<PAGE>
As filed with the Securities and Exchange Commission on August 12, 1998
FILE NO. 33-03093 (811-07615)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933 /X/
----
PRE-EFFECTIVE AMENDMENT NO. ___ / /
----
POST-EFFECTIVE AMENDMENT NO. 8* /X/
----
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT of 1940 /X/
----
AMENDMENT NO. 10* /X/
----
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
(Exact Name of Registrant)
GREAT AMERICAN RESERVE INSURANCE COMPANY
(Name of Depositor)
11825 North Pennsylvania Street, Carmel, Indiana 46032-4572
(Address of Principal Executive Offices of Depositor)
Depositor's Telephone Number: 800-437-3506
--------------------------
Karl W. Kindig, Esq.
Great American Reserve Insurance Company
11825 North Pennsylvania Street
Carmel, Indiana 46032
(Name and Address of Agent for Service)
COPY TO:
John H. Grady, Jr.
C. Ronald Rubley
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
--------------------------
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b) of
---- Rule 485
on (date) pursuant to paragraph (b) of Rule 485
----
X 60 days after filing pursuant to paragraph (a) of Rule
---- 485
on (date) pursuant to paragraph (a) of Rule 485
----
If appropriate, check the following box:
This post-effective amendment designates a new
---- effective date for a previously filed post-effective
amendment
TITLE OF SECURITIES BEING REGISTERED: Individual Variable Annuity
Contracts
*Amendment on Form N-4 to Registration Statement on Form N-3 in connection with
change in registration from a management investment company to a unit
investment trust.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Location in Statement of
Form N-4 Item Number Location in Prospectuses Additional Information
- -------------------- ------------------------ ----------------------
<S> <C> <C> <C>
Item 1. Cover Page Cover Page N/A
Item 2. Definitions Definitions N/A
Item 3. Synopsis Table of Fees N/A
or Highlights and Expenses
Item 4. Condensed Accumulation N/A
Financial Unit Values
Information
Item 5. General Great American Reserve N/A
Description Insurance Company;
of Registrant, The Separate Account
Depositor and
Portfolio
Companies
Item 6. Deductions The Contract - Fees and N/A
and Expenses Charges
Item 7. General The Contract N/A
Description
of Variable
Annuity
Contracts
Item 8. Annuity Period The Contract - Annuity N/A
Provisions
Item 9. Death Benefit The Contract - Payment N/A
On Death
Item 10. Purchases and The Contract - Purchases Payments; N/A
Contract The Contract - Accumulation
Value Units
Item 11. Redemptions The Contract - Withdrawals N/A
Item 12. Taxes Federal Income Tax N/A
Considerations
Item 13. Legal N/A N/A
Proceedings
<PAGE>
CROSS REFERENCE SHEET
Location in Statement of
Form N-4 Item Number Location in Prospectuses Additional Information
- -------------------- ------------------------ ----------------------
Item 14. Table of Table of Contents of N/A
Contents of Statement of Additional
Statement of Information
Additional
Information
Item 15. Cover Page N/A Cover Page
Item 16. Table of N/A Cover Page
Contents
Item 17. General N/A N/A
Information
and History
Item 18. Services Great American Reserve N/A
Insurance Company
Item 19. Purchase of The Contract - Purchases Payments; Distribution of
Securities The Contract - Withdrawals Contracts and
Being Offered Certificates
and Expenses
Item 20. Underwriters N/A Distribution of
Contracts
Item 21. Calculation of N/A Calculation of
Performance Return Quotations
Data
Item 22. Annuity N/A Variable Annuity
Payments Provisions
Item 23. Financial N/A Financial Statements
Statements
</TABLE>
<PAGE>
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
ADMINISTRATIVE OFFICE: 11825 NORTH PENNSYLVANIA STREET, CARMEL, INDIANA 46032
PHONE: (800) 437-3506
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT - FLEXIBLE PURCHASE PAYMENTS
The individual deferred variable annuity contract (the "Contract")
described in this Prospectus is issued by Great American Reserve Insurance
Company ("Great American Reserve"). The Contract provides seven investment
options and provides for the payment of annuity and other benefits at a future
date. The Contract is sold ONLY to individuals who wish to accumulate assets by
engaging in strategic or tactical asset allocation investing with the assistance
of a professional money manager.
The investment options, which are provided through Rydex Advisors Variable
Annuity Account (a separate account of Great American Reserve), are separate
investment funds ("Funds") of Rydex Variable Trust ("Trust"). The names of the
Funds are the Nova, Ursa, OTC, Precious Metals, U.S. Government Bond, Juno, U.S.
Government Money Market Funds. THE TRUST PROSPECTUS, WHICH ACCOMPANIES THIS
PROSPECTUS, PROVIDES AN INVESTMENT RISK/RETURN SUMMARY AND OTHER INFORMATION
ABOUT THE FUNDS AND THE TRUST.
The Contract also provides for investment in a Fixed Account of Great
American Reserve. Allocations and transfers to the Fixed Account are held in
the general account of Great American Reserve, accumulate on a fixed basis and
are guaranteed by the general account assets of Great American Reserve.
INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY.
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 that a prospective Contract Owner
should know before investing. It should be read and retained for future
reference. Additional information is contained in a Statement of Additional
Information, dated October , 1998, which has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. The Securities
and Exchange Commission has a Web site (http://www.sec.gov) that contains the
Statement of Additional Information, material incorporated by reference and
other information regarding companies that file electronically with the
Securities and Exchange Commission.
INQUIRIES: If you would like the Statement of Additional Information at no
charge or would like more information about the Contract, please write to
Conseco Equity Sales, Inc., 11825 North, Pennsylvania Street, Carmel, Indiana
46032, or call (800) 437-3506. The Table of Contents of the Statement of
Additional Information is included at the end of this Prospectus.
October __, 1998
PROSPECTUS
<PAGE>
TABLE OF CONTENTS
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
TABLE OF FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . 4
ACCUMULATION UNIT VALUES . . . . . . . . . . . . . . . . . . . . . . . . . 5
GREAT AMERICAN RESERVE INSURANCE COMPANY . . . . . . . . . . . . . . . . . 6
THE SEPARATE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Rydex Variable Trust . . . . . . . . . . . . . . . . . . . . . . . . 7
THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Purchase Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Accumulation Units. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Suspension of Payment or Transfers. . . . . . . . . . . . . . . . . . 11
Systematic Withdrawal Plan. . . . . . . . . . . . . . . . . . . . . . 12
Payment on Death. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Annuity Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 13
Fees and Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Fund Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . 17
Annuity Contracts in General. . . . . . . . . . . . . . . . . . . . . 17
Qualified and Non-Qualified Contracts . . . . . . . . . . . . . . . . 18
Withdrawals -- Non-Qualified Contracts. . . . . . . . . . . . . . . . 18
Withdrawals -- Qualified Contracts . . . . . . . . . . . . . . . . . 18
Withdrawals -- Tax-Sheltered Annuities. . . . . . . . . . . . . . . . 18
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Investor Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . 20
-2-
<PAGE>
DEFINITIONS
ACCUMULATION UNIT: A unit of measure used to compute your interest in a
subaccount of the Separate Account.
ANNUITY DATE: The date on which annuity payments begin.
CONTRACT: The individual deferred variable annuity offered by and described in
this Prospectus.
CONTRACT OWNER: The person specified in the Contract as the owner of the
Contract and entitled to exercise ownership rights under the Contract.
CONTRACT VALUE: The current value of all interests held under the Contract in
subaccounts of the Separate Account and the Fixed Account.
FINANCIAL ADVISOR: A person who is registered as an Investment Adviser with the
U.S. Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended, or who qualifies for exclusion from such registration, and who
provides strategic or tactical asset allocation services to the Contract Owner
and who is not prevented from providing such services by any federal or state
regulatory action.
FIXED ACCOUNT: An account maintained by Great American Reserve as part of its
general asset account where amounts allocated and transferred to the account are
held and accumulated on a fixed basis.
SEPARATE ACCOUNT: Rydex Advisor Variable Annuity Account, a separate account of
Great American Reserve Insurance Company.
YOU: A reference to "you" denotes the Contract Owner or prospective Contract
Owner.
WE OR US: A reference to "we"or "us" denotes Great American Reserve Insurance
Company.
-3-
<PAGE>
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
Sales Load Imposed on Purchase Payments . . . . . . . . . . . . . . . None
Withdrawal Charge (percent of purchase payments withdrawn) . . . . . 7%*
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
ANNUAL CONTRACT FEE . . . . . . . . . . . . . . . . . . . . . . . . . NONE
SEPARATE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF SUBACCOUNT
VALUES)
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . . 1.25%
Contract Administration Fee . . . . . . . . . . . . . . . . . . . . 0.15%
Total Separate Account Annual Expenses . . . . . . . . . . . . . . . 1.40%
</TABLE>
- -------------------------
* THE CHARGE ON A WITHDRAWAL OF A PURCHASE PAYMENT DECLINES TO ZERO IN 1%
INCREMENTS OVER A SEVEN-YEAR PERIOD COMMENCING ON THE DATE WE RECEIVED THE
PURCHASE PAYMENT. SEE "FEES AND CHARGES" IN 1% INCREMENTS IN THIS PROSPECTUS
FOR ADDITIONAL INFORMATION, INCLUDING INFORMATION ON FREE WITHDRAWALS.
