Registration Nos. 33-74092
811-8288
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.
Post-Effective Amendment No. 5 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 5 [X]
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
(Exact Name of Registrant)
GREAT AMERICAN RESERVE INSURANCE COMPANY
(Name of Depositor)
11825 N. Pennsylvania Street
Carmel, Indiana 46032-4572
(Address of Depositor's Principal Executive Offices)
(317) 817-3700
(Depositor's Telephone Number, including Area Code)
Michael A. Colliflower
Great American Reserve Insurance Company
11825 N. Pennsylvania Street
Carmel, Indiana 46032-4572
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) (1) of Rule 485
[ ] on [date] pursuant to paragraph (a) (1) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Title of Securities Registered:
Individual and Group Deferred Annuity Contracts and Certificates
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
FORM N-4
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
Under The Securities Act of 1933
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Form N-4
Item No. PART A - Prospectus Caption
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1. Cover Page................................... Cover Page
2. Definitions.................................. Definitions
3. Synopsis or Highlights....................... Summary
4. Condensed Financial Information.............. Condensed Financial Information
5. General Description of Registrant,........... Great American Reserve, Variable Account, and
Depositor and Portfolio Companies Investment Options
6. Deductions and Expense....................... Contract Charges
7. General Description of Variable.............. The Contracts
Annuity Contracts
8. Annuity Period .............................. The Contracts
Section B. Settlement Provisions
9. Death Benefit................................ The Contracts
Section B. Settlement Provisions: Death Benefit on or
After Maturity Date
10. Purchase and Contract Values................. Great American Reserve, Variable Account, and
Investment Options
The Contracts
Section A. Accumulation Provisions
11. Redemptions.................................. The Contracts
Section B. Settlement Provisions
12. Taxes........................................ Federal Tax Status
13. Legal Proceedings............................ Not Applicable
14. Table of Contents of the Statement........... Table of Contents of the Statement
of Additional Information of Additional Information
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Form N-4
Item No.
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PART B - Statement of Additional Information
-----------------------------------
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15. Cover Page................................... Statement of Additional Information
Cover Page
16. Table of Contents............................ Table of Contents
17. General Information and History.............. General Information and History
18. Services..................................... Not Applicable
19. Purchase of Securities....................... Not Applicable
Being Offered
20. Underwriters................................. Distribution
21. Calculation of Performance Data.............. Calculation of Yield Quotations, Calculation of
Total Return Quotations, and Other Performance Data
22. Annuity Payments............................. Not Applicable
23. Financial Statements......................... Financial Statements
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PART C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this registration statement.
PART A
Great American
Reserve
1998 Account E
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GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
INDIVIDUAL & GROUP VARIABLE DEFERRED ANNUITY CONTRACTS
OFFERED BY
GREAT AMERICAN RESERVE INSURANCE COMPANY
ADMINISTRATIVE OFFICE:
11815 N. PENNSYLVANIA STREET, CARMEL, IN 46032
(317) 817-3700
The Individual and Group Flexible Purchase Payment Variable Deferred
Annuity Contracts (the "Contracts") described by this Prospectus are offered by
Great American Reserve Insurance Company ("Great American Reserve"). The
Contracts are designed for use in retirement planning. Purchase Payments
received with respect to the Contracts (subject to certain deductions) are
deposited by Great American Reserve in the separate investment account entitled
Great American Reserve Variable Annuity Account E (the "Variable Account") for
further investment or in the general account of Great American Reserve.
The Variable Account is a unit investment trust separate account. The
Variable Account consists of 40 sub-accounts ("Sub-accounts"), each of which
invests in shares of the eligible open-end management investment companies
("Funds"). The Sub-accounts invest in shares of the following Funds: the Conseco
Series Trust Asset Allocation, Common Stock, Corporate Bond, Government
Securities and Money Market Portfolios; the Alger American Fund Growth,
Leveraged AllCap, MidCap Growth and Small Capitalization Portfolios; the
American Century Variable Portfolios, Inc. VP International, VP Value and VP
Income & Growth Funds; the Berger Institutional Products Trust Berger IPT - 100,
Berger IPT - Growth and Income, Berger IPT - Small Company Growth, and Berger/
BIAM IPT - International Funds; The Dreyfus Socially Responsible Growth Fund,
Inc.; the Dreyfus Stock Index Fund; the Dreyfus Variable Investment Fund, Inc.
International Value and Disciplined Stock Portfolios; the Federated Insurance
Series High Income Bond II, International Equity II and Utility II Funds; the
INVESCO Variable Investment Funds, Inc. INVESCO VIF - High Yield and INVESCO VIF
- - Industrial Income Portfolios; the Janus Aspen Series Aggressive Growth, Growth
and Worldwide Growth Portfolios; the Lazard Retirement Series, Inc. Lazard
Retirement Equity and Lazard Retirement Small Cap Portfolios; the Lord Abbett
Series Fund, Inc. Growth and Income Portfolio; the Mitchell Hutchins Series
Trust Growth and Income Portfolio, the Neuberger & Berman Advisers Management
Trust Limited Maturity Bond and Partners Portfolios; the Strong Opportunity Fund
II, Inc. Opportunity Fund II; the Strong Variable Insurance Funds, Inc. Growth
Fund II; and the Van Eck Worldwide Insurance Trust Worldwide Hard Assets,
Worldwide Bond, Worldwide Emerging Markets and Worldwide Real Estate Funds.
TEN OF THESE FUNDS, INCLUDING THE AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
INCOME AND GROWTH FUND, THE INVESCO VARIABLE INVESTMENT FUNDS, INC. INVESCO VIF-
HIGH YIELD AND INVESCO VIF-INDUSTRIAL INCOME PORTFOLIOS; THE DREYFUS VARIABLE
INVESTMENT FUND, INC. INTERNATIONAL VALUE AND DISCIPLINED STOCK PORTFOLIOS; THE
LAZARD RETIREMENT SERIES, INC. LAZARD RETIREMENT EQUITY AND LAZARD RETIREMENT
SMALL CAP PORTFOLIOS, THE MITCHELL HUTCHINS SERIES TRUST GROWTH AND INCOME
PORTFOLIO; AND THE VAN ECK WORLDWIDE INSURANCE TRUST WORLDWIDE HARD ASSETS AND
WORLDWIDE REAL ESTATE FUNDS, WILL BE AVAILABLE FOR THE FIRST TIME UNDER THE
CONTRACTS ON MAY 1, 1998. The availability of such Funds may be delayed
beyond May 1, 1998, pending receipt of state approvals. Before investing
in any of the Sub-accounts, carefully review the prospectuses of the eligible
Funds.
This Prospectus contains information regarding the Contracts which
investors should know before investing. It should be read and retained for
future reference. A Statement of Additional Information, incorporated herein by
reference and dated May 1, 1998, has been filed with the Securities and Exchange
Commission ("SEC"). Investors can obtain a free copy by contacting Great
American Reserve at the address or telephone number given above. The Table of
Contents of the Statement of Additional Information appears in this Prospectus
on page __. The SEC maintains 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 SEC.
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 ON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
THE DATE OF THIS PROSPECTUS IS MAY 1, 1998.
TABLE OF CONTENTS
Page
Definitions....................................................................
Summary........................................................................
Fee Table ....................................................................
Condensed Financial Information...............................................
Great American Reserve, Variable Account,
and the Investment Options
A. Great American Reserve...................................................
B. Variable Account.........................................................
C. Investment Options.......................................................
Voting Rights.................................................................
The Contracts
A. Accumulation Provisions
PURCHASE PAYMENTS.......................................................
ALLOCATION OF PURCHASE PAYMENTS.........................................
ACCUMULATION UNITS......................................................
VALUE OF AN INDIVIDUAL ACCOUNT..........................................
NET INVESTMENT FACTOR FOR EACH
VALUATION PERIOD........................................................
INFORMATION ON THE FIXED ACCOUNT........................................
TRANSFER AMONG INVESTMENT OPTIONS.......................................
DOLLAR COST AVERAGING...................................................
REBALANCING............................................................
SWEEPS..................................................................
WITHDRAWALS.............................................................
SYSTEMATIC WITHDRAWAL PLAN..............................................
CHECK WRITING...........................................................
LOANS...................................................................
CONTRACT CHARGES
WITHDRAWAL CHARGE....................................................
ADMINISTRATIVE CHARGES...............................................
MORTALITY AND EXPENSE RISK
CHARGE..............................................................
REDUCTION OR ELIMINATION
OF CONTRACT CHARGES.................................................
PREMIUM TAXES.........................................................
OTHER CHARGES.........................................................
DEATH BENEFIT BEFORE MATURITY DATE..........................................
OPTIONS UPON TERMINATION OF
PARTICIPATION IN THE PLAN
(FOR GROUP CONTRACTS ONLY)..................................................
RESTRICTIONS UNDER OPTIONAL
RETIREMENT PROGRAMS..................................................
RESTRICTIONS UNDER SECTION 403(B)
PLANS................................................................
B. Settlement Provisions
OPTIONAL ANNUITY PERIOD ELECTIONS.......................................
ANNUITY OPTIONS.........................................................
PROCEEDS APPLIED TO ANNUITY OPTION......................................
DETERMINATION OF AMOUNT OF THE FIRST
MONTHLY VARIABLE ANNUITY PAYMENT.....................................
VALUE OF AN ANNUITY UNIT................................................
AMOUNTS OF SUBSEQUENT MONTHLY
VARIABLE ANNUITY PAYMENTS............................................
TRANSFERS AFTER MATURITY DATE...........................................
DEATH BENEFIT ON OR AFTER
MATURITY DATE.........................................................
C. Other Contract Provisions
TEN-DAY RIGHT TO REVIEW.................................................
OWNERSHIP...............................................................
MODIFICATION............................................................
COMPANY APPROVAL........................................................
FEDERAL TAX STATUS
General Matters
PERFORMANCE INFORMATION.....................................................
DISTRIBUTION OF CONTRACTS...................................................
CONTRACT OWNER INQUIRIES....................................................
LEGAL PROCEEDINGS...........................................................
OTHER INFORMATION...........................................................
Table of Contents of the Statement of
Additional Information......................................................
DEFINITIONS
ACCUMULATION UNIT: An accounting unit of measure used to calculate the values
before the Maturity Date.
ANNUITANT: The person upon whose life the Contract is issued.
ANNUITY: A series of payments for life; or for life with a minimum number of
payments certain; or for a certain period; or for a certain payment amount.
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
annuity payments.
CONTRACT VALUE: The total of your Individual Account values held under the
Contract in each Investment Option of the Variable Account plus the Fixed
Account.
CONTRACT YEAR: A period of 12 months commencing with the effective date of
your Contract.
FIXED ACCOUNT: The general account of Great American Reserve in which you may
choose to allocate purchase payments and Contract Values. It provides guaranteed
values and periodically adjusted interest rates.
GREAT AMERICAN RESERVE: Great American Reserve Insurance Company. Also
referred to as "we" or "us".
INDIVIDUAL ACCOUNT: The record established by Great American Reserve which
represents a Contract Owner's interest in an Investment Option prior to the
Maturity Date.
INVESTMENT OPTIONS: The investment choices available to Contract Owners.
MATURITY DATE: The date on which annuity payments of the Contract begin.
OWNER(S) OR CONTRACT OWNER(S): The person, persons (co-owner) or entity
entitled to all of the ownership rights under the Contract. Also referred to as
"you" or "yours".
PARTICIPANT: (For group contracts only) Any eligible person participating in
a plan and for whom an Individual Account is established under a Contract.
PLAN: A voluntary program of an employer that qualifies for special tax
treatment.
PURCHASE PAYMENTS: Premium payments made to Great American Reserve under the
terms of the Contract.
VALUATION PERIOD: The period of time from the end of one business day of the
New York Stock Exchange to the end of the next business day.
VARIABLE ACCOUNT (GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E): A
separate account established pursuant to the insurance laws of Texas. Assets
attributable to the variable portions of contracts are segregated from other
assets of Great American Reserve and are held in the Great American Reserve
Variable Annuity Account E.
VARIABLE ANNUITY: An annuity which provides retirement payments which vary in
dollar amount with investment results.
SUMMARY
THE CONTRACTS. The Contracts offered by this Prospectus are tax-deferred
flexible purchase payment individual or group variable annuity contracts. The
Contracts provide for the accumulation of contract values and the payment of
annuity benefits on a variable and/or fixed basis. Except as specifically noted
herein and set forth under the caption "Information on the Fixed Account" this
Prospectus describes only the variable portion of the Contracts.
RETIREMENT PLANS. The Contracts may be issued pursuant to either
non-qualified retirement plans or plans qualifying for special income tax
treatment under the Internal Revenue Code (the "Code"), such as individual
retirement annuities ("IRAs"), pension and profit sharing plans, tax-sheltered
annuities ("TSAs"), and state and local government deferred compensation
plans (see "Federal Tax Status").
PURCHASE PAYMENTS. The Contracts permit Purchase Payments to be made on a
flexible purchase payment basis. For TSAs, the minimum initial payment and
amount for each subsequent payment is $50 per month. For IRAs, the minimum
initial investment is $2,000 and the minimum amount of each additional payment
is $50. For non-qualified Contracts, the minimum initial investment is $5,000
and the minimum amount of each additional lump sum payment is $2,000 (or $200
per month). Purchase Payments may be made at any time, except that if a Purchase
Payment exceeds $500,000, it will be accepted only with the prior approval of
Great American Reserve (see "Purchase Payments").
INVESTMENT OPTIONS. Purchase Payments may be allocated among the 41
Investment Options available under the Contracts: 40 variable Investment Options
and one fixed option. The 40 variable Investment Options consist of Sub-accounts
which invest in shares of the following Funds: the Conseco Series Trust Asset
Allocation, Common Stock, Corporate Bond, Government Securities and Money Market
Portfolios; the Alger American Fund Growth, Leveraged AllCap, MidCap Growth and
Small Capitalization Portfolios; the American Century Variable Portfolios, Inc.
International, Value and Income and Growth Funds; the Berger Institutional
Products Trust, Berger IPT - 100, Berger IPT - Growth and Income, Berger IPT -
Small Company Growth, and Berger/BIAM IPT - International Funds; The Dreyfus
Socially Responsible Growth Fund, Inc.; the Dreyfus Stock Index Fund; the
Dreyfus Variable Investment Fund, Inc. International Value and Disciplined Stock
Portfolios; the Federated Insurance Series High Income Bond II, International
Equity II and Utility II Funds; INVESCO Variable Investment Funds, Inc. INVESCO
VIF - High Yield and INVESCO VIF - Industrial Income Portfolios; the Janus Aspen
Series Aggressive Growth, Growth and Worldwide Growth Portfolios; the Lazard
Retirement Series, Inc. Lazard Retirement Equity and Lazard Retirement Small Cap
Portfolios; the Lord Abbett Series Fund, Inc. Growth and Income Portfolio; the
Mitchell Hutchins Series Trust Growth and Income Portfolio; the Neuberger &
Berman Advisers Management Trust Limited Maturity Bond and Partners Portfolios;
the Strong Opportunity Fund II, Inc. Opportunity Fund II; the Strong Variable
Insurance Funds, Inc. Growth Fund II; and, the Van Eck Worldwide Insurance Trust
Worldwide Hard Assets, Worldwide Bond, Worldwide Emerging Markets and Worldwide
Real Estate Funds (see the accompanying prospectuses of the eligible Funds). The
portion of the Contract Value in the Variable Account will reflect the
investment performance of the Investment Options selected (see "Variable
Account"). Purchase Payments may also be allocated to the Fixed Account (see
"Information on the Fixed Account"). Subject to certain regulatory limitations,
Great American Reserve may elect to add, subtract or substitute investment
options.
TRANSFERS. Prior to the Maturity Date, amounts may be transferred among the
Variable Account investment options and from the Variable Account investment
options to the Fixed Account investment option without charge. In addition,
amounts may be transferred prior to the Maturity Date from the Fixed Account
investment option to the Variable Account investment options, subject to a limit
of 20 percent of the Fixed Account value per any six-month period (see
"Information on the Fixed Account"). After the Maturity Date, transfers are not
permitted from variable annuity options to fixed annuity options or from fixed
annuity options to variable annuity options. Great American Reserve may impose
certain additional limitations on transfers (see "Transfers Among Investment
Options" and "Transfers After Maturity Date"). Transfer privileges may also be
used under special services offered by Great American Reserve to dollar cost
average an investment in the contract (see "Dollar Cost Averaging"), transfer
earnings from the Fixed Account to another Investment Option (see "Sweeps"), or
rebalance an Investment Option on a periodic basis (see "Rebalancing").
