Managers. Dividend income and other
distributions are recorded on the ex-dividend date, except for
certain dividends from foreign securities which are recorded
as soon as the Separate Account is informed after the ex-
dividend date.

B-20
<PAGE>

Illiquid securities, securities for which reliable
quotations or pricing services are not readily available, and
all other assets will be valued at their respective fair value
as determined in good faith by, or under procedures
established by, the Managers, which procedures may include the
delegation of certain responsibilities regarding valuation to
PADCO or the officers of the Separate Account. PADCO and
officers of the Separate Account report, as necessary, to the
Managers regarding portfolio valuation determination. The
Managers, from time to time, will review these methods of
valuation and will recommend changes which may be necessary to
assure that the investments of the Subaccounts are valued at
fair value.

PERFORMANCE INFORMATION

Total Return Calculations

From time to time, each of the Subaccounts (other than
the Money Market Subaccounts) may include its total return for
prior periods in advertisements or reports to Contract Owners
or prospective Contract Owners. Quotations of average annual
total return for a Subaccount will be expressed in terms of
the average annual compounded rate of return on a hypothetical
investment in the Subaccount over a period of at least 1, 5,
and 10 years (up to the life of the Subaccount) (the ending
date of the period will be stated), or for the life of the
Subaccount. Other total return quotations, aggregate over
other time periods for the Subaccount, also may be included.
Total return of a Subaccount is calculated from two factors:
the amount of dividends earned by each Subaccount unit and by
the increase or decrease in value of the Subaccount's unit
value.

The total return of a Subaccount for a particular period
represents the increase (or decrease) in the value of a
hypothetical investment in the Subaccount from the beginning
to the end of the period. Total return is calculated by
subtracting the value of the initial investment from the
ending value and showing the difference as a percentage of the
initial investment; this calculation assumes that the initial
investment is made at the current Accumulation Unit Value and
that all income dividends or capital gains distributions
during the period are reinvested in Accumulation Units of the
Subaccount at Accumulation Unit Value. Total return is based
on historical earnings and asset value fluctuations and is not
intended to indicate future performance.

Average annual total return quotations for various
periods are computed by finding the average annual compounded
rate of return over the period that would equal the initial

B-21
<PAGE>

amount invested to the ending contract value available for
withdrawal. A more-detailed description of the method by
which the total return of a Subaccount is calculated is
contained in this Statement of Additional Information under
"Calculation of Return Quotations."

Yield Calculations

In addition to total return information, the Bond
Subaccount may also advertise its current "yield." Yield
figures are based on historical earnings and are not intended
to indicate future performance. Yield is determined by
analyzing the Bond Subaccount s net income per unit for a
thirty-day (or one-month) period (which period will be stated
in the advertisement), and dividing by the maximum offering
price per unit on the last day of the period. Calculation of
yield does not include any applicable withdrawal charges. A
"bond equivalent" annualization method is used to reflect a
semi-annual compounding.

For purposes of calculating yield quotations, net income
is determined by a standard formula prescribed by the SEC to
facilitate comparison with yields quoted by other investment
companies. Net income computed for this formula differs from
net income reported by the Bond Subaccount in accordance with
generally accepted accounting principles and from net income
computed for Federal income tax reporting purposes. Thus, the
yield computed for a period may be greater or less than the
Bond Subaccount s then-current dividend rate.

The Bond Subaccount s yield is not fixed and will
fluctuate in response to prevailing interest rates and the
market value of portfolio securities, and as a function of the
type of securities owned by the Bond Subaccount, portfolio
maturity, and the Bond Subaccount s expenses.

Yield quotations should be considered relative to changes
in the Accumulation Unit Value of the Bond Subaccount, the
Bond Subaccount s investment policies, and the risks of
investing in Bond Subaccount units. The investment return and
principal value of an investment in the Bond Subaccount will
fluctuate so that a Contract Owner's Accumulation Units, when
redeemed, may be worth more or less than their original cost.

From time to time, each of the Money Market Subaccounts
advertise their "yield" and "effective yield." Both yield
figures are based on historical earnings and are not intended
to indicate future performance. The "yield" of a Money Market
Subaccount refers to the income generated by an investment in
the Money Market Subaccount over a seven-day period (which
period will be stated in the advertisement). This income is
then "annualized." That is, the amount of income generated by

B-22
<PAGE>

the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage
of the investment. The "effective yield" is calculated
similarly, but, when annualized, the income earned by an
investment in a Money Market Subaccount is assumed to be
reinvested. The "effective yield" will be slightly higher
than the "yield" because of the compounding effect of this
assumed reinvestment. A description of the respective methods
by which the yield of the Bond Subaccount and the current and
effective yields of the Money Market Subaccounts are
calculated is contained in this Statement of Additional
Information under "Information on Computation of Yield."

Since yield fluctuates, yield data cannot necessarily be
used to compare an investment in units of the Bond Subaccount
or the Money Market Subaccounts with bank deposits, savings
accounts, and similar investment alternatives which often
provide an agreed or guaranteed fixed yield for a stated
period of time. Contract Owners of the Bond Subaccount and
Money Market Subaccounts should remember that yield generally
is a function of the kind and quality of the instrument held
in portfolio, portfolio maturity, operating expenses, and
market conditions.

Comparisons of Investment Performance

Performance information for each of the Subaccounts
contained in reports to Contract Owners or prospective
Contract Owners, advertisements, and other promotional
literature may be compared to the record of various unmanaged
indexes for the same period. In conjunction with performance
reports, promotional literature, and/or analyses of Contract
Owner service for a Subaccount, comparisons of the performance
information of the Subaccount for a given period to the
performance of recognized, unmanaged indexes for the same
period may be made. Such indexes include, but are not limited
to, ones provided by Dow Jones & Company, Standard & Poor s
Corporation, Lipper Analytical Services, Inc., Shearson Lehman
Brothers, National Association of Securities Dealers, Inc.,
The Frank Russell Company, Value Line Investment Survey, the
American Stock Exchange, the Philadelphia Stock Exchange,
Morgan Stanley Capital International, Wilshire Associates, the
Financial Times-Stock Exchange, and the Nikkei Stock Average
and Deutcher Aktienindex, all of which are unmanaged market
indicators. Such comparisons can be a useful measure of the
quality of a Subaccount s investment performance.

In particular, performance information for the Nova
Subaccount, the Ursa Subaccount, and the Precious Metals
Subaccount may be compared to various unmanaged indexes,
including, but not limited to, the Standard & Poor's 500
Composite Stock Price Index (the "S&P500 Index") or the Dow

B-23
<PAGE>

Jones Industrial Average. Performance information for the
Precious Metals Subaccount also may be compared to its current
benchmark, the Philadelphia Stock Exchange Gold/Silver Index
(the "XAU Index"). Performance information for the OTC
Subaccount may be compared to various unmanaged indexes,
including, but not limited to, its current benchmark, the
NASDAQ 100 Index , and the NASDAQ Composite Index . The
NASDAQ Composite Index comparison may be provided to show how
the OTC Subaccount's total return compares to the record of a
broad average of over-the-counter stock prices over the same
period. The OTC Subaccount has the ability to invest in
securities not included in the NASDAQ 100 Index or the NASDAQ
Composite Index, and the OTC Subaccount's investment portfolio
may or may not be similar in composition to NASDAQ 100 Index
or the NASDAQ Composite Index. The NASDAQ Composite Index is
based on the prices of an unmanaged group of stocks and,
unlike the OTC Subaccount's returns, the returns of the NASDAQ
Composite Index, and such other unmanaged indexes, may assume
the reinvestment of dividends, but generally do not reflect
payments of brokerage commissions or deductions for operating
costs and other expenses of investing. Performance
information for the Bond Subaccount and the Juno Subaccount
may be compared to the price movement of the Current Long
Treasury Bond (the "Long Bond") and to various unmanaged
indexes, including, but not limited to, the Shearson Lehman
Government (LT) Index . Such unmanaged indexes may assume the
reinvestment of dividends, but generally do not reflect
deductions for operating costs and expenses.

In addition, rankings, ratings, and comparisons of
investment performance and/or assessments of the quality of
Contract Owner service appearing in publications such as
Money, Forbes, Kiplinger s Magazine, Personal Investor,
Morningstar, Inc., the Morningstar Variable Annuity/Life
Reporter, VARDS, and similar sources which utilize information
compiled (i) internally, (ii) by Lipper Analytical Services,
Inc. ("Lipper"), or (iii) by other recognized analytical
services, may be used in sales literature. The Morningstar
Variable Annuity/Life Reporter consists of nearly 700 variable
life and annuity funds, all of which report their data net of
investment advisory fees, direct operating expenses, and
separate account charges. VARDS is a monthly reporting
service that monitors approximately 760 variable life and
variable annuity funds on performance and account information.
The total return of each Subaccount (other than the Money
Market Subaccounts) may be compared to the performance of
broad groups of comparable subaccounts or mutual funds with
similar investment goals, as such performance is tracked and
published by such independent organizations as Lipper, and CDA
Investment Technologies, Inc., among others. When Lipper's
tracking results are used, the Subaccount will be compared to
Lipper's appropriate fund category, that is, by fund objective

B-24
<PAGE>

and portfolio holdings. Accordingly, the Lipper ranking and
comparison, which may be used by the Separate Account in
performance reports, will be drawn from the "Capital
Appreciation Subaccounts" grouping for each of the Nova
Subaccount and the Ursa Subaccount, from the "Small Company
Growth Subaccounts" grouping for the OTC Subaccount, from the
"Precious Metals Subaccounts" grouping for the Precious Metals
Subaccount, and from the "Bond Subaccounts" grouping for the
Bond Subaccount and the Juno Subaccount. In addition, the
broad-based Lipper groupings may be used for comparison to any
of the Subaccounts. Rankings may be listed among one or more
of the asset-size classes as determined by Lipper. Since the
assets in all Subaccounts are always changing, a Subaccount
may be ranked within one Lipper asset-size class at one time
and in another Lipper asset-size class at some other time.
Footnotes in advertisements and other marketing literature
will include the time period and Lipper asset-size class, as
applicable, for the ranking in question. Performance figures
are based on historical results and are not intended to
indicate future performance.

Calculation of Return Quotations

For purposes of quoting and comparing the performance of
a Subaccount (other than a Money Market Subaccount) to that of
relevant market indexes in advertisements or in reports to
Contract Owners, performance for the Subaccount may be stated
in terms of average annual total return. Total return is
calculated according to the following formula:

P(1+T)n=ERV

Where: P = a hypothetical initial payment of $1,000;

T = average annual total return;

n = number of years (1, 5, or 10); and

ERV = e n d i n g
Contract
V a l u e
available
f o r
withdrawal
o f a
hypothetical
$ 1 , 0 0 0
payment made
a t t h e
beginning of
the 1, 5, or
10 year

B-25
<PAGE>

periods at
the end of
the 1, 5, or
10 year
periods (or
fractional
portion
thereof).

Under the foregoing formula, the time periods used in
advertising will be based on rolling calendar quarters,
updated to the last day of the most recent quarter prior to
submission of the advertising for publication, and will cover
1, 5, and 10 year periods or a shorter period dating from the
effectiveness of the Registration Statement of the Separate
Account. In calculating the ending redeemable value, all
dividends and distributions by a Subaccount are assumed to
have been reinvested. Total return, or "T" in the formula
above, is computed by finding the average annual compounded
rates of return over the 1, 5, and 10 year periods (or
fractional portion thereof) that would equate the initial
amount invested to the ending redeemable value. The deduction
for the asset allocation on advisory fee will be included in
the determination of standard total return in any performance
advertising for the Subaccounts.

From time to time, each Subaccount also may include in
such advertising an aggregate total return figure calculated
by assuming the allocation of $10,000 to the Subaccount and
assuming reinvestment of each dividend or other distribution.
Percentage increases are determined by subtracting the initial
value of the investment from the ending value and by dividing
the remainder by the beginning value. Each Subaccount may
show non-standardized total returns and average annual total
returns that do not include sales loads, which, if included,
would reduce the percentages reported.

Information on Computation of Yield

The Bond Subaccount. In addition to the total return
quotations discussed above, the Bond Subaccount also may
advertise its yield based on a thirty-day (or one month)
period ended on the date of the most recent balance sheet
included in the Separate Account's Registration Statement,
computed by dividing the net investment income per Bond
Subaccount unit earned during the period by the maximum
offering price per Bond Subaccount unit on the last day of the
period, according to the following formula:

B-26
<PAGE>

YIELD = 2[( a-b +1)6-1]
cd

Where: a = dividends and interest earned
during the period;

b = expenses accrued for the period (net of
reimbursements);

c = the average daily number of units
outstanding during the period that were
entitled to receive dividends; and

d = the maximum offering price per unit on
the last day of the period.

Under this formula, interest earned on debt obligations, for
purposes of "a" above, is calculated by (i) computing the
yield to maturity of each obligation held by the Bond
Subaccount based on the market value of the obligation
(including actual accrued interest) at the close of business
on the last day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual
accrued interest), (ii) dividing that figure by 360 and
multiplying the quotient by the market value of the obligation
(including actual accrued interest as referred to above) to
determine the interest income on the obligation that is in the
Bond Subaccount's portfolio (assuming a month of thirty days),
and (iii) computing the total of the interest earned on all
debt obligations and all dividends accrued on all equity
securities during the thirty-day or one month period. In
computing dividends accrued, dividend income is recognized by
accruing 1/360 of the stated dividend rate of a security each
day that the security is in the Bond Subaccount's portfolio.
Undeclared earned income, computed in accordance with
generally accepted accounting principles, may be subtracted
from the maximum offering price calculation required pursuant
to "d" above.

The Bond Subaccount from time to time may also advertise
its yield based on a thirty-day period ending on a date other
than the most recent balance sheet included in the Separate
Account's Registration Statement, computed in accordance with
the yield formula described above, as adjusted to conform with
the differing period for which the yield computation is based.

Any quotation of performance stated in terms of yield
(whether based on a thirty-day or one month period) will be
given no greater prominence than the information prescribed
under SEC Rules. In addition, all advertisements containing
performance data of any kind will include a legend disclosing
that such performance data represents past performance and

B-27
<PAGE>

that the investment return and principal value of an
investment will fluctuate so that a Contract Owner's units,
when redeemed, may be worth more or less than their original
value.

The Money Market Subaccounts. Each of the Money Market
Subaccounts' annualized current yield, as may be quoted from
time to time in advertisements and other communications to
Contract Owners and potential Contract Owners, is computed by
determining, for a stated seven-day period, the net change,
exclusive of capital changes and including the value of
additional Accumulation Units purchased with dividends and any
dividends declared therefrom (which reflect deductions of all
expenses of the Money Market Subaccount such as advisory
fees), in the value of a hypothetical pre-existing account
having a balance of one Accumulation Unit at the beginning of
the period, and dividing the difference by the value of the
account at the beginning of the base period to obtain the base
period return, and then multiplying the base period return by
(365/7).

Each of the Money Market Subaccounts' respective
annualized effective yield, as may be quoted from time to time
in advertisements and other communications to Contract Owners
and potential Contract Owners, is computed by determining (for
the same stated seven-day period as the current yield) the net
change, exclusive of capital changes and including the value
of additional Accumulation Units purchased with dividends and
any dividends declared therefrom (which reflect deductions of
all expenses of the Money Market Subaccount, as appropriate,
such as advisory fees), in the value of a hypothetical pre-
existing account having a balance of one Accumulation Unit at
the beginning of the period, and dividing the difference by
the value of the account at the beginning of the base period
to obtain the base period return, and then compounding the
base period return by adding 1, raising the sum to a power
equal to 365 divided by 7, and subtracting 1 from the result.

The yields quoted in any advertisement or other
communication should not be considered a representation of the
yields of either of the Money Market Subaccounts in the future
since the yield is not fixed. Actual yields will depend not
only on the type, quality, and maturities of the investments
held by the Money Market Subaccount and changes in interest
rates on such investments, but also on changes in the Money
Market Subaccount's expenses during the period.

Yield information may be useful in reviewing the
performance of the Money Market Subaccounts and for providing
a basis for comparison with other investment alternatives.
However, unlike bank deposits or other investments, which

B-28
<PAGE>

typically pay a fixed yield for a stated period of time, the
yields of the Money Market Subaccounts fluctuate.

UNDERWRITER OF THE CONTRACTS

PADCO Financial Services, Inc. ("PFS"), is the principal
underwriter of the Contracts. The offering of the Contracts
is continuous, although Great American Reserve has reserved
the right to suspend the offer and sale of the Contracts
whenever, in its opinion, market or other conditions make a
suspension appropriate. The Contracts are sold by authorized
broker-dealers, including registered representatives of PFS.
These registered representatives are also Great American
Reserve's licensed insurance agents. Great American Reserve,
from its general account, pays commissions to PFS not to
exceed 6.0% of purchase payments.

INDEPENDENT ACCOUNTANTS

The financial statements of Great American Reserve and
the Statement of Assets and Liabilities of the Separate
Account included in the Prospectus and the Statement of
Additional Information have been examined by Coopers & Lybrand
LLP, independent accountants, for the periods indicated in
their reports as stated in their opinions, and have been so
included in reliance upon such opinion given upon the
authority of that firm as experts in accounting and auditing.

CUSTODY

Boston Safe Deposit and Trust Company, a Massachusetts
trust company with its principal place of business at One
Boston Place, Boston, Massachusetts 02108, acts as the
Custodian bank for the Separate Account and each of the
Subaccounts. The securities of the Subaccount are held by the
Custodian in the Federal book-entry system pursuant to a
custodial agreement.

FINANCIAL STATEMENTS

Financial statements of the Great American Reserve
included herein should be considered only as bearing on the
ability of Great American Reserve to meet its obligations
under the Contract. No financial statements for the Separate
Account are included herein, because the Separate Account had
not commenced operations as of the date of this Statement of
Additional Information.

B-29
<PAGE>

APPENDIX A

COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.

Commercial paper rated "Prime" by Moody's Investors
Service, Inc. ("Moody's"), is based upon Moody's evaluation of
many factors including: (1) the management of the issuer; (2)
the issuer's industry or industries and the speculative-type
risks which may be inherent in certain areas; (3) the issuer's
products in relation to competition and customer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6)
trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist
with the issue; and (8) recognition by the management of
obligations which may be present or may arise as a result of
public interest questions and preparations to meet such
obligations. Relative differences in these factors determine
whether the issuer's commercial paper is rated "Prime-1,"
"Prime-2," or "Prime-3" by Moody's.

"Prime-1" indicates a superior capacity for repayment of
short-term promissory obligations. Prime-1 repayment capacity
will normally be evidenced by the following characteristics:
(1) leading market positions in well-established industries;
(2) high rates of return on funds employed; (3) conservative
capitalization structures with moderate reliance on debt and
ample asset protection; (4) broad margins in earnings coverage
of fixed financial charges and high internal cash generation;
and (5) well-established access to a range of financial
markets and assured sources of alternative liquidity.

"Prime-2" indicates a strong capacity for repayment of
short-term promissory obligations. This repayment capacity
normally will be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions.
Ample alternative liquidity is maintained.

Standard & Poor's Rating Group

Commercial paper rated by Standard & Poor's Rating Group
has the following characteristics: (1) liquidity ratios
adequate to meet cash requirements; (2) long-term senior debt
is rated "A" or better; (3) the issuer has access to at least
two additional channels of borrowing; (4) basic earnings and
cash flow have an upward trend with allowance made for unusual
circumstances; (5) typically, the issuer's industry is well-
established and the issuer has a strong position within the

B-30
<PAGE>

industry; and (6) the reliability and quality of management
are unquestioned. The relative strength or weakness of the
above factors determine whether the issuer's commercial paper
is rated "A-1," "A-2," or "A-3."

A-1 -- This designation rating indicates that the degree
of safety regarding timely payment is either overwhelming or
very strong. Those issues determined to possess overwhelming
safety characteristics are denoted with a plus (+) sign
designation.

A-2 -- The capacity for timely payment on issues with
this designation rating is strong; however, the relative
degree of safety is not as high as for issues designated "A-
1."

Fitch Investors Service, Inc.

Commercial paper rated by Fitch Investors Service, Inc.
("Fitch"), reflects Fitch's current appraisal of the degree of
assurance of timely payment of such debt. An appraisal
results in the rating of an issuer's paper as "F-1," "F-2,"
"F-3," or "F-4."

F-1 -- This designation rating indicates that the
commercial paper is regarded as having the strongest degree of
assurance for timely payment.

F-2 -- Commercial paper issues assigned this designation
rating reflect an assurance of timely payment only slightly
less in degree than those issues rated "F-1."

Duff and Phelps Credit Rating Co.

Short-term ratings by Duff & Phelps Credit Rating Co.
("Duff") are consistent with the rating criteria utilized by
money market participants. The ratings apply to all
obligations with maturities of under one year, including
commercial paper, the uninsured portion of certificates of
deposit, unsecured bank loans, master notes, bankers
acceptances, irrevocable letters of credit, and current
maturities of long-term debt. Asset-backed commercial paper
is also rated according to this scale.

An emphasis of Duff's short-term ratings is placed on
"liquidity," which is defined as not only cash from
operations, but also access to alternative sources of funds
including trade credit, bank lines, and the capital markets.
An important consideration is the level of an obligor's
reliance on short-term funds on an ongoing basis.

B-31
<PAGE>

The distinguishing feature of Duff's short-term ratings
is the refinement of the traditional "1" category. The
majority of short-term debt issuers carry the highest rating,
yet quality differences exist within that tier. As a
consequence, Duff has incorporated gradations of "1+" (one
plus) and "1-" (one minus) to assist investors in recognizing
those differences.

Duff 1+ -- This designation rating indicates the highest
certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.

Duff 1 -- This designation rating indicates a very high
certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk
factors are minor.

Duff 2 -- This designation rating indicates a good
certainty of timely payment. Liquidity factors and company
fundamental are sound. Although ongoing funding needs may
enlarge total financing requirements, access capital markets
is good. Risk factors are small.

IBCA, Inc.

In addition to conducting a careful review of an
institution's reports and published figures, IBCA's analysts
regularly visit the companies for discussions with senior
management. These meetings are fundamental to the preparation
of individual reports and ratings. To keep abreast of any
changes that may affect assessments, analysts maintain contact
throughout the year with the management of the companies that
the analysts cover.

IBCA's analysts speak the languages of the countries
that the analysts cover, which is essential to maximize the
value of their meetings with management and to analyze
properly a company's written materials. IBCA's analysts also
have a thorough knowledge of the laws and accounting practices
that govern the operations and reporting of companies within
the various countries.

Often, in order to ensure a full understanding of their
position, companies entrust IBCA with confidential data.
While these data cannot be disclosed in reports, these data
are taken into account by IBCA when assigning IBCA's ratings.
Before dispatch to subscribers, a draft of the report is
submitted to each company to permit the correction of any

B-32
<PAGE>

factual errors and to enable the clarification of issues
raised.

IBCA's Rating Committees meet at regular intervals to
review all ratings and to ensure that individual ratings are
assigned consistently for institutions in all the countries
covered. Following these committee meetings, IBCA ratings are
issued directly to subscribers. At the same time, the company
is informed of the ratings as a matter of courtesy, but not
for discussion.

A1+ -- This designation rating indicates obligations
supported by the highest capacity for timely repayment.

A1 -- This designation rating indicates obligations
supported by a very strong capacity for timely repayment.

A2 -- This designation rating indicates obligations
supported by a strong capacity for timely repayment, although
such capacity may be susceptible to adverse changes in
business, economic, or financial conditions.

B-33
<PAGE>

FINANCIAL STATEMENTS OF

GREAT AMERICAN RESERVE INSURANCE COMPANY
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
Great American Reserve Insurance Company

We have audited the accompanying statutory basis balance
sheet of Great American Reserve Insurance Company (a
wholly-owned subsidiary of Jefferson National Life Insurance
Company of Texas, which is an indirect wholly-owned subsidiary
of Conseco, Inc.) as of December 31, 1995 and 1994, and the
related statutory basis statements of operations and changes
in capital and surplus and cash flows for the years then
ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As described in Note 1, these financial statements have
been prepared in conformity with accounting practices
prescribed or permitted by the National Association of
Insurance Commissioners and the Texas Department of Insurance,
which is a comprehensive basis of accounting other than
generally accepted accounting principles.

In our opinion, the financial statements referred to
above present fairly, in all material respects, the admitted
assets, liabilities, and capital and surplus of Great American
Reserve Insurance Company as of December 31, 1995 and 1994,
and the results of its operations and its cash flows for the
years then ended in conformity with accounting practices
prescribed or permitted by the National Association of
Insurance Commissioners and the Texas Department of Insurance.

/S/ COOPERS & LYBRAND
L.L.P.
Coopers & Lybrand L.L.P.
Indianapolis, Indiana
March 20, 1996

B-35
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Balance Sheet-Statutory Basis
December 31, 1995 and 1994
(Amounts in thousands, except share data)

<TABLE>
<CAPTION>
1995 1994
---- ----

ADMITTED ASSETS

Cash and investments:

<S> <C> <C>
Bonds $2,060,828 $2,052,243
Preferred stocks 13,879 10,432
Common stocks 256 426
Mortgage loans on real estate 111,541 113,990
Real estate 125 125
Policy loans 84,664 81,549
Cash and short-term investments 19,006 13,531
Other invested assets 12,758 22,753
--------- ---------
Total cash and investments 2,303,057 2,295,049

Insurance premiums deferred and uncollected 10,181 11,910
Accrued investment income 33,973 34,665
Other Assets 6,833 5,114
Assets held in separate accounts 137,475 91,375

--------- ---------
Total admitted assets $2,491,519 $2,438,113
========== ===========
</TABLE>

B-36
<PAGE>

(Continued)
LIABILITIES, CAPITAL AND SURPLUS
<TABLE>
<CAPTION>

Liabilities: 1995 1994
---- -------
<S> <C> <C>
Policy and contract liabilities $1,999,662 $2,103,497
Interest maintenance reserve 64,654 49,660
Federal income taxes 7,851 (3,267)
Asset valuation reserve 26,229 23,173

B-37
<PAGE>

Investment borrowings and interest thereon 82,365 -0-
Other liabilities 17,127 17,017
Liabilities related to separate accounts 137,475 91,375
--------- ---------
Total liabilities 2,335,363 2,281,455
--------- ---------
Capital and surplus:
Common stock, $4.80 par value, 1,065,000 shares
authorized, 1,043,565 shares issued and
outstanding 5,009 5,009
Preferred stock, $100 par value, 40,000 shares
authorized, 2,538 shares issued 254 254
Paid in surplus 59,562 59,562
Unassigned surplus 112,142 112,644
Treasury stock at cost, 2,538 preferred shares (20,811) (20,811)
--------- --------

Total capital and surplus 156,156 156,658
--------- ---------

Total liabilities, capital and surplus $2,491,519 $2,438,113
========== ==========

<FN>
The accompanying notes are an integral part
of the statutory basis financial statements.