RYDEX VARIABLE TRUST ANNUAL EXPENSES
(AS A PERCENT OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
TOTAL
MANAGEMENT OTHER FUND
FEES EXPENSES EXPENSES
---------- -------- --------
<S> <C> <C> <C>
Nova Fund 0.75% % %
Ursa Fund 0.90% % %
OTC Fund 0.75% % %
Precious Metals Fund 0.75% % %
U.S. Government Bond Fund 0.50% % %
Juno Fund 0.90% % %
U.S. Government Money Market Fund 0.50% % %
</TABLE>
- -------------------------
EXAMPLES
The following examples illustrate the cumulative dollar amount of expenses
that would be incurred on each $1,000 invested.
If you surrender your Contract at the end of the applicable period, or if
you annuitize your Contract at the end of the applicable period and your
Contract has been in effect less than five years, you would pay the following
expenses on a $1,000 investment, assuming a 5% annual return on assets.
-4-
<PAGE>
<TABLE>
<CAPTION>
ONE THREE
YEAR YEARS
---- -----
<S> <C> <C>
Nova Subaccount . . . . . . . . . . . . . . . . . . . .
Ursa Subaccount . . . . . . . . . . . . . . . . . . . . .
OTC Subaccount . . . . . . . . . . . . . . . . . . . . .
Precious Metals Subaccount . . . . . . . . . . . . . . .
U.S. Government Bond Account . . . . . . . . . . . . . .
Juno Subaccount . . . . . . . . . . . . . . . . . . . . .
U.S. Government Money Market Subaccount . . . . . . . . .
</TABLE>
If you do not surrender your Contract at the end of the applicable period,
or if you annuitize your Contract at the end of the applicable period and your
Contract has been in effect for five or more years, you would pay the following
expenses on a $1,000 investment, assuming a 5% annual return on assets.
<TABLE>
<CAPTION>
ONE THREE
YEAR YEARS
---- -----
<S> <C> <C>
Nova Subaccount . . . . . . . . . . . . . . . . . . . .
Ursa Subaccount . . . . . . . . . . . . . . . . . . . .
OTC Subaccount . . . . . . . . . . . . . . . . . . . .
Precious Metals Subaccount . . . . . . . . . . . . . .
U.S. Government Bond Subaccount . . . . . . . . . . . .
Juno Subaccount . . . . . . . . . . . . . . . . . . . .
U.S. Government Money Market Subaccount . . . . . . . .
</TABLE>
The purpose of the above table is to assist you in understanding the costs
and expenses that you will bear directly or indirectly. The table reflects
expenses of the Separate Account as well as the Trust. 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 of
the subaccounts of the Separate Account. Neither the tables nor the examples
reflect any state premium taxes that may be applicable to variable annuity
Contracts, which currently range from 0% to 3.5%, or any fees that you pay your
Financial Advisor for assisting in strategic or tactical asset allocation
services. For additional information on fees and expenses, see "Fees and
Charges" in this prospectus.
ACCUMULATION UNIT VALUES
The following table shows Accumulation Unit Values and the number of
Accumulation Units outstanding for the Nova Fund, Ursa Fund, OTC Fund, Precious
Metals Fund, U.S. Government Bond Fund, Juno Fund and U.S. Government Money
Market Fund subaccounts of the Separate Account for the periods indicated.
-5-
<PAGE>
<TABLE>
<CAPTION>
PERIODS ENDED DECEMBER 31, 1997
PRECIOUS U.S. GOV'T. U.S. GOV'T MONEY
NOVA(a) URSA(a) OTC(a) METALS(b) BOND(b) JUNO(a) MARKET (a)
------- ------- ------ --------- ----------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Values at
Beginning of Period $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $10.00 $ 10.00
Values at End of Period $ 12.21 $ 8.07 $ 10.65 $ 7.02 $ 11.82 $ 9.01 $ 10.32
Number of Outstanding
at End of Period 855,862 356,784 222,217 73,827 75,493 1,734,974
</TABLE>
(a) For the period May 7, 1997 (date subaccount was established) through
December 31, 1997.
(b) For the period May 29, 1997 (date subaccount was established) through
December 31, 1997.
The financial statements of Great American Reserve and the Separate Account
are included in the Statement of Additional Information.
In advertisements of the Contracts, information on total return performance
and on annual changes in Accumulation Unit values may be provided. Information
on total return performance will include average annual rates of total return
for one, five and ten year periods, or lesser periods depending on how long the
subaccount has been in existence. Average annual total return figures will show
the average annual rates of increase or decrease in investments in the
subaccounts, assuming a $1,000 investment at the beginning of the period,
withdrawal of the investment at the end of the period, and the deduction of all
applicable charges. We may also show average annual rates of total return,
assuming other amounts invested at the beginning of the period and not withdrawn
at the end of the period. Average annual total return figures which assume no
withdrawal at the end of the period will reflect all recurring charges, but will
not reflect the withdrawal charge (if applicable, the withdrawal charge would
reduce the amount that may be withdrawn under the Contracts). In addition, we
may show cumulative total return for selected periods, assuming no withdrawal at
the end of the period. Future performance will vary and the results shown are
not necessarily representative of future results.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Great American Reserve Insurance Company ("Great American Reserve"),
originally organized in 1937, is principally engaged in the life insurance
business in 49 states and the District of Columbia. Great American Reserve is a
stock company organized under the laws of the State of Texas and an indirect
wholly-owned subsidiary of Conseco, Inc. ("Conseco"). Conseco provides
corporate and Contract administration services to Great American Reserve.
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 11825 North Pennsylvania
Street, Carmel, Indiana, 46032, (800)437-3506.
-6-
<PAGE>
THE SEPARATE ACCOUNT
Great American Reserve established the Rydex Advisor Variable Annuity
Account (the ASeparate Account") under Texas insurance law on April 15, 1996, as
a separate investment account for the Contracts. On May 2, 1996, the Separate
Account was registered with the Securities and Exchange Commission (the ASEC")
as a management investment company pursuant to the provisions of the Investment
Company Act of 1940, as amended (the A1940 Act"). The Separate Account is
divided into seven subaccounts, each holding a separate portfolio of
investments. On September __, 1998, Contract Owners approved a change of
registration of the Separate Account from a management investment company to a
unit investment trust and approved the transfer of the assets held in the
subaccounts to Rydex Variable Trust (the ATrust"). In exchange for the assets,
the Trust issued a separate series of shares to each subaccount and assumed
liabilities of each subaccount.
Income, gains and losses, realized or unrealized, of the Separate Account
are credited to or charged against the Separate Account without regard to any
other income, gains or losses of Great American Reserve. Assets equal to the
reserves and other Contract liabilities with respect to the Separate Account are
not chargeable with liabilities arising out of any other business of Great
American Reserve. Great American Reserve is obligated to pay all benefits and
make all payments provided under the Contracts.
As a Contract Owner participating in the Separate Account, you may instruct
Great American Reserve as to the voting of the shares of the Rydex Variable
Trust Fund held in subaccounts of the Separate Account in which you have an
interest. The number of shares of a Fund for which voting instructions may be
given is determined by dividing the Contract Owner's interest in the applicable
subaccount by the net asset value per share of the Fund. Should the governing
law, or interpretations thereof, change so as to permit us to vote shares of the
Funds in our own right, we may elect to do so. Further, we reserve the right to
modify the manner in which we calculate the weight to be given to pass-through
voting instructions where such a change is necessary to comply with federal law
or interpretations thereof.
RYDEX VARIABLE TRUST
The Trust is organized as a Delaware business trust and is registered with
the SEC as an open-end management investment company under the 1940 Act. PADCO
Advisors II, Inc. serves as the investment adviser and manager of the Funds. YOU
SHOULD READ THE PROSPECTUS FOR THE TRUST CAREFULLY BEFORE INVESTING. THE TRUST
PROSPECTUS IS ATTACHED TO THIS PROSPECTUS. The following Funds are available
under the Contracts:
Nova Fund - seeks to provide returns that correspond to 150% of
the performance of the S&P 500 Index
Ursa Fund - seeks to provide results that will inversely
correlate to the performance of the S&P 500 Index
-7-
<PAGE>
OTC Fund - seeks to provide investment results that correspond
to the NASDAQ 100 IndexJ (a capitalized-weighted
index composed of 100 of the largest non-financial
securities listed on the National Association of
Securities Dealers Automated Quotation System)
Precious Metals Fund - seeks to provide investment results that correspond
to the Philadelphia Stock Exchange Gold/Silver
IndexJ (a capitalization-weighted index featuring
securities of eleven widely-held companies in gold
and silver mining and production industry or
companies that invest in such mining and production
companies
U.S. Government - seeks to provide investment results that correspond
Bond Fund to 120% of the price movement of the Long Treasury
Bond
Juno Fund - seeks total returns that inversely correlate to the
price movement of the Long Treasury Bond
U.S. Government - seeks to provide security of principal, high income
Money Market Fund and liquidity
THE CONTRACT
The Contract is sold only to individuals who have retained a Financial
Advisor to provide strategic or tactical asset allocation services under their
Contract. You are responsible for selecting, supervising, and paying any
compensation to your Financial Advisor. You must execute a power of attorney
authorizing your Financial Advisor to give allocation and transfer directions to
us and/or our designee. You may make withdrawals from or surrender your
Contract at any time, BUT ONLY YOUR FINANCIAL ADVISOR MAY GIVE STRATEGIC OR
TACTICAL ASSET ALLOCATION DIRECTIONS TO US AND/OR OUR DESIGNEE. We do not
recommend, select or supervise your Financial Advisor. We do not make
recommendations on strategic or tactical asset allocations or transfers. We are
not responsible for advice provided by your Financial Advisor. If you enter
into an advisory agreement with your Financial Advisor to have the Financial
Advisor's fee paid out of your Contract, you should consider the tax
consequences of withdrawing funds from the Contract to pay the fee. See
"AFederal Income Tax Considerations" in this Prospectus.