WITHDRAWALS. Prior to the earlier of the Maturity Date or the death of the
Annuitant, the Contract Owner may withdraw all or a portion of the Contract
Value. The amount withdrawn from any Individual Account must be at least $250
or, if less, the entire balance of the Individual Account. If a partial
withdrawal plus any applicable withdrawal charge would reduce the Contract Value
to less than $500, the withdrawal request may be treated as a request to
withdraw the entire Contract Value (see "Withdrawals"). A withdrawal charge and
an administrative fee may be imposed (see "Withdrawal Charge"). A withdrawal may
also be subject to income taxes and a penalty tax (see "Federal Tax Status").
Withdrawal privileges may also be exercised pursuant to Great American Reserves
systematic withdrawal plan (see "Systematic Withdrawal Plan").
LOANS. Your contract may contain a loan provision issued in connection with
certain qualified plans. Owners of such contracts may be eligible to obtain
loans using the contract as the only security for the loan (see "Loans").
DEATH BENEFIT BEFORE MATURITY DATE. Generally, if the Annuitant or Owner
dies before the Maturity Date, Great American Reserve will pay to the
beneficiary the minimum death benefit less any outstanding loans (see "Death
Benefit Before Maturity Date").
ANNUITY PAYMENTS. Great American Reserve offers a variety of fixed and
variable annuity options. Periodic annuity payments will begin on the Maturity
Date. The Contract Owner selects the Maturity Date, frequency of payment and
annuity option (see "Settlement Provisions").
TEN-DAY REVIEW. Within 10 days of receipt of a Contract (or the period
required in your state), a Contract Owner may cancel the Contract by returning
it to Great American Reserve (see "Ten-Day Right to Review").
TAXES. There is a ten percent (10%) federal income tax penalty that may be
applied to the income portion of any distribution. The penalty is not imposed
under certain circumstances. In addition, the Contract provides that upon the
death of the Annuitant prior to the Maturity Date, the death proceeds will be
paid to the beneficiary. Such payments upon the death of the Annuitant who is
not the Contract Owner as in the case of certain Non-Qualified Contracts, do not
qualify for the death of Contract Owner exception to the ten percent
distribution penalty unless the beneficiary is 59 1/2 or one of the other
exceptions to the penalty applies. (See "Federal Tax Status - Tax Treatment of
Withdrawals - Non-Qualified Contracts" and "Tax Treatment of Withdrawals -
Qualified Contracts".)
For TSA Contracts, withdrawals of amounts attributable to contributions
made pursuant to a salary reduction agreement (as defined in the Internal
Revenue Code) are limited to circumstances only when the Contract Owner attains
age 59 1/2, separates from service, dies, becomes disabled, in the case of
hardship or made pursuant to a qualified domestic relations order. Withdrawals
for hardship are restricted to the portion of the Contract Owner's Contract
value which represents contributions made by the owner and does not include any
investment results. (See "Federal Tax Status - Tax-Sheltered Annuities -
Withdrawal Limitations.")
CHARGES AND DEDUCTIONS. The following fee table and examples are designed
to assist Contract Owners in understanding the various expenses that Contract
Owners bear directly and indirectly. The table reflects expenses of the Variable
Account and the underlying Portfolios. The items listed under "Contract Owner
Transaction Expenses" and "Variable Account Annual Expenses" are
described in this Prospectus (see "Contract Charges"). The items listed under
"Annual Fund Expenses" are described in detail in the accompanying
prospectuses of the eligible Funds to which reference should be made.
FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES (1)
Sales Charge Imposed on Purchases........................................None
Exchange Fee.............................................................None
Surrender Fee............................................................None
Deferred Sales Load (as a percentage
of purchase payments) (2)
First and Second Year..............................................9%
Third Year.........................................................8%
Fourth Year........................................................7%
Fifth Year.........................................................5%
Sixth Year.........................................................3%
Seventh Year or More...............................................0%
Annual Administrative Fee (2).............................................$30
VARIABLE ACCOUNT ANNUAL EXPENSES (as a
percentage of average account value)
Mortality and Expense Risk Fees.......................................1.25%
Administrative Charge.................................................0.15%
Total Annual Expenses of the Variable
Account (2)..........................................................1.40%
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(1)Premium taxes are not shown. Any premium tax due may be deducted from
Purchase Payments or from Individual Account values at the Maturity Date or
at such other time based on the sole discretion of the Company. The current
range of premium taxes in jurisdictions in which the Contracts are made
available is from 0 percent to 3.5 percent.
(2)Great American Reserve may reduce or eliminate the sales, administrative, or
other expenses with certain contracts in cases when Great American Reserve
expects to incur lower sales and administrative expenses or perform fewer
services (see "Reduction or Elimination of Contract Charges"). Great American
Reserve will waive the annual administrative fee if the Owner's Individual
Account value is $25,000 or greater.
ANNUAL FUND EXPENSES (1)
(as a percentage of the average daily net assets of a Portfolio)
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TOTAL ANNUAL
OTHER EXPENSES PORTFOLIO
(AFTER EXPENSE EXPENSES
REIMBURSEMENT (AFTER EXPENSE
MANAGEMENT 12b-1 FOR CERTAIN REIMBURSEMENT FOR
FEES FEES PORTFOLIOS) CERTAIN PORTFOLIOS)
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CONSECO SERIES TRUST (1)
Asset Allocation Portfolio (2) ............................. 0.55% -- 0.20% 0.75%
Common Stock Portfolio (2) ................................. 0.60% -- 0.20% 0.80%
Corporate Bond Portfolio ................................... 0.50% -- 0.20% 0.70%
Government Securities Portfolio ............................ 0.50% -- 0.20% 0.70%
Money Market Portfolio (2) ................................. 0.25% -- 0.20% 0.45%
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ............................ 0.75% -- 0.04% 0.79%
Alger American Leveraged AllCap Portfolio (3) .............. 0.85% -- 0.15% 1.00%
Alger American MidCap Growth Portfolio ..................... 0.80% -- 0.04% 0.84%
Alger American Small Capitalization Portfolio .............. 0.85% -- 0.04% 0.89%
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC ..................
VP Income & Growth ......................................... 0.70% -- 0.0% 0.70%
VP International ........................................... 1.50% -- 0.0% 1.50%
VP Value ................................................... 1.00% -- 0.0% 1.00%
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT--100 Fund (4) ................................... 0.00% -- 1.00% 1.00%
Berger IPT--Growth and Income Fund (4) ..................... 0.00% -- 1.00% 1.00%
Berger IPT--Small Company Growth Fund (4) .................. 0.00% -- 1.15% 1.15%
Berger/BIAM IPT--International Fund (4) .................... 0.00% -- 1.20% 1.20%
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. 0.75% -- 0.07% 0.82%
DREYFUS STOCK INDEX FUND ............................... 0.25% -- 0.03% 0.28%
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio............................... 0.75% 0.27% 1.02%
International Value Portfolio............................... 1.00% 0.42% 1.42%
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II (5) ..................... 0.51% -- 0.29% 0.80%
Federated International Equity Fund II (5) ................. 0.02% -- 1.21% 1.23%
Federated Utility Fund II (5) .............................. 0.48% -- 0.37% 0.85%
INVESCO VARIABLE INVESTMENT FUND
INVESCO VIF - High Yield Portfolio (6) ..................... .60% -- .27% .87%
INVESCO VIF - Industrial Income Portfolio (6) .............. .75% -- .20% .95%
JANUS ASPEN SERIES
Aggressive Growth Portfolio (7) ........................... 0.73% -- 0.03% 0.76%
Growth Portfolio (7) ...................................... 0.65% -- 0.05% 0.70%
Worldwide Growth Portfolio (7) ............................. 0.66% -- 0.08% 0.74%
LAZARD RETIREMENT SERIES, INC ..............................
Lazard Retirement Equity Portfolio (8) .................... 0.75% 0.25% 0.50% 1.50%
Lazard Retirement Small Cap Portfolio (8) .................. 0.75% 0.25% 0.50% 1.50%
LORD ABBETT SERIES FUND, INC ...............................
Growth and Income Portfolio (9) ........................... 0.50% 0.15% 0.02% 0.67%
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio ................................ 0.70% -- 0.88% 1.58%
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST (10)
Limited Maturity Bond Portfolio ............................ 0.65% -- 0.12% 0.77%
Partners Portfolio ......................................... 0.80% -- 0.06% 0.86%
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II ........................................ 1.00% -- 0.15% 1.15%
STRONG VARIABLE INSURANCE FUNDS, INC .......................
Growth Fund II (11) ........................................ 1.00% -- 0.20% 1.20%
VAN ECK WORLDWIDE INSURANCE TRUST (12)
Worldwide Bond Fund ........................................ 1.00% -- 0.12% 1.12%
Worldwide Emerging Markets Fund ............................ 1.00% -- (-.20)% 0.80%
Worldwide Hard Assets Fund ................................. 1.00% -- 0.17% 1.17%
Worldwide Real Estate Fund ................................. 0.00% -- 1.00% 1.00%
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(1) Conseco Capital Management, Inc., the investment adviser of Conseco
Series Trust, has voluntarily agreed to reimburse all expenses, including
management fees, in excess of the following percentage of the average annual net
assets of each listed Portfolio, as long as such reimbursement would not result
in a Portfolio's inability to qualify as a regulated investment company under
the Code: 0.75% for the Asset Allocation Portfolio; 0.80% for the Common Stock
Portfolio; 0.70% for the Corporate Bond Portfolio and Government Securities
Portfolio; and 0.45% for the Money Market Portfolio. The total percentages in
the above table is after reimbursement. In the absence of expense reimbursement,
the total fees and expenses in 1997 would have totaled: 0.84% for the Asset
Allocation Portfolio; 0.80% for the Common Stock Portfolio; 0.77% for the
Corporate Bond Portfolio; 0.92% for the Government Securities Portfolio; and
0.52% for the Money Market Portfolio.
(2) Conseco Capital Management, Inc., since January 1, 1993, has
voluntarily waived its management fees in excess of the annual rates set forth
above. Absent such fee waivers, the management fees would be: .65% for the Asset
Allocation Portfolio; .65% for the Common Stock Portfolio; and .50% for the
Money Market Portfolio.
(3) The Alger American Leveraged AllCap Portfolio's "Other Expenses"
includes .04% of interest expense.
(4) The Funds' investment advisers have voluntarily agreed to waive their
advisory fee and have voluntarily reimbursed the Funds for additional expenses
to the extent that normal operating expenses in any fiscal year, including the
investment advisory fee but excluding brokerage commissions, interest, taxes and
extraordinary expenses, of each of the Berger IPT--100 Fund and the Berger
IPT-- Growth and Income Fund exceed 1.00%, and the normal operating expenses
in any fiscal year of the Berger IPT--Small Company Growth Fund exceed
1.15%, and the normal operating expenses of the Berger/BIAM IPT -
International Fund exceed 1.20% of the respective Fund's average daily net
assets. Absent the voluntary waiver and reimbursement, the Management Fee for
the Berger IPT--100 Fund, Berger IPT--Growth and Income Fund, the Berger
IPT--Small Company Growth Fund and the Berger/BIAM IPT - International Fund
would have been .75%, .75%, .90%, and .90% respectively, and their Total
Annual Portfolio Expenses would have been 9.18%, 9.62%, 5.81% and 3.83%,
respectively.
(5) In the absence of a voluntary waiver by Federated Advisers, the Funds'
investment adviser, the Management Fee and Total Annual Portfolio Expenses would
have been 0.60% and 0.89%, respectively, for High Income Bond Fund II and
0.75% and 1.12%, respectively, for Utility Fund II. Absent a voluntary waiver of
the management fee and the voluntary reimbursement of certain other operating
expenses by Federated Advisers, the Management Fee and Total Annual Portfolio
Expenses for International Equity Fund II would have been 1.00% and 2.21%,
respectively.
(6) Certain expenses are being absorbed voluntarily by the investment
adviser and sub-adviser. Total expenses (after expenses were absorbed but before
any expense offset arrangement) of the INVESCO VIF - High Yield Portfolio and
INVESCO VIF - Industrial Income Portfolio for the year ended December 31, 1997
amounted to 0.83% and 0.91%, respectively, of each Portfolio's average net
assets. In the absence of such voluntary expense limitation, the total operating
expenses of the INVESCO VIF - High Yield Portfolio and INVESCO VIF - Industrial
Income Portfolio for the fiscal period ended December 31, 1997 would have been
0.94% and 0.97%, respectively, of each Portfolio's average net assets.
It should be noted that the Portfolio's actual expenses were lower than the
figures shown because the Portfolio's custodian fees and pricing expenses were
reduced under expense offset arrangements. However, as a result of an SEC
requirement for mutual funds to state their total operating expenses without
crediting any such expense offset arrangements, the figures shown above do not
reflect these reductions.
(7) The expense figures shown are net of certain fee waivers or reductions
from Janus Capital Corporation, the investment adviser of the Janus Aspen
Series. Without such waivers or reductions, the total fees and expenses in 1997
would have totaled: 0.78% for Aggressive Growth; 0.78% for Growth; and 0.81% for
Worldwide Growth.
(8) Lazard Asset Management, the Fund's investment adviser, has
voluntarily agreed to reimburse all expenses, including management fees, in
excess of 1.50% of the average annual net assets of the Portfolio.
(9) The Growth and Income Portfolio of Lord Abbett Series Fund, Inc. has
a 12b-1 plan which provides for payments to Lord, Abbett & Co. for remittance to
a life insurance company for certain distribution expenses (see the Fund
Prospectus). The 12b-1 plan provides that such remittances, in the aggregate,
will not exceed .15%, on an annual basis, of the daily net asset value of shares
of the Growth and Income Portfolio. For the year ending December 31, 1998, the
12b-1 fees are estimated to be .15%. The examples below for this Portfolio
reflect the estimated 12b-1 fees.
(10) Neuberger & Berman Advisers Management Trust is divided into
portfolios (Portfolios), each of which invests all of its net investable assets
in a corresponding series of Advisers Managers Trust. The figures reported under
"Management Fees" include the total of the administration fees paid by the
Portfolio and the management fees paid by its corresponding series. Similarly,
"Other Expenses" includes all other expenses of the Portfolio and its
corresponding series.
(11) Strong Capital Management, Inc., the investment adviser of the Strong
Growth Fund II, has voluntarily agreed to cap the Fund's total operating
expenses at 1.20%. The Adviser has no current intention to, but may in the
future, discontinue or modify any waiver of fees or absorption of expenses at
its discretion with appropriate notification to its shareholders.
(12) All figures are annualized. Expenses of the Worldwide Real Estate
Fund, which commenced operation in June 1997, are being assumed by the Fund's
investment adviser. Without such assumption, Worldwide Real Estate Fund's
Management Fee would be 1.00%, Other Expenses would be 3.88% and Total Expenses
would be 4.88%. Other Expenses of Worldwide Real Estate Fund are an estimate
which assumes $80 million in average daily net assets, and may be greater or
less than those shown. Prior to April 30, 1997, Worldwide Hard Assets Fund was
named Gold and Natural Resources Fund. Other Expenses of the Worldwide Hard
Assets Fund are net of soft dollar credits. Without such credits, Other
Expenses would have been 0.18% and Total Annual Portfolio Expenses would have
been 1.18%. Other Expenses of Worldwide Emerging Markets Fund are net of the
reduction of the Fund's operating fees in connection with a fee arrangement,
based on cash balances left on deposit with the custodian, and net of the
waiver or assumption by the Fund's investment adviser of certain fees and
expenses. Without such fee arrangement and, to a lesser extent, the waiver/
assumption, Other Expenses would have been 0.34% and Total Expenses would have
been 1.34%. The Fund's investment adviser is no longer waiving or assuming fees
and expenses.