</FN>

</TABLE>

B-38
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Statement of Operations and Changes in Capital and Surplus-Statutory Basis
For the Years Ended December 31, 1995 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
1995 1994

Income:
<S> <C> <C>
Premiums and annuity considerations $184,407 $186,627
Considerations for supplementary contracts
without life contingencies and dividend
accumulations 26,573 19,342
Net investment income 186,307 181,002
Commissions and expense allowances
on reinsurance ceded 7,033 9,191
Other income 2,417 1,308
--------- --------
Total income 406,737 397,470
--------- --------

Benefits and expenses:
Policy benefits 307,885 245,147
Increase (decrease) in future policy
benefit reserves (99,062) 27,681
Net transfer of annuity reserves under
terminated coinsurance agreement 71,123 -0-
Commissions 17,163 18,144
Other operating costs and expenses 35,335 33,935
Net transfers to separate accounts 14,874 10,675
Dividends to policyholders 1,944 1,872
------- -------
Total benefits and expenses 349,262 337,454
------- -------

Income from operations before federal
income taxes 57,475 60,016

Federal income taxes (17,992) (18,821)

B-39
<PAGE>

(Continued)

Net realized capital losses, net of tax
and transfer to IMR (1,047) (3,489)
-------- ---------
Net income $ 38,436 $ 37,706
========= =========

Capital and surplus, beginning of year $156,658 $153,830
Net income 38,436 37,706
Net unrealized capital gains 1,737 1,426
Decrease in non-admitted assets 256 48
Decrease in liability for reinsurance in
unauthorized companies -0- 797
Decrease in reserves on account of change in
valuation basis 3,320 -0-
Increase in asset valuation reserve (3,056) (3,124)
Dividends to shareholder (41,195) (34,025)
--------- ---------
Capital and surplus, end of year $156,156 $156,658
========= =========

<FN>
The accompanying notes are an integral part of the statutory basis
fiancial statements.
</FN>

</TABLE>

B-40
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Statement of Cash Flows-Statutory Basis
For the Years Ended December 31, 1995 and 1994
(Amounts in thousands)

Cash flows from operations:
Premiums and annuity considerations $ 186,285 $ 186,245
Net investment income 184,295 179,205
Other income 35,929 30,053
Life and accident and health claims (56,848) (57,127)
Surrender benefits and other withdrawals (198,328) (140,878)
Other benefits to policyholders (53,870) (43,321)
Commissions and other expenses (50,899) (52,922)
Net transfers to separate accounts (15,349) (10,490)
Dividends to policyholders (1,704) (1,548)
Federal income taxes (6,874) (19,166)
Net increase in policy loans (3,115) (1,916)
---------- ----------

Net cash provided from operations 19,522 68,135

Proceeds from investments sold, matured or
repaid, net of tax 2,257,672 1,422,990
Investment borrowings, net 82,245 (58,085)
Other 2,035 9,014
----------- ----------
Total cash provided 2,361,474 1,442,054
----------- ----------

B-41
<PAGE>

Application of cash:
Purchase of investments 2,238,161 1,496,908
Dividends to shareholder 41,195 34,024
Net transfer of annuity reserves under
terminated coinsurance agreement 71,123 -0-
Other 5,520 4,117
---------- ----------

Total cash applied 2,355,999 1,535,049
---------- ---------

Net increase (decrease) in cash and
short-term investments 5,475 (92,995)
Cash and short-term investments,
beginning of year 13,531 106,526
---------- ----------

Cash and short-term investments, end of year $ 19,006 $ 13,531
========== ==========

<FN>
The accompanying notes are an integral part of the statutory basis
fiancial statements.
</FN>

</TABLE>

B-42
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements

1. ACCOUNTING POLICIES

Basis of Presentation

Great American Reserve Insurance Company (the
"Company"), a life insurance company domiciled in the
State of Texas, is a wholly-owned subsidiary of Jefferson
National Life Insurance Company of Texas ("Jefferson
National of Texas"), a life insurance company domiciled
in the State of Texas and an indirect wholly-owned
subsidiary of Conseco, Inc., a publicly held specialized
financial services holding company.

On August 31, 1995, Conseco purchased all of the
shares of common stock that it did not previously own
(50.5%) of CCP Insurance, Inc., the Company's indirect
parent, and effected a merger, with Conseco as the
surviving company.

The accompanying financial statements have been
prepared in conformity with accounting practices
prescribed or permitted by the National Association of
Insurance Commissioners and the State of Texas Department
of Insurance. These practices differ in certain respects
from generally accepted accounting principles ("GAAP").
The significant differences which impact net income or
surplus are:

a. Policy acquisition costs are charged to operations
as incurred rather than deferred and amortized over
the lives of the policies.

b. Future policy benefit liabilities are based on
statutory mortality and interest requirements and
may differ from liabilities based on reasonably
conservative estimates of expected mortality,
interest and withdrawals for traditional life
insurance products and the fund balances of
universal life insurance products.

c. Deferred income taxes are not provided for temporary
differences in reporting of income and expenses for
financial reporting and tax purposes.

d. The asset valuation reserve ("AVR"), which includes
unrealized capital gains and losses and
credit-related realized capital gains and losses,
net of tax, on all invested assets excluding cash,
policy loans and premium notes, is reported as a
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

liability with changes reported in unassigned
surplus.

The interest maintenance reserve ("IMR"), which
consists of interest-related realized capital gains
and losses, net of tax, to be amortized into income
over the approximate remaining lives of the fixed
income securities sold, is reported as a liability.

e. Certain assets designated as "non-admitted" assets
are reported as a reduction of unassigned surplus.

f. Fixed maturities designated as available for sale
are valued at amortized cost rather than market
value.

g. Premiums on interest sensitive and annuity policies
are recognized as income rather than policy
liabilities.

The preparation of statutory basis financial
statements requires management to make estimates and
assumptions that affect the reported assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the
periods presented. Significant estimates and assumptions
are utilized in the calculation of insurance liabilities.
Actual experience could differ from the estimates and
assumptions utilized which could have a material impact
on the financial statements.

Recognition of Premiums

Premiums on traditional life, interest sensitive and
annuity policies are recognized as income on the policy
anniversary dates or when received; group life and individual
and group health premiums are earned pro-rata over the terms
of the policies.

Insurance Liabilities

The liabilities for traditional life and interest
sensitive policies, all developed by actuarial methods, are
established and maintained on the basis of published tables
using assumed interest rates and valuation methods that will
provide, in the aggregate, reserves that are greater than or

B-44
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

equal to the minimum valuation required by law or the
guaranteed policy cash values.

Investments

Investments are valued on the following bases:

Bonds not backed by other loans-at amortized cost using
the interest method.

Loan-backed bonds and structured securities-at amortized
cost using the interest method including anticipated
prepayments at the date of purchase; significant changes
in estimated cash flows from the original purchase
assumptions are accounted for using the specific
identification method.

Preferred stocks-at cost.

Common stocks-at market.

Property acquired in satisfaction of debt - at
depreciated cost, less encumbrances.

Mortgage loans on real estate - at the aggregate unpaid
balance.

Policy loans - at the aggregate unpaid balance.

Other invested assets - at the aggregate unpaid balance
or at equity.

Prepayment assumptions for loan-backed bonds and
structured securities were obtained from the broker at the
date of purchase. These assumptions are generally consistent
with the current interest rate and economic environment. The
prospective adjustment method is used to value these
securities.

Realized gains or losses from the sale of investments are
recognized on the specific identification basis. Changes in
the market value of common stocks are reported as unrealized
capital gains or losses and, accordingly, have no effect on
net income.

B-45
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

The Company uses the grouped method of amortization for
interest related gains and losses arising from the sale of
fixed income investments.

Fair Values of Financial Instruments

The following methods and assumptions were used by the
Company in determining the estimated fair values of
investments:

Investment securities-for bonds, preferred stocks
and common stocks, the estimated fair values were
determined using quoted market prices and independent
pricing services, where available. For investment
securities for which such quotes are not available, the
estimated fair vales were determined by discounting
expected future cash flows using a current market rate
appropriate for the yield, credit quality and, for bonds,
the maturity.

Mortgage loans-Estimated fair values were determined by
discounting expected cash flows based on interest rates
currently being offered for similar loans to borrowers
with similar credit ratings. Loans with similar
characteristics were aggregated in the calculations.

Real estate, policy loans, short-term investments and
other invested assets-The statutory carrying values of
these assets approximated their fair values as of
December 31, 1995 and 1994.

B-46
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

The carrying and estimated fair values of investments were as
follows (amounts in thousands):

<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------- -----------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Bonds $2,060,828 $2,110,649 $ 2,052,243 $1,881,555
Preferred stocks 13,879 13,596 10,432 10,044
Common stocks 256 256 426 426
Mortgage loans on
real estate 111,541 117,362 113,990 112,152
Real estate 125 125 125 125
Policy loans 84,664 84,664 81,549 81,549
Short-term investments 30,806 30,806 24,187 24,187
Other invested assets 12,758 12,758 22,753 22,753
---------- ---------- ---------- ----------
Total investments $2,314,857 $2,370,216 $2,305,705 $2,132,791
========== ========== ========== ===========
</TABLE>

The statutory values of the liabilities for investment
contracts of $1,324,691,278 and $1,418,383,202 as of December
31, 1995 and 1994, respectively, approximated their fair
values because interest rates credited on the vast majority of
account balances approximate current rates paid on investment
contracts and are not generally guaranteed beyond one year.

Investments in Affiliates

On January 2, 1995, the Company sold 100% of the common
stock of GARCO Equity Sales, Inc., to an affiliate.

Separate Accounts

Separate accounts represent funds for which investment
income and gains and losses accrue directly to the
policyholders. The assets of each account are legally
segregated and are not subject to claims which may arise out
of other business of the Company.

B-47
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

2. INVESTMENTS

The carrying and estimated fair values of bonds were as follows
(amounts in thousands):

<TABLE>
<CAPTION>
Gross Gross Estimated
Carrying Unrealized Unrealized Fair
Value Gains Losses Value
--------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
December 31, 1995
Governments (a) $ 136,962 $ 4,419 $ 319 $ 141,062
States, Territories and
Possessions (b) 10,448 337 -0- 10,785
Political Subdivisions of States,
Territories and Possessions (b) 6,909 316 -0- 7,225
Special Revenue and Special
Assessment Obligations 556,152 8,631 2,570 562,213
Public Utilities (c) 350,410 12,887 2,357 360,940
Industrial and Miscellaneous (c) 999,948 40,865 12,389 1,028,424
------- ------- ------ ---------
Totals $2,060,828 $67,456 $17,635 $2,110,649
========== ======= ======== ==========
December 31, 1994
Governments (a) $ 95,030 $ 740 $ 7,098 $ 88,672
States, Territories and
Possessions (b) 15,428 -0- 957 14,471
Political Subdivisions of States,
Territories and Possessions (b) 5,121 4 129 4,996
Special Revenue and Special
Assessment Obligations 610,661 2,989 54,070 559,580
Public Utilities (c) 416,092 3,025 38,821 380,296
Industrial and Miscellaneous (c) 909,911 2,992 79,363 833,540
------- ------ ------ -------

Totals $2,052,243 $ 9,750 $180,438 $1,881,555
========== ======== ======== ==========

<FN>
(a) Including all obligations guaranteed by governments
(b) Direct and guaranteed
(c) Unaffiliated
</FN>

</TABLE>

B-48
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

The carrying and estimated fair values of bonds at
December 31, 1995 by contractual maturity are shown
below. Actual maturities may differ from contractual
maturities because the borrowers may have the right to
call or prepay obligations with or without call or
prepayment penalties and because most mortgage-backed
securities provide for periodic payments throughout their
lives.

<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- --------

(Amounts in thousands)
<S> <C> <C>

Due in one year or less $ 3,050 $ 3,123
Due after one year through five years 109,972 113,769
Due after five years through ten years 409,723 420,531
Due after ten years 872,082 898,286
---------- ----------
Subtotal 1,394,827 1,435,709
Mortgage-backed securities 666,001 674,940
---------- ----------
Total bonds $2,060,828 $2,110,649
========= ==========

</TABLE>

The Company's investment in its unconsolidated subsidiary
was equal to the subsidiary's equity and amounted to
$76,192 at December 31, 1994. The cost of all other common
stocks held by the Company at December 31, 1995 and 1994
was $20,482 and $498,144, respectively.

At December 31, 1995, the mortgage loan balance was
primarily comprised of commercial loans. Approximately 30
percent, 22 percent and 14 percent of the mortgage loan
balance were on properties located in California, Indiana

B-49
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

and Texas, respectively. No other state comprised greater
than 6 percent of the mortgage loan balance.

The Company had assets with statement values of
$16,274,109 and $16,577,123 at December 31, 1995 and 1994,
respectively, on deposit with state regulatory authorities
to fulfill statutory requirements.

Net investment income consisted of the following (amounts
in thousands):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Bonds $166,279 $159,569
Preferred stocks 1,651 439
Mortgage loans on real estate 11,520 11,982
Policy loans 5,417 5,228
Collateral loans -0 160
Cash and short-term investments 2,651 3,765
Other invested assets 368 1,128
Miscellaneous 404 183
-------- -------
Gross investment income 188,290 182,454
Less investment expenses 6,618 4,633
-------- --------
Net investment income before
amortization of IMR 181,672 177,821
Amortization of IMR 4,635 3,181
-------- -------
Net investment income $186,307 $181,002
======== ========

</TABLE>

B-50
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Net realized capital gains (losses) consisted of the
following (amounts in thousands):

<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Bonds $ 28,110 $ 4,935
Preferred stocks -0- (727)
Common stocks (21) 594
Mortgage loans on real estate 125 53
Real estate -0- (123)
Other invested assets 2,742 (2,970)
Federal income tax expense (12,375) (1,138)
---------- ---------
Net realized capital gains,
net of tax 18,581 624
Transfer to IMR, net of tax (19,628) (4,113)
---------- ---------
Net realized capital losses,
net of tax and transfer to IMR $ (1,047) $ (3,489)
========== =========

</TABLE>

In 1995, net realized capital gains on bonds consisted of
$34,142,497 gross realized gains and $6,032,521 gross
realized losses. In 1994, net realized capital gains on
bonds consisted of $16,406,657 gross realized gains and
$11,472,023 gross realized losses.

At December 31, 1995, the Company had an outstanding
liability for borrowed money of $31,500,838 relating to
reverse repurchase agreements with brokers to sell and
subsequently repurchase certain securities. These
securities were sold for cash with a specific date to
repurchase securities of the same issuer with an equivalent
coupon rate, principal value, and maturity date. The
securities were repurchased in January 1996 with an average
finance rate of 6.25%.

B-51
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

In addition, the Company had an outstanding liability for
borrowed money of $50,743,711 relating to dollar repurchase
agreements with brokers to sell and subsequently repurchase
mortgage-backed securities. These securities were sold for
cash with a specific date to repurchase similar securities.
Securities were repurchased in January, 1996 with an
average finance rate of 5.75%.

3. REINSURANCE

The Company reinsures certain of its risks with other
companies which are accounted for as transfers of risk.
The Company retains a maximum of $500,000 of coverage per
individual life. The Company is contingently liable for any
reinsured claims for which the assuming company is unable
to pay.

A block of single premium deferred annuities assumed by
the Company in 1991 under a coinsurance agreement was
recaptured effective September 30, 1995. The Company
transferred $71,122,854 in cash in exchange for the
reserves released, net of a recapture premium of $728,220.

During 1995, the Company did not write off any
reinsurance balances due and did not report any income or
expense as a result of commutation of reinsurance. Amounts
in the financial statements have been reduced for
reinsurance ceded on life and accident and health policies
as follows (amounts in thousands):

B-52
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

1995 1994

---- ----
<S> <C> <C>
Premiums $29,075 $35,397
Policy benefits 19,842 27,528
Policy and contract liabilities 31,715 36,738

</TABLE>

4. FEDERAL INCOME TAXES

The Company's federal income tax return is
consolidated with the following entities: Jefferson
National of Texas and Beneficial Standard Life Insurance
Company. The method of allocation between the companies is
subject to a written agreement approved by the Board of
Directors. Allocation is based upon separate return
calculations with current credit for net losses and other
tax attributes. Intercompany tax balances are settled
quarterly. The federal income tax liability as of December
31, 1995 of $7,851,288 was payable to Jefferson National of
Texas.

A reconciliation of expected federal income tax
expense to federal income tax expense as shown in the
statement of operations is as follows (amounts in
thousands):

B-53
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

1995 1994
---- ----
<S> <C> <C>
Computed "expected" federal income
tax expense $20,116 $21,005
Tax adjustments:
Difference in statutory and tax basis
of reserves (1,041) (595)
Difference in statutory and tax basis
of deferred acquisition costs (330) 317
Taxes related to prior year 793 (554)
Difference in statutory and tax basis of
investment income (2,065) (2,050)
Other 519 698
-------- -------

Reported federal income tax expense $17,992 $18,821
======== =======
</TABLE>

The Internal Revenue Service is currently examining
the Company's 1993 and 1994 federal income tax returns.
During 1995, the Company remitted $253,236 to its parent
for the Company's portion of the federal income tax
assessment arising from the 1991 and 1992 tax periods.

5. BENEFIT PLANS

The Company has no employee retirement plan or
deferred compensation plan. However, the Company's
employees are eligible to participate in Conseco's 401(k)
savings plan. Company contributions, which match certain
voluntary employee contributions to the plan, totaled
$537,707 and $139,861 for the year ended December 31, 1995
and 1994, respectively. In addition, certain officers and
employees of the Company are included in Conseco's deferred
compensation and incentive stock option plans.

The Company provides certain health care and life
insurance benefits ("postretirement benefits") for
currently retired employees only. Health care benefits for
retirees under age 65 are generally the same as indemnity

B-54
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

benefits offered to active employees; health care benefits
coordinate with Medicare benefits for retirees 65 and
older. These benefits are generally set at fixed amounts.

Net postretirement benefit costs for the year ended
December 31, 1995 and 1994 were $63,992 and $27,200,
respectively, and included interest cost and gains and
losses arising from differences between actuarial
assumptions and actual experience. In 1994, an actuarial
gain of $33,800 resulted from the reduction of the initial
health care cost trend rate from 17% to 12%, which was
recognized in net postretirement benefit expense. The
Company made contributions to the plan of $19,992 and
$26,100 in 1995 and 1994, respectively, as claims were
incurred.

At December 31, 1995 and 1994, the unfunded
postretirement benefit obligation for retirees was $525,800
and $481,800, respectively, and was included in other
liabilities. The discount rate used in determining the
accumulated postretirement benefit obligation was 8.0% and
the health care cost trend rate was 12% graded to 5% over
12 years.

6. COMMITMENTS AND CONTINGENT LIABILITIES

The Company has given Crescent Realty Partners, a
limited partnership created to organize a number of limited
partnerships to make equity investments in real estate, a
standby equity commitment of $5,000,000 until September
1997. The Company had funded $4,848,837 of the commitment
at December 31, 1995.

The Company has given Hicks, Muse, Tate & Furst Equity
Fund II, a limited partnership created to make equity
investments in a variety of corporations, a standby equity
commitment of $10,000,000 until January 1999. As of
December 31, 1995, the Company had funded $7,218,686 of the
commitment.

The Company has given Mountain Star Limited Liability
Company, a limited liability company created for land
development, a construction loan commitment of $11,000,000.
Mountain Star had drawn and repaid $10,691,653 as of
December 31, 1995.

B-55
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

The Company has committed no reserves to cover any
contingent liabilities. Various lawsuits against the
Company may arise in the ordinary course of the Company's
business. Contingent liabilities arising from litigation,
income taxes and other matters are not considered material
in relation to the financial position of the Company.

7. RELATED PARTY TRANSACTIONS

During 1995 and 1994, the Company did not own any
shares of an upstream intermediate or ultimate parent,
either directly or indirectly via a downstream subsidiary,
controlled or affiliated company.

The Company has not made any guarantees or
undertakings for the benefit of an affiliate which would
result in a material contingent exposure of the Company's
or any affiliated insurer's assets to loss.

Under an investment advisory services agreement, an
affiliate of the Company manages the Company's investments,
for which expenses totalled $3,947,284 and $3,990,479 in
1995 and 1994, respectively. In addition, an affiliate of
the Company provides executive management services, for
which expenses totalled $450,000 in both 1995 and 1994.
Also, another affiliate provides origination and servicing
for the Company's mortgage loans, for which expenses
totalled $368,460 and $331,720 in 1995 and 1994,
respectively. The Company also has a service agreement in
which another affiliate provides certain accounting, tax,
marketing, actuarial, legal, data processing and other
functional support services. Expenses under this agreement
totalled $20,378,895 and $20,155,406 in 1995 and 1994,
respectively.

8. CAPITAL AND SURPLUS

The maximum amount of dividends which can be paid by
State of Texas life insurance companies to shareholders
without prior approval of the Insurance Commissioner is the
greater of statutory net gain from operations before
realized capital gains or losses for the preceding year or
10% of statutory surplus as regards policyholders at the
end of the preceding year. Statutory net gain from
operations before realized capital gains or losses for 1995
was $39,483,045. Statutory surplus as regards policyholders
as of December 31, 1995 was $156,155,029. The maximum

B-56
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

dividend payout which may be made without prior approval in
1995 is $39,483,045. However, due to the restrictions on
dividends within a twelve month period, the maximum
dividend payout may not be made without prior approval
until June 26, 1996.

B-57
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

9. WITHDRAWAL CHARACTERISTICS OF ANNUITY RESERVES AND
DEPOSIT LIABILITIES

The withdrawal characteristics of annuity reserves and
deposit fund liabilities were as follows:

<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------- -----------------
% of % of
Amount Total Amount Total
------- ------ ------- ------

(Amounts in thousands)

Subject to discretionary
withdrawal:

With market value adjustment $ -0- 0.0% $ -0- 0.0%
At book value less current
surrender charge of 5% or more 224,595 14.8% 348,180 22.2%
At market value 137,413 9.0% 91,789 5.9%
------- ----- ------- -----

Total with adjustment or
at market value 362,008 23.8% 439,969 28.1%

At book value without adjustment
(surrender charge of
less than 5%) 1,083,942 71.3% 1,054,201 67.4%

Not subject to discretionary
withdrawal 74,638 4.9% 70,094 4.5%
--------- ---- --------- ----

Total (gross) 1,520,588 100% 1,564,264 100%
Reinsurance ceded -0- ==== -0- ====
--------- ---------

Total (net) $1,520,588 $1,564,264
========== ==========

</TABLE>

B-58
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

STATEMENT OF ASSETS AND LIABILITIES OF
THE RYDEX ADVISOR VARIABLE ANNUITY
ACCOUNT, AS OF SEPTEMBER 25, 1996, AND
INDEPENDENT AUDITORS REPORT

B-59
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board Managers of
Rydex Advisor Variable Annuity Account

We have audited the accompanying statement of assets and
liabilities of the NOVA Subaccount, URSA Subaccount, OTC
Subaccount, Precious Metals Subaccount, U.S. Government
Subaccount, JUNO Subaccount, Money Market I Subaccount, and
Money Market II Subaccount of the Rydex Advisor Variable
Annuity Account (the Subaccounts"), as of September 25, 1996.
These financial statements are the responsibility of the
Subaccounts management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management as well as evaluating the overall financial
statement presentation. We believe that our audits provides a
reasonable basis for our opinion.

In our opinion, the statement of assets and liabilities
referred to above present fairly, in all material respects,
the financial position of the Separate Account as of September
25, 1996, in conformity with generally accepted accounting
principles.

Baltimore Maryland
September 25, 1996
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Rydex Advisor Variable Annuity Account
Statement of Assets and Liabilities
September 25, 1996

<TABLE>
<CAPTION> The
Precious
The Nova The Ursa The OTC Metals
Subaccount Subaccount Subaccount Subaccount

ASSETS

Cash $ 0 $ 0 $ 0 $ 0
Deferred organi-
zation and initial
offering cost 95,180 95,180 95,180 95,180

Total Assets 95,180 95,180 95,180 95,180

LIABILITIES
Accrued organization
expenses 95,180 95,180 95,180 95,180

NET ASSETS $ 0 $ 0 $ 0 $ 0

</TABLE>

B-61
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

(Continued)
Rydex Advisor Variable Annuity Account
Statement of Assets and Liabilities
September 25, 1996

<TABLE>
<CAPTION> The
U.S. The Money The Money
Government The Juno Market I Market II
Subaccount Subaccount Subaccount Subaccount

ASSETS

Cash $ 0 $ 0 $ 0 $ 5,000
Deferred organi-
zation and initial
offering cost 95,180 95,180 5,000 5,000

Total Assets 95,180 95,180 5,000 10,000

LIABILITIES
Accrued organization
expenses 95,180 95,180 5,000 5,000

NET ASSETS $ 0 $ 0 $ 0 $ 5,000

Units Outstanding
(Accumulation unit
value of $10.00
unlimited units
outstanding) 500

Net unit value and
redemption price per unit $10.00

</TABLE>

B-62
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

NOTES TO STATEMENT OF ASSETS AND LIABILITIES

A. The Separate Account is a segregated investment account
of Great American Reserve Insurance Company ( GARCO") and is
comprised of eight investment portfolios, each of which is
managed by PADCO Advisors II, Inc. Great American Reserve
established the separate account on April 15, 1996 as a
Separate Account under Texas law. The Separate Account is
registered with the Securities and Exchange Commission as a
diversified open-end management investment company pursuant to
the provisions of the Investment Company Act of 1940 ( 40
Act") and meets the definition of a separate account" set
forth in the 40 Act. PADCO Financial Services, Inc. ( PADCO")
acts as principal underwriter only for the Separate Account.
GARCO has provided the initial capital for the Separate
Account by purchasing 500 units at the accumulation unit value
of $10.00 per unit. Such units were acquired for investment
and can be disposed of only by withdrawal.