To change your Financial Advisor without interrupting allocations and
transfers among your investment subaccounts, you must: (1) notify us in writing
of the name of your new Financial Advisor and (2) provide us with a power of
attorney authorizing your new Financial Advisor to give us asset allocation
directions.
If we receive notification that your Financial Advisor is no longer
authorized by you to give strategic or tactical asset allocation directions on
your behalf, or that your Financial Advisor has resigned or has died, amounts
credited under your Contract to subaccounts of the Separate Account will be
transferred to the U.S. Government Money Market subaccount. You may, however,
transfer amounts from the U.S. Government Money Market subaccount to the Fixed
Account without a Financial Advisor (subject to time restrictions on
transferring amounts out of the Fixed Account). Until such time as we receive
written notification of the name of your new Financial Advisor and we receive a
power of attorney authorizing your new Financial Advisor to give us strategic or
tactical asset allocation
-8-
<PAGE>
directions, your investment options are limited to the U.S. Government Money
Market subaccount and the Fixed Account. When we receive written notification
of your new Financial Advisor and the power of attorney, allocations and
transfers among the investment options may resume. You may also surrender your
Contract. Withdrawals may be made from the Contract subject to any applicable
withdrawal fee.
THE STRATEGIC OR TACTICAL ASSET ALLOCATION CONTEMPLATED IN THE CONTRACT MAY
BE CHARACTERIZED AS AGGRESSIVE INVESTING. THERE CAN BE NO ASSURANCE THAT ANY
FINANCIAL ADVISOR WILL PREDICT MARKET MOVES SUCCESSFULLY. IN SELECTING YOUR
FINANCIAL ADVISOR, CAREFULLY CONSIDER THE EDUCATION, EXPERIENCE AND REPUTATION
OF THE FINANCIAL ADVISOR.
The Contract may be amended at any time to conform to applicable laws or
governmental regulations. If, in our judgment, investment in any of the funds
becomes inappropriate to the purposes of the Contract, we may, with approval of
the Securities and Exchange Commission and any governing state insurance
department, substitute another fund for existing and future funds.
PURCHASE PAYMENTS
To purchase a Contract, your completed application and all required
documentation, together with a check for the first purchase payment, must be
forwarded to our administrative office. Once we receive your purchase payment
and all necessary information, we will issue your Contract and allocate your
first purchase payment within 2 business days. If you do not provide us all of
the information needed, we will contact you. If for some reason we are unable
to complete this process within 5 business days, we will either send back your
money or get your permission to keep it until we obtain all of the necessary
information. If you add more money to your Contract by making additional
purchase payments, we will credit these amounts to your Contract within one
business day. The transaction cut-off time for crediting purchase payments to
subaccounts of the Separate Account is 2:30 p.m., Eastern time. The transaction
cut-off time for crediting purchase payments to the Fixed Account is 4:00 p.m.,
Eastern time. We reserve the right to reject any application or purchase
payment. All subsequent purchase payments are sent directly to our
administrative office.
If you change your mind about owning the Contract, you can cancel it within
10 days after receiving it (or such other period as provided in your state).
When you cancel the Contract within this time period, Great American Reserve
will not assess a withdrawal charge. On the day we receive your request we will
return your purchase payment.
Initial purchase payments to be allocated to the Separate Account are
credited to the U.S. Government Money Market subaccount. Fourteen days after
the Contract Date, transfers will be made to subaccounts of the Separate Account
pursuant to instructions from your Financial Advisor. Purchase payments are
allocated to the Fixed Account upon receipt pursuant to instructions from your
Financial Advisor.
The minimum initial purchase payment is $25,000 and the minimum for each
subsequent purchase payment is $1,000. We will accept total purchase payments
under your Contract of up to $500,000. Payments to us in excess of $500,000
require our prior approval.
The principal underwriter of the Contract (under federal securities laws)
is Conseco Equity Sales, Inc., 11825 North Pennsylvania Street, Carmel, Indiana
46032.
-9-
<PAGE>
ACCUMULATION UNITS
Purchase payments allocated or transferred to a subaccount are credited to
the Contract in the form of Accumulation Units of the subaccount selected. The
number of Accumulation Units credited is determined by dividing the purchase
payment allocated to the subaccount by the value of the Accumulation Unit for
the valuation period in which the purchase payment is received at our
administrative office or, in the case of the first purchase payment, is accepted
by us.
Accumulation Units are used to account for all amounts allocated or
transferred to or withdrawn from a subaccount as a result of purchase payments,
withdrawals, transfers and charges.
For each subaccount of the Separate Account the value of an Accumulation
Unit was set at $10 when it was established. The value of an Accumulation Unit
may increase or decrease from one valuation period to the next. We calculate
the value of an Accumulation Unit for each subaccount after the New York Stock
Exchange closes each day. A valuation period is the interval from one valuation
day of a subaccount to the next valuation day, measured from the time each day
the subaccount is valued.
The value of an Accumulation Unit for a valuation period, is determined by
dividing the current market value of the assets of the subaccount less any
liabilities, by the total number of Accumulation Units of the subaccount.
TRANSFERS
Transfers among the subaccounts may only be made by your Financial Advisor
at any time prior to the Annuity Date. Transfer requests may be made by written
instruction or by telephonic or other electronic instruction satisfactory to us.
By authorizing your Financial Advisor to give transfer instructions by telephone
or other electronic medium, you agree that we will not be liable for any losses
you may suffer from any fraudulent or unauthorized transfer instruction. We or
our designee will employ reasonable procedures to confirm that transfer
instructions are genuine, such as requiring some form of personal
identification. We may discontinue or change the right to make telephonic and
other electronic transfers at any time.
The minimum amount which can be transferred is $500 from any subaccount or
your entire interest in the subaccount, if less. We do not charge you for
transfers.
The transaction cut-off times for the transfers among the subaccounts are
as follows. With respect to transfers for the Nova, Ursa, and OTC subaccounts,
the time is 3:45 p.m., Eastern time; for the Precious Metals subaccount, the
time is 3:30 p.m., Eastern time; for the U.S. Government Bond and Juno
subaccounts, the time is 2:45 p.m., Eastern time; and for the U.S. Government
Money Market subaccount and the Fixed Account, the time is 4:00 p.m., Eastern
time. For transfers involving different transaction end times, the earlier of
the times indicated above applies. Telephone and electronic transfer orders
will be accepted only prior to the transaction cut-off times. If the primary
exchange or market on which the underlying Fund transacts business closes early,
the above cut-off time will be approximately thirty minutes (forty-five minutes,
in the case of the Precious Metals Fund) prior to the close of such exchange or
market.
-10-
<PAGE>
WITHDRAWALS
Prior to of the Annuity Date, you may withdraw all or part of your Contract
Value. Withdrawals will be based on values for the valuation period in which a
proper written request for withdrawal (and the Contract, if required) are
received at our administrative office. Withdrawal requests may be made only
between 8:30 a.m. Eastern time, and 2:30 p.m., Eastern time; withdrawal requests
received after 2:30 p.m., will be accepted at the close of business on the next
business day. Payment will normally be made within seven days of receipt of the
written request and the Contract, if required. A withdrawal may result in a
withdrawal charge and/or tax consequences (including an additional 10% tax
penalty under certain circumstances). Certain withdrawal restrictions may apply
if your Contract is issued in connection with a Section 403(b) tax-qualified
plan (also known as a tax-sheltered annuity). See "AWithdrawal Charge" and
"Federal Income Tax Considerations" in this Prospectus.
The minimum withdrawal is $500, and the remaining Contract Value must be at
least $10,000 ($3,500 for Contracts held under a tax-qualified retirement
arrangement.) If a partial withdrawal plus any withdrawal charge would reduce
the value of your Contract to less than $10,000 ($3,500 for tax-qualified
Contracts), Great American Reserve reserves the right to treat the partial
withdrawal as a total withdrawal of your Contract Value. We reserve the right
to increase or decrease such minimums. If you request a partial withdrawal, you
must specify in writing the subaccount(s) and/or Fixed Account from which funds
are to be withdrawn.
Great American Reserve will, pursuant to an agreement with you, make a
partial withdrawal from your Contract Value to pay for the services of your
Financial Advisor. If your Contract is non-qualified, the withdrawal will be
treated like any other distribution and may be included in gross income for
federal tax purposes and, if you are under age 59 1/2, may be subject to a tax
penalty. If your Contract is tax-qualified, the withdrawal for the payment of
fees may not be treated as a taxable distribution if certain conditions are met.
You should consult a tax adviser regarding the tax treatment of the payment of
Financial Advisor fees from your Contract.