VARIABLE DEFERRED ANNUITY CONTRACT
EXAMPLE 1- Assuming surrender of the Contract at the end of the periods shown
(1): You would pay the following expenses on a $1,000 investment, assuming a 5
percent annual return on assets:
<TABLE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
====================================================================================================================================
<S> <C> <C> <C> <C>
CONSECO SERIES TRUST
Asset Allocation Portfolio ....................................... $108 $141 $163 $255
Common Stock Portfolio ........................................... 108 142 166 260
Corporate Bond Portfolio ......................................... 107 139 161 250
Government Securities Portfolio .................................. 107 139 161 250
Money Market Portfolio ........................................... 105 132 148 224
THE ALGER AMERICAN FUND
Alger American Growth Portfolio .................................. 108 142 165 259
Alger American Leveraged AllCap Portfolio ........................ 110 148 176 280
Alger American MidCap Growth Portfolio ........................... 108 143 168 264
Alger American Small Capitalization Portfolio .................... 109 145 170 269
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC
Income and Growth ................................................ 107 139
International .................................................... 115 163 201 328
Value ............................................................ 110 148 176 280
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT - 100 Fund ............................................ 110 148 176 280
Berger IPT - Growth and Income Fund .............................. 110 148 176 280
Berger IPT - Small Company Growth Fund ........................... 112 153 183 295
Berger/BIAM IPT - International Fund ............................. 112 154 186 300
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC ...................... 108 143 167 262
DREYFUS STOCK INDEX FUND ............................................... 103 126 139 206
DREYFUS VARIABLE INVESTMENT FUND, INC.
Disciplined Stock Portfolio ...................................... 110 149
International Value Portfolio .................................... 114 161
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............................... 108 142 166 260
Federated International Equity Fund II ........................... 112 155 187 303
Federated Utility Fund II ........................................ 109 144 168 265
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield Portfolio ............................... 109 144
INVESCO VIF - Industrial Income Portfolio ........................ 110 147
JANUS ASPEN SERIES
Aggressive Growth Portfolio ...................................... 108 141 164 256
Growth Portfolio ................................................. 107 139 161 250
Worldwide Growth Portfolio ....................................... 107 140 163 254
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............................... 115 163
Lazard Retirement Small Cap Portfolio ............................ 115 163
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio ...................................... 107 138
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio ...................................... 116 165
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio .................................. 108 141
Partners Portfolio ............................................... 109 144
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II .............................................. 112 153 183 295
STRONG VARIABLE INSURANCE FUNDS, INC
Growth Fund II ................................................... 112 154 186 300
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund .............................................. 111 152 182 292
Worldwide Emerging Markets Fund .................................. 108 142 166 260
Worldwide Hard Assets Fund ....................................... 112 153 184 297
Worldwide Real Estate Fund ....................................... 110 148
====================================================================================================================================
</TABLE>
VARIABLE DEFERRED ANNUITY CONTRACT
EXAMPLE 2-Assuming annuitization of the Contract at the end of the periods shown
(1): You would pay the following expenses on a $1,000 investment, assuming a 5
percent annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
====================================================================================================================================
<S> <C> <C> <C> <C>
CONSECO SERIES TRUST
Asset Allocation Portfolio ....................................... $108 $141 $119 $255
Common Stock Portfolio ........................................... 108 142 121 260
Corporate Bond Portfolio ......................................... 107 139 116 250
Government Securities Portfolio .................................. 108 139 116 250
Money Market Portfolio ........................................... 105 132 104 224
THE ALGER AMERICAN FUND
Alger American Growth Portfolio .................................. 108 143 121 259
Alger American Leveraged AllCap Portfolio ........................ 110 148 131 280
Alger American MidCap Growth Portfolio ........................... 108 143 123 264
Alger American Small Capitalization Portfolio .................... 109 145 126 269
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC
Income and Growth ................................................ 107 139
International .................................................... 115 163 156 328
Value ............................................................ 110 148 131 280
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT - 100 Fund ............................................ 110 148 131 280
Berger IPT - Growth and Income Fund .............................. 110 148 131 280
Berger IPT - Small Company Growth Fund ........................... 112 153 139 295
Berger/BIAM IPT - International Fund ............................. 112 154 141 300
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC ...................... 108 143 122 262
DREYFUS STOCK INDEX FUND ............................................... 103 126 95 206
DREYFUS VARIABLE INVESTMENT FUND, INC.
Disciplined Stock Portfolio ...................................... 110 148
International Value Portfolio .................................... 114 161
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............................... 108 142 121 260
Federated International Equity Fund II ........................... 112 155 143 303
Federated Utility Fund II ........................................ 100 144 124 263
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield Portfolio ............................... 109 144
INVESCO VIF - Industrial Income Portfolio ........................ 110 147
JANUS ASPEN SERIES
Aggressive Growth Portfolio ...................................... 108 141 119 256
Growth Portfolio ................................................. 107 139 116 250
Worldwide Growth Portfolio ....................................... 107 140 118 254
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............................... 115 163
Lazard Retirement Small Cap Portfolio ............................ 115 163
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio ...................................... 107 138
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio ...................................... 116 165
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio .................................. 108 141 120 257
Partners Portfolio ............................................... 109 144 124 266
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II .............................................. 112 153 139 295
STRONG VARIABLE INSURANCE FUNDS, INC
Growth Fund II ................................................... 112 154 141 300
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund .............................................. 111 152 137 292
Worldwide Emerging Markets Fund .................................. 108 142 121 260
Worldwide Hard Assets Fund ....................................... 112 153 140 297
Worldwide Real Estate Fund ....................................... 110 148
====================================================================================================================================
</TABLE>
VARIABLE DEFERRED ANNUITY CONTRACT - CONT.
EXAMPLE 3-Assuming no surrender of the Contract at the end of the periods shown
(1): You would pay the following expenses on a $1,000 investment, assuming a 5
percent annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
====================================================================================================================================
<S> <C> <C> <C> <C>
CONSECO SERIES TRUST
Asset Allocation Portfolio ....................................... $ 23 $ 69 $119 $255
Common Stock Portfolio ........................................... 23 71 121 260
Corporate Bond Portfolio ......................................... 22 68 116 250
Government Securities Portfolio .................................. 22 68 116 250
Money Market Portfolio ........................................... 20 60 104 224
THE ALGER AMERICAN FUND
Alger American Growth Portfolio .................................. 23 71 121 259
Alger American Leveraged AllCap Portfolio ........................ 25 77 131 280
Alger American MidCap Growth Portfolio ........................... 23 72 123 264
Alger American Small Capitalization Portfolio .................... 24 74 126 269
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC ..............................
Income and Growth ................................................ 22 68
International ................................................... 30 92 156 328
Value ............................................................ 25 77 131 280
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT - 100 Fund ............................................ 25 77 131 280
Berger IPT - Growth and Income Fund .............................. 25 77 131 280
Berger IPT - Small Company Growth Fund ........................... 27 81 139 295
Berger/BIAM IPT - International Fund ............................. 27 83 141 300
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC ...................... 23 71 122 262
DREYFUS STOCK INDEX FUND ............................................... 18 55 95 206
DREYFUS VARIABLE INVESTMENT FUND, INC.
Disciplined Stock Portfolio ...................................... 25 77
International Value Portfolio .................................... 29 89
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ............................... 23 71 121 260
Federated International Equity Fund II ........................... 27 84 143 303
Federated Utility Fund II ........................................ 24 72 124 265
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield Portfolio ............................... 24 73
INVESCO VIF - Industrial Income Portfolio ........................ 25 75
JANUS ASPEN SERIES
Aggressive Growth Portfolio ...................................... 23 70 119 256
Growth Portfolio ................................................. 22 68 116 250
Worldwide Growth Portfolio ....................................... 22 69 118 254
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio ............................... 30 92
Lazard Retirement Small Cap Portfolio ............................ 30 92
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio ...................................... 22 67
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio ...................................... 31 93
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio .................................. 23 70 120 257
Partners Portfolio ............................................... 24 73 124 266
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II .............................................. 27 81 139 295
STRONG VARIABLE INSURANCE FUNDS, INC
Growth Fund II ................................................... 27 83 141 300
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund .............................................. 26 80 137 292
Worldwide Emerging Markets Fund .................................. 23 71 121 260
Worldwide Hard Assets Fund ....................................... 27 82 140 297
Worldwide Real Estate Fund. ...................................... 25 77
====================================================================================================================================
</TABLE>
PLEASE REMEMBER THAT THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES AND THAT ACTUAL EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN. SIMILARLY, THE 5 PERCENT ANNUAL RATE OF RETURN IS NOT AN ESTIMATE
OR A GUARANTEE OF FUTURE INVESTMENT PERFORMANCE.
Expense examples are shown only for one and three year periods for the
Portfolios which were first offered under the Contract on May 1, 1998.
(1) This Contract is designed for retirement planning. Surrenders prior to the
Annuity Date are not consistent with the long-term purposes of the Contract
and the applicable tax laws.
The above table reflects estimates of expenses of the Variable Account and
the Funds. The standard table and examples assume the highest deductions
possible under a Contract, whether or not such deductions actually would be
made under such a Contract. Annual maintenance charges have been
approximated as a 16 basis point annual asset charge.
CONDENSED FINANCIAL INFORMATION
The table below provides per unit information about the financial history
of the Sub-accounts for the periods indicated. No per-unit information is
provided with respect to certain Sub-accounts because such Sub-accounts were not
available under the Contracts as of December 31, 1997.
<TABLE>
<CAPTION>
==================================================================================================================
1997 1996 1995 1994
<S> <C> <C> <C> <C>
CONSECO SERIES TRUST
ASSET ALLOCATION (A)
Accumulation unit value at beginning of period ..................... $1.698 $1.342 $1.035 $1.000
Accumulation unit value at end of period............................ $1.973 $1.698 $1.342 $1.035
Percentage change in accumulation unit value ....................... 16.21% 26.50% 29.67% 3.52%
Number of accumulation units outstanding at end of period .......... 5,740,115 2,475,992 461,876 21,037
COMMON STOCK (A)
Accumulation unit value at beginning of period ..................... $2.071 $1.449 $1.078 $1.000
Accumulation unit value at end of period ........................... $2.424 $2.071 $1.449 $1.078
Percentage change in accumulation unit value ....................... 17.04% 42.96% 34.42% 7.79%
Number of accumulation units outstanding at end of period .......... 7,962,515 3,374,110 1,009,305 41,601
CORPORATE BOND (A)
Accumulation unit value at beginning of period ..................... $1.207 $1.166 $1.000 $1.000
Accumulation unit value at end of period ........................... $1.308 $1.207 $1.166 $1.000
Percentage change in accumulation unit value ....................... 8.39% 3.50% 16.61% (0.03)%
Number of accumulation units outstanding at end of period .......... 4,066,812 1,540,494 350,623 12,553
GOVERNMENT SECURITIES (A)
Accumulation unit value at beginning of period ..................... $1.169 $1.154 $0.997 $1.000
Accumulation unit value at end of period ........................... $1,248 $1.169 $1.154 $0.997
Percentage change in accumulation unit value ....................... 6.76% 1.31% 15.72% (0.26)%
Number of accumulation units outstanding at end of period .......... 354,897 135,680 30,614 0
MONEY MARKET (A)
Accumulation unit value at beginning of period ..................... $1.095 $1.056 $1.014 $1.000
Accumulation unit value at end of period ........................... $1.136 $1.095 $1.056 $1.014
Percentage change in accumulation unit value ....................... 3.80% 3.67% $4.14% 1.38%
Number of accumulation units outstanding at end of period .......... 3,116,005 1,144,951 641,747 0
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH (C)
Accumulation unit value at beginning of period ..................... $1.044 $1.000 N/A N/A
Accumulation unit value at end of period ........................... $1.294 $1.044 N/A N/A
Percentage change in accumulation unit value ....................... 24.00% 4.35% N/A N/A
Number of accumulation units outstanding at end of period .......... 742,233 73,227 N/A N/A
ALGER AMERICAN LEVERAGED ALLCAP (B)
Accumulation unit value at beginning of period ..................... $1.555 $1.408 $1.000 N/A
Accumulation unit value at end of period ........................... $1.836 $1.555 $1.408 N/A
Percentage change in accumulation unit value ....................... 18.02% 10.47% 40.79% N/A
Number of accumulation units outstanding at end of period .......... 1,279,296 832,794 207,147 N/A
ALGER AMERICAN MIDCAP GROWTH (C)
Accumulation unit value at beginning of period ..................... $0.987 $1.000 N/A N/A
Accumulation unit value at end of period ........................... $1.119 $0.987 N/A N/A
Percentage change in accumulation unit value ....................... 13.41% (1.33)% N/A N/A
Number of accumulation units outstanding at end of period .......... 679,330 42,736 N/A N/A
ALGER AMERICAN SMALL CAPITALIZATION (B)
Accumulation unit value at beginning of period ..................... $1.252 $1.219 $1.000 N/A
Accumulation unit value at end of period ........................... $1.375 $1.252 $1.219 N/A
Percentage change in accumulation unit value ....................... 9.84% 2.72% 21.89% N/A
Number of accumulation units outstanding at end of period .......... 3,988,448 1,946,993 517,903 N/A
BERGER INSTITUTIONAL PRODUCTS TRUST
BERGER IPT - 100 (C)
Accumulation unit value at beginning of period ..................... $1.029 $1.000 N/A N/A
Accumulation unit value at end of period ........................... $1.155 $1.029 N/A N/A
Percentage change in accumulation unit value ....................... 12.18% 2.93% N/A N/A
Number of accumulation units outstanding at end of period .......... 627,056 69,521 N/A N/A
BERGER IPT - GROWTH AND INCOME (C)
Accumulation unit value at beginning of period ..................... $1.104 $1.000 N/A N/A
Accumulation unit value at end of period ........................... $1.360 $1.104 N/A N/A
Percentage change in accumulation unit value ....................... 23.26% 10.36% N/A N/A
Number of accumulation units outstanding at end of period .......... 802,420 59,956 N/A N/A
BERGER IPT - SMALL COMPANY GROWTH (C)
Accumulation unit value at beginning of period ..................... $0.985 $1.000 N/A N/A
Accumulation unit value at end of period ........................... $1.178 $0.985 N/A N/A
Percentage change in accumulation unit value ....................... 19.64% (1.53)% N/A N/A
Number of accumulation units outstanding at end of period .......... 187,471 42,982 N/A N/A
BERGER/BIAM IPT - INTERNATIONAL (C)
Accumulation unit value at beginning of period ..................... $1.000 N/A N/A N/A
Accumulation unit value at end of period ........................... $0.970 N/A N/A N/A
Percentage change in accumulation unit value ....................... -3.01% N/A N/A N/A
Number of accumulation units outstanding at end of period .......... 2,029,230 N/A N/A N/A
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC. (B)
Accumulation unit value at beginning of period ..................... $1.404 $1.175 $1.000 N/A
Accumulation unit value at end of period ........................... $1.778 $1.404 $1.175 N/A
Percentage change in accumulation unit value ....................... 26.60% 19.53% 17.49% N/A
Number of accumulation units outstanding at end of period .......... 1,195,614 221,018 21,878 N/A
DREYFUS STOCK INDEX FUND (B)
Accumulation unit value at beginning of period ..................... $1.393 $1.158 $1.000 N/A
Accumulation unit value at end of period............................ $1.834 $1.393 $1.158 N/A
Percentage change in accumulation unit value ....................... 31.67% 20.31% 15.76% N/A
Number of accumulation units outstanding at end of period .......... 8,884,649 1,862,980 91,752 N/A
FEDERATED INSURANCE SERIES
FEDERATED HIGH INCOME BOND II (B)
Accumulation unit value at beginning of period ..................... $1.202 $1.067 $1.000 N/A
Accumulation unit value at end of period ........................... $1.349 $1.202 $1.067 N/A
Percentage change in accumulation unit value ....................... 12.25% 12.71% 6.66% N/A
Number of accumulation units outstanding at end of period .......... 2,184,739 508,205 26,380 N/A
FEDERATED INTERNATIONAL EQUITY II (B)
Accumulation unit value at beginning of period ..................... $1.095 1.025 $1.000 N/A
Accumulation unit value at end of period ........................... $1.888 1.095 $1.025 N/A
Percentage change in accumulation unit value ....................... 8.55% 6.80% 2.51% N/A
Number of accumulation units outstanding at end of period .......... 329,971 93,215 36,798 N/A
FEDERATED UTILITY II (B)
Accumulation unit value at beginning of period ..................... $1.234 1.122 $1.000 N/A
Accumulation unit value at end of period ........................... $1.541 1.234 $1.122 N/A
Percentage change in accumulation unit value ....................... 24.88% 10.00% 12.21% N/A
Number of accumulation units outstanding at end of period .......... 674,836 294,882 11,711 N/A
JANUS ASPEN SERIES
AGGRESSIVE GROWTH (B)
Accumulation unit value at beginning of period ..................... $1.348 $1.266 $1.000 N/A
Accumulation unit value at end of period ........................... $1.498 $1.348 $1.266 N/A
Percentage change in accumulation unit value ....................... 11.10% 6.44% 26.64% N/A
Number of accumulation units outstanding at end of period .......... 1,867,131 1,041,050 122,278 N/A
GROWTH (B)
Accumulation unit value at beginning of period ..................... $1.364 $1.167 $1.000 N/A
Accumulation unit value at end of period ........................... $1.650 $1.364 $1.167 N/A
Percentage change in accumulation unit value ....................... 21.00% 16.79% 16.75% N/A
Number of accumulation units outstanding at end of period .......... 5,160,718 1,466,042 138,532 N/A
WORLDWIDE GROWTH (B)
Accumulation unit value at beginning of period ..................... $1.541 $1.211 $1.000 N/A
Accumulation unit value at end of period ........................... $1.856 $1.541 $1.211 N/A
Percentage change in accumulation unit value ....................... 20.46% 27.23% 21.12% N/A
Number of accumulation units outstanding at end of period .......... 8,234,605 2,173,781 155,653 N/A
THE VAN ECK WORLDWIDE INSURANCE TRUST
WORLDWIDE HARD ASSETS (B)
Accumulation unit value at beginning of period ..................... $1.254 $1.077 $1.000 N/A
Accumulation unit value at end of period ........................... $1.216 $1.254 $1.077 N/A
Percentage change in accumulation unit value ....................... -3.05% 16.41% 7.72% N/A
Number of accumulation units outstanding at end of period .......... 3,728,758 651,603 68,730 N/A
THE VAN ECK WORLDWIDE INSURANCE TRUST - CONT.