B. Deferred organization and initial offering costs
represent expenses incurred by GARCO and PADCO in connection
with this offering and will be amortized on a straight line
basis over five years commencing on the effective date of the
Separate Account s initial prospectus. These costs have been
allocated to the Subaccounts based on estimates of expenses
incurred. The Separate Account has agreed to reimburse GARCO
and PADCO for the organization expenses advanced by GARCO and
PADCO, respectively. The advances are repayable on demand but
must be fully repaid within five years. The proceeds realized
by GARCO upon withdrawal during the amortization period of any
of the accumulation units constituting initial capital will be
reduced by a proportionate amount of the unamortized deferred
organization expenses which the number of initial units
redeemed bears to the number of initial units then
outstanding. At September 25, 1996, accrued organizational
expenses payable to GARCO and PADCO were $195,435 and
$385,649, respectively.

C. The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could
differ from those estimates.

B-63
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

PART C

OTHER INFORMATION

B-64
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

PART C: OTHER INFORMATION

Item 28. Financial Statements and Exhibits

(a) Financial Statements:

(1) Statement of Assets and Liabilities of the
Registrant, Rydex Advisor Variable Annuity Account.1/

(2) Financial statements of the Insurance Company, Great
American Reserve Insurance Company.1/

(b) Exhibits:

(1) Resolutions of the Executive Committee of the Board
of Directors of Great American Reserve Insurance
Company.2/

(2) Separate Account Rules for Rydex Advisor Variable
Annuity Account.1/

(3) Form of Custodian Agreement Between Rydex Advisor
Variable Annuity Account and Boston Safe Deposit and
Trust Company.1/

(4) Form of Investment Advisory Agreement Between Rydex
Advisor Variable Annuity Account and PADCO Advisors
II, Inc.1/

(5) Form of Underwriting Agreement Among Great American
Reserve Insurance Company, Rydex Advisor Variable
Annuity Account, and PADCO Financial Services, Inc.1/

(6) Form of Variable Annuity Contract.2/

(7) Form of Application for Variable Annuity Contract.1/

(8) Certificate of Incorporation and Bylaws of Great
American Reserve Insurance Company.2/

(9) Not Applicable.

1/ Filed herewith.

C-1
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

2/ Filed on May 2, 1996 as part of initial Registration
Statement, CIK No. 0001013169; Accession No. 0000906287-
96-000070.
3/ None.

Item 28. (Cont'd)

(10) Not Applicable.

(11)(a) Form of Subaccount Administration Agreement
Between Rydex Advisor Variable Annuity Account
and PADCO Service Company, Inc.1/

(11)(b) Form of Accounting Services Agreement Between
Rydex Advisor Variable Annuity Account and PADCO
Service Company, Inc.1/

(11)(c) Form of Fidelity Bond Allocation Agreement Among
Rydex Advisor Variable Annuity Account, PADCO
Advisors II, Inc., Rydex Series Trust, PADCO
Advisors, Inc., and PADCO Service Company, Inc.1/

(11)(d) Form of Joint Account Agreement Between Rydex
Advisor Variable Annuity Account and PADCO
Advisors II, Inc.1/

(12) Opinion of Great American Reserve Insurance Company
Counsel.1/

(13)(a) Opinion and Consent of Coopers & Lybrand LLP.1/

(13)(b) Consent of Jorden Burt Berenson & Johnson LLP.1/

(14) Not Applicable.

(15) Not Applicable.

(16) Not Applicable.

(17) Not Yet Applicable.

1/ Filed herewith.

C-2
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

2/ Filed on May 2, 1996 as part of initial
Registration Statement, CIK No. 0001013169;
Accession No. 0000906287-96-000070.
3/ None.

Item 29. Directors and Officers of the Insurance Company

The following table sets forth certain information
regarding the executive officers of Great American Reserve who
are engaged directly or indirectly in activities relating to
the Separate Account or the Contracts. Their principal
business address is 11815 N. Pennsylvania Street, Carmel,
Indiana 46032.
Positions and Offices with
Name Great American Reserve

Stephen C. Hilbert Chief Executive Officer and Director

Lynn C. Tyson President and Director

Donald F. Gongaware Chief Operations Officer and Director

Rollin M. Dick Chief Financial Officer and Director

Lawrence W. Inlow Secretary, General Counsel and
Director

Ngaire E. Cuneo Director

Item 30. Persons Controlled by or Under Common Control with
the
Insurance Company or Registrant

The following information concerns those companies that
may be deemed to be controlled by or under common control with
Great American Reserve Insurance Company:

Conseco, Inc. (Indiana) (publicly traded)

Conseco Capital Management, Inc. (Delaware) (100%)

Conseco Private Capital Group, Inc. (Indiana) (100%)
Conseco Global Investments, Inc. (Delaware) (100%)

Conseco Risk Management, Inc. (Indiana) (100%)
Wells & Company, Inc. (Indiana) (100%)

C-3
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

CRM Acquisition Company (Indiana) (100%)
Wellsco, Inc. (Indiana) (100%)

Conseco Mortgage Capital, Inc. (Delaware) (100%)

Lincoln American Life Insurance Company (Tennessee)
(100%)

Marketing Distribution Systems Consulting Group, Inc.
(Delaware) (100%)
MDS Securities Incorporated (Delaware) (100%)
BankMark School of Business (Delaware) (100%)
CBC Insurance Agency Services, Inc. (Delaware) (100%)
Bankmark, Inc. (Maine) (100%)
Community Insurance Agency, Inc. (New Hampshire) (100%)
InveStar Insurance Agency, Inc. (Indiana) (100%)
InveStar Insurance Agency, Inc. (Ohio) (100%)
MDS of New Jersey, Inc. (New Jersey) (100%)
Investment & Insurance Services, Inc. (Connecticut)
(100%)
Marketing Distribution Systems Insurance Agency of
Massachusetts, Inc. (Massachusetts) (100%)
Marketing Distribution Systems, Inc. (Pennsylvania)
(100%)
CIHC, Incorporated (Delaware) (100%)
NACT, Inc. (Texas) (100%)
Conseco Distribution Systems, L.L.C. (Indiana) (90%)
Life Partners Group, Inc. (Delaware) (100%)
Lamar Life International, Inc. (Delaware) (100%)
Whitehall Fund Managers, Inc. (Kentucky) (100%)
Partners Risk Management Company (Mississippi)
(100%)
Eagles National Corporation (Kentucky) (100%)
Wabash Life Insurance Company (Kentucky) (100%)
Travel Partners Group, Inc. (Colorado) (100%)
Independent Processing Services, Inc. (Delaware)
(100%)
Stratford Capital Group, Inc. (Texas) (100%)
Massachusetts General Life Insurance Company
(Massachusetts) (100%)
Philadelphia Life Insurance Company
(Pennsylvania) (100%)
Philadelphia Life Asset Planning Company
(Pennsylvania) (100%)
Lamar Life Insurance Company (Mississippi)
(100%)

C-4
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Invest Co, Inc. (Mississippi) (100%)

Conseco L.L.C. (Delaware) (90%)
Conseco Services, L.L.C. (Indiana) (89%)
Bankers National Life Insurance Company (Texas)
(100%)
National Fidelity Life Insurance Company (Missouri)
(100%)
Bankers Life Holding Corporation (Delaware) (publicly
traded)
K.F. Agency Inc. (Illinois) (100%)
Bankers Life Insurance Company of Illinois
(Illinois) (100%)
Bankers Life and Casualty Company (Illinois)
(100%)
Certified Life Insurance Company (California)
(100%)
Jefferson National Life Insurance Company of Texas
(Texas) (100%)
Beneficial Standard Life Insurance Company
(California) (100%)
Great American Reserve Insurance Company (Texas)
(100%)

GARCO Equity Sales, Inc. (Texas) (100%)

CNC Real Estate, Inc. (Delaware) (100%)

Conseco Entertainment, Inc. (Indiana) (100%)
Conseco Entertainment, L.L.C. (Indiana) (99%)
Conseco HPLP, L.L.C. (Indiana) (1%)

Conseco Partnership Management, Inc. (Indiana) (100%)
Conseco Capital Partners II, L.P. (Delaware) (2%)
American Life Holdings Group, Inc. (Delaware) (80%)
American Life Holding Company (Delaware) (100%)
American Life and Casualty Marketing Division
Co. (Iowa) (100%)
American Life and Casualty Insurance Company
(Iowa) (100%)
Vulcan Life Insurance Company (Alabama)
(98%)

Item 31. Number of Contract Owners

None.

C-5
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Item 32. Indemnification

The Board of Managers of the Separate Account is
indemnified by Great American Reserve against claims and
liabilities to which such person may become subject by reason
of having been a member of such Board or by reason of any
action alleged to have been taken or omitted by him as such
member, and the member shall be indemnified for all legal and
other expenses reasonably incurred by him in connection with
any such claim or liability; however, no indemnification shall
be made in connection with any claim or liability unless such
person (i) conducted himself in good faith, (ii) in the case
of conduct in his official capacity as a member of the Board
of Directors, reasonably believed that his conduct was at
least not opposed to the best interests of the Separate
Account, and (iii) in the case of any criminal proceeding, had
no reasonable cause to believe that his conduct was unlawful.

Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to members of the
Board of Managers, officers, and controlling persons of the
Registrant pursuant to the provisions described under
"Indemnification" or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than payment by the Registrant of expenses
incurred or paid by a member of the Board of Managers,
officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is
asserted by such member of the Board of Managers, officer, or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.

Item 33. Business and Other Connections of Investment
Advisers

Each of the directors of the Rydex Advisor Variable
Annuity Account's investment adviser, PADCO Advisors II, Inc.
("PADCO"), Albert P. Viragh, Jr., the Chairman of the Board of

C-6
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Directors, President, and Treasurer of PADCO, and Amanda C.
Viragh, the Secretary of PADCO, is an employee of PADCO at
6116 Executive Boulevard, Suite 400, Rockville, Maryland
20852. Albert P. Viragh, Jr. also has served (and continues
to serve) as: (i) the Chairman of the Board of Managers and
the President of the Rydex Advisor Variable Annuity Account
since the Rydex Advisor Variable Annuity Account's
establishment as a separate account of Great American Reserve
Insurance Company on April 15, 1996; (ii) the Chairman of the
Board of Directors, the President, and the Treasurer of PADCO
Service Company, Inc. (the "Servicer"), the Rydex Advisor
Variable Annuity Account's registered transfer agent, since
the incorporation of the Servicer in the State of Maryland on
October 6, 1993; (iii) the Chairman of the Board of Directors,
the President, and the Treasurer of PADCO Advisors, Inc.
("PADCO I"), a registered investment adviser, since the
incorporation of PADCO I in the State of Maryland on February
5, 1993; and (iv) the Chairman of the Board of Directors, the
President, and the Treasurer of PADCO Financial Services, Inc.
(the "Distributor"), the Rydex Advisor Variable Annuity
Account's principal underwriter, since the incorporation of
the Distributor in the State of Maryland on March 22, 1996.

Item 34. Principal Underwriters

(a) PADCO Financial Services, Inc. acts as principal
underwriter only for the Rydex Advisor Variable
Annuity Account and the Rydex Institutional Money
Market Fund, a series of Rydex Series Trust, a
registered investment adviser advised by PADCO I.

(b) The following table sets forth certain information
regarding directors and officers of PADCO Financial
Services, Inc. The principal business address of
these directors and officers is 6116 Executive
Boulevard, Suite 400, Rockville, Maryland 20852.

Positions and Positions and
Offices with Offices with
Name Underwriter Registrant

Albert P. Director, President, Chairman of the
Viragh, Jr. and Treasurer Board of Managers

C-7
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Amanda C. Director none
Viragh

C-8
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Victor J. Edgar Chief Operating none
Officer and Chief
Financial Officer

Michael P. Secretary none
Byrum
Sothara Chin Compliance Officer none

Item 35. Location of Accounts and Records

The accounts, books, or other documents required to be
maintained by the Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and the rules promulgated
thereunder are in the possession of Great American Reserve
Insurance Company, 11815 North Pennsylvania Street, Carmel,
Indiana 46032, or PADCO Advisors II, Inc., 6116 Executive
Boulevard, Rockville, Maryland 20852.

Item 36. Management Services

Not Applicable.

Item 37. Undertakings

(a) The Registrant hereby undertakes to file a post-
effective amendment, using financial statements of
the Registrant which need not be certified, within
four to six months from the effective date of the
Registrant's Securities Act of 1933 registration
statement.
(b) The Registrant hereby undertakes to file a post-
effective amendment to this registration statement
as frequently as is necessary to ensure that the
audited financial statements in the registration
statement are never more than 16 months old for so
long as payments under the Contracts may be
accepted.

(c) The Registrant hereby undertakes to include, as
part of any application to purchase a Contract, a
space that an applicant can check to request a
Statement of Additional Information.

C-9
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

(d) The 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.

(e) The Registrant is relying on a no-action letter
issued to the American Council of Life Insurance,
published November 28, 1988, relating to Section
403(b)(11) of the Internal Revenue Code and
Sections 22(e), 27(c)(1), and 27(d) of the
Investment Company Act of 1940. The Registrant
hereby represents that it has complied with the
provisions of paragraphs (1) through (4) of said
no-action letter.

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant's
sponsor, GREAT AMERICAN RESERVE INSURANCE COMPANY, has duly
caused this pre-effective amendment no. 1 to this registration
statement to be signed on its behalf by the undersigned
thereunto duly authorized, and the seal of the sponsor to be
hereunto affixed and attested, all in the City of Carmel,
State of Indiana, on the 23rd day of September, 1996.

GREAT AMERICAN RESERVE
INSURANCE COMPANY

By: /s/ Lynn C. Tyson
Lynn C. Tyson, President and
Chief Executive Officer,
Great American Reserve
Insurance Company

C-10
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT, has duly caused this
pre-effective amendment no. 1 to this registration statement
to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Rockville, State of Maryland, on the
23rd day of September, 1996.

RYDEX ADVISOR VARIABLE
ANNUITY ACCOUNT

/s/ Albert P. Viragh, Jr.
Albert P. Viragh, Jr.,
Chairman of the Board of Managers,
Rydex Advisor Variable Annuity Account

As required by the Securities Act of 1933, this
Registration Statement has been signed by the following
persons in the capacities with the Registrant and on the dates
indicated on this 23rd day of September, 1996.

Signature Title Date
<S> <C> <C>

/s/ Albert P. Viragh, Chairman of the Board September 23, 1996
Jr.Albert P. Viragh, Jr. of Managers, Principal
Executive Officer, and
President
/s/ Corey A. Colehour* Member of the Board of September 23, 1996
Corey A. Colehour Managers

/s/ J. Kenneth Dalton* Member of the Board of September 23, 1996
J. Kenneth Dalton Managers

/s/ Roger Somers* Member of the Board of September 23, 1996
Roger Somers Managers

Member of the Board of September 23, 1996
L. Gregory Gloeckner Managers

/s/ Timothy P. Hagan Vice President, September 23, 1996
Timothy P. Hagan Principal Financial
Officer, and Principal
Accounting Officer
</TABLE>

*By: /s/ Albert P. Viragh, Jr.
Albert P. Viragh, Jr.
Attorney-in-Fact
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

SIGNATURES

RYDEX ADVISOR VARIABLE
ANNUITY ACCOUNT

Albert P. Viragh, Jr.,
Chairman of the Board of Managers,
Rydex Advisor Variable
Annuity Account

Signature Title Date

_______________________ Chairman of the Board _____________, 1996
Albert P. Viragh, Jr. of Managers, Principal
Executive Officer, and
President
_______________________ Member of the Board of ______________, 1996
Corey A. Colehour Managers

_______________________ Member of the Board of _______________, 1996
J. Kenneth Dalton Managers

_______________________ Member of the Board of _____________, 1996
Roger Somers Managers

<PAGE>

/s/ L Gregory Gloeckner Member of the Board of September 23, 1996
L. Gregory Gloeckner Managers

______________________ Vice President, ______________,
Timothy P. Hagan Principal Financial 1996
Officer, and Principal
Accounting Officer
</TABLE>
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

EXHIBITS

<PAGE>

EXHIBIT INDEX

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Exhibit
Number Description of Exhibit

(2) Separate Account Rules for Rydex
Advisor Variable Annuity Account
(3) Form of Custodian Agreement
Between Rydex Advisor Variable
Annuity Account and Boston Safe
Deposit and Trust Company

(4) Form of Investment Advisory
Agreement Between Rydex Advisor
Variable Annuity Account and
PADCO Advisors II, Inc.

(5) Form of Underwriting Agreement
Among Great American Reserve
Insurance Company, Rydex Advisor
Variable Annuity Account, and
PADCO Financial Services, Inc.

(7) Form of Application for Variable
Annuity Contract
(11)(a) Form of Subaccount Administration
Agreement Between Rydex Advisor
Variable Annuity Account and
PADCO Service Company, Inc.

(11)(b) Form of Accounting Services
Agreement Between Rydex Advisor
Variable Annuity Account and
PADCO Service Company, Inc.

(11)(c) Form of Fidelity Bond Allocation
Agreement Among Rydex Advisor
Variable Annuity Account, PADCO
Advisors II, Inc., Rydex Series
Trust, PADCO Advisors, Inc., and
PADCO Service Company, Inc.

(11)(d) Form of Joint Account Agreement
Between Rydex Advisor Variable
Annuity Account and PADCO
Advisors II, Inc.

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

(12) Opinion of Great American Reserve
Insurance Company Counsel

(13)(a) Opinion and Consent of Coopers &
Lybrand LLP
(13)(b) Consent of Jorden Burt Berenson &
Johnson LLP

<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Statutory Basis Financial Statements (continued)

Wdc # : 2253
<PAGE>

<PAGE>

EXHIBIT 2

Separate Account Rules for
Rydex Advisor Variable Annuity Account
<PAGE>

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

RULES AND REGULATIONS

ARTICLE I

GENERAL

Section 1. Name. The name of this separate
account shall be the "Rydex Advisor Variable Annuity Account"
(the "Account"). The Account is established in accordance
with the provisions of Chapter 3, Article 3.75, of the Texas
Insurance Code.

Section 2. Office. The principal office of the
Account shall be at 11815 North Pennsylvania Street, Carmel,
Indiana 46032. The Account also shall have offices at 6116
Executive Boulevard, Rockville, Maryland 20852, and at such
other locations as the Board of Managers of the Account, from
time to time, may determine.

Section 3. Purposes. The Account is a separate
account of Great American Reserve Insurance Company ("Great
American Reserve") authorized under the laws of the State of
Texas and pursuant to a resolution of the Executive Committee
of the Board of Directors of Great American Reserve adopted on
April 15, 1996. The purposes of the Account are to provide,
pursuant to Chapter 3, Article 3.75, of the Texas Insurance
Code, a separate investment account for the assets held and
applied exclusively for the benefit of owners or beneficiaries
of certain individual and group variable annuity contracts and
other agreements issued and administered by Great American
Reserve, for which reserves shall be maintained in the
Account, and as may be granted from time to time by Great
American Reserve (the "Contracts"), and to pay contractual
obligations relating to the assets and investment performance
of the Account under such Contracts to their owners or holders
("Contract Owners") or their beneficiaries.
<PAGE>

ARTICLE II

MEETINGS OF CONTRACT OWNERS

Section 1. Place of Meetings. Meetings of Contract
Owners shall be held at such place as the members of the Board
of Managers of the Account (the "Board") may determine, or, in
the absence of such a determination, at the place specified in
the notice of the meeting.

Section 2. Voting Powers. The Contract Owners shall
have the power to vote only:

a. for the election of members of the Board to the
extent required under the Investment Company
Act of 1940, as amended ("1940 Act"), or other
applicable law;

b. for the removal of members of the Board, as
provided in these Rules and Regulations, and to
the extent required under the 1940 Act;

c. with respect to approval of any contract with
an investment adviser to the extent required
under the 1940 Act or other applicable law;

d. with respect to the merger, consolidation, and
sales of assets of the Account to the extent
required under the 1940 Act or other applicable
law; and

e. with respect to such additional matters
relating to the Account as may be required by
the 1940 Act, by other applicable law, by these
Rules and Regulations, by the Securities and
Exchange Commission (the "Commission") or any
State, or as the Board may consider desirable.

Any matter affecting a particular subaccount of the
Account ("Subaccount"), if any, including, without limitation,
matters affecting the investment advisory arrangements or
investment policies or restrictions of a Subaccount, if
required by law, shall not be deemed to have been effectively
acted upon unless approved by the required vote of the
Contract Owners of such Subaccount, if required by the 1940
Act or other applicable law. There shall be no cumulative
voting in the election of members of the Board. Until
Contracts are issued, the Board may exercise all rights of
Contract Owners and may take any action to be taken by
Contract Owners which is required or permitted by the 1940
Act, or other applicable law, and these Rules and Regulations.

2
<PAGE>

Section 3. Meetings. No annual or regular meetings of
the Contract Owners are required. Meetings of the Contract
Owners may be called by the Board, and shall be held at such
times, on such day, and at such hour as the Board may from
time to time determine, for the purposes specified in Article
II, Section 2, of these Rules and Regulations, and for such
other purposes as may be specified by the Board.

Section 4. Contract Owners. For the purposes of
these Rules and Regulations, the term "Contract Owner" shall
mean each owner or holder of a Contract issued by Great
American Reserve to which any units are credited and held in
the Account as of the record date. The records of Great
American Reserve shall be conclusive in determining the
persons who are Contract Owners.

Section 5. Record Dates. The Board may fix a date as
the record date of a meeting of Contract Owners for the
purpose of determining Contract Owners entitled to notice of,
and/or to vote at, any meeting of the Contract Owners, or in
order to make a determination of Contract Owners for any other
proper purpose. Such date, in any case, shall not be more
than one-hundred twenty (120) days, and, in the case of a
meeting of Contract Owners, not less than ten (10) days prior
to the date on which the particular action requiring such
determination of Contract Owners is to be taken.

Section 6. Notice of Meetings. At least ten (10) days
and not more than one-hundred twenty (120) days prior to each
meeting of Contract Owners, a written notice stating the time,
date, and place of such meeting and the purpose or purposes of
the meeting shall be given to each Contract Owner entitled to
vote at the meeting, as provided in Section 5 of this Article,
either by mail or by presenting the written notice to the
Contract Owner personally or by leaving the written notice at
the Contract Owner's residence or usual place of business.

Section 7. Quorum. At all meetings of the Contract
Owners, the presence in person or by proxy of Contract Owners
entitled to cast one-quarter of the votes entitled to be cast
at the meeting shall constitute a quorum for the transaction
of business at that meeting. If, however, the vote of a
majority of the outstanding voting securities, as defined in
the 1940 Act, is required for action to be taken on any matter
to be brought before the meeting, there shall be present,
either in person or by proxy, Contract Owners entitled to cast
more than one-half of such total number of votes in order to
constitute such quorum. "A majority of the votes entitled to
be cast" by the Contract Owners, when required by these Rules
and Regulations, means: (a) sixty-seven percent (67%) or more
of the votes present at a meeting if the holders of Contracts
entitled to more than fifty percent (50%) of the outstanding

3
<PAGE>

votes are present or represented by proxy; or (b) more than
fifty percent (50%) of the outstanding votes of the Account,
whichever is less. If a quorum shall not be present, Contract
Owners present in person or by proxy and entitled to vote at
such meeting, or, if no such Contract Owner is so present, any
person entitled to preside at or act as secretary of such
meeting, may adjourn the meeting from time to time, and, at
any such adjourned meeting, if a quorum shall be present, any
business may be transacted that might have been transacted at
the meeting as originally called. Except as otherwise
provided by law, no notice need be given of any adjourned
meeting other than by announcement at the meeting at which the
adjournment is taken, unless after the adjournment is taken
the Board fixes a new record date for the adjourned meeting.
Except as otherwise provided by law or these Rules and
Regulations, a majority of the votes cast at a meeting by the
Contract Owners entitled to vote thereon shall decide any
question brought before such meeting, except that election of
members of the Board shall be by a plurality of the votes cast
at a meeting by the Contract Owners entitled to vote thereon.

Section 8. Voting. In the case of each of the
Contracts, a Contract Owner may cast a number of votes and
fractions thereof equal to the number of dollars and fractions
thereof credited to such Contract as of the record date.
Contract Owners shall have the right, in their discretion, to
seek instruction from participants as to casting applicable
votes with respect to the participants' respective accounts
arising from the participant's own purchase payments under
retirement plans qualified under Section 401, Section 403(b),
Section 408, or Section 457 of the U.S. Internal Revenue Code
of 1986, as amended.

Section 9. Conduct of Meetings. Each meeting of
Contract Owners shall be provided over by the Chairman of the
Board or such other person as may be designated by the Board.
The Secretary of the Account shall act as the secretary of the
meeting, or if the Secretary of the Account is not present, an
Assistant Secretary of the Account shall so act. If neither
the Secretary nor an Assistant Secretary of the Account is
present, the chairman of the meeting shall appoint a secretary
of the meeting. The order of business at all meetings shall
be determined by the presiding officer. The proxies and
ballots shall be received and taken in charge, and all
questions touching the qualifications of voters, the validity
of proxies, and the acceptance or rejection of votes shall be
decided by one or more inspectors of election appointed by the
Board. Such inspectors, who need not be Contract Owners,
shall be appointed by the Board before the meeting, or, if no
such appointment shall have been made, then by the presiding
officer of the meeting. In the event of failure, refusal, or
inability of any inspector previously appointed to serve, the

4
<PAGE>

presiding officer may appoint any person to fill such vacancy.