SUSPENSION OF PAYMENT OR TRANSFERS
Great American Reserve may be required to suspend or postpone payments for
withdrawal or transfers for any period when:
1. the New York Stock Exchange, the Chicago Board of Trade or the Chicago
Mercantile Exchange, as appropriate, is closed (other than customary
weekend and holiday closings);
2. trading on the New York Stock Exchange, the Chicago Board of Trade or the
Chicago Mercantile Exchange is restricted;
3. an emergency (including severe weather conditions) exists as a result of
which disposal of shares of the Funds is not reasonably practicable or
Great American Reserve cannot reasonably value the shares of the Funds;
4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of owners.
-11-
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN
We administer a systematic withdrawal plan which enables you to arrange for
pre-authorized systematic withdrawals. To take advantage of the plan, you enter
into an agreement with us to withdraw a level dollar amount from specified
subaccounts on a periodic basis. The plan is limited to free withdrawal amounts
to ensure that no withdrawal charge will apply. See "Fees and Charges" in this
Prospectus. If you make an additional withdrawal outside the systematic
withdrawal plan, the plan will terminate automatically and may be reinstated
only on or after making a written request to us. Withdrawals under the plan may
result in tax consequences (including an additional 10% tax penalty under
certain circumstances). See "Federal Income Tax Considerations" in this
Prospectus.
PAYMENT ON DEATH
If you or your spouse, as joint Contract Owner, dies prior to the Annuity
Date, we will pay the death benefit to the beneficiary. Upon the death of a
joint Contract Owner, the surviving joint Contract Owner will become the
beneficiary. The death benefit is the greater of the Contract Value or purchase
payments made under the Contract less any applicable withdrawals, on the date
proof of death is received at our administrative office (subject to state
regulations which vary from state to state). When we receive notification of a
Contract Owner's death, the amounts held in subaccounts under your Contract will
be transferred to the U.S. Government Money Market subaccount. 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 which provides for full payout within five years of death, or within the
life or life expectancy of the beneficiary. Payments must begin 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
at the then current Contract Value.
If you or your spouse, as joint Contract Owner, who is not the Annuitant,
dies after the Annuity Date, any remaining payments under the Annuity Option
that was selected will continue at least as rapidly as under the pay-out plan in
effect upon death. If you die after the Annuity Date, the beneficiary becomes
the Contract Owner. Upon the death of a joint Contract Owner after the Annuity
Date, the surviving joint Contract Owner will be treated as the primary
beneficiary. Any other person designated on record as a beneficiary at the time
of death will be treated as a contingent beneficiary.
If you are a natural person and not the Annuitant and the Annuitant dies
prior to the Annuity Date, the Contract will continue in force on the same terms
and you will become the Annuitant, unless another person is designated by you
and we are notified in writing within thirty days. If the Contract Owner is a
non-natural person (for example, a corporation) then the death of the Annuitant
will be treated as the death of the Contract Owner and a new Annuitant may not
be named.
If the Annuitant dies after the Annuity Date, any remaining payments will
be made as provided for in the annuity option selected. See "Annuity
Provisions" in this Prospectus.
Different rules apply to payments on death under tax-qualified Contracts.
-12-
<PAGE>
ANNUITY PROVISIONS
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. You can change the annuity option with 30 days written
notice to us prior to the Annuity Date. The Contract Value, less any applicable
Withdrawal Charge, is applied to the Annuity Table in the Contract to determine
the amount of each fixed annuity payment to be made under the annuity option
selected. No withdrawal charge is applicable if the annuity payments begin at
least 5 years after the effective date of the Contract and are paid under any
life annuity option, or any annuity option with payments for a minimum of 5
years. Annuity payments will be made to the Annuitant unless you notify us
otherwise in writing. The annuitant is the individual on whose continuation of
life annuity payments may depend.
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 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
(you choose before payments begin), annuity payments will be continued during
the remainder of such period to the beneficiary. If no beneficiary is
designated, we will, 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. Because this Second Option
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 3 through 20. Should the Annuitant
die before the specified number of monthly payments are made, the remaining
payments will be commuted and paid to the designated beneficiary in a lump sum
payment.
Fifth Option--Joint and Survivor Annuity. We 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 b% of the annuity payment (or limits)
in effect during their joint lifetime.
Annuity payments will be made monthly. However, if any payment would be or
become less than $50, we may change the frequency so payments are at least $50
each. If the net Contract Value to be applied at the Annuity Date is less than
$10,000 ($3,500 for a Contract held under tax-qualified retirement
arrangements), we reserve the right to pay such amount in a lump sum.
-13-
<PAGE>
We may require proof of age, sex, or survival of any person upon whose
continuation of life annuity payments depend.
You select the Annuity Date in the application for the Contract, and you
may change the Annuity Date by notifying us in writing of a new Annuity Date at
least 30 days prior to the current Annuity Date. The Annuity Date may not be
later than the first Contract year after the Annuitant's 90th birthday or the
maximum date permitted under applicable state law. If the Contract Owner is 85
or older on the date of issue, the Annuity Date may not be later than the fifth
Contract year. If no Annuity Date is selected, we will assume the latest
possible Annuity Date. For a Contract held under tax-qualified retirement
arrangements, 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.
FEES AND CHARGES
CONTRACT ADMINISTRATION FEE. We deduct a Contract administration fee from
the Separate Account for services rendered in administering the Contract.
Contract administration includes preparing and issuing Contracts, communicating
with Contract Owners, maintaining Contract records and preparing and
distributing Contract Owner reports and statements. The fee is equal to an
effective annual rate of 0.15% of the daily net assets of each subaccount of the
Separate Account. We may not increase the fee over the duration of the
Contract.
MORTALITY AND EXPENSE RISK CHARGE. We deduct a mortality and expense risk
charge from the Separate Account. Mortality risk refers to risks Great American
Reserve assumes in the obligation to make annuity payments over the life time of
Annuitants and the obligation to pay minimum death benefits in the future in a
declining securities market and Contract Value. Expense risk refers to the risk
Great American Reserve assumes in the obligation not to increase administration
charges over the life of the Contract even though future expenses may increase.
The mortality and expense risk charge is equal to an annual rate of 1.25% of the
daily net assets of each subaccount.
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 (subject to certain state variations) 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:
-14-
<PAGE>
<TABLE>
<CAPTION>
Complete Years Since Withdrawal Charge
Receipt of Payment -----------------
------------------
<S> <C>
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and thereafter 0%
</TABLE>
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.
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 pay compensation 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
"Withdrawals" and "Federal Income Tax Considerations."
With respect to any Contract which is owned by a "charitable remainder
unitrust" or a "charitable remainder annuity trust" (both a "Charitable
Remainder Trust") within the meaning of Section 664(d) of the Internal Revenue
Code (the "Code"), 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.
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.
-15-
<PAGE>
PREMIUM TAXES
Some states and other governmental entities (e.g., municipalities) charge
premium taxes or similar taxes. Great American Reserve is responsible for the
payment of these taxes and will make a deduction from the value of the Contract
for them. These taxes are due either when the Contract is issued or when
annuity payments begin. It is Great American Reserve's current practice to
deduct these taxes when either annuity payments begin or upon partial or full
surrender of the Contract. Great American Reserve may in the future discontinue
this practice and assess the charge when the tax is due. Premium taxes
currently range from 0% to 3.5%, depending on the state.
INCOME TAXES
Great American Reserve will deduct from the Contract for any income taxes
which it incurs because of the Contract. At the present time, we are not making
any such deductions.
FUND EXPENSES
There are deductions from and expenses paid out of the assets of the
various Funds, which are described in the attached Trust prospectus.
THE FIXED ACCOUNT
In addition to the investment options in the Separate Account, the Contract
provides for a Fixed Account, where amounts held under the Contract may
accumulate at a guaranteed interest rate and become part of our general account.
We guarantee that we will credit daily interest of at least 3% on an annual
basis, compounded annually. We may credit interest at higher rates from time to
time in our discretion. Gains or losses on amounts allocated or transferred to
subaccounts of the Separate Account and charges against assets held in the
Separate Account, have no effect on the Fixed Account. The Fixed Account is
subject to certain transfer restrictions (e.g., in any six-month period, a
maximum of 20% of the Fixed Account Value may be transferred; this restriction,
however, is not effective until one year after the Contract Date).
BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED
ACCOUNT ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933 AND OUR GENERAL
ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. OUR
GENERAL ACCOUNT AND ANY INTERESTS HELD IN THE GENERAL ACCOUNT ARE THEREFORE NOT
SUBJECT TO THE PROVISIONS OF THESE ACTS. HENCE THIS PROSPECTUS GENERALLY
DISCUSSES ONLY THE VARIABLE PORTION OF THE CONTRACT. WE UNDERSTAND THAT THE
STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING TO
THE FIXED ACCOUNT. DISCLOSURE REGARDING THE FIXED ACCOUNT, HOWEVER, MAY BE
SUBJECT TO GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS
RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN THIS PROSPECTUS.
BENEFICIARY
The beneficiary and any contingent beneficiary are named in the application
for the Contract. However, unless the beneficiary has been irrevocably
designated, you may change the beneficiary by written notification to our
administrative office. The change will be effective as of the date signed,
unless we have acted in reliance on your designation of the prior beneficiary.