WORLDWIDE BOND (B)
Accumulation unit value at beginning of period ..................... $1.029 $1.018 $1.000 N/A
Accumulation unit value at end of period ........................... $1.039 $1.029 $1.018 N/A
Percentage change in accumulation unit value ....................... 0.96% 1.09% 1.82% N/A
Number of accumulation units outstanding at end of period .......... 3,332,067 1,790,259 130,071 N/A
WORLDWIDE EMERGING MARKETS (C)
Accumulation unit value at beginning of period .................... $1.136 $1.000 N/A N/A
Accumulation unit value at end of period .......................... $0.990 $1.136 N/A N/A
Percentage change in accumulation unit value .................... -12.83% 13.59% N/A N/A
Number of accumulation units outstanding at end of period ... 1,935,325 132,953 N/A N/A
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
INTERNATIONAL (D)
Accumulation unit value at beginning of period ..................... $1.000 N/A N/A N/A
Accumulation unit value at end of period ........................... $1.093 N/A N/A N/A
Percentage change in accumulation unit value ....................... 9.30% N/A N/A N/A
Number of accumulation units outstanding at end of period .......... 163,370 N/A N/A N/A
VALUE (D)
Accumulation unit value at beginning of period ..................... $1.000 N/A N/A N/A
Accumulation unit value at end of period ........................... $1.226 N/A N/A N/A
Percentage change in accumulation unit value ....................... 22.60% N/A N/A N/A
Number of accumulation units outstanding at end of period .......... 415,891 N/A N/A N/A
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
LIMITED MATURITY BOND (D)
Accumulation unit value at beginning of period ..................... $1.000 N/A N/A N/A
Accumulation unit value at end of period ........................... $1.043 N/A N/A N/A
Percentage change in accumulation unit value ....................... 4.31% N/A N/A N/A
Number of accumulation units outstanding at end of period .......... 25,089 N/A N/A N/A
PARTNERS (D)
Accumulation unit value at beginning of period ..................... $1.000 N/A N/A N/A
Accumulation unit value at end of period ........................... $1.240 N/A N/A N/A
Percentage change in accumulation unit value ....................... 23.99% N/A N/A N/A
Number of accumulation units outstanding at end of period .......... 1,000,600 N/A N/A N/A
STRONG OPPORTUNITY FUND II, INC.
OPPORTUNITY FUND II (D)
Accumulation unit value at beginning of period ..................... $1.000 N/A N/A N/A
Accumulation unit value at end of period ........................... $1.230 N/A N/A N/A
Percentage change in accumulation unit value ....................... 22.99% N/A N/A N/A
Number of accumulation units outstanding at end of period .......... 248,615 N/A N/A N/A
STRONG VARIABLE INSURANCE FUNDS, INC.
GROWTH II (D)
Accumulation unit value at beginning of period ..................... $1.000 N/A N/A N/A
Accumulation unit value at end of period ........................... $1.270 N/A N/A N/A
Percentage change in accumulation unit value ....................... 27.01% N/A N/A N/A
Number of accumulation units outstanding at end of period .......... 79,815 N/A N/A N/A
====================================================================================================================================
</TABLE>
(A) Inception date was July 25, 1994.
(B) Inception date was June 1, 1995.
(C) Inception date was May 1, 1996.
(D) Inception date was May 1, 1997.
GREAT AMERICAN RESERVE, VARIABLE ACCOUNT AND THE INVESTMENT OPTIONS
A. GREAT AMERICAN RESERVE
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"). The operations of Great American Reserve are handled by Conseco.
Conseco is a publicly owned financial services holding company, the principal
operations of which are the development, marketing and administration of
specialized annuity and life insurance products. Conseco is located at 11815 N.
Pennsylvania Street, Carmel, Indiana 46032.
All inquiries regarding Individual Accounts, the Contracts, or any related
matter should be directed to Great American Reserves Variable Annuity Department
at the address and telephone number shown on page 1 of this Prospectus. The
financial statements of Great American Reserve included in the Statement of
Additional Information should be considered only as bearing upon the ability of
Great American Reserve to meet the obligations under the Contracts. Furthermore,
neither the assets of Conseco nor those of any company in the Conseco group of
companies other than Great American Reserve support these obligations. As of
December 31, 1997 Great American Reserve had total assets of $2.8 billion and
total shareholders equity of $.4 billion. Great American Reserve does not
guarantee the investment performance of the Variable Account investment options.
B. VARIABLE ACCOUNT
Great American Reserve established the Variable Account on November 12,
1993, as a separate account under Texas law. The assets of the Variable Account
are not chargeable with liabilities arising out of any other business Great
American Reserve may conduct. In addition, any income, gains or losses realized
or unrealized on assets of the Variable Account are credited to or charged
against the Variable Account without regard to other income, gains or losses of
Great American Reserve. Nevertheless, obligations arising under the Contracts
are general obligations of Great American Reserve. In addition to the net assets
and other liabilities for variable annuity contracts, the Variable Account's
assets will include assets derived from charges made by Great American Reserve.
Great American Reserve may transfer out to its general account any of the
Variable Account's assets that are in excess of the reserves and other
liabilities relating to the Contracts. The Variable Account is regulated by the
Insurance Department of Texas. Regulation by the state, however, does not
involve any supervision of the Variable Account, except to determine compliance
with broad statutory criteria.
The Variable Account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"). A unit investment
trust is a type of investment company which invests its assets in specified
securities, such as shares of one or more investment companies. Registration
under the 1940 Act does not involve supervision by the SEC of the management or
investment policies or practices of the Variable Account.
The Variable Account is segmented into Sub-accounts. Each Sub-account
invests in shares of one of the Funds and such shares are purchased at net asset
value. The Sub-accounts and Funds may be added or withdrawn as permitted by
applicable law. The Variable Account consists of 40 Sub-accounts, each of which
invests in shares of the eligible Funds of the Conseco Series Trust Asset
Allocation, Common Stock, Corporate Bond, Government Securities and Money
Market Portfolios; the Alger American Fund Growth, Leveraged AllCap, MidCap
Growth and Small Capitalization Portfolios; the American Century Variable
Portfolios, Inc. International, Value and Income and Growth Funds; the Berger
Institutional Products Trust Berger IPT - 100, Berger IPT - Growth and Income,
Berger IPT - Small Company Growth and Berger/BIAM IPT - International Funds;
the Dreyfus Socially Responsible Growth Fund, Inc.; the Dreyfus Stock Index
Fund; the Dreyfus Variable Investment Fund, Inc. International Value and
Disciplined Stock Portfolios; the Federated Insurance Series High Income Bond
II, International Equity II and Utility II Funds; the INVESCO Variable
Investment Funds, Inc. INVESCO VIF - High Yield and INVESCO VIF - Industrial
Income Portfolios; the Janus Aspen Series Aggressive Growth, Growth and
Worldwide Growth Portfolios; the Lazard Retirement Series, Inc. Lazard
Retirement Equity and Lazard Retirement Small Cap Portfolios; the Lord Abbett
Series Fund, Inc. Growth and Income Portfolio; the Mitchell Hutchins Series
Trust Growth and Income Portfolio; the Neuberger & Berman Advisers Management
Trust Limited Maturity Bond and Partners Portfolios; the Strong Opportunity
Fund II, Inc. Opportunity Fund II; the Strong Variable Insurance Funds Inc.
Growth Fund II; and the Van Eck Worldwide Insurance Trust Worldwide Hard Assets,
Worldwide Bond, Worldwide Emerging Markets and Worldwide Real Estate Funds.
Great American Reserve reserves the right to add other Sub-accounts,
eliminate existing Sub-accounts, combine Sub-accounts or transfer assets in one
Sub-account to another Sub-account established by Great American Reserve or
an affiliated company. Great American Reserve will not eliminate existing
Sub-accounts or combine Sub-accounts without any required prior approval of the
appropriate state or federal regulatory authorities.
C. INVESTMENT OPTIONS
The investment objectives of the Funds available through the Variable
Account are briefly described below. More detailed information is contained in
the current prospectuses of the Funds, which are attached to this prospectus.
CONSECO SERIES TRUST
ASSET ALLOCATION PORTFOLIO seeks a high total investment return,
consistent with the preservation of capital and prudent investment risk. The
Portfolio seeks to achieve this objective by pursuing an active asset allocation
strategy whereby investments are allocated, based upon thorough investment
research, valuation and analysis of market trends and the anticipated relative
total return available, among various asset classes including debt
securities, equity securities, and money market instruments.
COMMON STOCK PORTFOLIO seeks to provide a high total return consistent
with preservation of capital and a prudent level of risk primarily by investing
in selected equity securities having the investment characteristics of
common stocks.
CORPORATE BOND PORTFOLIO seeks to provide as high a level of income as
is consistent with preservation of capital by investing primarily in debt
securities.
GOVERNMENT SECURITIES PORTFOLIO seeks safety of capital, liquidity and
current income by investing primarily in securities issued by the U.S.
Government or an agency or instrumentality of the U.S. Government, including
mortgage-related securities.
MONEY MARKET PORTFOLIO seeks current income consistent with stability
of capital and liquidity. An investment in this Portfolio is neither insured
nor guaranteed by the U.S. Government and there can be no assurance that the
Portfolio will be able to maintain a stable net asset value of $1.00 per share.
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO seeks long-term capital appreciation
by investing in a diversified, actively managed portfolio of equity securities,
primarily of companies with total market capitalization of $1 billion or
greater.
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO seeks long-term capital
appreciation by investing in a diversified, actively managed portfolio of
equity securities. The Portfolio may engage in leveraging (up to 33 1/3% of
its assets) and options and futures transactions, which are deemed to be
speculative and which may cause the portfolio's net asset value to fluctuate.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO seeks long-term capital
appreciation. Except during temporary defensive periods, the Portfolio
invests at least 65% of its total assets in equity securities of companies that,
at the time of purchase of the securities, have total market capitalization
within the range of companies included in the S&P MidCap 400 Index, updated
quarterly.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO seeks long-term capital
appreciation. Except during temporary defensive periods, the Portfolio invests
at least 65% of its total assets in equity securities of companies that, at the
time of purchase, have total market capitalization within the range of companies
included in the Russell 2000 Growth Index or the S&P Small Cap 600 Index,
updated quarterly.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
INCOME AND GROWTH FUND seeks dividend growth, current income and
capital appreciation. The fund will seek to achieve its investment
objective by investing in common stocks.
INTERNATIONAL FUND seeks capital growth by investing primarily in an
internationally diversified portfolio of common stocks that are considered by
management to have prospects for appreciation. The fund will invest primarily
in securities of issuers in developed markets.
VALUE FUND seeks long-term capital growth. Income is a secondary
objective. The fund will seek to achieve its objective by investing in
securities that management believes to be undervalued at the time of purchase.
BERGER INSTITUTIONAL PRODUCTS TRUST
BERGER IPT - 100 FUND seeks long-term capital appreciation by
investing primarily in common stocks of established companies which the
fund's adviser believes offer favorable growth prospects. Current income is
not an investment objective.
BERGER IPT - GROWTH AND INCOME FUND seeks capital appreciation and
secondarily a moderate level of current income by investing primarily in
common stocks and other securities, such as convertible securities or
preferred stocks, which the fund's adviser believes offer favorable growth
prospects and are expected to also provide current income.
BERGER IPT - SMALL COMPANY GROWTH FUND seeks capital appreciation by
investing primarily in equity securities (including common and preferred
stocks, convertible debt securities and other securities having equity
features) of small growth companies with market capitalization of less than
$1 billion at the time of initial purchase.
BERGER/BIAM IPT - INTERNATIONAL FUND seeks long-term capital
appreciation by investing primarily in common stocks of well established
companies located outside the United States. The fund intends to diversify
its holdings among several countries and to have, under normal market
conditions, at least 65% of the fund's total assets invested in the securities
of companies located in at least five countries, not including the United
States.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. seeks to provide
capital growth through equity investment in companies that, in the opinion of
the fund's management, not only meet traditional investment standards but also
show evidence that they conduct business in a manner that contributes to the
enhancement of the quality of life in America. Current income is secondary to
the primary goal.
DREYFUS STOCK INDEX FUND
DREYFUS STOCK INDEX FUND seeks to provide investment results that
correspond to the price and yield performance of publicly-traded common stocks
in the aggregate, as represented by the Standard & Poor's 500 Composite Price
Index. The Fund is neither sponsored by nor affiliated with the Standard &
Poor's Corporation.
DREYFUS VARIABLE INVESTMENT FUND
DISCIPLINED STOCK PORTFOLIO seeks to provide investment results that are
greater than the total return performance of publicly-traded common stocks
in the aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. The Portfolios will use quantitative statistical modeling
techniques to construct a portfolio in an attempt to achieve its investment
objective, without assuming undue risk relative to the broad stock market.
INTERNATIONAL VALUE PORTFOLIO seeks long-term capital growth by
investing primarily in a portfolio of publicly-traded equity securities of
foreign issuers which would be characterized as "value" companies according to
criteria established by the adviser to the Portfolio.
FEDERATED INSURANCE SERIES
FEDERATED HIGH INCOME BOND FUND II seeks to provide high current income
by investing at least 65 percent of its assets in lower rated fixed income
corporate debt obligations. Capital growth will be considered, but only when
consistent with the investment objective of high current income. The fixed
income securities in which the fund will primarily invest are commonly
referred to as "junk bonds."
INTERNATIONAL EQUITY FUND II seeks to obtain a total return on its
assets by investing at least 65% of its assets (and under normal market
conditions substantially all of its assets) in equity securities of issuers
in at least three different countries outside of the United States.
FEDERATED UTILITY FUND II seeks to provide high current income and
moderate capital appreciation by investing at least 65 percent of its assets
(under normal conditions) in equity and debt securities of utility companies.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - HIGH YIELD PORTFOLIO seeks a high level of current income
by investing substantially all of its assets in lower rated bonds and other
debt securities and in preferred stock.