Section 10. Action Without a Meeting. Any action
to be taken by Contract Owners may be taken without a meeting
if all Contract Owners entitled to vote on the matter consent
to the action in writing and the written consents are filed
with the records of meetings of Contract Owners of the
Separate Account. Such consent shall be treated for all
purposes as a vote at a meeting of the Contract Owners held at
the principal place of business of the Separate Account or at
such other place as the members of the Board may determine.

5
<PAGE>

ARTICLE III

BOARD OF MANAGERS

Section 1. Management of the Account. The Board
shall have power to conduct the business of the Account and
carry on the Account's operations in any and all of its
branches and maintain offices both within and without the
State of Indiana, the State of Maryland, and in any and all
other states of the United States of America, in the District
of Columbia, in any and all commonwealths, territories,
dependencies, colonies, or possessions of the United States of
America, and in any foreign jurisdiction, and to do all such
other things and execute all such instruments as the Board
deems necessary, proper, or desirable in order to promote the
interests of the Account although such things are not herein
specifically mentioned. Any determination as to what is in
the interests of the Account made by the Board in good faith
shall be conclusive. The powers of the Board may be exercised
without order of or resort to any court.

Section 2. Powers. The Board of Managers shall have
the following duties, responsibilities, and powers:

a. To select and approve annually an independent
public accountant.

b. To authorize and approve agreements providing for
investment management and advisory services, and
related matters, and to approve the continuance
of such an agreement.

c. To authorize and approve agreements providing for
sales and administrative services, and related
matters, and to approve the continuance of such
an agreement.

d. To authorize and approve agreements providing for
Subaccount administrative services, and related
matters, and to approve the continuance of such
an agreement.

e. To authorize and approve agreements providing for
custodian services, and related matters, and to
approve the continuance of such an agreement.

f. To authorize and approve agreements providing for
Subaccount accounting services, and related
matters, and to approve the continuance of such
an agreement.

g. To authorize and approve agreements providing for

6
<PAGE>

underwriting services, and related matters, and
to approve the continuance of such an agreement.

h. To authorize and approve any and all other
material agreements or contracts pertaining to
the operation of the Account, including, but not
limited to, fidelity bond premium allocation
agreements and joint account agreements to permit
the Subaccounts to deposit their daily uninvested
cash balances into a single joint account to be
used in order to enter into joint repurchase
agreements, and to approve the continuance of
such agreements or contracts.

i. To recommend from time to time any changes deemed
appropriate in the fundamental investment
objective or fundamental investment policies,
practices, or limitations of the Account or any
Subaccounts of the Account for submission to the
Contract Owners at their next meeting, and to
make such changes in those investment policies,
practices, and limitations of the Account or any
Subaccounts not requiring approval by the
Contract Owners as the Board deems appropriate.

j. To supervise the investment of the assets of the
Account and any Subaccounts in accordance with
the investment objectives, policies, practices,
and limitations of the Account and Subaccounts,
and to review periodically the investment
portfolios of the Account and the Subaccounts to
ascertain that these investment portfolios are
being managed in accordance with the investment
objectives, policies, practices, and limitations
of the Account and the Subaccounts, as
appropriate, and the interests of the Contract
Owners, and to take such corrective action as may
be necessary.

k. To enter into such other agreements and to take
any and all actions necessary or proper in
connection with the operation and management of
the Account and the Subaccounts and the assets
thereof.

l. To delegate such authority as the Board considers
desirable to any officers of the Account and to
any investment adviser, manager, Subaccount
administrator, custodian, underwriter, or other
agent or independent contractor.

m. To create and establish, and to change in any

7
<PAGE>

manner, separate and distinct Subaccounts with
separately defined investment objectives and
policies and distinct investment purposes, and to
fix the preferences, voting powers, rights, and
privileges of these Subaccounts, in accordance
with the provisions of the 1940 Act and other
Federal securities laws, and to establish classes
of such Subaccounts having relative rights,
powers, and duties as the Board may provide
consistent with applicable law.

n. In general, to carry on any other business in
connection with or incidental to any of the
foregoing powers, to do everything necessary,
suitable, or proper for the accomplishment of any
purpose or the attainment of any object or the
furtherance of any power hereinbefore set forth,
either alone or in association with others, and
to do every other act or thing incidental or
appurtenant to or growing out of or connected
with the aforesaid business or purposes, objects
or powers.

Any action by one or more of the Managers in their capacity
as such hereunder shall be deemed an action on behalf of the
Account or the applicable Subaccount, and not an action in an
individual capacity.

Section 3. Number and Tenure. The initial Board of
Managers shall consist of five initial members appointed by
the Executive Committee of the Board of Directors of Great
American Reserve. The number of members of the Board of
Managers which thereafter shall constitute the entire Board of
Managers may be increased or decreased by a vote of a majority
of the entire Board of Managers from time to time; provided,
that this number shall not be less than three or more than
nine. Each member of the Board of Managers shall hold office
until his or her successor is elected and qualified or until
his or her earlier death, resignation, or removal. Members of
the Board of Managers need not be Contract Owners.

Section 4. Vacancies. Vacancies in the Board for any
cause, including an increase in the authorized number of
members of the Board, may be filled by a majority of the
members of the Board then in office, subject to any
requirements under the 1940 Act or other applicable law.

Section 5. Removal of Members. At any meeting of Contract
Owners, the Contract Owners, by a majority of all votes
entitled to be cast for the election of members of the Board,
may remove any member of the Board from office, either with or
without cause, and, by the vote normally required to elect

8
<PAGE>

members of the Board, may elect a successor to fill any
resulting vacancy for the unexpired term of the removed member
of the Board.

Section 6. Place of Meetings. Meetings of the Board may
be held at any place within or without Indiana or Maryland as
the Board may determine.

Section 7. Regular Meetings. Regular meetings of the
Board shall be held at any time and place fixed by the Board.
Notice of a meeting shall be given by mail, personal delivery,
telephone, telefax, telegram, or other means at any time
preceding the meeting. Notice of a meeting of the Board may
be waived before or after any meeting by signed written
waiver. Neither the business to be transacted at, nor the
purpose of, any meeting of the Board need be stated in the
notice or waiver of notice of such meeting, and no notice need
be given of action proposed to be taken by written consent.
The attendance of a member at a meeting shall constitute a
waiver of notice of such meeting, except where a member
attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has
not been lawfully called or convened.

Section 8. Special Meetings. Special meetings of the
Board may be called at any time by the Chairman of the Board
or three or more members of the Board.

Section 9. Quorum. A majority of the total number of
members of the Board shall constitute a quorum for the
transaction of business, provided that a quorum shall in no
case be less than three members. If at any meeting of the
Board there shall be less than a quorum present, a majority of
those present may adjourn the meeting until a quorum shall
have been obtained. Except as otherwise provided by law, or
any contract or agreement to which the Account is a party, the
act of a majority of the members of the Board present at any
meeting at which there is a quorum shall be the act of the
Board.

Section 10. Committees. The Board may, by
resolution designate an executive committee and other
committees composed of two or more members, and the members
thereof, to the extend permitted by law, and each subcommittee
shall have the powers, authority, and duties specified in the
resolution creating the same and permitted by law. Each
committee may make rules for the notice and conduct of its
meetings and the keeping of the records thereof. The term of
any member of any committee shall be fixed by the Board.

Section 11. Compensation of Members. The Board may
authorize reasonable compensation to members for their

9
<PAGE>

services as members of the Board and as members of the
committees of the Board and may authorize the reimbursement of
reasonable expenses incurred by members in connection with
rendering those services.

Section 12. Resignations. Any member of the Board may
resign his or her membership at any time by mailing or
delivering his or her resignation in writing to the Chairman
of the Board or to a meeting of the Board. No member of the
Board who resigns shall have any right to compensation for any
period following his or her resignation. Any resignation
shall take effect at the time specified therein or, if the
time be not specified, upon receipt thereof.

Section 13. Action Without Meeting. Any action
required or permitted to be taken at any meeting of the Board
or of any committee thereof may be taken without a meeting if
all the members of the Board or committee thereof, as the case
may be, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the
Board or committee thereof.

Section 14. Action By the Board. Any meeting of
the Board conducted by telephone shall be deemed to take place
at the principal office of the Account or any other place, as
determined by the Board. Subject to the requirements of the
1940 Act, the Board by majority vote may delegate to any one
or more of the Board's members the authority of the Board to
approve particular matters or take particular actions on
behalf of the Account. Written consents or waivers of the
Board may be executed in one or more counterparts. Execution
of a written consent or waiver and delivery thereof to the
Account may be accomplished by telefax.

ARTICLE IV

OFFICERS

Section 1. Chairman. The members of the Board shall elect
on an annual basis a Chairman. The Chairman shall be a member
of the Board.

Section 2. Other Officers. The other officers of the
Account shall consist of a president, a secretary, a
treasurer, and such other officers or assistant officers,
including vice-presidents, as may be elected by the members.
Any two or more of the offices may be held by the same person,
except that the same person may not be both president and
secretary. The members may designate a vice-president as an
executive vice-president and may designate the order in which
the other vice-presidents may act. The members of the Board

10
<PAGE>

shall appoint and terminate such agents as the members shall
consider appropriate.

Section 3. Election and Tenure. At the initial
organizational meeting and at least once a year thereafter,
the member shall elect the Chairman, the president, secretary,
treasurer, and other such officers as the members shall deem
necessary or appropriate in order to carry out the business of
the Account. Such officers shall hold the office until their
successors have been duly elected and qualified.

Section 4. Chairman, President, and Vice-Presidents.
The Chairman shall, if present, preside at all meetings of the
Contract Owners and of the Board, and shall exercise and
perform such other powers and duties as may be from time to
time assigned to him or her by the members of the Board.
Subject to such supervisory powers, if any, as may be given by
the Board to the Chairman, the President shall be the chief
executive officer of the Account and, subject to the control
of the Board, shall have general supervision, direction, and
control of the business of the Account and shall exercise such
general powers of management as are usually vested in the
office of President of a corporation or a business trust. In
the absence of the Chairman, the President shall preside at
all meetings of the Contract Owners and of the Board, and, in
the absence of the President, the next-highest ranking officer
shall preside or such other person designated by the members.
Subject to direction of the Board, the Chairman and the
President shall each have power in the name and on behalf of
the Account to execute any and all loan documents, contracts,
agreements, deeds, mortgages, applications for Commission
orders, and other instruments in writing, and to employ and
discharge employees and agents of the Account. The Chairman
and the President shall have such further authorities and
duties as the Board shall from time to time determine. In the
absence or disability of the President, the Vice-Presidents in
order of their rank as fixed by the Board or, if more than one
and not ranked, the Vice-President designated by the Board,
or, if not so designated, designated by the President, shall
perform all the duties of the President, and when so acting
shall have all of the powers of and be subject to all of the
restrictions upon the President. Subject to the direction of
the Board, and of the President, each Vice-President shall
have the power in the name and on behalf of the Account to
execute any and all loan documents, contracts, agreements,
deeds, mortgages, and other instruments in writing, and, in
addition, shall have such other duties and powers as shall be
designated from time to time by the Board or by the President.

Section 5. Secretary. The Board may select a Secretary
and an Assistant Secretary who need not be members of the
Board. The Secretary and the Assistant Secretary shall have

11
<PAGE>

the power to certify the minutes of the proceedings of the
Contract Owners and the Board and portions thereof and shall
perform such duties and have such other powers as these Rules
and Regulations or the Board shall designate from time to
time. In the absence of the Secretary and Assistant
Secretary, an appointee of the Board shall perform such duties
and have such powers.

Section 6. Treasurer. Except as otherwise directed by
the Board, the Treasurer shall have the general supervision of
the monies, funds, securities, notes receivable, and other
valuable papers and documents of the Account, and shall have
and exercise under the supervision of the Board and of the
President all powers and duties incident to his office. The
Treasurer may endorse for deposit or collection all notes,
checks, and other instruments payable to the Account or to its
order. The Treasurer shall deposit all funds of the Account
in such depositories as the Board shall designate. The
Treasurer shall be responsible for such disbursement of the
funds of the Account as may be ordered by the Board or the
President. The Treasurer shall keep accurate account of the
books of the Account's transactions, which shall be the
property of the Account and, together with all other property
in his possession, shall be subject at all times to the
inspection and control of the Board. Unless the Board shall
otherwise determine, the Treasurer shall be the principal
accounting officer of the Account and shall also be the
principal financial officer of the Account. The Treasurer
shall have such other duties and authorities as the Board
shall from time to time determine. Notwithstanding anything
to the contrary herein contained, the Board may authorize any
adviser, administrator, manager, or agent to maintain bank
accounts and deposit and disburse funds of the Account or any
sub-account thereof.

Section 7. Vacancies and Removal. The Board may fill any
vacancy which may occur in any office. Officers shall hold
office at the pleasure of the Board and any officer may be
removed from office at any time with or without cause by the
vote of a majority of the entire Board whenever, in the
judgment of the Board, the best interests of the Account will
be served thereby.

Section 8. Resignations. Any officer of the Board may
resign his office any time by mailing or delivering his or her
resignation in writing to the Chairman of the Board or to a
meeting of the Board. No officer of the Account who resigns
shall have any right to compensation for any period following
his or her resignation. Any resignation shall take effect at
the time specified therein or, if the time be not specified,
upon receipt thereof.

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<PAGE>

ARTICLE V

CUSTODY OF ASSETS

Securities comprising the Account's portfolio and cash
representing contributions under the Contracts, the proceeds
from sales of portfolio securities and of payment of principal
and interest upon portfolio securities shall be held by a
custodian or trustee which shall be a bank or trust company
having the qualifications prescribed in the 1940 Act. The
Account shall, upon the resignation or inability to serve of
the custodian or trustee, (1) use its best efforts to obtain a
successor custodian or trustee, (2) require that the cash and
securities owned by the Account be delivered to the successor
custodian or trustee, and (3) in the event that no successor
custodian or trustee can be found, submit to the Contract
Owners, before permitting delivery of the cash and securities
owned by the Account to other than a successor custodian or
trustee, the question of whether such Account shall be
liquidated or shall function without a qualified custodian or
trustee.

ARTICLE VI

FISCAL YEAR

The fiscal year of the Account shall end on such date as
the Managers from time to time shall determine.

ARTICLE VII

AMENDMENTS

Except as otherwise provided by law, the Rules and
Regulations of the Account may be amended or repealed by the
Board.

The provisions of these Rules and Regulations are intended
to satisfy the requirements of the Investment Company Act of
1940, as amended. In the event that Federal law should be
amended or rules, regulations, rulings, or exemptions
thereunder should be adopted, with the result that any or all
of the provisions of the Rules and Regulations shall not be
required by Federal law, such provisions of the Rules and
Regulations may be amended or repealed by the Board of
Managers of the Account or by any committee thereof so
authorized by such Board of Managers.

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<PAGE>

<PAGE>

EXHIBIT 3

Form of
Custodian Agreement Between
Rydex Advisor Variable Annuity Account
and Boston Safe Deposit and Trust Company
<PAGE>

CUSTODY AGREEMENT

AGREEMENT dated as of ______________________, 1996,
between RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT, a segregated
investment account of Great American Reserve Insurance
Company, a diversified open-end management investment company
organized under Texas law (the "Separate Account"), having its
principal office and place of business at 11815 North
Pennsylvania Street, Carmel, Indiana 46032, and BOSTON SAFE
DEPOSIT AND TRUST COMPANY (the "Custodian"), a Massachusetts
trust company with its principal place of business at One
Boston Place, Boston, Massachusetts 02108.

W I T N E S S E T H:

That for and in consideration of the mutual promises
hereinafter set forth, the Separate Account and the Custodian
agree as follows:

1. Definitions.

Whenever used in this Agreement or in any Schedules to
this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:

(a) "Affiliated Person" shall have the meaning of the
term within Section 2(a)3 of the 1940 Act.

(b) "Authorized Person" shall be deemed to include the
Chairman of the Board of Managers, the President, and any
Vice President, the Secretary, the Treasurer or any other
person, whether or not any such person is an officer or
employee of the Separate Account, duly authorized by the
Board of Managers of the Separate Account to give Oral
Instructions and Written Instructions on behalf of the
Separate Account and listed in the certification annexed
hereto as Appendix A or such other certification as may be
received by the Custodian from time to time.

(c) "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency Securities, its successor or successors and
its nominee or nominees.

(d) "Business Day" shall mean any day on which the
Separate Account, the Custodian, the Book-Entry System and
appropriate clearing corporation(s) are open for business.

(e) "Certificate" shall mean any notice, instruction or
other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, which is
actually received by the Custodian and signed on behalf of
the Separate Account by any two Authorized Persons or any
two officers thereof.
<PAGE>

(f) "Separate Account Rules" shall mean the rules and
regulations of the Separate Account adopted June 26, 1996
as the same may be amended from time to time.

(g) "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities
and Exchange Commission under Section 17(a) of the
Securities Exchange Act of 1934, as amended, its successor
or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized to make
deposits. The term "Depository" shall further mean and
include any other person to be named in a Certificate
authorized to act as a depository under the 1940 Act, its
successor or successors and its nominee or nominees.

(h) "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed
as to interest and principal by the government of the
United States or agencies or instrumentalities thereof
("U.S. government securities"), commercial paper, bank
certificates of deposit, bankers' acceptances and short-
term corporate obligations, where the purchase or sale of
such securities normally requires settlement in federal
Separate Accounts on the same day as such purchase or
sale, and repurchase and reverse repurchase agreements
with respect to any of the foregoing types of securities.

(i) "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from a person
reasonably believed by the Custodian to be an Authorized
Person.

(j) "Prospectus" shall mean the Separate Account's
current prospectus and statement of additional information
relating to the registration of the Separate Account's
Units under the Securities Act of 1933, as amended.

(k) "Units" refers to the unit of measure used to compute
the value of interest in the Separate Account [which is
arbitrarily set at $10].

(l) "Security" or "Securities" shall be deemed to include
bonds, debentures, notes, stocks, Units, evidences of
indebtedness, and other securities, commodities interests
and investments from time to time owned by the Separate
Account.

(m) "Transfer Agent" shall mean the person which
performs the transfer agent, dividend disbursing agent and
shareholder servicing agent functions for the Separate
Account.

2
<PAGE>

(n) "Written Instructions" shall mean a written
communication actually received by the Custodian from a
person reasonably believed by the Custodian to be an
Authorized Person by any system, including, without
limitation, electronic transmissions, facsimile and telex.

(o) The "1940 Act" refers to the Investment Company Act
of 1940, and the Rules and Regulations thereunder, all as
amended from time to time.

2. Appointment of Custodian.

(a) The Separate Account hereby constitutes and appoints
the Custodian as custodian of all the Securities and
monies at the time owned by or in the possession of the
Separate Account during the period of this Agreement.

(b) The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.

3. Compensation.

(a) The Custodian shall be entitled to receive, and the
Separate Account agrees to pay to the Custodian, such
compensation as may be agreed upon from time to time
between the Custodian and the Separate Account. The
Custodian may charge against any monies held on behalf of
the Separate Account pursuant to this Agreement such
compensation and any expenses incurred by the Custodian in
the performance of its duties pursuant to this Agreement.
The Custodian shall also be entitled to charge against any
money held on behalf of the Separate Account pursuant to
this Agreement the amount of any loss, damage, liability
or expense incurred with respect to the Separate Account,
including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement. The
expenses which the Custodian may charge against such
account include, but are not limited to, the expenses of
sub-custodians and foreign branches of the Custodian
incurred in settling transactions outside of Boston,
Massachusetts or New York City, New York involving the
purchase and sale of Securities.

(b) The Separate Account will compensate the Custodian
for its services rendered under this Agreement in
accordance with the fees set forth in the Fee Schedule
annexed hereto as Schedule A and incorporated herein.
Such Fee Schedule does not include out-of-pocket
disbursements of the Custodian for which the Custodian

3
<PAGE>

shall be entitled to bill separately. Out-of-pocket
disbursements shall include, but shall not be limited to,
the items specified in the Schedule of Out-of-Pocket
charges annexed hereto as Schedule B and incorporated
herein, which schedule may be modified by the Custodian
upon not less than thirty days prior written notice to the
Separate Account.

(c) Any compensation agreed to hereunder may be adjusted
from time to time by attaching to Schedule A of this
Agreement a revised Fee Schedule, dated and signed by an
Authorized Person or authorized representative of each
party hereto.

(d) The Custodian will bill the Separate Account as soon
as practicable after the end of each calendar month, and
said billings will be detailed in accordance with Schedule
A, as amended from time to time. The Separate Account
will promptly pay to the Custodian the amount of such
billing.

4. Custody of Cash and Securities.

(a) Receipt and Holding of Assets. The Separate Account
will deliver or cause to be delivered to the Custodian all
Securities and monies owned by it at any time during the
period of this Agreement. The Custodian will not be
responsible for such Securities and monies until actually
received by it. The Separate Account shall instruct the
Custodian from time to time in its sole discretion, by
means of Written Instructions, or, in connection with the
purchase or sale of Money Market Securities, by means of
Oral Instructions confirmed in writing in accordance with
Section 11(h) hereof or Written Instructions, as to the
manner in which and in what amounts Securities and monies
are to be deposited on behalf of the Separate Account in
the Book-Entry System or the Depository; provided,
however, that prior to the deposit of Securities of the
Separate Account in the Book-Entry System or the
Depository, including a deposit in connection with the
settlement of a purchase or sale, the Custodian shall have
received a Certificate specifically approving such
deposits by the Custodian in the Book-Entry System or the
Depository. Securities and monies of the Separate Account
deposited in the Book-Entry System or the Depository will
be represented in accounts which include only assets held
by the Custodian for customers, including but not limited
to accounts for which the Custodian acts in a fiduciary or
representative capacity.

(b) Accounts and Disbursements. The Custodian shall
establish and maintain a separate account for the Separate

4
<PAGE>

Account and shall credit to the separate account all
monies received by it for the account of such Separate
Account and shall disburse the same only:

1. In payment for Securities purchased for the
Separate Account, as provided in Section 5 hereof;

2. In payment of dividends or distributions with
respect to the Units, as provided in Section 7
hereof;

3. In payment of original issue or other taxes with
respect to the Units, as provided in Section 8
hereof;

4. In payment for Units which have been redeemed by
the Separate Account, as provided in Section 8
hereof;

5. Pursuant to Written Instructions setting forth
the name and address of the person to whom the
payment is to be made, the amount to be paid and the
purpose for which payment is to be made, provided
that in the event of disbursements pursuant to this
sub-section 4(b)(5), the Separate Account shall
indemnify and hold the Custodian harmless from any
claims or losses arising out of such disbursements in
reliance on such Written Instructions which it, in
good faith, believes to be received from duly
Authorized Persons; or

6. In payment of fees and in reimbursement of the
expenses and liabilities of the Custodian
attributable to the Separate Account, as provided in
Sections 3 and 11(i).

(c) Confirmation and Statements. Promptly after the
close of business on each day, the Custodian shall furnish
the Separate Account with confirmations and a summary of
all transfers to or from the account of the Separate
Account during said day. Where securities purchased by
the Separate Account are in a fungible bulk of securities
registered in the name of the Custodian (or its nominee)
or shown on the Custodian's account on the books of the
Depository or the Book-Entry System, the Custodian shall
by book entry or otherwise identify the quantity of those
securities belonging to the Separate Account. At least
monthly, the Custodian shall furnish the Separate Account
with a detailed statement of the Securities and monies
held for the Separate Account under this Agreement.

(d) Registration of Securities and Physical Separation.

5
<PAGE>

All Securities held for the Separate Account which are
issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be
held by the Custodian in that form; all other Securities
held for the Separate Account may be registered in the
name of the Separate Account, in the name of the
Custodian, in the name of any duly appointed registered
nominee of the Custodian as the Custodian may from time to
time determine, or in the name of the Book-Entry System or
the Depository or their successor or successors, or their
nominee or nominees. The Separate Account reserves the
right to instruct the Custodian as to the method of
registration and safekeeping of the Securities. The
Separate Account agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the
name of its registered nominee or in the name of the Book-
Entry System or the Depository, any Securities which it
may hold for the account of the Separate Account and which
may from time to time be registered in the name of the
Separate Account. The Custodian shall hold all such
Securities specifically allocated to the Separate Account
which are not held in the Book-Entry System or the
Depository in a separate account for the Separate Account
in the name of the Separate Account physically segregated
at all times from those of any other person or persons.

(e) Segregated Accounts. Upon receipt of a Written
Instruction the Custodian will establish segregated
accounts on behalf of the Separate Account to hold liquid
or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in
such segregated accounts only as it shall be directed by
subsequent Written Instruction.

(f) Collection of Income and Other Matters Affecting
Securities. Unless otherwise instructed to the contrary
by a Written Instruction, the Custodian by itself, or
through the use of the Book-Entry System or the Depository
with respect to Securities therein deposited, shall with
respect to all Securities held for the Separate Account in
accordance with this Agreement:

1. Collect all income due or payable;

2. Present for payment and collect the amount
payable upon all Securities which may mature or be
called, redeemed, retired or otherwise become
payable. Notwithstanding the foregoing, the
Custodian shall have no responsibility to the
Separate Account for monitoring or ascertaining any
call, redemption or retirement dates with respect to

6
<PAGE>

put bonds which are owned by the Separate Account and
held by the Custodian or its nominees. Nor shall the
Custodian have any responsibility or liability to the
Separate Account for any loss by the Separate Account
for any missed payments or other defaults resulting
therefrom; unless the Custodian received timely
notification from the Separate Account specifying the
time, place and manner for the presentment of any
such put bond owned by the Separate Account and held
by the Custodian or its nominee. The Custodian shall
not be responsible and assumes no liability to the
Separate Account for the accuracy or completeness of
any notification the Custodian may furnish to the
Separate Account with respect to put bonds;

3. Surrender Securities in temporary form for
definitive Securities;

4. Execute any necessary declarations or
certificates of ownership under the Federal income
tax laws or the laws or regulations of any other
taxing authority now or hereafter in effect; and

5. Hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein
deposited, for the account of the Separate Account
all rights and similar Securities issued with respect
to any Securities held by the Custodian hereunder for
the Separate Account.