The estate or heirs of a
-16-
<PAGE>
beneficiary who died before payment under the Contract becomes due have no
rights under the Contract. If no beneficiary survives when payment under the
Contract becomes due, payment will be made to the Contract Owner's estate.
OWNERSHIP
As Contract Owner, you are entitled to all rights under the Contract.
Unless otherwise designated in the application for the Contract or by
endorsement to the Contract, the Contract Owner is also the Annuitant. Spousal
joint Contract Owners are allowed except in the case of a qualified Contract.
Upon the death of a joint Contract Owner, the surviving Contract Owner will be
the primary beneficiary. Any other beneficiary will be treated as a contingent
beneficiary unless otherwise stated in writing. No contingent owner of the
Contract may be named.
You may transfer ownership of the Contract to another person, subject to
certain conditions. A transfer of ownership must be in writing and the new
Contract Owner must appoint a Financial Advisor and execute a power of attorney
authorizing the Financial Advisor to give us transfer instructions.
Documentation for the foregoing must be received at our administrative office
before the transfer of ownership becomes effective. A transfer of ownership
does not affect the legal validity of a designation of beneficiary.
You may not assign, pledge, or transfer your Contract, 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, and therefore you should consult a
competent tax adviser before making any such designations, transfers, or
assignments.
FEDERAL INCOME TAX CONSIDERATIONS
NOTE: GREAT AMERICAN RESERVE HAS PREPARED THE FOLLOWING INFORMATION ON TAXES AS
A GENERAL DISCUSSION OF THE SUBJECT. IT IS NOT INTENDED AS TAX ADVICE TO ANY
INDIVIDUAL. YOU SHOULD CONSULT YOUR OWN TAX ADVISER ABOUT YOUR OWN
CIRCUMSTANCES. GREAT AMERICAN RESERVE HAS INCLUDED IN THE STATEMENT OF
ADDITIONAL INFORMATION AN ADDITIONAL DISCUSSION REGARDING TAXES.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs, usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (the ACode") for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax-deferral. There are different rules as to how you will be
taxed depending on how you take the money out and the type of Contract -
qualified or non-qualified (see following sections).
You, as the Owner, will not be taxed on increases in the value of your Contract
until a distribution occurs -- either as a withdrawal or as annuity payments.
When you make a withdrawal you are taxed on the
-17-
<PAGE>
amount of the withdrawal that is earnings. For annuity payments, different
rules apply. A portion of each annuity payment is treated as a partial return
of your purchase payments and will not be taxed. The remaining portion of the
annuity payment will be treated as ordinary income. How the annuity payment is
divided between taxable and non-taxable portions depends upon the period over
which the annuity payments are expected to be made. Annuity payments received
after you have received all of your purchase payments are fully includible in
income. When a non-qualified Contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than tax-qualified trusts), the
Contract will generally not be treated as an annuity for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS
A Contract purchased by an individual under a tax-qualified pension plan or
employer sponsored program, or as an individual retirement annuity ("IRA"), is
referred to as a tax-qualified Contract. Examples of qualified Contracts are
IRAs and tax-sheltered annuities (sometimes referred to as 403(b) Contracts). A
Contract which is not purchased under such a plan or program, or is not
purchased as an IRA, is referred to as a non-qualified Contract.
WITHDRAWALS -- NON-QUALIFIED CONTRACTS
If you make a withdrawal from your Contract, the Code generally treats such
a withdrawal as first coming from earnings and then from your purchase payments.
Such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity Contract
which is included in income may be subject to a penalty. The amount of the
penalty is equal to 10% of the amount that is includible in income. Some
withdrawals will be exempt from the penalty. They include any amounts: (1) paid
on or after you reach age 59 1/2; (2) paid after you die; (3) paid if you become
totally disabled (as that term is defined in the Code); (4) paid in a series of
substantially equal payments made annually (or more frequently) under a lifetime
annuity; (5) paid under an immediate annuity; or (6) which come from purchase
payments made prior to August 14, 1982.
WITHDRAWALS -- QUALIFIED CONTRACTS
The above information describing the taxation of non-qualified Contracts
does not apply to qualified Contracts. There are special rules that govern with
respect to qualified Contracts. We have provided a more complete discussion in
the Statement of Additional Information.
WITHDRAWALS -- TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of purchase payments made by owners from
certain Tax-Sheltered Annuities. Withdrawals can only be made when an owner:
(1) reaches age 59 1/2; (2) leaves his/her job; (3) dies; (4) becomes disabled
(as that term is defined in the Code); (5) in the case of hardship; or (6) made
pursuant to a qualified domestic relations order.
-18-
<PAGE>
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity
must satisfy certain diversification requirements in order to be treated as an
annuity contract. Great American Reserve believes that the Funds are being
managed so as to comply with such requirements.
INVESTOR CONTROL
Neither the Code nor the Internal Revenue Service Regulations issued to
date provide guidance as to the circumstances under which you, because of the
degree of control you exercise over the underlying investments, and not Great
American Reserve would be considered the owner of the shares of the Funds. If
this occurs, it will result in the loss of the favorable tax treatment for the
Contract. It is unknown to what extent under federal tax law owners are
permitted to select funds, to make transfers among the funds or the number and
type of funds owners may select from. If any guidance is provided which is
considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new
position, it may be applied retroactively. This would mean that you, as the
owner of the Contract, could be treated as the owner of the Funds.
Due to the uncertainty in this area, Great American Reserve reserves the
right to modify the Contract as reasonably deemed necessary to maintain
favorable tax treatment.
-19-
<PAGE>
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
Page
----
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Information. . . . . . . . . . . . . . . . . . . . . . . 2
Comparisons of Total Return . . . . . . . . . . . . . . . . . . . . . 3
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . 4
FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . 5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Multiple Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Contracts Owned by Other than Natural Persons . . . . . . . . . . . . 7
Tax Treatment of Assignments. . . . . . . . . . . . . . . . . . . . . 7
Income Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . 8
Tax Treatment of Withdrawals - Non-Qualified Contracts. . . . . . . . 8
Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tax Treatment of Withdrawals - Qualified Contracts. . . . . . . . . . 11
Tax-Sheltered Annuities - Withdrawal Limitations. . . . . . . . . . . 12
INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 12
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-20-
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 1, 1998
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
OF
GREAT AMERICAN RESERVE INSURANCE COMPANY
ADMINISTRATIVE OFFICE: 11825 NORTH PENNSYLVANIA STREET, CARMEL, INDIANA 46032
PHONE: (800) 437-3506
INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
FLEXIBLE PURCHASE PAYMENTS
THIS STATEMENT OF ADDITIONAL INFORMATION (WHICH IS NOT A PROSPECTUS)
SHOULD BE READ IN CONJUNCTION WITH THE CURRENT PROSPECTUS FOR RYDEX ADVISOR
VARIABLE ANNUITY ACCOUNT, DATED OCTOBER __, 1998. YOU MAY OBTAIN A COPY OF THE
CURRENT PROSPECTUS BY WRITING TO OR CALLING CONSECO EQUITY SALES, INC., 11825
NORTH PENNSYLVANIA STREET, CARMEL, INDIANA 46032, TELEPHONE: (800) 437-3506
TABLE OF CONTENTS
Page
----
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Total Return Information. . . . . . . . . . . . . . . . . . . . . . . . . 2
Comparisons of Total Return . . . . . . . . . . . . . . . . . . . . . . . 3
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FEDERAL INCOME TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . 5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Multiple Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Contracts Owned by Other than Natural Persons . . . . . . . . . . . . . . 7
Tax Treatment of Assignments. . . . . . . . . . . . . . . . . . . . . . . 7
Income Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tax Treatment of Withdrawals - Non-Qualified Contracts. . . . . . . . . . 8
Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tax Treatment of Withdrawals - Qualified Contracts. . . . . . . . . . . .11
Tax-Sheltered Annuities - Withdrawal Limitations. . . . . . . . . . . . .12
INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
<PAGE>
PERFORMANCE INFORMATION
TOTAL RETURN INFORMATION
From time to time, each of the Separate Account subaccounts (other than the U.S.
Government Money Market subaccount) 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 one, five
and ten years or for the life of the subaccount. Other total return quotations
also may be included. Total return of a subaccount is calculated from two
factors: the amount of dividends earned by each subaccount and by the increase
or decrease in value of the subaccount's unit value.
The average annual total return of each subaccount of the Separate Account for
the period beginning with the commencement of operations to July 31, 1998 is set
forth in the following table. Prior to the restructuring of the subaccounts on
_______________, 1998, the subaccounts were subject to expenses to which they
and the underlying Funds will not necessarily be subject going forward.
Accordingly, the performance information below has been adjusted by applying the
anticipated total expense rations for each subaccount and its underlying Fund.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
DATE OF FOR THE PERIOD
COMMENCEMENT OF ENDING JULY
OPERATIONS 31,1998
<S> <C> <C>
Nova Subaccount
Ursa Subaccount
OTC Subaccount
Precious Metals Subaccount
U.S. Government Bond Subaccount
Juno Subaccount
U.S. Government Money Market Subaccount
</TABLE>
The average annual rates of total return are computed by finding the average
annual compounded rates of return over the periods shown that would equate the
initial amount invested to the withdrawal value, in accordance with the
n
following formula: P(1 + T) = ERV. In the formula, P is a hypothetical
purchase payment of $1,000; T is the average annual total return; n is the
number of years; and ERV is the withdrawal value at the end of the period shown.