INVESCO VIF - INDUSTRIAL INCOME PORTFOLIO seeks the best possible
current income while following sound investment practices. Capital growth
potential is an additional consideration in the selection of portfolio
securities. The portfolio normally invests at least 65% of its total
assets in dividend-paying common stocks.
JANUS ASPEN SERIES
AGGRESSIVE GROWTH PORTFOLIO seeks long-term growth of capital by
investing primarily in common stocks, with an emphasis on securities
issued by medium-sized companies.
GROWTH PORTFOLIO seeks long-term growth of capital by investing
primarily in common stocks, with an emphasis on companies with larger
market capitalizations.
WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of capital by
investing primarily in common stocks of foreign and domestic issuers.
LAZARD RETIREMENT SERIES, INC.
LAZARD RETIREMENT EQUITY PORTFOLIO seeks capital appreciation by investing
primarily in equity securities of companies with relatively large
capitalizations that the investment manager considers inexpensively priced
relative to the return on total capital or equity.
LAZARD RETIREMENT SMALL CAP PORTFOLIO seeks capital appreciation by
investing primarily in equity securities of companies with market
capitalizations under $1 billion that the investment manager considers
inexpensively priced relative to the return on the total capital or equity.
LORD ABBETT SERIES FUND, INC.
GROWTH AND INCOME PORTFOLIO seeks long-term growth of capital and income
without excessive fluctuation in market value. The Portfolio will invest in
securities which are selling at reasonable prices in relation to value. The
Portfolio will normally invest in common stocks (including securities
convertible into common stocks) of large, seasoned companies in sound
financial condition, which common stocks are expected to show above-average
price appreciation.
MITCHELL HUTCHINS SERIES TRUST
GROWTH AND INCOME PORTFOLIO seeks current income and capital growth.
Under normal circumstances, the Portfolio invests at least 65% of total assets
in dividend-paying equity securities (common and preferred stocks) believed by
the adviser to have the potential for rapid earnings growth.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
LIMITED MATURITY BOND PORTFOLIO seeks the highest current income consistent
with low risk to principal and liquidity, and, secondarily, total return by
investing all of its net investable assets in another fund, AMT Limited Maturity
Bond Investments, which has investment objectives, policies, and limitations
that are identical to those of the Limited Maturity Bond Portfolio. AMT Limited
Maturity Bond Investments seeks to achieve its investment objective by investing
in short to intermediate-term debt securities, primarily of investment grade.
PARTNERS PORTFOLIO seeks capital growth by investing all of its net
investable assets in another fund, AMT Partners Investments, which has
investment objectives, policies and limitations that are identical to those
of the Partners Portfolio. AMT Partners Investments seeks to achieve its
investment objective by investing in common stocks and other equity
securities of medium to large capitalization established companies.
STRONG OPPORTUNITY FUND II, INC.
OPPORTUNITY FUND II seeks capital growth by investing primarily in
equity securities and currently emphasizes investments in medium-sized companies
which the fund's investment adviser believes are under-researched and
attractively valued. The fund will invest at least 80% of its net assets in
equity securities, including common stocks (which must constitute at least 65%
of its total assets), preferred stocks, and securities that are convertible
into common or preferred stocks, such as warrants and convertible bonds.
STRONG VARIABLE INSURANCE FUNDS, INC.
GROWTH FUND II seeks capital growth by investing primarily in equity
securities that the fund's investment adviser believes have above-average growth
prospects. Under normal market conditions, the fund will invest at least 65%
of its total assets in equity securities, including common stocks, preferred
stocks, and securities that are convertible into common or preferred stocks,
such as warrants and convertible bonds.
VAN ECK WORLDWIDE INSURANCE TRUST
WORLDWIDE BOND FUND seeks high total return through a flexible policy of
investing globally, primarily in debt securities. The Fund may emphasize
either component of total return (current income and capital appreciation).
WORLDWIDE EMERGING MARKETS FUND seeks long-term capital appreciation by
investing primarily in equity securities in emerging markets around the world.
The fund emphasizes countries that, compared to the world's major economies,
exhibit relatively low gross national product per capita as well as the
potential for rapid economic growth.
WORLDWIDE HARD ASSETS FUND seeks long-term capital appreciation by
investing globally, primarily in equity securities of "hard asset" companies,
and securities whose value is linked to the price of a "hard asset" commodity or
commodity index. "Hard Asset" companies include companies that are directly or
indirectly engaged to a significant extent in the exploration, development,
production or distribution of precious metals; ferrous and non-ferrous metals;
gas, petroleum, petrochemicals, and other hydrocarbons; forest products; real
estate; and other basic non-agricultural commodities which, historically, have
been produced and marketed profitably during periods of significant inflation.
INCOME IS A SECONDARY CONSIDERATION.
WORLDWIDE REAL ESTATE FUND seeks to maximize total return by investing
primarily in equity securities of domestic and foreign companies which are
principally engaged in the real estate industry or which own significant real
estate assets.
There is no assurance that the Funds will achieve their stated objectives.
The Funds' shares are also available to certain separate accounts funding
variable life insurance policies and variable annuity contracts offered by other
insurance company separate accounts. This is called "mixed and shared funding"
Although we do not anticipate any inherent difficulties arising from mixed and
shared funding, it is theoretically possible that, due to differences in tax
treatment or other considerations, the interests of owners of various contracts
participating in the Funds might at some time be in conflict. The Board of
Directors or Trustees of each Fund, each Fund's investment adviser, and Great
American Reserve are required to monitor events to identify any material
conflicts that arise from the use of the Funds for mixed and shared funding. For
more information about the risks of mixed funding, please refer to the relevant
Fund prospectus.
If the shares of any of the Funds should no longer be available for
investment by the Variable Account or, if in the judgment of Great American
Reserve's management, further investment of such Funds shall become
inappropriate in view of the purpose of the Contract, Great American Reserve may
add or substitute shares of another Sub-account or of another Fund for eligible
Sub-account shares already purchased under the Contract. No substitution of
Sub-account shares may take place without prior approval of the SEC and notice
to Contract Owners, to the extent required by the 1940 Act.
VOTING RIGHTS
Contract Owners may instruct Great American Reserve as to the voting of
Fund shares attributable to their respective interests under the Contracts at
meetings of shareholders of the Funds. Contract Owners entitled to vote will
receive proxy material and a form on which voting instructions may be given.
Great American Reserve will vote the shares of each Sub-account held by the
Variable Account attributable to the Contracts in accordance with instructions
received from Contract Owners. Shares held in each Sub-account for which timely
instructions have not been received from Contract Owners will be voted by Great
American Reserve for or against any proposition, or Great
American Reserve will abstain, in the same proportion as shares in that
Sub-account for which instructions are received. Great American Reserve will
vote, or abstain from voting, any shares that are not attributable to Contract
Owners in the same proportion as all Contract Owners in the Variable Account
vote or abstain. However, if Great American Reserve determines that it is
permitted to vote such shares of the Funds in its own right, it may elect to do
so, subject to the then-current interpretation of the 1940 Act and the rules
thereunder.
Under certain Contracts, not including contracts issued in connection with
governmental employers' deferred compensation plans described in this
Prospectus, Participants and Annuitants have the right to instruct the Contract
Owner with respect to the number of votes attributable to their Individual
Accounts. Votes attributable to Participants and Annuitants who do not instruct
the Contract Owner will be cast by the Contract Owner for or against each
proposal to be voted upon, in the same proportion as votes for which
instructions have been received. Participants and Annuitants entitled to
instruct the casting of votes will receive a notice of each meeting of Contract
Owners, and proxy solicitation materials, and a statement of the number of votes
attributable to their participation under the Contract.
The number of shares held in a Sub-account deemed attributable to a
Contract Owners interest under a Contract will be determined on the basis of the
value of the Accumulation Units credited to the Contract Owner's account as of
the record date. On or after the Maturity Date, the number of attributable
shares will be based on the amount of assets held to meet annuity obligations to
the payee under the Contract as of the record date. On or after the Maturity
Date, the number of votes attributable to a Contract will generally decrease
since funds set aside for Annuitants will decrease as payments are made.
THE CONTRACTS
A. ACCUMULATION PROVISIONS
PURCHASE PAYMENTS. Purchase Payments are paid to Great American Reserve at
its Administrative Office. For TSAs, the minimum initial and subsequent purchase
payment is $50 per month. For IRAs the minimum initial investment is $2,000 and
the minimum amount of each additional payment is $50. For non-qualified
Contracts, the minimum initial investment is $5,000 and the minimum amount of
each additional lump sum payment is $2,000 (or $200 per month). Purchase
Payments may be made at any time. If a Purchase Payment would exceed $500,000,
the Purchase Payment will be acceptable only with the prior approval of Great
American Reserve. Great American Reserve reserves the right to refuse any
Purchase Payment.
Great American Reserve may, at its option and with prior notice, cancel
certain contracts in which no Purchase Payments have been made, or if the
Contract Value is less than $500. Upon cancellation, Great American Reserve will
pay the Contract Owner the Contract Value computed as of the Valuation Period
during which the cancellation occurs less any outstanding loans, any withdrawal
charge, and the $30 annual administrative fee. Such cancellation could have
adverse tax consequences (see "Federal Tax Matters").
ALLOCATION OF PURCHASE PAYMENTS. The Contract Owner may elect to have
Purchase Payments accumulated (a) on a fully variable basis invested in one or
more of the Sub-accounts of the Variable Account; (b) on a fully fixed basis
which reflects a compound interest rate guaranteed by Great American Reserve; or
(c) in a combination of any of the investment options.
An election to change the allocation of future Purchase Payments may be
made by the Contract Owner 30 days (a) subsequent to the date of establishment
of the Individual Account or (b) subsequent to a prior change in allocation.
ACCUMULATION UNITS. Each Purchase Payment is credited to the Owners
Individual Account in the form of Accumulation Units, at the close of the
Valuation Period in which the Purchase Payment is received at the Administrative
Office of Great American Reserve. The number of Accumulation Units credited is
determined by dividing the Purchase Payment amount by the value of an
Accumulation Unit at the close of that Valuation Period. Accumulation Units are
valued separately for each Investment Option, so a Contract Owner who has
elected to have amounts in an Individual Account accumulated in more than one
Investment Option will have several types of Accumulation Units credited to the
Individual Account.
VALUE OF AN INDIVIDUAL ACCOUNT. The number of Accumulation Units credited
to an Individual Account will not be changed by any subsequent change in the
value of an Accumulation Unit, but the dollar value of an Accumulation Unit may
vary from Valuation Period to Valuation Period to reflect the investment
experience of the appropriate Investment Option. The value of an Individual
Account at any time prior to the Maturity Date can be determined by (a)
multiplying the total number of Accumulation Units credited to the Individual
Account for each Investment Option, respectively, by the appropriate current
Accumulation Unit value; and (b) totaling the resulting values for each portion
of the Individual Account. There is no assurance that the value of the
Individual Account will equal or exceed the Purchase Payments made. The Contract
Owner will be advised at least annually as to the number of Accumulation Units
which are credited to the Individual Account, the current Accumulation Unit
values, and the values of the Individual Account.
NET INVESTMENT FACTOR FOR EACH VALUATION PERIOD. The Variable Account value
will fluctuate in accordance with the investment results and expenses of the
underlying eligible Funds and the deduction of certain charges. In order to
determine how these fluctuations affect Contract Value, an Accumulation Unit
value is utilized. Each Sub-account has its own Accumulation Units and value per
unit. The unit value applicable during any Valuation Period is determined at the
end of that period.
When eligible Fund shares were first purchased on behalf of the Variable
Account, Accumulation Units were valued at $1.00 each. The value of an
Accumulation Unit for each Sub-account at any Valuation Period thereafter is
determined by multiplying the value for the prior period by a net investment
factor. This factor may be greater or less than 1.0; therefore, the Accumulation
Unit may increase or decrease from Valuation Period to Valuation Period. A net
investment factor for each Sub-account is calculated by dividing (a) by (b) and
then subtracting (c) (i.e., (a/b) - c), where:
(a) is equal to:
(i) the net asset value per share of the eligible Portfolio at the
end of the Valuation Period; plus
(ii) the per share amount of any distribution made by the eligible
Portfolio if the "ex-dividend" date occurs during that same
Valuation Period.
(b) is the net asset value per share of the eligible Portfolio at the
end of the prior Valuation Period.
(c) is equal to the Valuation Period equivalent of the per year mortality and
expense risk charge and administrative charges as indicated in the
Fee Table.
INFORMATION ON THE FIXED ACCOUNT. Because of exemptive and exclusionary
provisions, interests in the Fixed Account of the general account have not been
registered under the Securities Act of 1933 (the "1933 Act"), nor is the Fixed
Account of the general account registered as an investment company under the
1940 Act. Accordingly, neither the Fixed Account of the general account of Great
American Reserve nor any interest therein is generally subject to the provisions
of the 1933 or 1940 Acts, and we have been advised that the staff of the SEC has
not reviewed the disclosures in this Prospectus that relate to the fixed
portion. Disclosures regarding the Fixed Account of the Contracts and the
general account of Great American Reserve, however, may be subject to certain
generally applicable provisions of the federal securities laws relating to the
accuracy and completeness of statements made in prospectuses.
In addition to the 40 variable Investment Options described in this
Prospectus, the Contracts have a Fixed Account available for allocation of
Purchase Payments. Generally, the information in the Section called "Contracts"
applies in a like manner to the Fixed Account. However, there are some
differences.
The Fixed Account operates like a traditional annuity. Fixed Annuity Cash
Values increase based on interest rates that may change from time to time but
are guaranteed by Great American Reserve. Interest is credited daily and
compounded annually. Purchase Payments and transfers to the Fixed Account become
part of the general account of Great American Reserve. In contrast, Purchase
Payments and transfers for the Variable Account are applied to segregated asset
accounts; they are not commingled with Great American Reserve's main portfolio
of investments that support fixed annuity obligations. The gains achieved or
losses suffered by the segregated asset accounts have no effect on the Fixed
Account.
The Contracts allow you to transfer Contract Values between the Fixed and
Variable Account, but such transfers are restricted as follows:
1. You may transfer Contract Values from the Variable Account to the Fixed
Account once in any 30-day period.
2. You may transfer Contract Values from the Fixed Account to the Variable
Account once in any six-month period subject to a limit of 20 percent of
the Fixed Account value.
3. No transfers may be made from the Fixed Account once annuity payments
begin.
The administrative charge and the mortality and expense risk charge based
on the value of each Sub-account do not apply to values allocated to the Fixed
Account.
If you buy the annuity as a TSA or certain other qualified plans, the
Contract may contain a provision that allows a loan to be taken against the
Contract Values allocated to the Fixed Account. Loan provisions are described in
detail in the Contract.
TRANSFER AMONG INVESTMENT OPTIONS. Before the Maturity Date, Contract
Owners may transfer Variable Account value from one Sub-account to another
Sub-account and/or to the Fixed Account. The Contract allows Great American
Reserve to limit the number of transfers that can be made in a specified time
period. Contract Owners should be aware that transfer limitations may prevent a
Contract Owner from making a transfer on the date he or she desires, with the
result that the Contract owner's future Contract Value may be lower than it
would have been had the transfer been made on the desired date. Great American
Reserve is not charging a transfer fee, but limits transfers to one every 30
days and limits transfer from the Fixed Account to a maximum of 20 percent of
the Fixed Account value per any six-month period. All transfers requested for a
Contract on the same day will be treated as a single transfer in that period.
Great American Reserve's interest in applying these limitations is to
protect the interests of both Contract Owners who are not engaging in
significant transfer activity and Contract Owners who are engaging in such
activity. Great American Reserve has determined that the actions of Contract
Owners engaging in significant transfer activity among Sub-accounts may cause an
adverse effect on the performance of the underlying Portfolio for the
Sub-account involved. The movement of Sub-account values from one Sub-account to
another may prevent an underlying Portfolio from taking advantage of investment
opportunities because it must maintain a liquid position in order to handle
withdrawals. Such movement may also cause a substantial increase in fund
transaction costs which must be indirectly borne by the Contract Owner.
Transfers must be made by written authorization from the Contract Owner or
from the person acting for the Contract Owner as an attorney-in-fact under a
power-of-attorney if permitted by state law. By authorizing Great American
Reserve to accept telephone transfer instructions, a Contract Owner agrees to
accept and be bound by the conditions and procedures established by Great
American Reserve from time to time. We have instituted reasonable procedures to
confirm that any instructions communicated by telephone are genuine. All
telephone calls will be recorded, and the caller will be asked to produce your
personalized data prior to our initiating any transfer requests by telephone.