(g) Delivery of Securities and Evidence of Authority.
Upon receipt of a Written Instruction and not otherwise,
except for subparagraphs 5, 6, 7, and 8 of this section
4(g) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use
of the Book-Entry System or the Depository, shall:

1. Execute and deliver or cause to be executed and
delivered to such persons as may be designated in
such Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the
authority of the Separate Account as owner of any
Securities may be exercised;

2. Deliver or cause to be delivered any Securities
held for the Separate Account in exchange for other
Securities or cash issued or paid in connection with
the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;

3. Deliver or cause to be delivered any Securities

7
<PAGE>

held for the Separate Account to any protective
committee, reorganization committee or other person
in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of
assets of any corporation, and receive and hold under
the terms of this Agreement in the separate account
for the Separate Account such certificates of
deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such
delivery;

4. Make or cause to be made such transfers or
exchanges of the assets specifically allocated to the
separate account of the Separate Account and take
such other steps as shall be stated in Written
Instructions to be for the purpose of effectuating
any duly authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Separate Account;

5. Deliver Securities upon sale of such Securities
for the account of the Separate Account pursuant to
Section 5;

6. Deliver Securities upon the receipt of payment
in connection with any repurchase agreement related
to such Securities entered into by the Separate
Account;

7. Deliver Securities owned by the Separate Account
to the issuer thereof or its agent when such
Securities are called, redeemed, retired or otherwise
become payable; provided, however, that in any such
case the cash or other consideration is to be
delivered to the Custodian. Notwithstanding the
foregoing, the Custodian shall have no responsibility
to the Separate Account for monitoring or
ascertaining any call, redemption or retirement dates
with respect to the put bonds which are owned by the
Separate Account and held by the Custodian or its
nominee. Nor shall the Custodian have any
responsibility or liability to the Separate Account
for any loss by the Separate Account for any missed
payment or other default resulting therefrom; unless
the Custodian received timely notification from the
Separate Account specifying the time, place and
manner for the presentment of any such put bond owned
by the Separate Account and held by the Custodian or
its nominee. The Custodian shall not be responsible
and assumes no liability to the Separate Account for
the accuracy or completeness of any notification the
Custodian may furnish to the Separate Account with

8
<PAGE>

respect to put bonds;

8. Deliver Securities for delivery in connection
with any loans of Securities made by the Separate
Account but only against receipt of adequate
collateral as agreed upon from time to time by the
Custodian and the Separate Account which may be in
the form of cash or U.S. government securities or a
letter of credit;

9. Deliver Securities for delivery as security in
connection with any borrowings by the Separate
Account requiring a pledge of Separate Account
assets, but only against receipt of amounts borrowed;

10. Deliver Securities upon receipt of Written
Instructions from the Separate Account for delivery
to the Transfer Agent or to the holders of Units in
connection with distributions in kind, as may be
described from time to time in the Separate Account's
Prospectus, in satisfaction of requests by holders of
Units for repurchase or redemption;

11. Deliver Securities as collateral in connection
with short sales by the Separate Account of common
stock for which the Separate Account owns the stock
or owns preferred stocks or debt securities
convertible or exchangeable, without payment or
further consideration, into Units of the common stock
sold short;

12. Deliver Securities for any purpose expressly
permitted by and in accordance with procedures
described in the Separate Account's Prospectus; and

13. Deliver Securities for any other proper business
purpose, but only upon receipt of, in addition to
Written Instructions, a certified copy of a
resolution of the Board of Managers signed by an
Authorized Person and certified by the Secretary of
the Separate Account, specifying the Securities to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be
a proper business purpose, and naming the person or
persons to whom delivery of such Securities shall be
made.

(h) Endorsement and Collection of Checks, Etc. The
Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money
received by the Custodian for the account of the Separate
Account.

9
<PAGE>

5. Purchase and Sale of Investments of the Separate Account.

(a) Promptly after each purchase of Securities for the
Separate Account, the Separate Account shall deliver to
the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a
Written Instruction, and (ii) with respect to each
purchase of Money Market Securities, either a Written
Instruction or Oral Instruction, in either case specifying
with respect to each purchase: (1) the name of the issuer
and the title of the Securities; (2) the number of Units
or the principal amount purchased and accrued interest, if
any; (3) the date of purchase and settlement; (4) the
purchase price per unit; (5) the total amount payable upon
such purchase; (6) the name of the person from whom or the
broker through whom the purchase was made, if any; (7)
whether or not such purchase is to be settled through the
Book-Entry System or the Depository; and (8) whether the
Securities purchased are to be deposited in the Book-Entry
System or the Depository. The Custodian shall receive the
Securities purchased by or for the Separate Account and
upon receipt of Securities shall pay out of the monies
held for the account of the Separate Account the total
amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such
Written or Oral Instruction.

(b) Promptly after each sale of Securities of the
Separate Account, the Separate Account shall deliver to
the Custodian (i) with respect to each sale of Securities
which are not Money Market Securities, a Written
Instruction, and (ii) with respect to each sale of Money
Market Securities, either Written Instruction or Oral
Instructions, in either case specifying with respect to
such sale: (1) the name of the issuer and the title of
the Securities; (2) the number of Units or principal
amount sold, and accrued interest, if any; (3) the date of
sale; (4) the sale price per unit; (5) the total amount
payable to the Separate Account upon such sale; (6) the
name of the broker through whom or the person to whom the
sale was made; and (7) whether or not such sale is to be
settled through the Book-Entry System or the Depository.
The Custodian shall deliver or cause to be delivered the
Securities to the broker or other person designated by the
Separate Account upon receipt of the total amount payable
to the Separate Account upon such sale, provided that the
same conforms to the total amount payable to the Separate
Account as set forth in such Written or Oral Instruction.
Subject to the foregoing, the Custodian may accept payment
in such form as shall be satisfactory to it, and may
deliver Securities and arrange for payment in accordance

10
<PAGE>

with the customs prevailing among dealers in Securities.

6. Lending of Securities.

If the Separate Account is permitted by the terms of the
Separate Account Rules and as disclosed in its Prospectus
to lend securities, within 24 hours before each loan of
Securities, the Separate Account shall deliver to the
Custodian a Written Instruction specifying with respect to
each such loan: (a) the name of the issuer and the title
of the Securities; (b) the number of Units or the
principal amount loaned; (c) the date of loan and
delivery; (d) the total amount to be delivered to the
Custodian, and specifically allocated against the loan of
the Securities, including the amount of cash collateral
and the premium, if any, separately identified; (e) the
name of the broker, dealer or financial institution to
which the loan was made; and (f) whether the Securities
loaned are to be delivered through the Book-Entry System
or the Depository.

Promptly after each termination of a loan of Securities,
the Separate Account shall deliver to the Custodian a
Written Instruction specifying with respect to each such
loan termination and return of Securities: (a) the name
of the issuer and the title of the Securities to be
returned; (b) the number of Units or the principal amount
to be returned; (c) the date of termination; (d) the total
amount to be delivered by the Custodian (including the
cash collateral for such Securities minus any offsetting
credits as described in said Written Instruction); (e) the
name of the broker, dealer or financial institution from
which the Securities will be returned; and (f) whether
such return is to be effected through the Book-Entry
System or the Depository. The Custodian shall receive all
Securities returned from the broker, dealer or financial
institution to which such Securities were loaned and upon
receipt thereof shall pay the total amount payable upon
such return of Securities as set forth in the Written
Instruction. Securities returned to the Custodian shall
be held as they were prior to such loan.

7. Payment of Dividends or Distributions.

(a) The Separate Account shall furnish to the Custodian the
vote of the Board of Managers of the Separate Account
certified by the Secretary (i) authorizing the declaration of
distributions on a specified periodic basis and authorizing
the Custodian to rely on Oral or Written Instructions
specifying the date of the declaration of such distribution,
the date of payment thereof, the record date as of which

11
<PAGE>

shareholders entitled to payment shall be determined, the
amount payable per share to the shareholders of record as of
the record date and the total amount payable to the Transfer
Agent on the payment date, or (ii) setting forth the date of
declaration of any distribution by the Separate Account, the
date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the
amount payable per share to the shareholders of record as of
the record date and the total amount payable to the Transfer
Agent on the payment date.

(b) Upon the payment date specified in such vote, Oral
Instructions or Written Instructions, as the case may be, the
Custodian shall pay out the total amount payable to the
Transfer Agent of the Separate Account.

8. Sale and Redemption of Units of the Separate Account.

(a) Whenever the Separate Account shall sell any Units, the
Separate Account shall deliver or cause to be delivered to the
Custodian a Written Instruction duly specifying:

1. The number of Units sold, trade date, and price; and

2. The amount of money to be received by the Custodian for
the sale of such Units.

The Custodian understands and agrees that Written
Instructions may be furnished subsequent to the purchase of
Units and that the information contained therein will be
derived from the sales of Units as reported to the Separate
Account by the Transfer Agent.

(b) Upon receipt of money from the Transfer Agent, the
Custodian shall credit such money to the separate account of
the Separate Account.

(c) Upon issuance of any Units in accordance with the
foregoing provisions of this Section 8, the Custodian shall
pay all original issue or other taxes required to be paid in
connection with such issuance upon the receipt of a Written
Instruction specifying the amount to be paid.

(d) Except as provided hereafter, whenever any Units are
redeemed, the Separate Account shall cause the Transfer Agent
to promptly furnish to the Custodian Written Instructions,
specifying:

1. The number of Units redeemed; and

2. The amount to be paid for the Units redeemed.

12
<PAGE>

The Custodian further understands that the information
contained in such Written Instructions will be derived from
the redemption of Units as reported to the Separate Account by
the Transfer Agent.

(e) Upon receipt from the Transfer Agent of advice setting
forth the number of Units received by the Transfer Agent for
redemption and that such Units are valid and in good form for
redemption, the Custodian shall make payment to the Transfer
Agent of the total amount specified in a Written Instruction
issued pursuant to paragraph (d) of this Section 8.

(f) Notwithstanding the above provisions regarding the
redemption of Units, whenever such Units are redeemed pursuant
to any check redemption privilege which may from time to time
be offered by the Separate Account, the Custodian, unless
otherwise instructed by a Written Instruction shall, upon
receipt of advice from the Separate Account or its agent
stating that the redemption is in good form for redemption in
accordance with the check redemption procedure, honor the
check presented as part of such check redemption privilege out
of the monies specifically allocated to the Separate Account
in such advice for such purpose.

9. Indebtedness.

(a) The Separate Account will cause to be delivered to the
Custodian by any bank (excluding the Custodian) from which the
Separate Account borrows money for temporary administrative or
emergency purposes using Securities as collateral for such
borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Separate Account against delivery of a
stated amount of collateral. The Separate Account shall
promptly deliver to the Custodian Written Instructions stating
with respect to each such borrowing: (1) the name of the
bank; (2) the amount and terms of the borrowing, which may be
set forth by incorporating by reference an attached promissory
note, duly endorsed by the Separate Account, or other loan
agreement; (3) the time and date, if known, on which the loan
is to be entered into (the "borrowing date"); (4) the date on
which the loan becomes due and payable; (5) the total amount
payable to the Separate Account on the borrowing date; (6) the
market value of Securities to be delivered as collateral for
such loan, including the name of the issuer, the title and the
number of Units or the principal amount of any particular
Securities; (7) whether the Custodian is to deliver such
collateral through the Book-Entry System or the Depository;
and (8) a statement that such loan is in conformance with the
1940 Act and the Separate Account's Prospectus.

13
<PAGE>

(b) Upon receipt of the Written Instruction referred to in
subparagraph (a) above, the Custodian shall deliver on the
borrowing date the specified collateral and the executed
promissory note, if any, against delivery by the lending bank
of the total amount of the loan payable, provided that the
same conforms to the total amount payable as set forth in the
Written Instruction. The Custodian may, at the option of the
lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the
lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver as additional
collateral in the manner directed by the Separate Account from
time to time such Securities as may be specified in Written
Instruction to collateralize further any transaction described
in this Section 9. The Separate Account shall cause all
Securities released from collateral status to be returned
directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be tendered
to it. In the event that the Separate Account fails to
specify in Written Instruction all of the information required
by this Section 9, the Custodian shall not be under any
obligation to deliver any Securities. Collateral returned to
the Custodian shall be held hereunder as it was prior to being
used as collateral.

10. Persons Having Access to Assets of the Separate Account.

(a) No trustee or agent of the Separate Account, and no
officer, director, employee or agent of the Separate Account's
investment adviser, of any sub-investment adviser of the
Separate Account, or of the Separate Account's administrator,
shall have physical access to the assets of the Separate
Account held by the Custodian or be authorized or permitted to
withdraw any investments of the Separate Account, nor shall
the Custodian deliver any assets of the Separate Account to
any such person. No officer, director, employee or agent of
the Custodian who holds any similar position with the Separate
Account's investment adviser, with any sub-investment adviser
of the Separate Account or with the Separate Account's
administrator shall have access to the assets of the Separate
Account.

(b) Nothing in this Section 10 shall prohibit any duly
authorized officer, employee or agent of the Separate Account,
or any duly authorized officer, director, employee or agent of
the investment adviser, of any sub-investment adviser of the
Separate Account or of the Separate Account's administrator,
from giving Oral Instructions or Written Instructions to the
Custodian or executing a Certificate so long as it does not
result in delivery of or access to assets of the Separate
Account prohibited by paragraph (a) of this Section 10.

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<PAGE>

11. Concerning the Custodian.

(a) Standard of Conduct. Notwithstanding any other provision
of this Agreement, neither the Custodian nor its nominee shall
be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise,
except for any such loss or damage arising out of the gross
negligence or willful misconduct of the Custodian or any of
its employees, sub-custodians or agents. The Custodian may,
with respect to questions of law, apply for and obtain the
advice and opinion of counsel to the Separate Account or of
its own counsel, at the expense of the Separate Account, and
shall be fully protected with respect to anything done or
omitted by it in good faith in conformity with such advice or
opinion. The Custodian shall not be liable to the Separate
Account for any loss or damage resulting from the use of the
Book-Entry System or the Depository.

(b) Limit of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation
to inquire into, and shall not be liable for:

1. The validity of the issue of any Securities purchased by
the Separate Account, the legality of the purchase thereof, or
the propriety of the amount paid therefor;

2. The legality of the sale of any Securities by the Separate
Account or the propriety of the amount for which the same are
sold;

3. The legality of the issue or sale of any Units, or the
sufficiency of the amount to be received therefor;

4. The legality of the redemption of any Units, or the
propriety of the amount to be paid therefor;

5. The legality of the declaration or payment of any
distribution of the Separate Account;

6. The legality of any borrowing for temporary or emergency
administrative purposes.

(c) No Liability Until Receipt. The Custodian shall not be
liable for, or considered to be the Custodian of, any money,
whether or not represented by any check, draft, or other
instrument for the payment of money, received by it on behalf
of the Separate Account until the Custodian actually receives
and collects such money directly or by the final crediting of
the account representing the Separate Account's interest in
the Book-Entry System or the Depository.

15
<PAGE>

(d) Amounts Due from Transfer Agent. The Custodian shall not
be under any duty or obligation to take action to effect
collection of any amount due to the Separate Account from the
Transfer Agent nor to take any action to effect payment or
distribution by the Transfer Agent of any amount paid by the
Custodian to the Transfer Agent in accordance with this
Agreement.

(e) Collection Where Payment Refused. The Custodian shall not
be under any duty or obligation to take action to effect
collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused
after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and
(ii) it shall be assured to its satisfaction of reimbursement
of its costs and expenses in connection with any such action.

(f) Appointment of Agents and Sub-Custodians. The Custodian
may appoint one or more banking institutions, including but
not limited to banking institutions located in foreign
countries, to act as Depository or Depositories or as sub-
custodian or as sub-custodians of Securities and monies at any
time owned by the Separate Account. The Custodian shall use
reasonable care in selecting a Depository and/or sub-custodian
located in a country other than the United States ("Foreign
Sub-Custodian"), and shall oversee the maintenance of any
Securities or monies of the Separate Account by any Foreign
Sub-Custodian. In addition, the Custodian shall hold the
Separate Account harmless from, and indemnify the Separate
Account against, any loss that occurs as a result of the
failure of any Foreign Sub-Custodian to exercise reasonable
care with respect to the safekeeping of Securities and monies
of the Separate Account. Notwithstanding the generality of
the foregoing, however, the Custodian shall not be liable for
any losses resulting from or caused by events or circumstances
beyond its reasonable control, including, but not limited to,
losses resulting from nationalization, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority,
de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other
charges affecting the Separate Account's property; or acts of
war, terrorism, insurrection or revolution; or any other
similar act or event beyond the Custodian's or its agent s
control. This Section shall survive the termination of this
Agreement.

(g) No Duty to Ascertain Authority. The Custodian shall not
be under any duty or obligation to ascertain whether any
Securities at any time delivered to or held by it for the
Separate Account are such as may properly be held by the

16
<PAGE>

Separate Account under the provisions of the Separate Account
Rules and the Prospectus.

(h) Reliance on Certificates and Instructions. The Custodian
shall be entitled to rely upon any Certificate, notice or
other instrument in writing received by the Custodian and
reasonably believed by the Custodian to be genuine and to be
signed by an officer or Authorized Person of the Separate
Account. The Custodian shall be entitled to rely upon any
Written Instructions or Oral Instructions actually received by
the Custodian pursuant to the applicable Sections of this
Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person. The Separate
Account agrees to forward to the Custodian Written
Instructions from an Authorized Person confirming such Oral
Instructions in such manner so that such Written Instructions
are received by the Custodian, whether by hand delivery, telex
or otherwise, by the close of business on the same day that
such Oral Instructions are given to the Custodian. The
Separate Account agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way
affect the validity of the transactions or enforceability of
the transactions hereby authorized by the Separate Account.
The Separate Account agrees that the Custodian shall incur no
liability to the Separate Account in acting upon Oral
Instructions given to the Custodian hereunder concerning such
transactions provided such instructions reasonably appear to
have been received from a duly Authorized Person.

(i) Overdraft Facility and Security for Payment. In the event
that the Custodian is directed by Written Instruction (or Oral
Instructions confirmed in writing in accordance with Section
11(h) hereof) to make any payment or transfer of monies on
behalf of the Separate Account for which there would be, at
the close of business on the date of such payment or transfer,
insufficient monies held by the Custodian on behalf of the
Separate Account, the Custodian may, in its sole discretion,
provide an overdraft (an "Overdraft") to the Separate Account
in an amount sufficient to allow the completion of such
payment or transfer. Any Overdraft provided hereunder: (a)
shall be payable on the next Business Day, unless otherwise
agreed by the Separate Account and the Custodian; and (b)
shall accrue interest from the date of the Overdraft to the
date of payment in full by the Separate Account at a rate
agreed upon in writing, from time to time, by the Custodian
and the Separate Account. The Custodian and the Separate
Account acknowledge that the purpose of such Overdraft is to
temporarily finance the purchase of Securities for prompt
delivery in accordance with the terms hereof, to meet
unanticipated or unusual redemption, to allow the settlement
of foreign exchange contracts or to meet other emergency
expenses not reasonably foreseeable by the Separate Account.

17
<PAGE>

The Custodian shall promptly notify the Separate Account in
writing (an "Overdraft Notice") of any Overdraft by facsimile
transmission or in such other manner as the Separate Account
and the Custodian may agree in writing. To secure payment of
any Overdraft, the Separate Account hereby grants to the
Custodian a continuing security interest in and right of
setoff against the Securities and cash in the Separate
Account's account from time to time in the full amount of such
Overdraft. Should the Separate Account fail to pay promptly
any amounts owed hereunder, the Custodian shall be entitled to
use available cash in the Separate Account's account and to
liquidate Securities in the account as is necessary to meet
the Separate Account's obligations under the Overdraft. In
any such case, and without limiting the foregoing, the
Custodian shall be entitled to take such other actions(s) or
exercise such other options, powers and rights as the
Custodian now or hereafter has as a secured creditor under the
Massachusetts Uniform Commercial Code or any other applicable
law.

(j) Inspection of Books and Records. The books and records of
the Custodian shall be open to inspection and audit at
reasonable times by officers and auditors employed by the
Separate Account and by the appropriate employees of the
Securities and Exchange Commission.

The Custodian shall provide the Separate Account with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System or the Depository
and with such reports on its own systems of internal
accounting control as the Separate Account may reasonably
request from time to time.

12. Term and Termination.

(a) This Agreement shall become effective on the date first
set forth above (the "Effective Date") and shall continue in
effect thereafter until such time as this Agreement may be
terminated in accordance with the provisions hereof.

(b) Either of the parties hereto may terminate this Agreement
by giving to the other party a notice in writing specifying
the date of such termination, which shall be not less than 60
days after the date of receipt of such notice. In the event
such notice is given by the Separate Account, it shall be
accompanied by a certified vote of the Board of Managers of
the Separate Account, electing to terminate this Agreement and
designating a successor custodian or custodians, which shall
be a person qualified to so act under the 1940 Act.

In the event such notice is given by the Custodian, the

18
<PAGE>

Separate Account shall, on or before the termination date,
deliver to the Custodian a certified vote of the Board of
Managers of the Separate Account, designating a successor
custodian or custodians. In the absence of such designation
by the Separate Account, the Custodian may designate a
successor custodian, which shall be a person qualified to so
act under the 1940 Act. If the Separate Account fails to
designate a successor custodian, the Separate Account shall
upon the date specified in the notice of termination of this
Agreement and upon the delivery by the Custodian of all
Securities (other than Securities held in the Book-Entry
System which cannot be delivered to the Separate Account) and
monies then owned by the Separate Account, be deemed to be its
own custodian and the Custodian shall thereby be relieved of
all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the
Book-Entry System which cannot be delivered to the Separate
Account.

(c) Upon the date set forth in such notice under paragraph (b)
of this Section 12, this Agreement shall terminate to the
extent specified in such notice, and the Custodian shall upon
receipt of a notice of acceptance by the successor custodian
on that date deliver directly to the successor custodian all
Securities and monies then held by the Custodian on behalf of
the Separate Account, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it
shall then be entitled.

13. Limitation of Liability.

The Separate Account and the Custodian agree that the
obligations of the Separate Account under this Agreement shall
not be binding upon any of the Managers, shareholders,
nominees, officers, employees or agents, whether past, present
or future, of the Separate Account, individually, but are
binding only upon the assets and property of the Separate
Account, as provided in the Separate Account Rules. The
execution and delivery of this Agreement have been authorized
by the Managers of the Separate Account, and signed by an
authorized officer of the Separate Account, acting as such,
and neither such authorization by such Managers nor such
execution and delivery by such officer shall be deemed to have
been made by any of them or any shareholder of the Separate
Account individually or to impose any liability on any of them
or any shareholder of the Separate Account personally, but
shall bind only the assets and property of the Separate
Account as provided in the Separate Account Rules.

14. Miscellaneous.

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<PAGE>

(a) Annexed hereto as Appendix A is a certification signed by
the Secretary of the Separate Account setting forth the names
and the signatures of the present Authorized Persons. The
Separate Account agrees to furnish to the Custodian a new
certification in similar form in the event that any such
present Authorized Person ceases to be such an Authorized
Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized
Persons as set forth in the last delivered certification.

(b) Annexed hereto as Appendix B is a certification signed by
the Secretary of the Separate Account setting forth the names
and the signatures of the present officers of the Separate
Account. The Separate Account agrees to furnish to the
Custodian a new certification in similar form in the event any
such present officer ceases to be an officer of the Separate
Account or in the event that other or additional officers are
elected or appointed. Until such new certification shall be
received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon the signature of
an officer as set forth in the last delivered certification.

(c) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall
be sufficiently given if addressed to the Custodian and mailed
or delivered to it at its offices at One Boston Place, Boston,
Massachusetts 02108 or at such other place as the Custodian
may from time to time designate in writing.

(d) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Separate
Account, shall be sufficiently given if addressed to the
Separate Account and mailed or delivered to it at its offices
at 11815 North Pennsylvania Street, Carmel, Indiana 46032 or
at such other place as the Separate Account may from time to
time designate in writing.

(e) This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties
with the same formality as this Agreement (i) authorized, or
ratified and approved by a vote of the Board of Managers of
the Separate Account, including a majority of the members of
the Board of Managers of the Separate Account who are not
"interested persons" of the Separate Account (as defined in
the 1940 Act), or (ii) authorized, or ratified and approved by
such other procedures as may be permitted or required by the
1940 Act.

(f) This Agreement shall extend to and shall be binding upon

20
<PAGE>

the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Separate Account without the written consent
of the Custodian, or by the Custodian without the written
consent of the Separate Account authorized or approved by a
vote of the Board of Managers of the Separate Account
provided, however, that the Custodian may assign the Agreement
to an Affiliated Person and any attempted assignment without
such written consent shall be null and void. Nothing in this
Agreement shall give or be construed to give or confer upon
any third party any rights hereunder.

(g) The Separate Account represents that a copy of the
Separate Account Rules is on file with the Department of
Insurance of the State of Texas.

(h) This Agreement shall be construed in accordance with the
laws of The Commonwealth of Massachusetts.

(i) The captions of the Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.

(j) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives
duly authorized as of the day and year first above written.