-2-
<PAGE>
COMPARISONS OF TOTAL RETURN
Performance information for each of the Separate Account 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-TM- (the "S&P 500 Index") or the Dow Jones
Industrial Average. Performance information for the Precious Metals
subaccount also may be compared to the current benchmark for the Precious
Metals subaccount, Philadelphia Stock Exchange Gold/Silver Index-TM- (the
"XAU Index"). Performance information for the OTC subaccount may be compared
to various unmanaged indexes, including, but not limited to the current
benchmark for the OTC Fund, NASDAQ 100 Index-TM-, and the NASDAQ Composite
Index-TM-. The NASDAQ Composite Index-TM- 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 Fund
has the ability to invest in securities not included in the NASDAQ 100
Index-TM- or the NASDAQ Composite Index-TM-, and the OTC Fund's investment
portfolio may or may not be similar in composition to NASDAQ 100 Index-TM- or
the NASDAQ Composite Index-TM-. The NASDAQ Composite Index-TM- is based on
the prices of an unmanaged group of stocks and, unlike the OTC Fund's
returns, the returns of the NASDAQ Composite Index-TM-, 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 U.S.
Government 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-TM-. 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,
-3-
<PAGE>
KIPLINGER'S MAGAZINE, PERSONAL INVESTOR, MORNINGSTAR, INC., THE MORNINGSTAR
VARIABLE ANNUITY/LIFE REPORTER, VARDS, and similar sources which utilize
information compiled internally or by Lipper Analytical Services, Inc., may be
provided.
From time to time, each subaccount, other than the U.S. Government Money Market
subaccount, also may include in such advertising a total return figure that is
not calculated according to the formula set forth above in order to compare more
accurately the performance of the subaccount with other measures of investment
return. For example, in comparing the total return of a subaccount with data
published by Lipper Analytical Services, Inc., or with the performance of the
S&P 500 Index or the Dow Jones Industrial Average for each of the Nova
subaccount and the Ursa subaccount, the NASDAQ 100 Index-TM- for the OTC
subaccount, the XAU Index for the Precious Metals subaccount, and the Lehman
Government (LT) Index for the U.S. Government Bond subaccount and the Juno
subaccount, Great American Reserve may calculate for each subaccount the
aggregate total return for the specified periods of time by assuming the
allocation of $10,000 to the subaccount and assuming the reinvestment of each
dividend or other distribution at Accumulation Unit value on the reinvestment
date. 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 the withdrawal charge (ranging
from 7% to 0%) which, if included, would reduce total return. Such alternative
total return information will be given no greater prominence in such advertising
than the information prescribed under SEC Rules.
DISTRIBUTION OF CONTRACTS
Conseco Equity Sales, Inc., 11825 North Pennsylvania Street, Carmel, Indiana
46032, is the principal underwriter of the Contracts. Prior to October ,
1998, PADCO Financial Services, Inc., was the principal underwriter of the
Contracts. The offering of the Contracts is continuous, although Great
American Reserve reserves the right to suspend the offer and sale of the
Contracts whenever, in its opinion, market or other conditions make a
suspension appropriate. CES is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended, and is a member of the National
Association of Securities Dealers, Inc. The Contracts are sold by authorized
broker-dealers, and their registered representatives, including registered
representatives of CES. The broker-dealers and their registered
representatives are also licensed insurance agents of Great American Reserve.
Great American Reserve and its principal underwriter pay commissions to
authorized broker-dealers not exceeding 6.0% of purchase payments.
-4-
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
NOTE: 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 POSSIBILITY OF SUCH CHANGES. 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
HEREIN MAY BE APPLICABLE IN CERTAIN SITUATIONS. MOREOVER, NO ATTEMPT HAS BEEN
MADE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS.
Section 72 of the Code governs 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 cost basis of the Contract. For non-qualified
Contracts, this cost basis is generally the purchase payments, while for
qualified Contracts there may be no cost basis. 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 cost basis of the Contract (adjusted for any period 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 excludable amount equals the investment in the Contract) are
fully taxable. The taxable portion is taxed at ordinary income tax rates.
For certain types of qualified plans there may be no cost basis in the
Contract within the meaning of Section 72 of the Code. 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.
-5-
<PAGE>
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 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 to the Contract Owner with respect to 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 Contract 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.
On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.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 deemed adequately diversified if: (1) no more than 55% of the value
of the total assets of the portfolio is represented by any one investment;
(2) no more than 70% of the value of the total assets of the portfolio is
represented by any two investments; (3) no more than 80% of the value of the
total assets of the portfolio is represented by any three investments; and
(4) no more than 90% of the value of the total assets of the portfolio 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."
Great American Reserve intends that all Funds underlying the Contracts will be
managed in such a manner as to comply with these diversification requirements.
The Treasury Department has indicated that the diversification Regulations do
not provide guidance regarding the circumstances in which Contract Owner control
of the investments of the Separate Account will cause the Contract Owner to be
treated as the owner of the assets of the Separate Account, thereby resulting in
the loss of favorable tax treatment for the Contract. At this time it cannot be
determined whether additional guidance will be provided and what standards may
be contained in such guidance.
The amount of Contract Owner control which may be exercised under the Contract
is different in some respects from the situations addressed in published rulings
issued by the Internal Revenue
-6-
<PAGE>
Service in which it was held that the policy owner was not the owner of the
assets of the separate account. It is unknown whether these differences, such
as the Contract Owner's ability to transfer among investment choices or the
number and type of investment choices available, would cause the Contract Owner
to be considered as the owner of the assets of the Separate Account resulting in
the imposition of federal income tax to the Contract Owner with respect to
earnings allocable to the Contract prior to receipt of payments under the
Contract.
In the event any forthcoming guidance or ruling is considered to set forth a new
position, such guidance or ruling will generally be applied only prospectively.
However, if such ruling or guidance was not considered to set forth a new
position, it may be applied retroactively resulting in the Contract Owners being
retroactively determined to be the owners of the assets of the Separate Account.
Due to the uncertainty in this area, Great American Reserve reserves the right
to modify the Contract in an attempt to maintain favorable tax treatment.
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 OTHER THAN NATURAL PERSONS
Under Section 72(u) of the Code, the investment earnings on premiums for the
Contracts will be taxed currently to the Contract Owner if the Contract Owner is
a non-natural person, e.g., a corporation 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 a Contract held by a trust
or other entity as an agent for a natural person nor to Contracts held by
qualified plans. Purchasers should consult their own tax counsel or other tax
adviser before purchasing a Contract to be owned by a non-natural person.
TAX TREATMENT OF ASSIGNMENTS
An assignment or pledge of a Contract may be a taxable event. Contract Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.
-7-
<PAGE>
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross income
of the Contract Owner are subject to federal income tax withholding. Generally,
amounts are withheld from periodic payments at the same rate as wages and at the
rate of 10% from non-periodic payments. However, the Contract Owner, in most
cases, may elect not to have taxes withheld or to have withholding done at a
different rate.
Effective January 1, 1993, certain distributions from retirement plans qualified
under Section 401 or Section 403(b) of the Code, 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. returns
of after-tax contributions). Participants should consult their own tax counsel
or other tax adviser regarding withholding requirements.
TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS
Section 72 of the Code governs treatment of distributions from annuity
contracts. It 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, as
coming from the principal. Withdrawn earnings are includible in gross income.
It further provides that a ten percent (10%) penalty will apply to the income
portion of any premature distribution. However, the penalty is not imposed on
amounts received: (a) after the taxpayer reaches age 59 1/2; (b) after the death
of the Contract Owner; (c) if the taxpayer is totally disabled (for this
purpose disability is 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;
(e) under an immediate annuity; or (f) which are allocable to purchase payments
made prior to August 14, 1982.
The above information does not apply to qualified Contracts. However, separate
tax withdrawal penalties and restrictions may apply to such qualified Contracts.
(See "Tax Treatment of Withdrawals - Qualified Contracts" below.)
QUALIFIED PLANS
The Contracts offered herein are designed to be suitable for use under various
types of qualified plans. Taxation of participants in each qualified plan varies
with the type of plan and terms and conditions of each specific plan. Contract
Owners, annuitants and beneficiaries are cautioned
-8-
<PAGE>
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 Contracts 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 Contracts comply with applicable law.
Following are general descriptions of the types of qualified plans with which
the Contracts may be used. Such descriptions 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.
Contracts issued pursuant to qualified plans include special provisions
restricting Contract provisions that may otherwise be available as described
herein. 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" below.)
On July 6, 1983, the Supreme Court decided in ARIZONA GOVERNING COMMITTEE v.
NORRIS that optional annuity benefits provided under an employer's deferred
compensation plan could not, under Title VII of the Civil Rights Act of 1964,
vary between men and women. The Contracts sold by Great American Reserve in
connection with certain qualified plans will utilize annuity tables which do not
differentiate on the basis of sex. Such annuity tables will also be available
for use in connection with certain non-qualified deferred compensation plans.
a. Tax-Sheltered Annuities
Section 403(b) of the Code permits the purchase of "tax-sheltered
annuities" by public schools and certain charitable, educational and
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.) Employee loans are not
allowable under the Contracts. Any employee should obtain competent tax
advice as to the tax treatment and suitability of such an investment.