Additionally, as with other transactions, you will receive a written
confirmation of your transfer. If reasonable procedures are employed, neither
Great American Reserve nor Conseco Equity Sales, Inc. ("Conseco Equity Sales")
will be liable for following telephone instructions which it reasonably believes
to be genuine. Written transfer requests may be made by a person acting for the
Contract Owner as an attorney-in-fact under a power-of-attorney.
Transfer requests received by Great American Reserve before the close of
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time) will
be initiated at the close of business that day. Any request received later will
be initiated at the close of the next business day.
DOLLAR COST AVERAGING. Great American Reserve administers a Dollar Cost
Averaging ("DCA") program which enables a Contract Owner to transfer the value
from the Fixed Account or Money Market Sub-account to another Investment Option
on a predetermined and systematic basis. The DCA program is generally suitable
for Contract Owners making a substantial deposit to the Contract and who desire
to control the risk of investing at the top of a market cycle. The DCA program
allows such investments to be made in equal installments over time in an effort
to reduce such risk.
REBALANCING. Rebalancing is a program, which if elected, provides for
periodic pre-authorized automatic transfers prior to the Maturity Date among
the Sub-accounts pursuant to written instructions from the Contract Owner. Such
transfers are made to maintain a particular percentage allocation among the
Portfolios as selected by the Contract Owner. Amounts in the Fixed Account will
not be transferred pursuant to the Rebalancing Program. The Contract Value must
be at least $5,000 to have transfers made pursuant to the Program. Any transfer
made pursuant to the Program must be in whole percentages in one (1%) percent
allocation increments. The maximum number of Sub-accounts which can be used for
rebalancing is fifteen (15). A Contract Owner may select quarterly, semi-annual
or annual Rebalancing, on the date requested by the Contract Owner. There is
no fee for participating in the Program. The Company reserves the right to
terminate, modify or suspend the Rebalancing Program at any time.
SWEEPS. Sweeps are the transfer of the earnings from the Fixed Account into
another Investment Option on a periodic and systematic basis.
WITHDRAWALS. Prior to the earlier of the Maturity Date or the death of the
Annuitant, the Contract Owner may withdraw all or a portion of the Contract
Value upon written request complete with all necessary information to Great
American Reserve's Administrative Office. For certain qualified contracts,
exercise of the withdrawal right may be restricted and may require the consent
of the participant's spouse as required under the Code and regulations
thereunder. In the case of a total withdrawal, Great American Reserve will pay
the Contract Value as of the date of receipt of the request at its
Administrative Office, less the annual $30 administration fee, any outstanding
loans (plus the pro-rata interest accrued) and any applicable withdrawal charge,
and the Contract will be canceled. In the case of a partial withdrawal, Great
American Reserve will pay the amount requested and cancel that number of
Accumulation Units credited to each Investment Option of the Individual
Account necessary to equal the amount withdrawn from each Investment Option
of the Individual Account plus any applicable withdrawal charge deducted
from such Investment Option of the Individual Account. For withdrawals that
can be made free of withdrawal charges, see "Contract Charges".
When making a partial withdrawal, the Contract Owner should specify the
Investment Options from which the withdrawal is to be made. The amount requested
from an Investment Option may not exceed the value of that Investment Option
less any applicable withdrawal charge. If the Contract Owner does not specify
the investment options from which a partial withdrawal is to be taken, a partial
withdrawal will be taken from the Fixed Account until exhausted and then from
the Variable Account Investment Options. If the partial withdrawal is less than
the total value in the Variable Account Investment Options, the withdrawal will
be taken pro rata from the Variable Account investment options: taking from each
such Variable Account investment option an amount which bears the same
relationship to the total amount withdrawn as the value of such Variable Account
investment option bears to the total value of the Contract owner's investments
in the Variable Account Investment Options.
The amount withdrawn must be at least $250 or, if less, the entire
balance in the investment option. If a partial withdrawal plus any applicable
withdrawal charge would reduce the Contract Value to less than $500, Great
American Reserve reserves the right to treat the partial withdrawal as a total
withdrawal of the Contract Value.
The amount of any withdrawal from the Variable Account Investment Options
will be paid promptly, and in any event within seven days of receipt of the
request, except that Great American Reserve reserves the right to defer the
right of withdrawal or postpone payments for any periods when: (1) the New York
Stock Exchange is closed (other than customary weekend and holiday closings);
(2) trading on the New York Stock Exchange is restricted; (3) any emergency
exists as a result of which disposal of securities held in the Variable Account
is not reasonably practicable or it is not reasonably practical to determine the
value of the Variable Account's net assets; or (4) the SEC, by order, so permits
for the protection of security holders, provided that applicable rules and
regulations of the SEC shall govern as to whether the conditions described in
(2) and (3) exist.
Withdrawals from the Contract may be subject to income taxes, a
penalty tax and withdrawals are permitted from Contracts issued in
connection with certain qualified plans only under limited circumstances (see
"Federal Tax Status").
SYSTEMATIC WITHDRAWAL PLAN. Great American Reserve administers a Systematic
Withdrawal Plan (SWP) which enables a Contract Owner to pre-authorize a periodic
exercise of the contractual withdrawal rights described above. Contract Owners
entering into an SWP agreement instruct Great American Reserve to withdraw a
level dollar amount from specified Investment Options on a periodic basis. The
total of SWP withdrawals in a Contract Year is limited to free withdrawal
amounts to ensure that no withdrawal charge will ever apply to an SWP withdrawal
(see "Withdrawal Charge"). If an additional withdrawal is made from a Contract
participating in SWP, the SWP will terminate automatically and may be reinstated
only on or after a written request to Great American Reserve. SWP is not
available to Contracts participating in the dollar cost averaging program or for
which Purchase Payments are automatically deducted from a bank account on a
periodic basis. SWP is only available for withdrawals free of withdrawal
charges. SWP withdrawals may, however, be subject to the 10 percent federal tax
penalty on early withdrawals and to income tax (see "Federal Tax Matters").
Contract Owners interested in SWP may elect to participate in this program by
written request to Great American Reserves Administrative Office.
LOANS. Your Contract may contain a loan provision issued in connection with
certain qualified plans. Owners of such Contracts may obtain loans using the
Contract as the only security for the loan. Loans are subject to provisions of
the Code and to applicable retirement program rules (collectively, "Loan
Rules"). Tax advisers and retirement plan fiduciaries should be consulted prior
to exercising loan privileges. Loan provisions are described in detail in the
Contract.
The amount of any loan will be deducted from the minimum death benefit (see
"Death Benefit Before the Maturity Date"). In addition, a loan, whether or not
repaid, will have a permanent effect on the Contract Value because the
investment results of the Investment Options will apply only to the unborrowed
portion of the Contract Value. The longer the loan is outstanding, the greater
the effect is likely to be. The effect could be favorable or unfavorable. If the
investment results are greater than the rate being credited on amounts held in
the loan account while the loan is outstanding, the Contract Value will not
increase as rapidly as it would have if no loan were outstanding. If investment
results are below that rate, the Contract Value will be higher than it would
have been if no loan had been outstanding.
CONTRACT CHARGES
WITHDRAWAL CHARGE. There is no deduction for sales expenses from Purchase
Payments when made. However, Great American Reserve may assess a withdrawal
charge against the Purchase Payments when they are withdrawn to determine the
amount to be paid.
If a withdrawal is made from the Contract before the Maturity Date, a withdrawal
charge (a deferred sales load) may be assessed against Purchase Payments that
have been in the Contract less than six complete contract years. There is never
a charge with respect to free withdrawal amounts described below or Purchase
Payments that have been in the Contract more than six complete contract years.
The length of time from receipt of a Purchase Payment to the time of withdrawal
determines the withdrawal charge. For this purpose, Purchase Payments will be
deemed to be withdrawn in the order in which they are received and will be first
from Purchase Payments and then from other contract values. The charge is a
percentage of the withdrawal amount (not to exceed 8.5 percent of the aggregate
amount of the Purchase Payments made) and equals:
CHARGE PERCENTAGE YEARS PER PAYMENT
- - ----------------- -----------------
9%............ 1
9%............ 2
8%............ 3
7%............ 4
5%............ 5
3%............ 6
0%............ 7 and thereafter
In addition, the following circumstances further limit or reduce withdrawal
charges: For issue ages up to 52, there is no withdrawal charge made after the
15th Contract Year and later; for issue ages 53 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 .9 to 0 for Contract Years one through 10 and later, respectively.
A Contract Owner may make a free withdrawal from the Investment Options of
the Individual Account in an amount up to the greater of: 10 percent of the
Contract Value (as determined on the date of receipt of the requested
withdrawal), or the Contract Value divided by the Annuitant's life expectancy
based on the Code, or the amount of any Purchase Payments that have been
in the Contract more than six complete contract years without the application
of the withdrawal charge described above. Additional withdrawals in excess
of such amount in any Contract Year during the period when withdrawal
charges are applicable will be subject to the appropriate charge as set forth
above. From time to time, Great American Reserve may permit Contract Owners to
pre-authorize partial withdrawals subject to certain limitations then in
effect. On or after the Maturity Date, withdrawal charges may be made under
the Fourth and Fifth Annuity Options (see "Annuity Options"). No withdrawal
charges otherwise applicable will be assessed in the event of death of the
Annuitant, death of the Contract Owner or if payments are made under an
annuity option provided for under the Contract that begins at least four
years after the effective date of the Contract and is paid under any life
annuity option, or any option with payments for a minimum period of five
years.
In the case of a withdrawal of the entire amount of an Individual Account
with a certain dollar amount, the withdrawal charge is deducted from the
Purchase Payment amount withdrawn and the balance is paid to you. Example: You
request a total withdrawal of $2,000 and the applicable withdrawal charge is 5
percent. Your Individual Account will be reduced by $2,000 and you will receive
$1,880 (i.e., the $2,000 total withdrawal reduced by the 10 percent free
withdrawal less the 5 percent withdrawal charge and $30 Administrative Fee). In
the case of a partial withdrawal of an Individual Account in which you request
to receive a specified amount, the withdrawal charge will be calculated on the
total amount that must be withdrawn from your Individual Account in order to
provide you with the amount requested. Example: You request to receive $1,000
with a free withdrawal amount of $200 and the applicable withdrawal
charge is 5 percent. Your Individual Account will be reduced by $1,042.11.
In order to make a withdrawal of $1,000, the amount withdrawn must be greater
than the amount requested by the amount of the withdrawal charge. The amount
withdrawn is calculated by dividing (a) the amount requested ($1,000 less the
free withdrawal amount of $200) by (b) 1.00, minus the applicable deduction rate
of 5 percent (or .95), which produces $1,042.11 ( $842.11 plus the $200 free
withdrawal amount). The value of the Individual Account will be reduced by
this amount.
ADMINISTRATIVE CHARGES. Prior to the Maturity Date, an annual
administrative fee of $30 is deducted on each Contract anniversary from the
Individual Account value. Great American Reserve will waive the annual
administrative fee if the owner's Individual Account value is $25,000 or
greater. This administrative fee has been set at a level that will recover no
more than the actual costs associated with administering the Contracts. If an
Individual Account is fully withdrawn prior to the Maturity Date, the annual
administrative fee will be deducted from proceeds paid. The administrative fee
deduction is made first from amounts accumulated in the Fixed Account; if no or
an insufficient value exists in the Fixed Account, any balance will then be
deducted from the Sub-accounts of the Variable Account.
A daily charge in an amount equal to 0.15 percent of the value of each
Sub-account of the Variable Account on an annual basis is also deducted to
reimburse Great American Reserve for administrative expenses. This asset-based
administrative charge will not be deducted from the Fixed Account. The charge
will be reflected in the Contract Value as a proportionate reduction in the
value of each Sub-account of the Variable Account.
Great American Reserve does not expect to recover from such fees any amount
in excess of its accumulated administrative expenses. Even though administrative
expenses may increase, Great American Reserve guarantees that it will not
increase the amount of the administrative fees.
MORTALITY AND EXPENSE RISK CHARGE. Great American Reserve assumes two risks
under the Contract: an annuity mortality risk and an expense risk. Great
American Reserve makes daily deductions from the variable portion of a Contract
at an effective annual rate equal to 1.25 percent of the value of the assets of
the Variable Account for the mortality and expense risks assumed by Great
American Reserve consisting of .75 percent for the mortality risk and .50
percent for the expense risk. The annuity mortality risk is Great American
Reserve's promise to continue making annuity payments, determined in accordance
with the annuity tables and other provisions contained in the Contract,
regardless of how long the Annuitant lives and regardless of how long all
Annuitants as a group live. This promise assures that neither the longevity of
an Annuitant nor an improvement in life expectancy generally will have any
adverse effect on the monthly annuity payments, and that Annuitants will not
outlive the amounts which have been accumulated to provide such payment. The
promise is based on Great American Reserve's actuarial determination of expected
mortality rates among Annuitants. If, in the future, longevity of Annuitants as
a group is longer than Great American Reserve anticipated, Great American
Reserve must provide amounts from its assets which are not assets of its various
segregated asset accounts to fulfill its contract obligation. In that event, a
loss may fall on Great American Reserve. Conversely, if longevity among
Annuitants is shorter than anticipated, a gain may result to Great American
Reserve.
Great American Reserve also assumes the risk that the withdrawal charges
and the administrative fees may be insufficient to cover actual sales and
administrative expenses. If so, the shortfall will be made up from Great
American Reserve's general assets, which may include profits from other
Sub-account deductions. Conversely, if the sales deductions and administrative
fees exceed the actual sales and administrative expenses, a gain may result to
Great American Reserve. The mortality and expense risk charge is not assessed
against the Fixed Account.
REDUCTION OR ELIMINATION OF CONTRACT CHARGES. In some cases, Great American
Reserve may expect to incur lower sales and administrative expenses or perform
fewer services due to the size of the Contract, the average contribution and the
use of group enrollment procedures. Then, Great American Reserve may be able to
reduce or eliminate the contract charges for administrative expense and deferred
sales load charges.
PREMIUM TAXES. Any premium tax due may be deducted from Purchase Payments
or from other values on the Maturity Date or at such other time as determined by
Great American Reserve. The current range of premium taxes in jurisdictions in
which the Contracts are made available is from 0 percent to 3.5 percent.
OTHER CHARGES. Currently, no charge is made against the Variable Account
for Great American Reserve's federal income taxes, or provisions for such taxes,
that may be attributable to the Variable Account. Great American Reserve may
charge each Sub-account of the Variable Account for its portion of any income
tax charged to the Sub-account or its assets. Under present laws, Great
American Reserve may incur state and local taxes (in addition to premium
taxes) in several states. At present, these taxes are not significant. If
they increase, however, Great American Reserve may decide to make charges
for such taxes or provisions for such taxes against the Variable Account.
Any such charges against the Variable Account or its Sub-accounts could
have an adverse effect on the investment experience of such Sub-accounts.
DEATH BENEFIT BEFORE MATURITY DATE. If an Owner, Co-Owner or the Annuitant
dies prior to the Maturity Date, Great American Reserve will pay the minimum
death benefit to the beneficiary. The minimum death benefit will be paid either
as a lump sum or under an annuity option as explained below. Generally, the
distribution of the minimum death benefit must be made within five years after
the Owner's or Co-Owner's death. If the beneficiary is an individual, in lieu of
distribution within five years of the Owner's death, distribution may generally
be made as an annuity which begins within one year of the Owner's death and is
payable over the life of the beneficiary or over a period not in excess of the
life expectancy of the beneficiary. If the Owner's spouse is the beneficiary,
that spouse may elect to continue the Contract as the new Owner in lieu of
receiving the distribution. In such a case, the distribution rules applicable
when a Contract Owner dies will apply when that spouse, as the Owner, dies. In
the case of a Contract involving more than one Contract Owner, the death of any
Contract Owner shall cause this section to apply.