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

By:
Name:
Title:

BOSTON SAFE DEPOSIT AND TRUST COMPANY

By:
Name:
Title:

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<PAGE>

APPENDIX A

I, Robert M. Steele, the Secretary, of RYDEX ADVISOR
VARIABLE ANNUITY ACCOUNT, a segregated investment account of
Great American Reserve Insurance Company, a diversified open-
end management investment company organized under Texas law
(the "Separate Account"), do hereby certify that:

The following individuals have been duly authorized as
Authorized Persons to give Oral Instructions and Written
Instructions on behalf of the Separate Account and the
specimen signatures set forth opposite their respective names
are their true and correct signatures:

Name Signature

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

By: /s/ Robert M. Steele
Secretary: Robert M. Steele
Dated:
<PAGE>

APPENDIX B

I, Robert M. Steele, the Secretary of RYDEX ADVISOR
VARIABLE ANNUITY ACCOUNT, a segregated investment account of
Great American Reserve Insurance Company, a diversified open-
end management investment company organized under Texas law
(the "Separate Account"), do hereby certify that:

The following individuals serve in the following positions
with the Separate Account and each individual has been duly
elected or appointed to each such position and qualified
therefor in conformity with the Separate Account's Separate
Account Rules and the specimen signatures set forth opposite
their respective names are their true and correct signatures:

Name Position Signature

Chairman of the Board

President

Treasurer

Secretary

Vice President and
Investment Officer

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

By: /s/ Robert M. Steele
Secretary: Robert M. Steele
Dated:
<PAGE>

SCHEDULE A

BOSTON SAFE DEPOSIT AND TRUST COMPANY

CUSTODY FEE SCHEDULE

A. Domestic Safekeeping:

B. PLUS $5/security holding charge per
month

C. PLUS Transaction charges:

DTC eligible $
Non-DTC eligible $
Fed Book Entry $
Options $
Futures $
GNMA Paydowns $
Repo - depository $
- non-deposit $
Physical - Govt $
Physical - Corp/Muni $
Commercial Paper $
Euro-CDs (London) $

This Fee Schedule shall be effective as of _____________, 1996
through ___________, 19__.
<PAGE>

BOSTON SAFE DEPOSIT AND TRUST COMPANY

GLOBAL CUSTODY FEE SCHEDULE

A. Global Safekeeping:

*Group I Assets BP
Group II Assets
First $50 million BP
Next $50 million BP
Next $200 million BP
Excess BP
Group III Assets BP
Group IV Assets BP
Group V Assets BP
Group VI Assets BP

B. PLUS Transaction Charges:

Group I Transactions $
Group II Transactions $
Group III Transactions $
Group IV Transactions $
Group V Transactions $
Group VI Transactions $

**Third Party F/X $

* The breakpoint levels are based upon assets within
each category.

** A Third Party F/X is one in which Boston Safe is not
the currency broker. This charge will be assessed
only on transactions were Separate Accounts are
actually transfered.

Reimbursable out-of pocket expenses will be added to each
monthly invoice and will include, but not be limited to, such
customary items as telephone, wire charges ($5.25 per wire),
stamp duties, securities registration, postage, courier
services and duplication charges.

<TABLE>
<CAPTION>
COUNTRY GROUPS

Group I Group II Group III Group IV Group V Group VI
<PAGE>

<S> <C> <C> <C> <C> <C>
Japan Euroclear Austria Australia Brazil Mexico
Cedel Canada Belgium Denmark Spain
Germany Luxembourg Finland Sweden

Netherlands France Greece
New Zealand Hong Kong Indonesia
Switzerland Ireland Jordan
Italy Philippines
Malaysia Turkey

Norway Venezuela
Pakistan Argentina
Peru
Poland
Portugal

Shanghai
Shenzen
Singapore
Thailand
United
Kingdom

Uruguay

</TABLE>
<PAGE>

SCHEDULE B

The Separate Account will pay to the Custodian as soon as
possible after the end of each month all out-of-pocket
expenses reasonably incurred in connection with the assets of
the Separate Account.
<PAGE>

<PAGE>

EXHIBIT 4

Form of
Investment Advisory Agreement
Between Rydex Advisor Variable
Annuity Account and
PADCO Advisors II, Inc.
<PAGE>

INVESTMENT ADVISORY AGREEMENT

BETWEEN

THE RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

AND

PADCO ADVISORS II, INC.

THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement"),
dated as of _________________, 1996, is entered into by and
between THE RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT (the
"Separate Account"), a managed separate account of Great
American Reserve Insurance Company ("Great American Reserve")
established under the laws of the State of Texas on April 15,
1996, and PADCO ADVISORS II, INC. (the "Advisor"), a company
incorporated under the laws of the State of Maryland on July
5, 1994.

W I T N E S S E T H:

WHEREAS, the Separate Account is registered with the
Securities and Exchange Commission (the "Commission") as a
diversified open-end management investment company pursuant to
the provisions of the Investment Company Act of 1940, as
amended (the "1940 Act");

WHEREAS, the Advisor is an investment adviser registered
as such with the Commission pursuant to the provisions of the
Investment Advisers Act of 1940, and is engaged in the
business of rendering investment advice and investment
management services as an independent contractor;

WHEREAS, the assets of the Separate Account may be
segregated by eligible investments, thus establishing a series
of eligible investment portfolios (or "Subaccounts") within
the Separate Account pursuant to the laws of the State of
Texas and the 1940 Act;

WHEREAS, the variable annuity contracts proposed to be
sold by Great American Reserve and to be funded by the
Separate Account (the "Contracts") are designed for use by
purchasers of the Contracts (the "Contract Owners") who intend
to utilize an asset-allocation or market-timing investment
strategy and are advised by professional money managers
("Financial Advisors");

Separate Account: The Nova Subaccount, The Ursa Subaccount,
The OTC Subaccount, The Precious Metals Subaccount, The Juno
Subaccount, The U.S. Government Bond Subaccount, The Money
Market I Subaccount, and The Money Market II Subaccount
(collectively, the "Subaccounts");

WHEREAS, the accounting unit of measure used to compute
the value of a Contract Owner's interest in a Subaccount is
the "Accumulation Unit," and the current market value of the
Accumulation Units of a Subaccount is the "Accumulation Unit
Value;"

WHEREAS, the Separate Account wishes to engage the
Advisor, and the Advisor wishes to be engaged, to manage the
investment portfolios of the Subaccounts of the Separate
Account with respect to the investment and reinvestment of the
assets of the Subaccounts of the Separate Account, and to act
in such capacity in accordance with the terms, conditions, and
other provisions of this Agreement; and

WHEREAS, the Separate Account wishes to engage the
Advisor, and the Advisor wishes to be engaged, to manage the
investment portfolios of all Subaccounts of the Separate
Account which are created subsequent to this Agreement with
respect to the investment and reinvestment of the assets of
such future Subaccounts of the Separate Account, and to act in
such capacity in accordance with the terms, conditions, and
other provisions of this Agreement.

NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and for other good and
valuable consideration, the receipt, sufficiency, and adequacy
of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree and promise as follows:

1. Services To Be Provided

a. Employment. The Separate Account hereby employs the
Advisor to manage the investment and reinvestment of the
assets of the Subaccounts, including each of the Subaccounts,
comprising the Separate Account in accordance with the
investment objectives and policies as set forth in the
Separate Account's registration statement filed pursuant to
the Securities Act of 1933, as amended (the "1933 Act"), and
the 1940 Act (the "Registration Statement"), and subject to
the direction and control of the officers and the Board of
Managers of the Separate Account, for the period and on the
terms set forth in this Agreement. The Advisor hereby accepts
such employment and agrees to render the services and to
assume the obligations herein set forth, for the compensation
herein provided.

2
<PAGE>

b. Best Efforts. The Advisor hereby agrees to use its
best judgment and efforts in rendering the advice and services
with respect to the Subaccounts as contemplated by this
Agreement. The Advisor further agrees to use its best efforts
in the furnishing of such advice and recommendations with
respect to the Subaccounts, in the preparation of reports and
information, and in the management of the respective assets of
each Subaccount, all pursuant to this Agreement, and for this
purpose the Advisor shall, at its own expense, maintain such
staff and employ or retain such personnel and consult with
such other persons that the Advisor shall from time to time
determine to be necessary to the performance of the Advisor's
obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the
Advisor shall be deemed to include persons employed or
retained by the Advisor to furnish statistical, research, and
other factual information, advice regarding economic factors
and trends, information with respect to technical and
scientific developments, and such other information, advice,
and assistance as the Advisor may desire and request.

2. Payment of Fees and Expenses

The Advisor assumes and shall pay all expenses in
connection with the management of the investment and
reinvestment of the portfolio assets of each Subaccount,
except that each Subaccount assumes and shall pay all broker's
commissions and transfer taxes chargeable to the Subaccount in
connection with securities transactions to which the
Subaccount is a party.

3. Authority of the Advisor

a. In connection with the investment and reinvestment
of the assets of each of the Subaccounts, the Advisor is
authorized on behalf of the Subaccount, to place orders for
the execution of the Subaccount's portfolio transactions in
accordance with the applicable policies of the Subaccount as
set forth in the Separate Account's Registration Statement, as
such Registration Statement may be amended from time to time.
The Advisor shall place orders for the purchase or sale of
securities either directly with the issuer or with a broker or
dealer selected by the Advisor. In placing the Subaccount's
securities trades, it is recognized that the Advisor will give
primary consideration to securing the most favorable price and
efficient execution, so that the Subaccount's total cost or
proceeds in each transaction will be the most favorable under
all circumstances. Within the framework of this policy, the
Advisor may consider the financial responsibility, research
and investment information, and other services provided by
brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of

3
<PAGE>

the Advisor may be a party.

b. It is understood that it is desirable for each
Subaccount of the Separate Account that the Advisor have
access to investment and market research and securities and
economic analyses provided by brokers and others. It is also
understood that brokers providing such services may execute
brokerage transactions at a higher cost to the Subaccount than
might result from the allocation of brokerage to other brokers
purely based on seeking the most favorable price. Therefore,
the purchase and sale of securities for the Subaccount may be
made with brokers who provide such research and analysis,
subject to review by the Managers from time to time with
respect to the extent and continuation of this practice to
determine whether the Subaccount benefits, directly or
indirectly, from such practice. It is understood by both
parties that the Advisor may select broker-dealers for their
execution of the Subaccount's portfolio transactions who
provide research and analysis as the Advisor may lawfully and
appropriately use in its investment management and advisory
capacities, whether or not such research and analysis also may
be useful to the Advisor in connection with its services to
other clients.

c. On occasions when the Advisor deems the purchase or
sale of a security to be in the best interests of the
Subaccount, as well as of other clients, the Advisor to the
extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order
to obtain the most favorable price, lower brokerage
commissions, and the most efficient execution. In such event,
allocation of the securities so purchased or sold, as well as
the expenses incurred in the transaction, will be made by the
Advisor in the manner its considers to be the most equitable
and consistent with its fiduciary obligations to the
Subaccount and to such other clients.

4. Compensation

a. Advisory Fee. In exchange for the rendering of
advice and services pursuant hereto, the Separate Account
shall pay the Advisor, and the Advisor shall accept as full
compensation for the services to be rendered and as full
reimbursement for all the charges and expenses to be assumed
and paid by the Advisor as provided in Section 2, a fee at an
annual rate applied to the daily net assets of a Subaccount in
accordance with the following schedule:

4
<PAGE>

<S> <C>

The Nova Subaccount . . . . . 0.75% (75/100's of one percent)
The Ursa Subaccount . . . . . 0.90% (90/100's of one percent)
The OTC Subaccount . . . . . . 0.75% (75/100's of one percent)
The Precious Metals Subaccount 0.75% (75/100's of one percent)
The U.S. Government Bond
Subaccount . . . . . . . 0.50% (50/100's of one percent)
The Juno Subaccount . . . . . 0.90% (90/100's of one percent)
The Money Market I Subaccount 0.50% (50/100's of one percent)
The Money Market II Subaccount 0.25% (25/100's of one percent)
</TABLE>

b. Payment. The fee will be accrued daily by each
Subaccount and paid to the Advisor monthly not later than the
fifth (5th) business day of the month following the month for
which services have been provided. In the event of termination
of this Agreement, the fee shall be computed on the basis of the
period ending on the last business day on which this Agreement is
in effect subject to a pro rata adjustment based on the number of
days elapsed in the current month as a percentage of the total
number of days in such month, and such fee shall be payable on
the date of termination of this Agreement with respect to the
Subaccount. For purposes of calculating the Advisor's fee, the
value of the net assets of each respective Subaccount of the
Separate Account shall be determined in the same manner as the
Subaccount uses to compute the value of the Subaccount's net
assets in connection with the determination of the Accumulation
Unit Value of the Subaccount, all as set forth more fully in the
current Prospectus and Statement of Additional Information for
the Subaccounts included in the Registration Statement.

c. Reimbursement for Certain Expenses. Through June 30,
1997, the Advisor shall reimburse each Subaccount for certain
"Reimbursable Expenses" (i.e., expenses other than the advisory
fee, the Subaccount administration fee, mortality and expense
risk charges, the administrative fee or the asset allocation
advisory fee) in excess of the amounts listed below. The amount
of any expense reimbursement shall be the amount by which the
Reimbursable Expenses exceed the following:

5
<PAGE>

<S> <C>
The Nova Subaccount . . . . . 0.40% (40/100's of one percent);
The Ursa Subaccount . . . . . 0.35% (35/100's of one percent);
The OTC Subaccount . . . . . . 0.45% (45/100's of one percent);
The Precious Metals Subaccount 0.45% (45/100's of one percent);
The U.S. Government Bond
Subaccount . . . . . . . 0.30% (30/100's of one percent);
The Juno Subaccount . . . . . 0.35% (35/100's of one percent);
The Money Market I Subaccount 0.10% (10/100's of one percent);
The Money Market II Subaccount 0.10% (10/100's of one percent);
</TABLE>

provided, that no expense reimbursement will exceed the amount of
the applicable Subaccount's advisory fee for the period of the
reimbursement.

5. Affiliations of Parties; Change in Ownership or Control of
the Advisor

Subject to and in accordance with the Separate Account
Rules, the Bylaws and Articles of Incorporation of the Advisor,
and the 1940 Act, the Managers, officers, agents, and Contract
Owners of the Separate Account are or may be interested persons
of the Advisor or its affiliates (or any successor thereof) as
shareholders or officers, directors, agents, or otherwise, and
directors, officers, agents, or shareholders of the Advisor or
its affiliates are or may be interested persons of the Separate
Account as Managers, officers, agents, Contract Owners, or
otherwise, and the Advisor or its affiliates may be interested
persons of the Separate Account, and such relationships shall be
governed by said governing instruments and the applicable
provisions of the 1940 Act. The Advisor shall notify the
Separate Account of any change in ownership or control of PADCO
Advisors II, Inc., that could cause an "assignment" of this
Agreement (as the term "assignment" is defined in the 1940 Act
and the rules and regulations promulgated thereunder) as soon as
practicable. In the case of a voluntary assignment, notice will
be provided at least 90 days prior to the voluntary assignment if
the circumstances are such that the Separate Account could not
rely on Rule 15a-4 under the 1940 Act (or such shorter period
approved by a majority of the Managers who are not interested
persons of the Separate Account).

6. Furnishing of Information

During the term of this Agreement, the Separate Account
agrees:

6
<PAGE>

a. to provide the Advisor with copies of all
prospectuses, statements of additional
information, proxy statements, registration
statements, reports to Contract Owners, sales
literature, and other material prepared for
distribution to Contract Owners of the Subaccounts
of the Separate Account or the public that refer
in any way to the Advisor, no later than ten (10)
business days before the date such material is
first distributed to the public, or sooner if
practicable, and the Separate Account shall not
use such material, or shall discontinue the use of
such material, if the Advisor reasonably objects
in writing within five (5) business days (or
within such other time as may be mutually agreed
to by the parties) after the Advisor's receipt
thereof;

b. to provide the Advisor with true and correct
copies of each amendment or supplement to the
Separate Account's Registration Statement
(including any prospectus and statement of
additional information included therein) or the
Separate Account Rules not later than the date
such material is first distributed to the public,
or sooner if practicable; and

c. to provide the Advisor with (i) written notice of
any resolutions, policies, restrictions, or
procedures adopted by the Managers which affect
the Advisor's investment management
responsibilities hereunder, and (ii) a list of
every natural person or entity deemed by the
Separate Account to be an "affiliated person" of,
or "promoter" of, or "principal underwriter" for
the Separate Account, or "an affiliated person of
such person," as these terms are defined or used
in Sections 2(a)(3), 2(a)(30), and 2(a)(29),
respectively, of the 1940 Act, and the Separate
Account shall promptly notify the Advisor of any
additions or deletions to such list.

7. Term of Agreement; Termination

a. This Agreement shall become effective with respect to
each Subaccount on the date first above written, and continue in
effect until two years from the date hereof, and thereafter only
so long as such continuance is approved with respect to the
Subaccount at least annually by (i) a vote of a majority of the
Managers, and (ii) the vote of a majority of the Managers who are
not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of

7
<PAGE>

voting such approval.

b. This Agreement may be terminated on sixty (60) days
prior written notice to the Advisor with respect to any or all
Subaccounts without penalty either by vote of the Managers or by
vote of a majority of the outstanding voting securities of the
Subaccount(s). This Agreement shall automatically terminate in
the event of its assignment (within the meaning of the 1940 Act).
This Agreement may be terminated by the Advisor on sixty-days
(60) prior written notice to the Separate Account. Any notice
under this Agreement shall be given as provided in Section 12
below.

8. Non-Transferability

This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged without the affirmative vote
or prior written consent of the holders of a majority of the
outstanding voting securities of the Separate Account.

9. Other Activities of the Advisor

The services of the Advisor to the Separate Account
hereunder are not to be deemed exclusive, and the Advisor and
each of its affiliates shall be free to render similar services
to others so long as the Advisor's services hereunder are not
impaired thereby. The Advisor, for purposes herein, shall be
deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act
for or represent the Separate Account, including any of the
Subaccounts of the Separate Account, in any way or otherwise be
deemed an agent of the Separate Account, or the Subaccounts of
the Separate Account.

10. Standard of Care; Indemnification

a. No provisions of this Agreement shall be deemed to
protect the Advisor against any liability to the Separate
Account, the Subaccounts of the Separate Account, or the Contract
Owners of the Subaccounts to which the Advisor otherwise would be
subject by reason of any willful misfeasance, bad faith, or gross
negligence in the performance of the Advisor's duties or the
reckless disregard of the Advisor's obligations under this
Agreement. Nor shall any provisions hereof be deemed to protect
any Manager or officer of the Separate Account against any such
liability to which said Manager or officer might otherwise be
subject by reason of any willful misfeasance, bad faith, or gross
negligence in the performance of the Manager's or officer's
respective duties or the reckless disregard of the Manager's or
officer's respective obligations.

8
<PAGE>

b. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the Advisor's obligations or
duties hereunder, the Advisor shall not be subject to liability
to the Separate Account, to the Subaccounts, or to any Contract
Owner of the Subaccounts for any act or omission in the course
of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding, or sale of
any security or other property by a Subaccount. The Advisor
shall not be required to do or refrain from doing or concur in
anything which (by act or omission to act) may impose any
liability on the Advisor.

c. Any person, even though an officer, director, partner,
employee, or agent of the Manager, who may be or become an
officer, manager, director, trustee, partner, employee, or agent
of the Separate Account, shall be deemed when rendering such
services to the Separate Account or acting on any business of the
Separate Account to be rendering such services to or acting
solely for the Separate Account and not as the Manager's officer,
manager, director, trustee, partner, employee, or agent or as one
under the Manager's control or direction even though paid by the
Manager.

d. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule, or otherwise,
the remainder of this Agreement shall not be affected thereby.

11. Representations and Warranties of the Separate Account

The Separate Account represents and warrants that the
Separate Account is duly registered with the Securities and
Exchange Commission under the 1940 Act, as an open-end management
investment company, and that all required action has been taken
by the Separate Account under the 1933 Act, as amended, and the
1940 Act, to permit the public offering of, and to consummate the
sale of, the Contracts of the Separate Account pursuant to the
current prospectus of the Separate Account.

12. Notices

All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered or
sent by prepaid, first-class letter posted to the following
addresses, or to such other address as shall be designated in a
notice given in accordance with this section, and such notice
shall be deemed to have been given at the time of delivery of, if
sent by post, five (5) week days after posting by airmail.

9
<PAGE>

If to the Separate Account:

Rydex Advisor Variable Annuity Account
Great American Reserve Insurance Company
11815 North Pennsylvania Street
Carmel, Indiana 46032
Attention: Office of the General Counsel

with a copy to:

Rydex Advisor Variable Annuity Account
6116 Executive Boulevard
Suite 400
Rockville, Maryland 20852
Attention: President

If to the Advisor:

PADCO Advisors II, Inc.
6116 Executive Boulevard
Suite 400
Rockville, Maryland 20852
Attention: President

13. Governing Law

This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland (without
reference to such state's conflict of law rules).

14. Counterparts

This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but which together
shall constitute one and the same instrument.

15. Definitions

As used in this Agreement, the terms "interested persons"
and "vote of a majority of the outstanding securities" shall have
the respective meanings set forth in Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.

10
<PAGE>

IN WITNESS WHEREOF, the Separate Account and the Advisor
have caused this Agreement to be executed on the date first above
written.

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

By: /s/ L. Gregory Gloeckner
L. Gregory Gloeckner
Vice President

PADCO ADVISORS II, INC.

By: /s/ Albert P. Virgah, Jr.
Albert P. Viragh, Jr.
President

11
<PAGE>

<PAGE>

EXHIBIT 5

Underwriting Agreement Among
Great American Reserve
Insurance Company, Rydex Advisor
Variable Annuity Account,
and PADCO Financial Services, Inc.
<PAGE>

PRINCIPAL UNDERWRITING AGREEMENT
FOR THE CONTRACTS FUNDED BY
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

AGREEMENT made this ____day of ______, 1996, by and among
PADCO Financial Services, Inc., a Maryland corporation
("PFS"), on its own behalf and on behalf of
, its insurance agency subsidiary (collectively with
PFS, PADCO ), Great American Reserve Insurance Company, a
stock company organized under the laws of the State of Texas
( Great American Reserve ), and Rydex Advisor Variable Annuity
Account, a managed separate account of Great American Reserve
(the Annuity Account ).

WITNESSETH:

WHEREAS, Great American Reserve has established the
Annuity Account to segregate assets funding the variable
benefits provided by individual, flexible premium, deferred
annuity contracts (the Contracts ), as well as by other
contracts that may be offered by Great American Reserve in the
future;

WHEREAS, the Annuity Account is registered as an open-end
management investment company under the Investment Company Act
of 1940, as amended (the 1940 Act ), and currently consists
of eight separate subaccounts and may consist of additional
subaccounts in the future (collectively, the Subaccounts );

WHEREAS, Great American Reserve and the Annuity Account
have registered the Contracts under the Securities Act of
1933, as amended (the 1933 Act ), and desire to retain PADCO
to distribute the Contracts, and PADCO is willing to
distribute the Contracts in the manner and on the terms set
forth herein;

WHEREAS, PFS is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the 1934 Act ),
and is a member of the National Association of Securities
Dealers, Inc. ( NASD );

WHEREAS, prior to the distribution of any Contracts
through the insurance agency subsidiary of PFS, PFS will cause
such subsidiary (i) to be licensed to market the Contracts to
the extent required by applicable state law, (ii) to
be registered as a broker-dealer under the 1934 Act, and
(iii) to become a member of the NASD; and

WHEREAS, Great American Reserve is willing to compensate
PADCO for the services to be provided in the manner and on the
terms set forth herein.

NOW, THEREFORE, in consideration of the premises and the
<PAGE>

mutual covenants herein contained, Great American Reserve, the
Annuity Account, and PADCO hereby agree as follows:

1. Distribution of the Contracts

(a) Great American Reserve and the Annuity Account
hereby grant to PADCO the exclusive right, subject to the
applicable requirements of the 1933 Act, the 1934 Act, the
1940 Act, state law, and the terms set forth herein, to
distribute the Contracts during the term of this Agreement.
PADCO agrees to use commercially reasonable efforts to
distribute the Contracts.

(b) To the extent necessary to offer and sell the
Contracts, PADCO shall be duly registered or otherwise
qualified under the securities and insurance laws of any state
or other jurisdiction in which the Contracts lawfully may be
sold and in which PADCO is licensed or otherwise authorized to
sell the Contracts. Each of PADCO's agents or representatives
soliciting applications for Contracts shall be duly licensed,
registered, or otherwise qualified for the offer and sale of
Contracts under the applicable insurance laws and any
applicable securities laws of each state or other
jurisdictions in which these agents or representatives are
soliciting applications for Contracts. PADCO shall be
responsible for the training, supervision, and control of its
registered representatives for the purpose of the NASD Rules
of Fair Practice and federal and state securities law
requirements applicable in connection with the distribution of
the Contracts. In this connection, PADCO shall maintain
written supervisory procedures in compliance with Article III,
Section 27, of the NASD Rules of Fair Practice.

(c) Unless otherwise permitted by applicable law, each
person engaged in the distribution of Contracts under this
Agreement shall be both an agent of Great American Reserve and
a person associated with a broker or dealer within the
meaning attributed to that phrase under the 1934 Act (each
such person, an "Agent," and, collectively, "Agents"). With
respect to all Agents, PADCO will be responsible for their
training, qualification, registration, supervision, and
control in the manner and to the extent required by the
applicable rules of the Securities and Exchange Commission
(the "Commission") and NASD and by any applicable securities
laws or rules of the various states relating to the
distribution of the Contracts.

(d) PADCO agrees to offer the Contracts for sale in
accordance with the then-current prospectus and statement of
additional information ( SAI ) therefor filed with the
Commission.

2
<PAGE>

(e) Great American Reserve shall furnish PADCO with all
application materials and other documentation that Great
American Reserve requires applicants to complete in connection
with their purchase of Contracts. Great American Reserve also
shall furnish PADCO with copies of all prospectuses, SAIs,
financial statements, and other documents which PADCO
reasonably requires for use in connection with the
distribution of the Contracts. PADCO will be entitled to rely
on all documentation and information furnished to it by Great
American Reserve s or the Annuity Account s management. To
the extent required by law, PADCO shall file all marketing
materials with the NASD, the Commission, and other securities
regulatory authorities, and Great American Reserve shall file
all marketing materials with state insurance regulatory
authorities, and PADCO and Great American Reserve shall each
exert commercially reasonable efforts to obtain any necessary
approvals of such marketing materials from the respective
regulatory authorities.