-9-
<PAGE>
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 and suitability of such an investment.
Roth IRAs
Beginning in 1998, individuals may purchase a new type of non-deductible
IRA, known as a Roth IRA. Purchase payments for a Roth IRA are limited to
a maximum of $2,000 per year. Lower maximum limitations apply to
individuals with adjusted gross incomes between $95,000 and $110,000 in the
case of single taxpayers, between $150,000 and $160,000 in the case of
married taxpayers filing joint returns, and between $0 and $10,000 in the
case of married taxpayers filing separately. An overall $2,000 annual
limitation continues to apply to all of a taxpayer's IRA contributions,
including Roth IRA and non-Roth IRAs.
Qualified distributions from Roth IRAs are free from federal income tax. A
qualified distribution requires that an individual has held the Roth IRA
for at least five years and, in addition, that the distribution is made
either after the individual reaches age 59 1/2, on the individual's death
or disability, or as a qualified first-time home purchase, subject to a
$10,000 lifetime maximum, for the individual, a spouse, child, grandchild,
or ancestor. Any distribution which is not a qualified distribution is
taxable to the extent of earnings in the distribution. Distributions are
treated as made from contributions first and therefore no distributions are
taxable until distributions exceed the amount of contributions to the Roth
IRA. The 10% penalty tax and the regular IRA exceptions to the 10% penalty
tax apply to taxable distributions from a Roth IRA.
Amounts may be rolled over from one Roth IRA to another Roth IRA.
Furthermore, an individual may make a rollover contribution from a non-Roth
IRA to a Roth IRA, unless the individual has adjusted gross income over
$100,000 or the individual is a married taxpayer filing a separate return.
The individual must pay tax on any portion of the IRA being rolled over
that represents income or a previously deductible IRA contribution.
-10-
<PAGE>
However, for rollovers in 1998, the individual may pay that tax ratably
over the four taxable year period beginning with tax year 1998.
Purchasers of Contracts to be qualified as a Roth IRA should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.
TAX TREATMENT OF WITHDRAWALS - QUALIFIED CONTRACTS
In the case of a withdrawal under a qualified Contract, 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 retirement plans, including Contracts
issued and qualified under Code Sections 403(b) (Tax-Sheltered Annuities) and
408 and 408A (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 distribution is
made on or after the date on which the Contract Owner reaches age 59 1/2; (b)
distributions following the death or disability of the Contract Owner (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 the joint lives (or joint life
expectancies) of such Contract Owner and his or her designated Beneficiary; (d)
distributions to a Contract Owner who has separated from service after he has
attained age 55; (e) distributions made to the Contract Owner 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; (f) distributions made to an alternate
payee pursuant to a qualified domestic relations order; (g) distributions from
an Individual Retirement Annuity for the purchase of medical insurance (as
described in Section 213(d)(1)(D) of the Code) for the Contract Owner and his or
her spouse and dependents if the Contract Owner has received unemployment
compensation for at least 12 weeks (this exception will no longer apply after
the Contract Owner has been re-employed for at least 60 days); (h) distributions
from an Individual Retirement Annuity made to the Contract Owner to the extent
such distributions do not exceed the qualified higher education expenses (as
defined in Section 72(t)(7) of the Code) of the Contract Owner for the taxable
year; and (i) distributions from an Individual Retirement Annuity made to the
Contract Owner which are qualified first-time home buyer distributions (as
defined in Section 72(t)(8)of the Code.) The exceptions stated in (d) and (f)
above do not apply in the case of an 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 begin no later than April
1st of the calendar year following the later of (a) the year in which the
employee attains age 70 1/2 or (b) the calendar year in which the employee
retires. The date set forth in (b) does not apply to an Individual
-11-
<PAGE>
Retirement Annuity. Required distributions must be 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.
TAX-SHELTERED ANNUITIES - WITHDRAWAL LIMITATIONS
The Code limits the withdrawal of amounts attributable to contributions made
pursuant to a salary reduction agreement (as defined in Section 403(b)(11) of
the Code) to circumstances only: (1) when the Contract Owner attains age
59 1/2; (2) when the Contract Owner separates from service; (3) when the
Contract Owner dies; (4) when the Contract Owner becomes disabled (within the
meaning of Section 72(m)(7) of the Code); (5) in the case of hardship; or (6)
pursuant to the terms of a Qualified Domestic Relations Order. 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 Tax-Sheltered Annuity Plans. Contract Owners should consult their own
tax counsel or other tax adviser regarding any distributions.
INDEPENDENT ACCOUNTANTS
The financial statements of Great American Reserve Insurance Company, for Great
American Reserve's fiscal year ended December 31, 1997, and of the Separate
Account, for the Separate Account's fiscal year ended December 31, 1997,
included in the Statement of Additional Information, have been audited by
_______________________, independent certified public accounts, and
_____________________, independent certified public accountants, respectively,
whose reports thereon appear elsewhere therein, and have been included in
reliance on the reports of ________________, given upon their authority as
experts in accounting and auditing.
FINANCIAL STATEMENTS
The financial statements of Great American Reserve should be considered only as
bearing upon the ability of Great American Reserve to meet its obligations under
the Contracts.
-12-
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT
OF ADDITIONAL INFORMATION
<PAGE>
PART C
OTHER INFORMATION
<PAGE>
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of the Registrant:
[To be filed by Amendment.]
Financial Statements of the Depositor:
[To be filed by Amendment.]
(b) Exhibits
1. (a) Resolutions of Board of Directors of Great American Reserve
Insurance Company authorizing the establishment of the
Registrant. Incorporated herein by reference to
Exhibit b(1) to initial Registration Statement on Form N-3
filed on May 2, 1996 (CIK 0001013169; Accession No.
0000906287-96-000070).
(b) Resolutions of the Board of Directors of Great American
Reserve Insurance Company authorizing restructuring of
investments of the Registrant and registration of Registrant
under the 1940 Act as a unit investment trust. [To be filed
by Amendment].
(c) Resolutions of the Board of Managers of the Registrant
authorizing restructuring of investments of the Registrant
and registration of Registrant under the 1940 Act as a unit
investment trust. [To be filed by Amendment].
2. Not Applicable.
3. (a) Underwriting Agreement Among Great American Reserve
Insurance Company, the Rydex Advisor Variable Annuity
Account, and Conseco Equity Sales, Inc. [To be filed by
Amendment.]
(b) Form of Group Selling Agreement Among Great American Reserve
Insurance Company, Conseco Equity Sales, Inc., Broker, and
Insurance Agent. [To be filed by Amendment.]
C-1
<PAGE>
4. (a) Form of Variable Annuity Contract. Incorporated herein by
reference to initial Registration Statement, filed on May 2,
1996. (CIK No. 0001013169; Accession No.
0000906287-96-000070).
(b) Form of Variable Annuity Contract Endorsement (regarding the
Death Benefit). Incorporated herein by reference to
Post-Effective Amendment No. 1 to this Registration
Statement, filed on September 24, 1997. (CIK No.
0001013169; Accession No. 0000906287-97-000264).
5. Form of Applications for Variable Annuity Contract. Incorporated
herein by reference to Post-Effective Amendment No. 1 to this
Registration Statement, filed on September 24, 1997. (CIK No.
0001013169; Accession No. 0000906287-97-000264).
6. Certificate of Incorporation and Bylaws of Great American Reserve
Insurance Company. Incorporated herein by reference to initial
Registration Statement, filed on May 2, 1996. (CIK No.
0001013169; Accession No. 0000906287-96-000070).
7. None.
8. Participation Agreement between Great American Reserve Insurance
Company, Rydex Variable Trust and PADCO Financial Services, Inc.
[To be filed by Amendment.]
9. Opinion of Counsel and Consent to its use as to the legality of
the securities registered and indicating that they will be
legally issued and will represent binding obligations of Great
American Reserve Insurance Company.
10. Consent of Auditors. [To be filed by Amendment.]
11. None.
12. None.
13. Schedule for Computation of Performance Quotations. [To be filed
by Amendment.]
14. Limited Power of Attorney
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The following table sets forth the names of (a) the officers and
trustees of the Great American Reserve Insurance Company who are
engaged directly or indirectly in activities relating to the
Registrant or the variable annuity contracts and (b) the executive
officers of the Great American Reserve.
STEPHEN C. HILBERT THOMAS J. KILIAN
Chairman and Director President and Director
NGAIRE E. CUNEO ROLLIN M. DICK
Director Executive Vice President,
Chief Financial Officer and
Director
C-2
<PAGE>
JOHN SABL
Executive Vice President,
General Counsel, Secretary and Director
The business address of the directors and officers is Great American
Reserve Insurance Company, 11825 North Pennsylvania Street, Carmel,
Indiana 46032.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR 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. owns 100% of each of the
companies listed below, unless indicated otherwise:
Conseco, Inc.
Conseco Risk Management, Inc.
Wells & Company
CRM Acquisition Company
Wellsco, Inc.
Conseco Mortgage Capital, Inc.
Conseco Group Risk Management, Inc.
Conseco Capital Management, Inc.
Conseco Private Capital Group, Inc.
Conseco Equity Sales, Inc.
Lincoln American Life Insurance Company
Marketing Distribution Systems Consulting Group, Inc.
MDS Securities Incorporated
BankMark School of Business, Inc.
Investment Services Center of Delaware, Inc.