The minimum death benefit during the first seven contract years will be equal
to the greater of: (a) the Contract Value on the date due proof of death is
received at Great American Reserve's Administrative Office, or (b) the sum of
all Purchase Payments made, less any partial withdrawals. During any subsequent
seven-contract-year period, the minimum death benefit will be the greater of:
(a) the Contract Value on the date due proof of death is received at Great
American Reserve's Administrative Office; or (b) the Contract Value on the last
day of the previous seven-contract-year period plus any purchase payments made
and less any subsequent partial withdrawals; or (c) the sum of all premiums
paid, less any partial withdrawals. If the Annuitant or Owner dies after
attaining the age of 80, the death benefit will be the Contract Value on the
date due proof of death is received at Great American Reserve's Administrative
Office. The minimum death benefit will be reduced by any outstanding loans.
Death benefits generally will be paid within seven days of receipt of due
proof of death at Great American Reserve's Administrative Office, subject to
postponement under the same circumstances that payment or withdrawals may be
postponed (see "Withdrawals").
OPTIONS UPON TERMINATION OF PARTICIPATION IN THE PLAN (FOR GROUP CONTRACTS
ONLY). Upon termination of participation in the Plan prior to the Maturity Date,
a Contract Owner will have the following options:
(a) leave the Individual Account in force under the Contract, and the
Sub-account will continue to participate in the investment results of the
selected Investment Option. On the Maturity Date, the Participant will
begin to receive annuity payments. During the interim, any of the options
described below may be elected by the Contract Owner. This option will
automatically apply, unless written election of another option is filed
with Great American Reserve.
(b) apply the Individual Account to provide annuity payments commencing
immediately.
(c) convert the Individual Account to an individual variable annuity contract
of the type then being issued by Great American Reserve.
(d) terminate the Individual Account and receive its Contract Value less any
applicable charges and outstanding loans.
RESTRICTIONS UNDER OPTIONAL RETIREMENT PROGRAMS. Participants in Optional
Retirement Programs can withdraw their interest in a Contract only upon (1)
termination of employment in all public institutions of higher education as
defined by applicable law, (2) retirement, or (3) death. Accordingly, a
Participant may be required to obtain a certificate of termination from his
employer before he can withdraw his interest.
RESTRICTIONS UNDER SECTION 403(B) PLANS. Withdrawals of amounts
attributable to contributions made pursuant to a salary reduction agreement
(as defined in Section 403(b)(11) of the Code) are limited to circumstances
only when the Contract Owner attains age 59 1/2, separates from service, dies,
becomes disabled (within the meaning of Section 72(m)(7) of the Code), in the
case of hardship or made pursuant to a qualified domestic relations order.
Withdrawals for hardship are restricted to the portion of the Contract Owner's
Contract value which represents contributions made by the Owner and does not
include any investment results. The limitations on withdrawals become effective
on January 1, 1989, and apply only to:(1) salary reduction contributions made
after December 31, 1988; (2) income attributable to such contributions; and (3)
income attributable to amounts held as of December 31, 1988. The limitations
on withdrawals do not affect rollovers or transfers between certain Qualified
Plans. Tax penalties may also apply.
B. SETTLEMENT PROVISIONS
OPTIONAL ANNUITY PERIOD ELECTIONS. The Contract Owner selects a Maturity
Date and an Annuity option which may be on a fixed or variable basis, or a
combination of both. The Contract Owner may select a Maturity Date at any time
subject to applicable state requirements. The Maturity Date and the annuity
options are normally established by the terms of the Contract. If the Contract
Owner does not elect otherwise, (a) the manner of payment will be a lifetime
annuity with 120 monthly payments certain; and (b) the value of the Owner's
Individual Account will be applied as follows: (1) any value accumulated in the
Fixed Account will be applied to provide a fixed annuity; and (2) any value in
the Sub-account(s) of the Variable Account will be applied, separately, to
provide variable annuity payments.
By giving written notice to Great American Reserve at least 30 days prior
to the Maturity Date, the Contract Owner may elect to change (a) the annuity
option to any of the optional annuity forms described below or agreed to by
Great American Reserve, and (b) the manner in which the value of the owner's
Individual Account is to be applied to provide annuity payments (for example, an
election that a portion or all of the amounts accumulated on a variable basis be
applied to provide fixed annuity payments or vice versa). Once annuity payments
commence, no changes may be elected by the Contract Owner (except transfers: see
"Transfers After Maturity Date").
No election may be made that would result in a first monthly annuity
payment of less than $50 if payments are to be on a fully fixed or variable
basis, or less than $50 on each basis if a combination of variable and fixed
annuity payments is elected. If at any time payments are or become less than $50
per monthly payment, Great American Reserve reserves the right to change the
frequency of payment to such interval as will result in annuity payments of at
least $50 each, except that payments shall not be made less frequently than
annually.
Prior to the selected Maturity Date, an Individual Account may be
terminated by the Contract Owner and the value thereof received in a lump sum.
Once annuity payments have commenced, neither the Annuitant nor the Contract
Owner can terminate the annuity benefit and receive a lump-sum settlement in
lieu thereof.
See "Federal Tax Status" for information on the federal tax status of
annuity payments or other settlements in lieu thereof.
ANNUITY OPTIONS
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. Of the first two options, this option offers the maximum
level of monthly payments 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.
SECOND OPTION - LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS
GUARANTEED. 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 120, 180 or 240 months, as elected, annuity payments will be
continued during the remainder of such period to the beneficiary designated by
the Contract Owner. If no beneficiary is designated, Great American Reserve
will, in accordance with the Contract provisions, pay in a lump sum to the
Annuitant's estate the present value, as of the date of death, of the number of
guaranteed annuity payments remaining after that date, computed on the basis of
the assumed net investment rate used in determining the first monthly payment.
See "Determination of Amount of the First Monthly Variable Annuity Payment"
below.
Because it provides a specified minimum number of annuity payments, this
option results in somewhat lower payments per month than the First Option.
THIRD OPTION - INSTALLMENT REFUND LIFE ANNUITY. Payments are made for the
installment refund period, which is the time required for the sum of the
payments to equal the amount applied, and thereafter for the life of the payee.
FOURTH OPTION - PAYMENTS FOR A FIXED PERIOD. Payments are made for the
number of years selected, which may be from three through 20. If elected on a
variable basis, payments under this option will vary monthly in accordance with
the net investment rate of the Sub-accounts of the Variable Account, as
applicable. Should the Annuitant die before the specified number of monthly
payments is made, the remaining payments will be commuted and paid to the
designated beneficiary in a lump sum payment.
FIFTH OPTION - PAYMENTS OF A FIXED AMOUNT. Payments of a designated dollar
amount on a monthly, quarterly, semi-annual, or annual basis are made until the
Individual Account value applied under this option, adjusted each Valuation
Period to reflect investment experience, is exhausted within a minimum of three
years and a maximum of 20 years. Should the Annuitant die before the value is
exhausted, the remaining value will be commuted and paid to the beneficiary in a
lump sum payment. In lieu of a lump sum payment, the beneficiary may elect an
annuity option for distribution of any amount on deposit at the date of the
annuitant's death which shall result in a rate of payment at least as rapid as
the rate of payment during the life of the Annuitant.
To the extent that the Fourth or Fifth Option is elected on a variable
basis, at any time during the payment period the Contract Owner may elect that
the remaining value be applied to effect a lifetime annuity under one of the
first two options described above, provided that the distribution will be made
at least as rapidly during the life of the Annuitant. Since the Contract Owner
may elect a lifetime annuity at any time, the annuity rate and expense risks
continue during the payment period. Accordingly, deductions for these risks will
continue to be made from the Individual Account values.
PROCEEDS APPLIED TO AN ANNUITY OPTION. All or part of the Contract Value
may be applied to an annuity option. The proceeds that will be applied to the
annuity option will be as follows:
(a) the Contract Value less any outstanding loans, if the annuity option
elected begins at least four years after the effective date of your
contract and is paid under any life annuity option, or any option with
payments for a minimum period of five years, with no rights of early
withdrawal; or
(b) the death benefit if proceeds are payable under death of Annuitant or an
Owner (as applicable); or
(c) the Contract Value less any outstanding loans, withdrawal charge and any
administrative fee.
DETERMINATION OF AMOUNT OF THE FIRST MONTHLY VARIABLE ANNUITY PAYMENT. On
or after the Maturity Date when annuity payments commence, the value of the
Individual Account is determined as the total of the product(s) of (a) the value
of an Accumulation Unit for each Investment Option at the end of the Valuation
Period immediately preceding the Valuation Period in which the first annuity
payment is due and (b) the number of Accumulation Units credited to the
Individual Account with respect to each Investment Option as of the date the
Annuity is to commence. Premium tax, if assessed at such time by the applicable
jurisdiction, will be deducted from the Individual Account value. Any portion of
the Individual Account value for which a fixed annuity election has been made is
applied to provide fixed-dollar payments under the option elected.
The amount of the first monthly variable annuity payment is then calculated
by multiplying the Individual Account Value less any outstanding loans and
applicable charges, which is to be applied to provide variable payments, by the
amount of first monthly payment in accordance with annuity tables contained in
the Contract. The annuity tables are based on the 1983 Individual Annuity
Mortality Table. The amount of the first monthly payment varies according to the
form of annuity selected (see "Annuity Options" above), the age of the Annuitant
(for certain options) and the assumed net investment rate selected by the
Contract Owner. The standard assumed net investment rate is 3 percent per annum;
however, an alternative 5 percent per annum, or such other rate as Great
American Reserve may offer, may be selected prior to the Maturity Date.
The assumed net investment rates built into the annuity tables affect both
the amount of the first monthly variable annuity payment and the amount by which
subsequent payments may increase or decrease. Selection of a 5 percent rate,
rather than the standard 3 percent rate, would produce a higher first payment,
but subsequent payments would increase more slowly in periods when Annuity Unit
values are rising and decrease more rapidly in periods when Annuity Unit values
are declining. With either assumed rate, if the actual net investment rate
during any two or more successive months was equal to the assumed rate, the
annuity payments would be level during that period.
If a greater first monthly payment would result, Great American Reserve
will compute the first monthly payment on the same mortality basis as used in
determining the first payment under immediate annuity contracts being issued for
a similar class of Annuitants at the date the first monthly payment is due under
the Contract.
VALUE OF AN ANNUITY UNIT. On the Maturity Date, a number of Annuity Units
is established for the Contract Owner for each Investment Option on which
variable annuity payments are to be based. For each Sub-account of the Variable
Account, the number of Annuity Units established is calculated by dividing (i)
the amount of the first monthly variable annuity payment on that basis by (ii)
the Annuity Unit value for that basis for the current Valuation Period. That
number of Annuity Units remains constant and is the basis for calculating the
amount of the second and subsequent annuity payments.
The Annuity Unit value is determined for each Valuation Period, for each
Investment Option, and is equal to the Annuity Unit value for the preceding
Valuation Period multiplied by the product of (i) the net investment factor for
the appropriate Sub-account (see Net Investment Factor for Each Valuation
Period) for the immediately preceding Valuation Period and (ii) a factor to
neutralize the assumed net investment rate built into the annuity tables
(discussed under the preceding caption), for it is replaced by the actual net
investment rate in step (i). The daily factor for a 3 percent assumed net
investment rate is .99991902; for a 5 percent rate, the daily factor is
.99986634.
AMOUNTS OF SUBSEQUENT MONTHLY VARIABLE ANNUITY PAYMENTS. The amounts of
subsequent monthly variable annuity payments are determined by multiplying (i)
the number of Annuity Units established for the Annuitant for the applicable
Sub-account by (ii) the Annuity Unit value for the Sub-account. If Annuity Units
are established for more than one Sub-account, the calculation is made
separately and the results combined to determine the total monthly variable
annuity payment.
1. EXAMPLE OF CALCULATION OF MONTHLY VARIABLE ANNUITY PAYMENTS. The
determination of the amount of the variable annuity payments can be
illustrated by the following hypothetical example. The example assumes that
the monthly payments are based on the investment experience of only one
investment option. If payments were based on the investment experience of
more than one investment option, the same procedure would be followed to
determine the portion of the monthly payment attributed to each Investment
Option.
2. FIRST MONTHLY PAYMENT. Assume that at the Maturity Date there are 40,000
Accumulation Units credited under a particular Individual Account and that
the value of an Accumulation Unit for the Valuation Period immediately
prior to the Maturity Date was $1.40000000; this produces a total value
for the Individual Sub-account of $56,000. Assume also that no premium
tax is payable and that the annuity tables in the Contract provide, for the
option elected, a first monthly variable annuity payment of $5.22 per
$1,000 of value applied; the first monthly payment to the Annuitant would
thus be 56 multiplied by $5.22, or $292.32.
Assume that the Annuity Unit value for the Valuation Period in which the
first monthly payment was due was $1.30000000. This is divided into the
amount of the first monthly payment to establish the number of Annuity
Units for the Participant: $292.32 $1.30000000 produces 224.862 Annuity
Units. The value of this number of Annuity Units will be paid in each
subsequent month.
3. SECOND MONTHLY PAYMENT. The current Annuity Unit value is first calculated.
Assume a net investment factor of 1.01000000 for the Valuation Period
immediately preceding the due date of the second monthly payment. This
is multiplied by .99753980 to neutralize the assumed net investment rate of
3 percent per annum built into the number of Annuity Units determined
above (if an assumed net investment rate of 5 percent had been elected,
the neutralization factor would be .99594241), producing a result
of 1.00751520. This is then multiplied by the Annuity Unit value for
the Valuation Period preceding the due date of the second monthly
payment (assume this value to be $1.30000000) to produce the current
Annuity Unit value, $1.30976976.
The second monthly payment is then calculated by multiplying the
constant number of Annuity Units by the current Annuity Unit value: 224.862
times $1.30976976 produces a payment of $294.52.
TRANSFERS AFTER MATURITY DATE. Transfers after the Maturity Date may be
made upon written notice to Great American Reserve at least 30 days before the
due date of the first annuity payment for which the change will apply. Transfers
will be made by converting the number of Annuity Units being transferred to the
number of Annuity Units of the Sub-account to which the transfer is made, so
that the next annuity payment if it were made at that time would be the same
amount that it would have been without the transfer. Thereafter, annuity
payments will reflect changes in the value of the new Annuity Units. Great
American Reserve reserves the right to limit, upon notice, the maximum number of
transfers a Contract Owner may make to one in any six- month period once annuity
payments have commenced. In addition, on or after the Maturity Date, no
transfers may be made from a fixed annuity option to a variable annuity
option or from a variable annuity option to a fixed annuity option. Great
American Reserve reserves the right to defer the transfer privilege at any
time that Great American Reserve is unable to purchase or redeem shares of
the Funds. Great American Reserve also reserves the right to modify or
terminate the transfer privilege at any time in accordance with applicable law.
DEATH BENEFIT ON OR AFTER MATURITY DATE. If annuity payments have been
selected based on an annuity option providing for payments for a guaranteed
period, and the Annuitant or an Owner dies on or after the Maturity Date, Great
American Reserve will make the remaining guaranteed payments to the beneficiary.
Such payments will be made at least as rapidly as under the method of
distribution being used as of the date of the Annuitant's death. If no
beneficiary is living, Great American Reserve will commute any unpaid guaranteed
payments to a single sum (on the basis of the interest rate used in determining
the payments) and pay that single sum to the Annuitant's estate.
C. OTHER CONTRACT PROVISIONS
TEN-DAY RIGHT TO REVIEW. Contracts allow a "10-day free look" (in some
states, the period may be longer), wherein the Contract Owner may revoke the
contract by returning it to either a Great American Reserve representative or to
Great American reserve's Administrative Office within 10 days of delivery of the
Contract. Great American Reserve deems this period as ending 15 days after a
Contract is mailed from its Administrative Office. If the Contract is returned
under the terms of the 10-day free look (or the period required in your state),
Great American Reserve will refund to the Contract Owner an amount equal to all
payments received with respect to the Contract.
OWNERSHIP. The Contract Owner is the person entitled to exercise all rights
under the Contract. Co-Owners may be named in Non-Qualified Contracts. Prior to
the Maturity Date, the Contract Owner is the person designated in the
application or as subsequently named. On and after the Maturity Date, the
Annuitant is the Contract Owner and after the death of the Annuitant, the
beneficiary is the Contract Owner.