(f) PADCO shall accept, on behalf of Great American
Reserve, the initial purchase payment under the Contract and
without undue delay shall remit such payment (in full) to
Great American Reserve accompanied by a completed application
and/or such other documentation or information that Great
American Reserve may require in connection with the purchase
of a Contract. Any check, draft, or money order used by the
applicant to cover the initial purchase payment shall be made
payable to "Great American Reserve Insurance Company," and
PADCO shall return to the applicant any check, draft, or money
order made payable to any person or entity other than Great
American Reserve. It is understood that Great American
Reserve reserves the right to reject any Contract application
in its sole discretion.

(g) PADCO shall not accept payments made by a Contract
owner subsequent to the initial purchase payment under the
Contract, and PADCO shall return to the Contract owner any
such payments received by PADCO.

(h) PADCO shall take reasonable steps to ensure that the
Agents shall not make recommendations to an applicant to
purchase Contracts in the absence of reasonable grounds to
believe that the purchase of Contracts is suitable for such
applicant. While not limited to the following, PADCO's
determination of suitability shall be based on information
furnished to an Agent after reasonable inquiry concerning the
applicant s insurance and investment objectives and financial
situation and needs.

(i) PADCO shall have no authority to, and shall not: (i)
add, alter, waive or discharge any Contract or application
provision or prospectus provision or represent that such can

3
<PAGE>

be done by Great American Reserve or PADCO; (ii) extend the
time of making any payments; (iii) alter or substitute Great
American Reserve's forms in any manner; (iv) give or offer to
give, on behalf of Great American Reserve, any tax or legal
advice related to the purchase of a Contract; (v) guarantee
the issuance of any Contract or the reinstatement of any
lapsed Contract; or (vi) exercise any authority on behalf of
Great American Reserve other than that expressly conferred on
PADCO by this Agreement.

(j) Except as may be necessary to comply with the
requirements of any applicable law or regulation, PADCO shall
not, absent Great American Reserve's consent, actively promote
the replacement of any Contract or the redirection of the cash
value of a Contract into any other product. "Actively
promote" shall include mailings specifically sent to or
conversations specifically held with Contract owners or
licensed agents of PADCO which induce or attempt to induce a
Contract owner to surrender the Contract and replace it with
another variable annuity product (other than a product offered
by Great American Reserve or its affiliates), or to direct
premiums, cash values or deposits from a Contract to any other
variable annuity product (other than a product offered by
Great American Reserve or its affiliates). Notwithstanding
the foregoing, in no event shall this provision prevent PADCO
from concurrently or subsequently offering and selling to a
Contract owner any non-variable annuity product, whether or
not offered by Great American Reserve or its affiliates. This
provision shall not be violated in connection with business
contacts by PADCO with, or investment decisions made by,
registered investment advisers performing asset allocation
services with respect to the Contracts. This provision shall
survive this Agreement for ( ) years after its termination,
and Great American Reserve shall have the right to cease
commission payments to PADCO in the even of its violation.

2. Sales Agreements

(a) Great American Reserve and PADCO may, from time to
time, enter into separate written agreements ( Sales
Agreements ), on such terms and conditions as PADCO may
determine not to be inconsistent with this Agreement, with
broker-dealers which agree to participate in the distribution
of Contracts. Such broker-dealers and their agents or
representatives soliciting applications for Contracts shall be
duly licensed, registered, or otherwise qualified for the
offer and sale of Contracts under the applicable insurance
laws and any other applicable laws of each state or other
jurisdiction in which Great American Reserve is licensed to
sell the Contracts. Each such broker-dealer shall be both
registered as a broker-dealer under the 1934 Act and a member
of the NASD, or if not so registered or not such a member,

4
<PAGE>

then the agents and representatives of such organization
soliciting applications for Contracts shall be agents and
registered representatives of a registered broker-dealer and
NASD member which is the parent or other affiliate of such
organization and which maintains full responsibility for the
training, supervision, and control of the agents and
representatives selling Contracts. Such Sales Agreements with
other broker-dealers shall be subject to approval by Great
American Reserve.

(b) PADCO shall have the responsibility for training,
monitoring and supervising all such broker-dealers involved in
the offer and sale of the Contracts to the extent required by
applicable law. Application materials for Contracts solicited
by such broker-dealers through their agents or representatives
shall be forwarded to PADCO. All initial purchase payments
shall be remitted promptly by such broker-dealers directly to
Great American Reserve.

3. State Insurance Agent Licensing Requirements

(a) As to any activities that would require either PADCO
or any of PADCO s Agents to be licensed as an insurance agent
in a particular state or jurisdiction, neither PADCO nor any
of PADCO s Agents (as the case may be) shall engage in such
activities until such persons are properly licensed in such
state or jurisdiction. As used herein, "properly licensed"
includes the filing of an appointment by Great American
Reserve when required by the laws or regulations of the
applicable state or jurisdiction.

(b) PADCO, from time to time, shall advise Great
American Reserve of the identity of all persons or entities
that PADCO desires Great American Reserve to appoint as Great
American Reserve insurance agents. In that connection, PADCO,
either on its own or in conjunction with the efforts of other
broker-dealers with whom it has contracted to offer the
product, will ensure that, after careful investigation, the
insurance agents selected to engage in the sale of the
Contracts are trained and qualified to make such sales. PADCO
shall prepare and submit completed agent appointment forms for
Great American Reserve's approval, and Great American Reserve
shall forward all approved agent appointment forms in a timely
manner to the appropriate state insurance departments. PADCO
shall pay all required appointment fees.

(c) With respect to each agent appointment executed by
Great American Reserve, Great American Reserve shall take all
action necessary to effect the renewals of the agent
appointments, however, PADCO shall be responsible for the
payment of all required renewal fees paid to state insurance
authorities.

5
<PAGE>

4. Books and Records

(a) Great American Reserve, the Annuity Account, and
PADCO shall cause to be maintained and preserved all required
books of account and related financial records as each is
required to maintain and preserve under the 1934 Act, the
NASD, and any other applicable laws and regulations, including
state insurance laws and regulations.

(b) All the books and records maintained by PADCO in
connection with the offer and sale of the Contracts shall be
maintained and preserved in conformity with the requirements
of the 1934 Act, to the extent that such requirements are
applicable to the obligations imposed on the parties under
this Agreement. All such books and records shall be
maintained and held by PADCO, whose property these books and
records are and shall remain. Such books and records shall be
at all times subject to inspection by the Commission in
accordance with Section 17(a) of the 1934 Act.

(c) PADCO shall have the responsibility for maintaining
the records of any sales commissions paid by PADCO to broker-
dealers and/or sales representatives licensed, registered, and
otherwise qualified to sell the Contracts.

5. Reports

PADCO shall cause Great American Reserve and/or the
Annuity Account to be furnished with such reports as either or
both may reasonably request in connection with the offer and
sale of Contracts for the purpose of meeting reporting and
record keeping requirements under the insurance laws of the
State of Texas and any other applicable states or
jurisdictions. Likewise, Great American Reserve and/or the
Annuity Account shall cause PADCO to be furnished with such
reports as PADCO reasonably may request in connection with the
offer and sale of Contracts for the purpose of meeting
reporting and record keeping requirements under applicable
federal or state securities laws or regulations.

6. Compensation and Expenses

(a) In consideration of the services performed by PADCO
hereunder, Great American Reserve shall compensate PADCO
monthly (or, to the extent applicable law requires that such
compensation be paid to an Agent of PADCO, to such Agent).
The amount of this compensation shall be based on a percentage
of all premiums received by Great American Reserve and
allocated to the Annuity Account under the Contracts. The
current rate of compensation is shown on Schedule A, attached
hereto.

6
<PAGE>

(b) The Annuity Account shall not be liable to PADCO (or
Great American Reserve) for any expense incurred for services
related to the distribution of the Contracts (except to the
extent that profits from the mortality and expense risk charge
paid to Great American Reserve were to be used by Great
American Reserve to cover a portion of Great American
Reserve's obligations to pay such distribution expenses).
PADCO shall be responsible for all expenses relating to the
distribution of the Contracts, including, but not limited to:

(i) the costs and expenses of providing the
necessary facilities, personnel, office equipment, and
supplies, telephone services, and other utility service
necessary to carry out PADCO s obligations hereunder;

(ii) charges and expenses of outside legal counsel
retained with respect to activities related to the
distribution of the Contracts;

(iii) the costs and expenses of underwriting and
issuance of the Contracts;

(iv) the costs and expenses of printing definitive
prospectuses and SAIs and any supplements thereto for
prospective purchasers;

(v) expenses incurred in connection with PADCO s
registration as a broker or dealer or in the registration or
qualification of PADCO's officers, directors, or
representatives under federal and state securities laws;

(vi) the costs of promotional, sales, and
advertising material; and

(vii) the costs of licensing PADCO and PADCO's
Agents pursuant to state insurance laws, as required under
section 3 of this Agreement; and

(viii) any expenses incurred by PADCO or its
representatives in connection with performing the obligations
of PADCO under this Agreement.

7. Non-Exclusivity

Great American Reserve and the Annuity Account agree that
the services to be provided by PADCO hereunder are not to be
deemed exclusive and PADCO is free to act as distributor or
underwriter of other variable insurance products, investment
company shares, or other securities or instruments issued by
entities other than Great American Reserve and the Annuity
Account. PADCO shall, for all purposes herein, be deemed to
be an independent contractor of Great American Reserve and the

7
<PAGE>

Annuity Account. Neither PADCO nor Great American Reserve
shall exercise any authority on behalf of the other except to
the extent such authority is expressly conferred under this
Agreement, and, in connection therewith, PADCO shall have no
authority to act for or represent Great American Reserve or
the Annuity Account in any way or otherwise be deemed an agent
of Great American Reserve or the Annuity Account other than in
furtherance of PADCO s duties and responsibilities as set
forth in this Agreement.

8. Indemnification

(a) Great American Reserve agrees to indemnify and hold
harmless PADCO and its affiliates and each Agent, officer, and
director thereof, and each person, if any, who is associated
with PADCO within the meaning of the 1934 Act, and each person
who controls PADCO within the meaning of the 1933 Act or the
1934 Act (collectively, the "PADCO Indemnitees"), against any
losses, claims, damages, or liabilities, joint or several, to
which any of the PADCO Indemnitees 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 a material fact, or omission or alleged
omission required to be stated therein or necessary to make
the statements therein not misleading, contained:

(i) in any registration statement, or prospectus,
or any amendment thereof, or

(ii) in any document executed by Great American
Reserve filed with any state insurance authority for the
purpose of qualifying the Contracts for sale under the
insurance laws of any jurisdiction, or

(iii) in any sales materials relating to the
Contracts prepared by Great American Reserve.

Great American Reserve will reimburse each of the PADCO
Indemnitees for any legal or other expenses reasonably
incurred by PADCO or such officer or director of PADCO in
connection with investigating or defending any such loss,
claim, damages, liability, or action; provided, that Great
American Reserve will not be liable in any such case to the
extent that such loss, claim, damage, or liability arises out
of, or is based upon, an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance
upon and in conformity with information (including, without
limitation, negative responses to inquiries) furnished to
Great American Reserve by or on behalf of PADCO specifically
for use in the preparation of any registration statement, or
prospectus, or any amendment thereof, or any submission to a

8
<PAGE>

state insurance authority, or supplement thereto, or any sales
materials for use in connection with the Contracts. This
indemnity agreement will be in addition to any liability which
Great American Reserve may otherwise have.

(b) PADCO agrees to indemnify and hold harmless Great
American Reserve and its officers and directors and each
person, if any, who controls Great American Reserve within the
meaning of the 1933 Act or the 1934 Act (collectively, the
"Great American Reserve Indemnitees"), against any losses,
claims, damages, or liabilities, joint or several, to which
any of the Great American Reserve Indemnitees 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:

(i) Any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading,
contained (a) in any registration statement, or prospectus, or
any amendments thereof, or (b) in any submission to a state
insurance authority, in each case to the extent, but only to
the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance
upon and in conformity with information (including, without
limitation, negative responses to inquiries) furnished to
Great American Reserve by PADCO specifically for use in the
preparation of any registration statement, or prospectus, or
any amendments thereof or any submission to a state insurance
authority or supplement thereto; or

(ii) Any unauthorized use of sales materials or
any verbal or written misrepresentations or any unlawful sales
practices concerning the Contracts by PADCO; or
(iii) Claims by agents or representatives or
employees of PADCO for commissions, service fees, expense
allowances, or other compensation or remuneration of any type.

PADCO will reimburse each of the Great American Reserve
Indemnitees for any legal or other expenses reasonably
incurred by Great American Reserve, such director, officer, or
controlling person in connection with investigating or
defending any such loss, claim, damage, liability, or action.
This indemnity agreement will be in addition to any liability
which PADCO may otherwise have.

(c) Promptly after receipt by a party entitled to
indemnification ( indemnified party ) under this section 8 of
notice of the commencement of any action, if a claim in
respect thereof is to be made against any person obligated to

9
<PAGE>

provide indemnification under this section 8 ( indemnifying
party ), the indemnified party will notify the indemnifying
party in writing of the commencement thereof, but the omission
to so notify the indemnifying party will not relieve the
indemnifying party from any liability under this section 8,
except to the extent that the omission results in a failure of
actual notice to the indemnifying party and the indemnifying
party is damaged solely as a result of the failure to give
such notice. In case any such action is brought against any
indemnified party, and the indemnified party notifies the
indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein,
and to the extent that the indemnifying party may wish, to
assume the defense thereof, within separate counsel
satisfactory to the indemnified party. Such participation
shall not relieve the indemnifying party of the obligation to
reimburse the indemnified party for reasonable legal and other
expenses incurred by the indemnifying party in defending
itself, except for such expenses incurred after the
indemnifying party has deposited funds sufficient to effect
the settlement, with prejudice, of the claim in respect of
which indemnity is sought. An indemnifying party shall not be
liable to an indemnified party on account of any settlement of
any claim or action effected without the consent of the
indemnifying party.

(d) The indemnity agreements contained in this section 8
shall remain operative and in full force and effect,
regardless of:

(i) any investigation made by or on behalf of
PADCO or any officer or director thereof or by or on behalf of
Great American Reserve or any officer or director thereof;

(ii) delivery of any Contracts and payments
therefore; and

(iii) any termination of this Agreement.

(e) A successor by law of PADCO or of any of the parties
to this Agreement, as the case may be, shall be entitled to
the benefits of the indemnity agreements contained in this
section 8.

9. Liability

(a) PADCO shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Annuity
Account in connection with the matters to which this Agreement
relates. Nothing herein contained shall be construed to
protect PADCO against any liability resulting from the willful
malfeasance, bad faith, or gross negligence of PADCO in the

10
<PAGE>

performance of its obligations and duties or from reckless
disregard of its obligations and duties under this Agreement
or by virtue of violation of any applicable law.

(b) In no event shall any party under this Agreement be
liable for lost profits or for exemplary, special, or punitive
damages alleged to have been sustained by another party.

10. Regulation

(a) This Agreement shall be subject to the applicable
provisions of applicable state law and the 1940 Act, the 1934
Act, and the rules, regulations, and rulings thereunder, and
the rules, regulations, and rulings of the NASD, as in effect
from time to time, including such exemptions and other relief
as the Commission, its staff, or the NASD may grant, and the
terms hereof shall be interpreted and construed in accordance
therewith. Without limiting the generality of the foregoing,
the term assigned shall not include any transactions
exempted from Section 15(b)(2) of the 1940 Act.

(b) PADCO shall submit to all regulatory and
administrative bodies having jurisdiction over the present and
future operations of the Annuity Account, any information,
reports, or other material which any such body by reason of
this Agreement may request or require pursuant to applicable
laws or regulations. Without limiting the generality of the
foregoing, PADCO shall furnish the Commission, and/or the
State of Texas Superintendent of Insurance with any
information or reports which the Commission, and/or the
Superintendent of Insurance may request in order to ascertain
whether the operations of the Annuity Account are being
conducted in a manner consistent with the applicable laws or
regulations.

11. Investigations and Proceedings

(a) Great American Reserve, the Annuity Account, and
PADCO agree to cooperate fully in any insurance or securities
regulatory inspection, inquiry, investigation, or proceeding,
or any judicial proceeding with respect to Great American
Reserve, the Annuity Account, or PADCO, their affiliates and
their representatives, to the extent that the inspection,
inquiry, investigation, or proceeding is in connection with
the Contracts distributed under this Agreement.

(b) Great American Reserve, the Annuity Account, and
PADCO will cooperate in investigating customer complaints and
shall arrive at mutually satisfactory responses to such
complaints.

11
<PAGE>

12. Confidentiality

Subject to the requirements of legal process and
regulatory authority, each of the parties hereto shall treat
as confidential (a) the identity of existing or prospective
Contract owners, (b) any financial or other information
provided by existing or prospective Contract owners, and (c)
any other information reasonably identified as confidential in
writing by any other party hereto (collectively "confidential
information"). Except as permitted by this Agreement, none of
the parties hereto shall disclose, disseminate, or utilize any
confidential information without the express written consent
of the affected party until such time as such confidential
information may come into the public domain, except as
permitted by this Agreement or as otherwise necessary to
service the Contracts and/or to respond to appropriate
regulatory authorities. Each of the parties hereto shall take
all reasonable precautions to prevent the unauthorized
disclosure of any confidential information.

13. Licenses

(a) PADCO owns all rights, title, and interest in and to
the name, trademark, and service mark "PADCO," and such other
trade names, trademarks, and service marks identified in
Schedule B, attached hereto (the "PADCO licensed marks" or the
"licensor's licensed marks"). PADCO hereby grants to Great
American Reserve a non-exclusive license to use the PADCO
licensed marks in connection with Great American Reserve s
performance of the services contemplated under this Agreement,
subject to the terms and conditions set forth in this Section
13.

(b) Great American Reserve is the owner of all rights,
title, and interest in and to the trade name, trademarks, and
service mark "Great American Reserve Insurance Company," and
such other trade names, trademarks and service marks
identified in Schedule C, attached hereto (the "Great American
Reserve licensed marks" or the "licensor's licensed marks").
Great American Reserve hereby grants to PADCO a non-exclusive
license to use the Great American Reserve licensed marks in
connection with PADCO's performance of the services
contemplated by this Agreement, subject to the terms and
conditions set forth in this Section 13.

(c) The grant of license by PADCO and Great American
Reserve (each, a "licensor") to the other (the "licensee")
shall terminate upon termination of this Agreement and the
licensee shall cease to use the licenses granted hereunder,
except that Great American Reserve shall have the right to
administer any outstanding Contracts bearing any of the PADCO
licensed marks and in connection therewith to use the PADCO

12
<PAGE>

licensed marks.

(d) Notwithstanding any provision in this Agreement to
the contrary, a 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 approval shall not be unreasonably
withheld.

(e) Each licensee hereunder: (i) acknowledges and
stipulates that 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.

14. Injunctive Relief

Each of the parties hereto agrees that monetary damages
may be an inadequate remedy in the event of a breach or
threatened breach of any of the covenants contained in Section
12 or Section 13 of this Agreement, and the covenants
contained in such sections shall be specifically enforceable
by temporary, preliminary, and permanent injunctive relief in
addition to, and not in limitation of, any other rights or
remedies, whether at law or in equity, that the party seeking
such injunctive relief may have. If any court shall determine
that any covenant contained in said sections of this Agreement
is invalid in whole or in part as to time or location, or as
to both, it is the intention of the parties hereto that such
covenant shall not thereby be terminated but shall be deemed
amended to the minimum extent required to render such covenant
valid and enforceable.

15. Duration and Termination of the Agreement

(a) This Agreement shall become effective with respect
to the Contracts as of the date first written above. This
Agreement shall become effective with respect to any
subsequently offered contract when the contract has been
approved by the Board of Managers of the Annuity Account
(including a majority of the members thereof who are not
parties to this Agreement nor interested persons of any such
parties) specifically for such contract. Subsequently
offered contract means a contract issued and funded by the
Annuity Account subsequent to the initial effective date of
this Agreement.

13
<PAGE>

(b) This Agreement shall continue in effect for two
years from the date of its execution and thereafter from year
to year, but only so long as such continuance is specifically
approved at least annually by (i) the Board of Managers of the
Annuity Account, or by the vote of a majority of the
outstanding voting securities of the Annuity Account, and (ii)
a vote of a majority of those members of the Board of Managers
of the Annuity Account who are not parties to this Agreement
nor interested persons of any such parties, cast in person at
a meeting called for the purpose of voting on such approval.
This Agreement shall continue in effect with respect to each
subsequently created Subaccount so long as such continuance is
specifically approved at least annually in the manner
described in (i) and (ii) above of this section 15(b).

(c) This Agreement may be terminated, without the
payment of any penalty, by Great American Reserve, the Annuity
Account, or PADCO on sixty (60) days written notice to the
other parties. This Agreement shall automatically terminate
in the event of its assignment.

(d) Upon termination of this Agreement, all
authorizations, rights, and obligations shall cease except the
obligation to settle accounts hereunder and the agreements
contained in sections 8, 11, 12, 13, and 14 of this Agreement.

16. Amendments

This Agreement may be amended at any time by mutual
consent of the parties, provided that the consent of the
Annuity Account shall be given in the manner contemplated
under section 15(b)(i) and (ii) of this Agreement.

17. Definitions

The terms assignment, interested person, and
majority of the outstanding voting securities, when used in
this Agreement, shall have the respective meanings specified
under the 1940 Act and the rules thereunder.

18. Further Actions

Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate
the purposes hereof.

19. Governing Law

The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of
Maryland, as at the time in effect, and the applicable
provisions of the 1940 Act and rules thereunder or other

14
<PAGE>

federal laws and regulations which may be applicable. To the
extent that the applicable law of the State of Maryland, or
any of the provisions herein, conflict with the applicable
provisions of the 1940 Act and rules thereunder or other
federal laws and regulations which may be applicable, the
latter shall control.

20. Counterparts

This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and
all of which shall be deemed one instrument.

21. Notices

All notices and other communications provided for
hereunder shall be in writing and shall be delivered by hand
or mailed first class, postage prepaid, addressed as follows:

(a) If to Great American Reserve:

Great American Reserve Insurance Company
11815 North Pennsylvania Street
Carmel, Indiana 46032
Attention: Office of the General Counsel

(b) If to the Annuity Account:

Great American Reserve Insurance Company
11815 North Pennsylvania Street
Carmel, Indiana 46032
Attention: Office of the General Counsel

With a copy to:

Rydex Advisor Variable Annuity Account
6116 Executive Boulevard
Suite 400
Rockville, Maryland 20852
Attention: President

PADCO Financial Services, Inc.
6116 Executive Boulevard
Suite 400
Rockville, Maryland 20852
Attention: President

or to such other address as Great American Reserve, the
Annuity Account, or PADCO shall designate by written notice tothe others.

15
<PAGE>

22. Miscellaneous

Captions in this Agreement are included for convenience
or reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or
effect.

IN WITNESS WHEREOF, Great American Reserve, the Annuity
Account, and PADCO, have caused this Agreement to be executed
in their names and on their behalf by and through their duly
authorized officers on the day and year first above written.

ATTEST: GREAT AMERICAN RESERVE
INSURANCE COMPANY

By: /s/ L. Gregory Gloeckner
Name: L. Gregory Gloeckner
Title: Vice President

ATTEST: RYDEX ADVISOR VARIABLE
ANNUITY ACCOUNT

By:/s/ Albert P. Viragh, Jr.
Name: Albert P. Viragh, Jr.
Title: President

ATTEST: PADCO FINANCIAL SERVICES, INC.
on its own behalf and on behalf of
its insurance agency subsidiary

By:/s/ Robert M. Steele
Name: Robert M. Steele
Title: Vice President

16
<PAGE>

SCHEDULE A
TO
PRINCIPAL UNDERWRITING AGREEMENT
FOR THE CONTRACTS FUNDED BY
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

CURRENT RATE OF COMPENSATION

The amount payable monthly by Great American Reserve to
PADCO in consideration of the services performed by PADCO
under this Agreement is six percent (6.0%) of the premiums (as
that term is used in section 6(a) of this Agreement) received
by Great American Reserve and allocated to the Separate
Account under the Contracts during each month.
<PAGE>

SCHEDULE B
TO
PRINCIPAL UNDERWRITING AGREEMENT
FOR THE CONTRACTS FUNDED BY
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

PADCO LICENSED MARKS

PADCO owns all rights, title, and interest in and to the
following names, trademarks, and service marks:

PADCO
Padco
Rydex
<PAGE>

SCHEDULE C
TO
PRINCIPAL UNDERWRITING AGREEMENT
FOR THE CONTRACTS FUNDED BY
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

GREAT AMERICAN RESERVE INSURANCE COMPANY
LICENSED MARKS

Great American Reserve owns all rights, title, and
interest in and to the following names, trademarks, and
service marks:

Great American Reserve Insurance Company
Great American Reserve
GARCO
Garco
<PAGE>

<PAGE>

EXHIBIT 7

Form of Application for
Variable Annuity Contract
<PAGE>

GREAT AMERICAN RESERVE INSURANCE COMPANY
Administrative Office: 11815 N. Pennsylvania Street
P.O. Box 1911, Carmel, Indiana 46032-4911

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT APPLICATION

1. CONTRACT OWNER(S) If no annuitant is specified in
Section 2, the contract owner will be the annuitant

______________________________________________
(Print) Last First MI
______________________________________________
Address
______________________________________________
City State Zip

Soc. Sec. No./Tax I.D. ___-___-___

Marital Status __________

Annuitization Age ____________

Date of Birth ________ ________ _________
Month Day Year

Sex M______ F______

1.(b) JOINT OWNER (If Applicable)
(Spouse Only)

______________________________________________
(Print) Last First MI
______________________________________________
Address
______________________________________________
City State Zip

Soc. Sec. No./Tax I.D. ___-___-___

Date of Birth ________ ________ _________
Month Day Year

Sex M______ F______
<PAGE>

2. ANNUITANT (Complete only if different from the contract
owner)

______________________________________________
(Print) Last First MI
______________________________________________
Address
______________________________________________
City State Zip

Soc. Sec. No./Tax I.D. ___-___-___

Date of Birth ________ ________ _________
Month Day Year

Marital Status __________

Sex M______ F______

3. BENEFICIARY

Primary
______________________________________________
(Print) Last First MI
______________________________________________
Relationship To Owner(s)

Contingent
______________________________________________
(Print) Last First MI
______________________________________________
Relationship To Owner(s)

4. TYPE OF PLAN

a. Nonqualified

______ Regular
______ 1035 Transfer

b. Qualified

______ IRA/SEP Transfer/Rollover
______ 403(b) Transfer/Rollover

5. INVESTMENT INFORMATION

Minimum Initial Purchase Payment: $25,000.00
Minimum Subsequent Purchase Payment: $1,000.00

a. An initial purchase payment $_______ is attached.
<PAGE>

b. Allocated to year __________
(Complete for IRA contributions)

6. PAYMENT ALLOCATION (Use whole percentages. The
percentages for all allocations must equal 100%)

____ A. Separate Account/Money Market I Subaccount
____ B. Fixed Account (Subject to transfer restrictions)

7. REPLACEMENT

Will the proposed contract replace any existing annuity
or insurance contract?