BankMark, Inc.
Community Insurance Agency, Inc.
InveStar Insurance Agency, Inc. (IN)
InveStar Insurance Agency, Inc. (OH)
Marketing Distribution Systems, Inc.
MDS of New Jersey, Inc.
Community Insurance Agency, Inc.
CIHC, Incorporated
NACT, Inc.
Conseco Services, L.L.C.
Conseco Marketing LLC
Conseco Entertainment Nevada, Inc.
American Travellers Insurance Services Company, Inc.
Conseco L.L.C.
C-3
<PAGE>
Conseco Global Investments, Inc.
CNC Real Estate, Inc.
Bankers National Life Insurance Company
National Fidelity Life Insurance Company
K.F. Acquisition Corporation
Jefferson National Life Insurance Company of Texas
Beneficial Standard Life Insurance Company
Great American Reserve Insurance Company
American Travellers Life Insurance Company
Conseco Life Insurance Company of New York
United General Life Insurance Company
Continental Life Insurance Company
Conseco Financial Services, Inc.
Eagles' National Corporation
Bankers Life Insurance Company of Illinois
Bankers Life and Casualty Company
Certified Life Insurance Company
Capitol American Financial Corporation
Capitol Insurance Company of Ohio*
Capital American Life Insurance Company
Capitol National Life Insurance Company
Frontier National Life Insurance Company
K.F. Agency Inc. of Texas
Colonial Penn Life Insurance Company
C.P. Real Estate Services Corp.
Hawthorne Advertising Agency Incorporated
Providential Life Insurance Company
Eagle Mortgage Company, Inc.
U.S. Insurance Marketing, Inc.
K.F. Insurance Agency of Massachusetts, Inc.
Wabash Life Insurance Company
Conseco Life Insurance company
Philadelphia Life Insurance Company
Lamar Life Insurance Company
Independent Processing Services, Inc.
Conseco Travel Services, inc.
K.F. Agency, Inc.
American Life Holdings, Inc.
American Life and Casualty Marketing Division Co.
American Life and Casualty Insurance Company
Vulcan Life Insurance Company**
Automobile Underwriters Corporation
Automobile Underwriters Incorporated
Statesman Data Services, Inc.
Pioneer Financial Services, Inc.
PL Holdings, Inc.
Integrated Networks, Inc.
Administrators Service Corporation
National Benefit Plans, Inc.
Design Securities Corporation
Conseco Teleservices, Inc.
Target Ad Group, Inc.
C-4
<PAGE>
Design Benefit Plans, Inc.
Continental Marketing Corporation of Illinois,
Inc.
DBP of Nevada, Inc.
Design Benefit Plans of Oregon, Inc.
Pioneer Life Insurance Company
Health and Life Insurance Company of America
Manhattan National Life Insurance Company
Connecticut National Life Insurance Company
MNL Marketing Corporation
Business Information Group, Inc.
Geneva International Insurance Company, Inc.
Response Air Ambulance Network, Inc.
United Life Holdings, Inc.
Direct Financial Services, Inc.
Erie International Insurance Company, Inc.
Association Management Corporation
Pioneer Savers Plan, Inc.
Independent Savers Plan, Inc.
Network Air Medical Systems, Inc.
Partners Health Group, Inc.
Personal Healthcare, Inc.
Healthscape, Inc.
Preferred Health Choice, Inc.
Markman International, L.L.C.
United Group Holdings, Inc.
National Group Life Insurance Company
Continental Life and Accident Company
Conseco Entertainment, Inc.
Conseco Entertainment, L.L.C.
Conseco HPLP, L.L.C.
Washington National Corporation
Anchor Corporation
Washington National Financial Services, Inc.
Washington National Insurance Company
Washington National Development Company
United Presidential Corporation
United Presidential Life Insurance Company
Diversified National Corporation
* Mutual Assessment Life and Accident Association.
** Conseco, Inc. owns 98% of Vulcan Life Insurance Company's voting
securities.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of June 30, 1998, there were:
204 Contract Owners of qualified variable annuity contracts; and
490 Contract Owners of nonqualified variable annuity contracts.
C-5
<PAGE>
ITEM 28. INDEMNIFICATION
Article VI of the By-Laws of Great American Reserve Life Insurance
Company generally provide that the Company shall indemnify its
directors and officers against liabilities incurred in acting as
directors and officers if they acted in good faith and in a manner
they reasonably believed to be in the best interest of the Company
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. See the
By-Laws of the Company, filed as Exhibit (6) to this Registration
Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted
to members of the Board of Directors, officers, and controlling
persons of the Company pursuant to the provisions described under
"Indemnification" or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the
Company of expenses incurred or paid by a member of the Board of
Directors, officer, or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by
such member of the Board of Directors, officer, or controlling person
in connection with the securities being registered, the Company 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 1933 Act and will be governed by the final
adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Conseco Equity Sales, Inc. is principal underwriter for the
following other investment companies (other than the Registrant):
Great American Reserve Variable Annuity Account C
Great American Reserve Variable Annuity Account E
Great American Reserve Variable Annuity Account G
Conseco Fund Group
(b) Conseco Equity Sales, Inc. ("CES") is principal underwriter for
the Registrant and for the Contracts. The following persons are
the officers and directors of CES. The principal business
address for each officer and director of CES is 11825 N.
Pennsylvania Street, Carmel, Indiana 46032.
POSITIONS AND OFFICES
NAME WITH UNDERWRITER
L. Gregory Gloeckner President and Director
William P. Latimer Vice President, Senior Counsel, Secretary
and Director
James S. Adams Senior Vice President, Treasurer and
Director
C-6
<PAGE>
POSITIONS AND OFFICES
NAME WITH UNDERWRITER
William T. Devanney, Jr. Senior Vice President, Corporate Taxes
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The name and address of the person who maintains physical possession
of each account, book or other document of the Registrant required by
Section 31(a) of the Investment Company Act of 1940 is as follows:
Lowell Short
Great American Reserve Insurance Company
11825 North Pennsylvania Street
Carmel, Indiana 46032
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) 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.
(b) 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) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to
be made available under this Form N-4 promptly upon written or
oral request.
(d) 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 paragraphs (1) through (4) of said no-action
letter.
(e) Great American Reserve Insurance Company hereby represents that
the fees and charges deducted under the Contract, in the
aggregate, are reasonable in relation to the services rendered,
the expenses to be incurred, and the risks assumed by Great
American Reserve Insurance Company.
C-7
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Post-Effective Amendment No. 8 to be signed
on its behalf, in the City of Carmel, State of Indiana on this 11th day of
August, 1998.
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
(Registrant)
By: GREAT AMERICAN RESERVE INSURANCE COMPANY
(Depositor)
By: /s/ Thomas J. Kilian
-----------------------------------------------
Thomas J. Kilian, President
By: GREAT AMERICAN RESERVE INSURANCE COMPANY
(Depositor)
By: /s/ Thomas J. Kilian
-----------------------------------------------
As required by the Securities Act of 1933, this Registration Statement
has been signed by the following officers and directors of Great American
Reserve Insurance Company, in the capacities indicated, on the 11th day of
August, 1998.
SIGNATURE TITLE
/s/ STEPHEN C. HILBERT Chairman of the Board
- --------------------------- (Chief Executive Officer)
Stephen C. Hilbert
/s/ ROLLIN M. DICK Executive Vice President, Chief
- --------------------------- Financial Officer and Director
Rollin M. Dick
/s/ JAMES S. ADAMS Senior Vice President and
- --------------------------- Treasurer
James S. Adams (Chief Accounting Officer)
Director
- ---------------------------
Ngaire E. Cuneo
/s/ THOMAS J. KILIAN Director and President
- ---------------------------
Thomas J. Kilian
/s/ JOHN J. SABL Director
- ---------------------------
John J. Sabl
C-8
<PAGE>
EXHIBIT INDEX
C-9
<PAGE>
LIMITED POWER OF ATTORNEY
We, the undersigned directors and officers of Great American Reserve
Insurance Company, a corporation duly organized under the laws of the State of
Texas, do hereby severally constitute and appoint John J. Sable and/or Karl W.
Kindig, or either one of the foregoing individually, as our attorney and agent,
for us, and in our names and in the capacities indicated below on behalf of the
Company or otherwise, with full power to execute, deliver and file with the
Securities and Exchange Commission all documents required for registration of
variable annuity contracts under the Securities Act of 1933, as amended, and the
registration of unit investment trusts under the Investment Company Act of 1940,
as amended, and to do and perform each and every act that said attorney may deem
necessary or advisable to comply with the intent of the aforesaid Acts.
WITNESS our hands this 11th day of August, 1998.
SIGNATURE TITLE
--------- -----
/s/ STEPHEN C. HILBERT Chairman of the Board
- ------------------------ (Chief Executive Officer)
Stephen C. Hilbert
/s/ ROLLIN M. DICK Executive Vice President, Chief
- ------------------------ Financial Officer and Director
Rollin M. Dick
/s/ JAMES S. ADAMS Senior Vice President and Treasurer
- ------------------------ (Chief Accounting Officer)
James S. Adams
- ------------------------ Director
Ngaire E. Cuneo
/s/ THOMAS J. KILIAN Director and President
- ------------------------
Thomas J. Kilian
/s/ JOHN J. SABL Director
- ------------------------
John J. Sabl