_____ No _____ Yes

If Yes, list company name, plan and year of issue.
________________________________________________

If Yes, replacement requirements must be completed.

______ Agent s initials certifying any replacement
criteria required in this state have been met.

In accordance with TEFRA (August 14, 1982), please
provide the cost basis of the contract.

Pre-TEFRA $________ Post-TEFRA $__________

8. SPECIAL REQUESTS

9. LIMITED POWER OF ATTORNEY

I hereby authorize the person set forth under Financial
Advisor to be my advisor and attorney-in-fact, and in
such capacity to give instructions to PADCO Service Co.,
Inc. And its affiliates ( PADCO ) for transactions
within the Rydex Advisor Variable Annuity, including
authorizing telephone transfers and to take all other
actions necessary or incidental thereto. PADCO may rely
on such instructions without obtaining my approval,
counter-signature, or co-signature. I will indemnify
and hold PADCO and Great American Reserve their
directors, officers, and employees harmless from all
liabilities and costs, including attorney fees and
expenses, which PADCO and Great American Reserve may
incur by relying upon the representations of the
Financial Advisor or upon this authorization.
<PAGE>

Contract Owner Signature X _________________________
Date _____________________

Joint Contract Owner Signature X ____________________
Date ______________________

10. FINANCIAL ADVISOR/TELEPHONE TRANSFER AUTHORIZATION

I, the Financial Advisor, have received a written power
of attorney from each Contract Owner for whom I have
been granted the power to direct the allocation and
exchange of funds invested within the Rydex Advisor
Variable Annuity Account. Pursuant to the Power of
Attorney, I authorize and direct PADCO to act on
telephone instructions, when proper identification is
furnished, to exchange units from any subaccount or the
fixed account to any other subaccount or the fixed
account subject to any limitations set forth in the
Contract. I agree that neither PADCO nor Great American
Reserve will be liable for any loss arising from the
exchange by acting in accordance with these telephone
instructions.

Financial Advisor Signature X _________________________
Date ________________

Name of Firm ________________________________________
Financial Advisor/Group Number __ __ __ __ __ __ __ __

11. SIGNATURE

All statements made in this application (including the reverse
side) are true to the best of my knowledge and belief, and I
agree to all terms and conditions as shown on the front and
back. I further agree that this application shall be part of
the annuity contract, and I verify my understanding that all
payments and values provided by the contract, when based on
investment experience of subaccounts, are variable and not
guaranteed as to dollar amount. I acknowledge receipt and
have read current prospectuses. Under penalty of perjury, I
certify that the Social Security (or Taxpayer identification)
number is correct as it appears in the application.

Signed at _______________________ this _______ day of
_______________, 19________.

______________________________________________
Signature of Contract Owner/Applicant

_______________________________________________
Signature of Joint Contract Owner (Spouse Only)
<PAGE>

REGISTERED REPRESENTATIVE CERTIFICATION

I certify that I have asked all questions in the application
and correctly recorded the proposed Contract Owners answers.
To the best of my knowledge, I have presented to Great
American Reserve all the pertinent facts. I further certify
that I am properly licensed to sell variable annuities in the
state in which the proposed Contract Owner resides and that no
sales material other than that approved by the Administrative
Office was used.

Signed at __________________ this ________ day of
_______________________, 19__________.

_________________________________
Agent s Number

_________________________________
Agent s License ID # (if required)

__________________________________
Registered Representative

__________________________________
2nd Agent s Number

__________________________________
Agent s License ID # (if required)

__________________________________
Other Registered Representative

__________________________________
Broker Dealer

__________________________________
Broker Dealer Phone Number

[ ] For Broker Dealer Use Only
<PAGE>

EXHIBIT 11(a)

Subaccount Administration Agreement
Between Rydex Advisor Variable Annuity
Account and PADCO Service Company, Inc.
<PAGE>

SUBACCOUNT ADMINISTRATION AGREEMENT

THIS SUBACCOUNT ADMINISTRATION AGREEMENT (the
"Agreement"), dated as of ________________, 1996, is entered
into by and between THE RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
(the "Separate Account"), a managed separate account of Great
American Reserve Insurance Company ("Great American Reserve")
established under the laws of the State of Texas on April 15,
1996, and PADCO SERVICE COMPANY, INC. (the "Servicer"), a
company incorporated under the laws of the State of Maryland
on October 6, 1993.

W I T N E S S E T H:

WHEREAS, the Servicer is registered with the Commission
as a transfer agent under the Securities Exchange Act of 1934,
as amended;

WHEREAS, the variable annuity contracts proposed to be
sold by Great American Reserve and to be funded by the
Separate Account (the "Contracts") are designed for use by
purchasers of the Contracts (the "Contract Owners") who intend
to utilize an asset allocation or market-timing investment
strategy and are advised by professional money managers
("Financial Advisors");

WHEREAS, the board of managers of the Separate Account
(the "Managers"), pursuant to Article III, Section 2.m.,
"Board of Managers; Powers," of the rules and regulations of
the Separate Account, dated June 26, 1996, have created the
following Subaccounts of the Separate Account: The Nova
Subaccount, The Ursa Subaccount, The OTC Subaccount, The
Precious Metals Subaccount, The Juno Subaccount, The U.S.
Government Bond Subaccount, The Money Market I Subaccount, and
The Money Market II Subaccount (collectively, the
"Subaccounts");

WHEREAS, the accounting unit of measure used to compute
the value of a Contract Owner's interest in a Subaccount is
the "Accumulation Unit," or "Unit," and the current market
value of the Accumulation Units of a Subaccount is the
<PAGE>

"Accumulation Unit Value;"

WHEREAS, the Separate Account wishes to have the
Servicer perform certain asset allocation administrative
services, including, among others, communications with
Financial Advisors (including receipt of and acting upon
transfer requests), asset allocation bookkeeping,
determination of Accumulation Unit Values, Subaccount
accounting and recordkeeping services, and other services for
the Subaccounts (other than the Money Market II Subaccount),
and Contract Owners, and to act in such capacity in the manner
set forth in this Agreement, and the Servicer is willing to
act in such capacity in accordance with the provisions of this
Agreement; and

WHEREAS, the Separate Account desires to appoint the
Servicer as the accounting services agent for the Subaccounts
(other than the Money Market II Subaccount): (i) to perform
certain accounting and recordkeeping functions required of a
duly-registered investment company; (ii) to file certain
financial reports; (iii) to maintain and preserve certain
books, accounts, and records as the basis for such reports;
and (iv) to perform certain daily functions in connection with
such accounts and records; and the Servicer is willing to
perform such functions upon the terms and conditions herein
set forth.

1. Services To Be Provided

In consideration of the compensation to be paid by the
Separate Account to the Servicer pursuant to Section 4 of this
Agreement and pursuant to Schedule I, Schedule II, and
Schedule III of this Agreement, attached hereto, as
applicable, the Servicer will:

a. Manage, supervise, and conduct the affairs and
business of the Subaccounts (other than the Money Market II
Subaccount) and matters incidental thereto. In the
performance of its duties, the Servicer will comply with the
Separate Account's Prospectus and Statement of Additional
Information, as the same may be amended from time to time, all
as delivered to the Servicer (collectively, the "Controlling
Documents"). The Servicer will also use its best efforts to
safeguard and promote the welfare of the Separate Account and
to comply with other policies which the Managers from time to
time may specify. The Servicer will furnish or provide to the

2
<PAGE>

Subaccounts (other than the Money Market II Subaccount)
general asset allocation administrative services as the
Subaccounts may reasonably require in the conduct of their
affairs and business, including, without limitation, the
services described on Schedule I attached hereto.

b. Provide the Subaccounts (other than the Money Market
II Subaccount) with all required Contract Owner services,
including, without limitation, those services described on
Schedule II, attached hereto. The Servicer will maintain
sufficient trained personnel and equipment and supplies to
perform such services in conformity with the Controlling
Documents and such other reasonable standards of performance
as said Subaccounts may from time to time specify, and
otherwise in an accurate, timely, and efficient manner.

c. Provide the Subaccounts (other than the Money Market
II Subaccount) with all other required asset allocation
administration services, including, without limitation, those
services described on Schedule III attached hereto. The
Servicer will maintain sufficient trained personnel and
equipment and supplies to perform such services in conformity
with the Controlling Documents and such other reasonable
standards of performance as said Subaccounts may from time to
time specify, and otherwise in an accurate, timely, and
efficient manner.

2. Obligations of the Separate Account

The Separate Account will have the following obligations
under this Agreement:

a. The Separate Account shall keep the Servicer
continuously and fully informed as to the composition of the
investment portfolio of each Subaccount of the Separate
Account (other than the Money Market II Subaccount) and the
nature of all of the assets and liabilities of each Subaccount
(other than the Money Market II Subaccount), and shall cause
the portfolio investment managers of said Subaccounts to
cooperate with the Servicer in all matters so as to enable the
Servicer to perform the Servicer's functions under this
Agreement.

b. The Separate Account shall furnish the Servicer with
any materials or information which the Servicer may reasonably
request to enable the Servicer to perform the Servicer's
functions under this Agreement. The Servicer shall be
entitled to rely exclusively on the completeness and
correctness of the materials and information furnished to the
Servicer by the Separate Account; provided, that such reliance

3
<PAGE>

is made in good faith; and provided, further, that such
materials and information shall belong to the Separate Account
and be considered confidential, and shall not be disclosed to
other than Federal and state regulators without permission
from the Separate Account.

3. Payment of Fees and Expenses

a. The Servicer shall pay all of the fees and expenses
incurred by the Servicer in providing each Subaccount (other
than the Money Market II Subaccount) with the services and
facilities described in this Agreement, except as otherwise
provided herein.

b. Notwithstanding any other provision of this
Agreement, each Subaccount (other than the Money Market II
Subaccount) shall pay, or reimburse the Servicer for the
payment of, all fees and expenses not directly related to the
Servicer's providing each such Subaccount with the services
and facilities described in this Agreement, including, but not
limited to, the following described fees and expenses of the
Separate Account (hereinafter called "Direct Expenses"),
whether or not billed to the Separate Account or said
Subaccount, the Servicer, or any related entity:

(i) fees and expenses relating to investment
advisory services;

(ii) fees and expenses of custodian and depositories
and banking services fees and costs;

(iii) fees and expenses of outside
legal counsel and any legal
counsel directly employed by the
Subaccounts and the Separate
Account;

(iv) fees and expenses of independent auditors and
income tax preparation and expenses of
obtaining quotations for the purpose of
calculating the value of the assets of the
Subaccounts;

(v) fees and expenses of consultants;

(vi) interest charges;

(vii) all Federal, state, and local
taxes (including, without
limitation, premium, stamp,
excise, income, and franchise
taxes);

4
<PAGE>

(viii) costs and expenses of issuing and
surrendering Units of the
Separate Account;

(ix) costs incidental to or associated with meetings
of Contract Owners;

(x) fees and expenses of registering or qualifying
Contracts for sale under Federal securities
laws and state insurance laws;

(xi) costs (including postage) of printing and
mailing prospectuses, confirmations, proxy
statements, and other reports and notices to
Contract Owners and to governmental agencies;

(xii) the Separate Account portion of
premiums on all insurance and
bonds and other expenses of
fidelity and liability insurance
and bonding covering the Separate
Account;

(xiii) fees and expenses of the
disinterested Managers and
expenses incidental to the
meetings of the Board;

(xiv) fees and expenses paid to any
securities pricing organization;

(xv) dues and expenses associated with membership in
any industry association;

(xvi) costs for incoming telephone WATS
lines; and

(xvii) organizational costs.

4. Compensation

As consideration for the services provided hereunder, the
Subaccounts (other than the Money Market II Subaccount) shall
accrue daily and pay the Servicer monthly a fee not later than
the fifth (5th) business day of the month following the month
for which services have been provided, at the following annual
rates based on the average daily net assets (the "Assets") of
each of said Subaccounts for such month:

The Nova Subaccount

0.25% of Assets

5
<PAGE>

The Ursa Subaccount

0.25% of Assets

The OTC Subaccount

0.20% of Assets

The Precious Metals Subaccount

0.20% of Assets

The U.S. Government Bond Subaccount

0.20% of Assets

The Juno Subaccount

0.25% of Assets

The Money Market I Subaccount

0.20% of Assets

In the event that this Agreement commences on a date
other than on the beginning of any calendar month, or if this
Agreement terminates on a date other than the end of any
calendar month, the fees payable hereunder by said Subaccounts
shall be proportionately reduced according to the number of
days during such month that services were not rendered
hereunder by the Servicer.

5. Reports to the Board of Managers

The Servicer shall consult with the Managers at such
times as the Managers reasonably request with respect to the
services provided hereunder, and the Servicer shall cause its
officers to attend such meetings with the Managers, and to
furnish such oral or written reports to the Managers, as the
Managers may reasonably request. In addition, the Servicer
agrees to provide to the Managers such reports and other
information as the Managers may reasonably request in order to
enable the Managers to perform a review of the Servicer's
performance under this Agreement.

6. Term of Agreement

This Agreement is effective on the date hereof. This
Agreement shall remain in full force and effect until

6
<PAGE>

________________, 1997, unless terminated earlier in
accordance with its terms, and thereafter from year to year;
provided, that: (a) such continuance is approved by (i)
either a vote of the majority of the Managers or a vote of a
"majority of the outstanding voting securities" (as defined at
Section 2(a)(42) of the 1940 Act) of the Separate Account and
(ii) a majority of the Managers who are not "interested
persons" (as defined at Section 2(a)(19) of the 1940 Act); and
(b) the following findings are made by a majority of the
Managers who are not "interested persons" (as defined at
Section 2(a)(19) of the 1940 Act): (i) that this Agreement is
in the best interests of the Separate Account; (ii) that the
services to be performed pursuant to this Agreement are
services required for the operation of the Separate Account;
(iii) that the Servicer can provide services the nature and
quality of which are at least equal to those provided by
others offering the same or similar services; and (iv) that
the fees for such services are fair and reasonable in light of
the usual and customary charges made by others for services of
the same nature and quality.

7. Termination

This Agreement may be terminated, without the payment of
any penalty, by either party hereto upon at least sixty (60)
days' written notice to the other party. Any termination by
the Separate Account will be pursuant to a vote of a majority
of the Managers.

8. Standard of Care

a. The Servicer shall be liable for any damages arising
out of an error by the Servicer in determining accumulation
unit values.

b. Except as noted above, the Servicer shall not be
liable for any error of judgment or mistake of law or for any
loss caused by the Separate Account in connection with the
matters to which this Agreement relates; provided, however,
that the Servicer has acted in the circumstances with the
care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent man acting in like capacity and
familiar with such matters would use in the conduct of any
enterprise of a like character and with like aims, and in
accordance with such other requirements of law; provided,
further, however, that nothing in this Agreement will protect
the Servicer against any liability to the Separate Account to
which the Servicer would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the
performance of the Servicer's duties hereunder or by reason of
the Servicer's reckless disregard of the Servicer's
obligations and duties hereunder.

7
<PAGE>

c. Except as provided by law, the Servicer shall have
no liability or be under any obligation to anyone with respect
to any failure on the part of the Managers or any portfolio
investment manager to perform any of their obligations under
the Controlling Documents, or for any error or omission
whatsoever on the part of the Managers or any portfolio
investment manager.

9. Other Activities of the Servicer

Subject to the provisions of Section 5 of this Agreement,
with respect to advance notice of the Servicer's taking on of
new clients or ventures of material significance, nothing
herein contained will limit or restrict the right of the
Servicer to engage in any other business or to render services
of any kind to any other corporation, firm, individual, or
association.

10. Scope of Authority

Neither the Servicer nor any of the Servicer's officers,
employees, agents, or assigns are authorized to make any
representations concerning the Separate Account or the
Contracts, except for those representations contained in the
Controlling Documents, copies of which will be supplied by the
Separate Account to the Servicer, or in such supplemental
literature or advertising as may be authorized by the Separate
Account in writing.

11. Indemnification

a. The Separate Account shall indemnify the Servicer
and hold the Servicer harmless from and against all actions,
suits, and claims, whether groundless or otherwise, arising
directly or indirectly out of or in connection with the
Servicer's performance under this Agreement and from and
against any and all losses, damages, costs, charges,
attorneys' and accountant's fees, payments, expenses, and
liabilities incurred by the Servicer in connection with any
such action, suit, or claim unless caused by the Servicer's
breach of this Agreement, negligence, or willful misconduct.
The Separate Account shall not be liable under this
indemnification provision with respect to any claim made
against the Servicer unless the Servicer shall have notified
the Separate Account 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 the
Servicer (or after the Servicer shall have received notice of
such service on any designated agent), but failure to notify

8
<PAGE>

the Separate Account of any such claim shall not relieve the
Separate Account from any liability which the Separate Account
may have to the Servicer against whom such action is brought
otherwise than on account of this indemnification provision.
In case any such action is brought against the Servicer, the
Separate Account shall be entitled to participate, at its own
expense, in the defense of such action. The Separate Account
also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from the Separate Account to such party of the Separate
Account's election to assume the defense thereof, the Servicer
shall bear the fees and expenses of any additional counsel
retained by the Servicer, and the Servicer 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. The Servicer will promptly notify the
Separate Account of the commencement of any litigation or
proceedings against the Servicer in connection with the
Contracts or the operations of the Subaccounts.

b. The Servicer shall indemnify the Separate Account
and hold the Separate Account harmless from all actions,
suits, damages, claims, demands, losses, and liabilities
(including reasonable attorneys' and accountants' fees and
expenses) incurred or assessed against the Separate Account
arising directly or indirectly from the Servicer's negligence,
wilful misconduct, or breach of this Agreement. The Servicer
shall not be liable under this indemnification provision with
respect to any claim made against the Separate Account unless
the Separate Account shall have notified the Servicer 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 the Separate Account (or
after the Separate Account shall have received notice of such
service on any designated agent), but failure to notify the
Servicer of any such claim shall not relieve the Servicer from
any liability which it may have to the Separate Account
against whom such action is brought otherwise than on account
of this indemnification provision. In case any such action is
brought against the Separate Account, the Servicer shall be
entitled to participate, at its own expense, in the defense of
such action. The Servicer also shall be entitled to assume
the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Servicer to such
party of the Servicer's election to assume the defense
thereof, the Separate Account shall bear the fees and expenses
of any additional counsel retained by the Separate Account,
and the Servicer 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.

9
<PAGE>

The Separate Account will promptly notify the Servicer of the
commencement of any litigation or proceedings against the
Separate Account in connection with the Contracts or the
operations of the Subaccounts.

12. Notices

a. Communications to the Servicer shall be addressed
to:

PADCO Service Company, Inc.
6116 Executive Boulevard
Suite 400
Rockville, Maryland 20852
Attention: President

b. Communications to the Separate Account shall be
addressed to:

Rydex Advisor Variable Annuity Account
Great American Reserve Insurance Company
11815 North Pennsylvania Street
Carmel, Indiana 46032
Attention: Office of the General Counsel

With a copy to:

Rydex Advisor Variable Annuity Account
6116 Executive Boulevard
Suite 400
Rockville, Maryland 20852
Attention: President

c. In the event of a change of address, communications
will be addressed to such new address as designated in a
written notice from the Separate Account or the Servicer, as
the case may be. All communications addressed in the above
manner and by registered mail or delivered by hand will be
sufficient under this Agreement.

13. Governing Law

This Agreement is governed by the laws of the State of
Maryland (without reference to such state's conflict of law
rules).

14. Counterparts

This Agreement may be executed in counterparts, each of
which shall be deemed an original, but which together shall

10
<PAGE>

constitute one and the same instrument.

15. Binding Effect and Assignment

This Agreement shall be binding upon the parties hereto
and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the
Separate Account without the written consent of the Servicer,
or by the Servicer without the written consent of the Separate
Account, in each case authorized or approved by a resolution
of the Separate Account's Managers.

16. Amendment, Modification, and Waiver.

No term or provision of this Agreement may be amended,
modified, or waived without the affirmative vote or action by
written consent of the Servicer and the Separate Account
effected in accordance with the provisions of the 1940 Act,
and the rules thereunder, and Section 6 of this Agreement.

IN WITNESS WHEREOF, the Servicer and the Separate Account
have executed this Agreement as of the date first written
above.

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

By: /s/ L. Gregory Gloeckner
L. Gregory Gloeckner
Vice President

PADCO SERVICE COMPANY, INC.

By: /s/ Albert P. Virgah, Jr.
Albert P. Viragh, Jr.
President

Schedule I

General Asset Allocation Administrative Services

The Servicer agrees to provide the Subaccounts (other
than the Money Market II Subaccount) with all required asset
allocation administrative services, including, without
limitation, the following:

1. Office space, equipment, and personnel.

2. Clerical and general back office services.

1
<PAGE>

3. Bookkeeping, internal accounting, secretarial,
and other general administrative services.

4. Preparation of all reports, prospectuses,
statements of additional information, proxy
statements, and all other materials required to
be filed or furnished by the Separate Account
under Federal and state securities laws.

5. Maintaining ledgers and determining
accumulation unit values.

I-2
<PAGE>

Schedule II

Contract Owner Services

The Servicer agrees to provide the Subaccounts (except
the Money Market II Subaccount) and the Contract Owners with
all required Contract Owner services ("Services"), including,
without limitation, the following:

1. The Servicer shall provide the following Services to the
Contract Owners with respect to the Subaccounts (except
for the Money Market II Subaccount):

a. Aggregate and process purchases and transfer
requests for Subaccount Units from Contract
Owners.

b. Arrange for bank wires.

c. Respond to Contract Owner and/or Financial
Advisor inquiries relating to the services
performed by the Servicer.

d. Provide accounting with respect to Units owned
by Contract Owners.

e. As required by law, forward certain Contract
Owner communications from the Separate Account
(such as proxies and annual and semi-annual
financial statements) to Contract Owners.

f. Provide such other similar services as the
Subaccounts may reasonably request to the
extent the Servicer is permitted to do so under
applicable statues, rules, or regulations.

2. The Servicer shall also provide the following additional
Services:

a. Maintain all records required by law relating
to transactions in Units and, upon request by
the Separate Account, promptly make these
records available to the Separate Account as
the Separate Account may reasonably request in
connection with the operations of the Separate
Account.

b. Promptly notify the Separate Account if the
Servicer experiences any difficulty in
maintaining the records described in this
Schedule II to the Agreement in an accurate and
complete manner.

II-1
<PAGE>

c. Furnish the Separate Account or any designee of
the Separate Account ("Designee") with
information relating to the Servicer's
performance under this Agreement as the
Separate Account or the Designee may reasonably
request (including, without limitation,
periodic certifications confirming the
provision to Contract Owners of the Services
described herein), and shall otherwise
cooperate with the Separate Account and the
Separate Account's Designees (including,
without limitation, any auditors designated by
the Separate Account), in connection with the
preparation of reports to the Managers
concerning this Agreement and the monies paid
or payable by the Separate Account pursuant
hereto, as well as any other reports or filings
that may be required by law.

II-2
<PAGE>

Schedule III

Asset Allocation Administration Services

The Servicer agrees to provide the Subaccounts (except
for the Money Market II Subaccount) with all required asset
allocation administration services, including, without
limitation, the following:

1. Receive Subaccount transfer requests from Financial
Advisors, and validate the authority of the party
originating the transaction.

2. Enforce transaction cut-off times as set forth in the
Controlling Documents.

3. Process and post all transfer transactions initiated by
Financial Advisors to the Contract Owner.

4. Answer all service-related telephone inquiries from
Financial Advisors, including:

- General and policy inquiries (research and resolve
problems)
- Separate Account yield inquiries
- Monitor inquiries regarding the investment
performance of Units
- Develop reports on telephone activity
- Communicate by electronic data transmission to
Financial Advisors the activity of Contract Owners

III-1
<PAGE>

<PAGE>

EXHIBIT 11(a)

Subaccount Administration Agreement
Between Rydex Advisor Variable Annuity
Account and PADCO Service Company, Inc.
<PAGE>

SUBACCOUNT ADMINISTRATION AGREEMENT

W I T N E S S E T H:

WHEREAS, the Servicer is registered with the Commission
as a transfer agent under the Securities Exchange Act of 1934,
as amended;

WHEREAS, the variable annuity contracts proposed to be
sold by Great American Reserve and to be funded by the
Separate Account (the "Contracts") are designed for use by
purchasers of the Contracts (the "Contract Owners") who intend
to utilize an asset allocation or market-timing investment
strategy and are advised by professional money managers
("Financial Advisors");

"Accumulation Unit Value;"

WHEREAS, the Separate Account wishes to have the Servicer
perform certain asset allocation administrative services,
including, among others, communications with Financial
Advisors (including receipt of and acting upon transfer
requests), asset allocation bookkeeping, determination of
Accumulation Unit Values, Subaccount accounting and
recordkeeping services, and other services for the Subaccounts
(other than the Money Market II Subaccount), and Contract
Owners, and to act in such capacity in the manner set forth in
this Agreement, and the Servicer is willing to act in such
capacity in accordance with the provisions of this Agreement;
and