In the case of non-qualified Contracts, ownership of the Contract may be
changed or the Contract collaterally assigned at any time during the lifetime of
the Annuitant prior to the Maturity Date, subject to the rights of any
irrevocable beneficiary. Assigning a Contract, or changing the ownership of a
Contract, may be treated as a distribution of the Contract Value for federal tax
purposes. Any change of ownership or assignment must be made in writing. Any
change must be approved by Great American Reserve. Any assignment and any
change, if approved, will be effective as of the date on which written. Great
American Reserve assumes no liability for any payments made or actions taken
before a change is approved or assignment is accepted, or responsibility for the
validity of any assignment.
In the case of qualified Contracts, ownership of the Contract generally may
not be transferred except by the trustee of an exempt employee's trust which is
part of a retirement plan qualified under Section 401 of the Code. Subject to
the foregoing, a qualified contract may not be sold, assigned, transferred,
discounted or pledged as collateral for a loan or as security for the
performance of an obligation or for any other purpose.
MODIFICATION. Great American Reserve may modify the Contract with the
approval of the Contract Owner unless provided otherwise by the Contract. After
the Contract has been in force, it may be modified by Great American Reserve
except that the mortality and expense risk charge, the withdrawal charges and
the administrative fees cannot be increased.
A Group Contract shall be suspended automatically on the effective date of
any modification initiated by Great American Reserve if the Contract Owner fails
to accept the modification. Effective with suspension, no new Participants may
enter the Plan but further Purchase Payments may be made on behalf of the
Participants then covered by the Contract.
No modification may affect Annuitants in any manner unless deemed necessary
to achieve the requirements of federal or state statutes or any rule or
regulation of the United States Treasury Department.
COMPANY APPROVAL. Each application is subject to acceptance by Great
American Reserve. Upon acceptance, a Contract is issued to the Contract Owner
and the Purchase Payment, as applicable to each Investment Option of the
Individual Account, is credited to the Owner's Individual Account. If an
application is complete upon receipt, the Purchase Payment will be credited to
the owner's Individual Account within two business days. If it is not complete,
Great American Reserve will request additional information to complete the
processing of the application. If this is not accomplished within five business
days, Great American Reserve will return any Purchase Payment to the applicant
unless otherwise instructed. Subsequent Purchase Payments will be credited to
the Owner's Individual Account at the price next computed after the Purchase
Payment is received by Great American Reserve at its Administrative Office.
FEDERAL TAX STATUS
NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON THE COMPANY'S UNDERSTANDING
OF CURRENT FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. THE
COMPANY 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. THE COMPANY 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.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended ("Code")
governs taxation of annuities in general. An 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. The exclusion amount for
payments based on a variable annuity option is determined by dividing the cost
basis of the Contract (adjusted for any period certain or refund guarantee) by
the number of years over which the annuity is expected to be paid. 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. 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 Variable Account is not a separate entity
from Great American Reserve, and its operations form a part of Great American
Reserve.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on
the underlying assets of variable annuity contracts. The Code provides that a
variable annuity 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 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 variable Investment Options
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 Owner control of
the investments of the Variable Account will cause the Owner to be treated as
the owner of the assets of the Variable 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 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 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 Owner's ability to transfer among
investment choices or the number and type of investment choices available, would
cause the Owner to be considered as the owner of the assets of the Variable
Account resulting in the imposition of federal income tax to the 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 Owners
being retroactively determined to be the owners of the assets of the Separate
Account.
Due to the uncertainty in this area, we reserve 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. 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 Owner if the 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. Owners
should therefore consult competent tax advisers should they wish to assign or
pledge their Contracts.
If the Contract is issued pursuant to a retirement plan which receives
favorable treatment under the provision of Sections 401, 403(b), 408 or 457 of
the Code, it may not be assigned, pledged or otherwise transferred except as
allowed under applicable law.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the 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 Owner, in many 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 you reach age 59 1/2; (b) after your death; (c) if you
become 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 your life (or life expectancy) or for
the joint lives (or joint life expectancies) of you and your Beneficiary; (e)
under an immediate annuity; or (f) which are allocable to purchase payments made
prior to August 14, 1982.
The Contract provides that upon the death of the Annuitant prior to
Maturity Date, the death proceeds will be paid to the beneficiary. Such
payments made upon the death of the Annuitant who is not the Owner of the
Contract do not qualify for the death of Owner exception described above, and
will be subject to the ten (10%) percent distribution penalty unless the
beneficiary is 59 1/2 years old or one of the other exceptions to the penalty
applies.
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 deisgned 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.
Owners, Annuitants and Beneficiaries are cautioned that benefits under
a Qualified Plan may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts issued
pursuant to the plan. Some retirement plans are subject to distribution and
other requirements that are not incorporated into the Company's administrative
procedures. 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 the Company in connection
with 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.) Any employee should obtain competent tax advice as to the tax
treatment and suitability of such an investment.
b. Individual Retirement Annuities
The Contracts offered by the prospectus are designed to be suitable for
use as an Individual Retirement Annuity (IRA). Generally, individuals who
purchase IRAs are not taxed on increases to the value of the contributions until
distribution occurs. Following is a general description of IRAs with which the
Contract may be used. The description is not exhaustive and is for general
informational purposes only.
Section 408(b) of the Code permits eligible individuals to contribute to
an individual retirement program known as an 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 - Individual Retirement Annuities" 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.
SIMPLE IRAs
Section 408(p) of the Code permits certain employers (generally those with
less than 100 employees) to establish a retirement program for employees using
Savings Incentive Match Plan Retirement Annuities ("SIMPLE IRA"). SIMPLE IRA
programs can only be established with the approval of and adoption by the
employer of the Contract Owner of the SIMPLE IRA. Contributions to SIMPLE IRAs
will be made pursuant to a salary reduction agreement in which an Owner would
authorize his/her employer to deduct a certain amount from his/her pay and
contribute it directly to the SIMPLE IRA. The Owner's employer will also make
contributions to the SIMPLE IRA in amounts based upon certain elections of the
employer. The only contributions that can be made to a SIMPLE IRA are salary
reduction contributions and employer contributions as described above, and
rollover contributions from other SIMPLE IRAs. Purchasers of Contracts to be
qualified as SIMPLE IRAs 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
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. 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.
c. Pension and Profit-Sharing Plans
Sections 401(a) and 401(k) of the Code permit employers to establish various
types of retirement plans for employees. These retirement plans may
permit the purchase of the Contracts to provide benefits under the Plan.
Contributions to the Plan for the benefit of employees will not be includible
in the gross income of the employees until distributed from the Plan. The tax
consequences to participants may vary depending upon the particular plan
design. However, the Code places limitations and restrictions on all
Plans including on such items as: amount of allowable contributions; form,
manner and timing of distributions; transferability of benefits; vesting and
nonforfeitability of interests; nondiscrimination in eligibility and
participation; and the tax treatment of distributions, withdrawals and
surrenders. Special considerations apply to plans covering self-employed
individuals, including limitations on contributions and benefits for key
employees or 5 percent owners. (See "Tax Treatment of Withdrawals - Qualified
Contracts" below.) Purchasers of Contracts for use with Pension or Profit
Sharing Plans should obtain competent tax advice as to the tax treatment and
suitability of such an investment.
d. Government and Tax-Exempt Organization's Deferred Compensation Plans.
Under Code provisions, employees and independent contractors performing
services for state and local governments and other tax-exempt organizations
may participate in Deferred Compensation Plans. While participants in such
Plans may be permitted to specify the form of investment in which their Plan
accounts will participate, all such investments are owned by the sponsoring
employer and are subject to the claims of its creditors until December 31,
1998, or such earlier date as may be established by Plan amendment. However,
amounts deferred under a Plan created on or after August 20, 1996 and amounts
deferred under any 457 Plan after December 31, 1998 must be held in trust,
custodial account or annuity contract for the exclusive benefit of Plan
participants and their beneficiaries. The amounts deferred under a Plan which
meets the requirements of Section 457 of the Code are not taxable as income to
the participant until paid or otherwise made available to the participant or
beneficiary. As a general rule, the maximum amount which can be deferred in
any one year is the lesser of $7,500 ($8,000 beginning in 1998, as indexed for
inflation) or 33 1/3 percent of the participant's includable compensation.
However, in limited circumstances, up to $15,000 may be deferred in each of
the last three years before normal retirement age.
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 401 (Pension and Profit-Sharing Plans), 403(b) (Tax-Sheltered
Annuities) and 408(b) (Individual Retirement Annuities). This penalty is
increasted to 25% instead of 10% for SIMPLE IRAs if distribution occurs within
the first two years after the Owner first participated in the SIMPLE IRA. 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) made on or after the date on which the
Owner or Annuitant (as applicable) reaches age 59 1/2; (b) following
the death or disability of the Owner or Annuitant (as applicable)
(for this purpose disability is as defined in Section 72(m) (7) of the
Code); (c) after separation from service, distributions that are
part of substantially equal periodic payments made not less frequently
than annually for the life (or life expectancy) of the Owner or
Annuitant (as applicable) or the joint lives (or joint life expectancies)
of such Owner or Annuitant (as applicable) and his or her designated
Beneficiary; (d) to an Owner or Annuitant (as applicable) who has
separated from service after he has attained age 55; (e) made to
the Owner or Annuitant (as applicable) to the extent such
distributions do not exceed the amount allowable as a deduction under
Code Section 213 to the Owner or Annuitant (as applicable) for amounts
paid during the taxable year for medical care; (f) made to an alternate payee
pursuant to a qualified domestic relations order;(g) from an Individual
Retirement Annuity for the purchase of medical insurance (as described
in Section 213(d)(1)(D) of the Code) for the Owner or Annuitant (as
applicable) and his or her spouse and dependents if the Owner or Annuitant
(as applicable) has received unemployment compensation for at least 12 weeks
(this exception will no longer apply after the Owner or Annuitant (as
applicable) has been re-employed for at least 60 days); (h) from an
Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
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 Owner or Annuitant
(as applicable) for the taxable year; and (i) distributions up to $10,000 from
an Individual Retirement Annuity made to the Owner or Annuitant (as applicable)
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.
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 when the Owner: (1) attains age 59 1/2; (2)
separates from service; (3) dies; (4) becomes disabled (within the meaning of
Section 72(m)(7) of the Code); (5) in the case of hardship; or (6) made
pursuant to a qualified domestic relations order. However, withdrawals for
hardship are restricted to the portion of the Owner's Contract Value which
represents contributions made by the 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 rollovers and transfers between certain Qualified Plans. Owners
should consult their own tax counsel or other tax adviser regarding any
distributions.
MANDATORY DISTRIBUTIONS - QUALIFIED PLANS
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
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.
GENERAL MATTERS
PERFORMANCE INFORMATION. Performance information for the Variable Account
investment options may appear from time to time in advertisements or sales
literature. Performance information reflects only the performance of a
hypothetical investment in the Variable Account investment options during the
particular time period on which the calculations are based. Performance
information may consist of yield, effective yield, and average annual total
return quotations reflecting the deduction of all applicable charges for recent
one-year and, when applicable, five- and 10-year periods and, where less than 10
years, for the period subsequent to the date each Sub-account first became
available for investment. Additional total return quotations may be shown that
do not reflect a withdrawal charge deduction (assuming no withdrawal at the end
of the illustrated period). Performance information may be shown by means
of schedules, charts or graphs. See the Statement of Additional Information for
a description of the methods used to determine yield and total return
information for the Sub-accounts.
DISTRIBUTION OF CONTRACTS. Conseco Equity Sales, Inc. ("Conseco Equity
Sales"), 11815 N. Pennsylvania Street, Carmel, IN 46032, an affiliate of Great
American Reserve, is the principal underwriter of the Contracts. Conseco Equity
Sales is a broker-dealer registered under the Securities and Exchange Act of
1934 and a member of the National Association of Securities Dealers, Inc. Sales
of the Contracts will be made by registered representatives of Conseco Equity
Sales and broker-dealers authorized to sell the Contracts. Such registered
representatives will also be licensed insurance representatives of Great
American Reserve. See the Statement of Additional Information for more
information.
CONTRACT OWNER INQUIRIES. All Contract Owner inquiries should be directed
to Great American reserve's Administrative Office address or telephone number
appearing on page 1 of this Prospectus.
LEGAL PROCEEDINGS. There are no legal proceedings to which the Variable
Account is a party or to which the assets of the Variable Account are subject.
Neither Great American Reserve nor Conseco Equity Sales is involved in any
litigation that is of material importance in relation to their total assets or
that relates to the Variable Account.
OTHER INFORMATION. This Prospectus contains information concerning the
Variable Account, Great American Reserve, and the Contracts, but does not
contain all of the information set forth in the Registration Statement and all
exhibits and schedules relating thereto, which Great American Reserve has filed
with the Securities and Exchange Commission, Washington, D.C.
Additional information may be obtained from Great American Reserve by
requesting from Great American Reserve's Administrative Office, 11815 N.
Pennsylvania Street, Carmel, Indiana 46032, a Statement of Additional
Information. For convenience, the Table of Contents of the Statement of
Additional Information is provided below:
TABLE OF CONTENTS OF THE STATEMENT
OF ADDITIONAL INFORMATION
PAGE
General Information and History .........
Independent Accountants..................
Distribution................. ...........
Calculation of Yield Quotations .........
Calculation of Total Return Quotations ..
Other Performance Data...................
Financial Statements ....................
If you would like a free copy of the Statement of Additional Information
for this Prospectus, please complete this form, detach, and mail to:
Great American Reserve Insurance Company
Administrative Office
11815 N. Pennsylvania Street
Carmel, Indiana 46032
Gentlemen:
Please send me a free copy of the Statement of Additional Information for
Great American Reserve Variable Annuity Account E at the following address:
Name:
---------------------------------------------------------------------------
Mailing Address:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Sincerely,
----------------------------------------
(Signature)
APPENDIX A
CONSECO SERIES TRUST
Conseco Series Trust is an open-end management investment company organized as a
business trust under the laws of the Commonwealth of Massachusetts on November
15, 1982. Trust shares are offered only to separate accounts of various
insurance companies to fund benefits of variable life and variable annuity
contracts. Conseco Capital Management, Inc. serves as the investment adviser.
THE ALGER AMERICAN FUND
The Alger American Fund is an open-end management investment company organized
as a business trust under the laws of the Commonwealth of Massachusetts on April
6, 1988. Trust shares are offered to separate accounts of various life insurance
companies as investment options of variable life and variable annuity contracts
and as a funding vehicle for qualified pension and retirement plans. Fred Alger
Management, Inc. serves as the investment adviser.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century Variable Portfolios, Inc. is an open-end management investment
company organized as a Maryland corporation on June 4, 1987, and is a part of
American Century Investments, a family of funds that includes nearly 70 no-load
mutual funds covering a variety of investment opportunities. The fund offers
its shares only to insurance companies to fund the benefits of variable annuity
or variable life insurance contracts. American Century Investment Management,
Inc. is the investment adviser.
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger Institutional Products Trust is an open-end management investment
company organized as a business trust under the laws of the State of Delaware
on October 17, 1995. Trust shares are offered only to separate accounts of
various insurance companies in connection with investment in and payments
under variable annuity contracts and variable life insurance contracts, as
well as to certain qualified retirement plans. The investment adviser is
Berger Associates, Inc. for the Berger IPT - 100 Fund, the Berger IPT -
Growth and Income Fund and the Berger IPT - Small Company Growth Fund. BBOI
Worldwide LLC is the investment adviser for the Berger/BIAM IPT -
International Fund.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
The Dreyfus Socially Responsible Growth Fund, Inc. is an open-end diversified,
management investment company. It was incorporated under Maryland law on
July 20, 1992, and commenced operations on October 7, 1993. The Dreyfus
Corporation serves as the Fund's investment adviser. NCM Capital Management
Group, Inc. serves as the Fund's sub-investment adviser and provides day-to-
day management of the Fund's portfolio.
DREYFUS STOCK INDEX FUND
Dreyfus Stock Index Fund is an open-end non-diversified, management investment
company. It was incorporated in the name Dreyfus Life and Annuity Index Fund,
Inc. under Maryland law on January 24, 1989, and commenced operations on
September 29, 1989. On May 1, 1994, the Fund began operating under the name
Dreyfus Stock Index Fund. The Dreyfus Corporation serves as the Fund's
manager and Mellon Equity Associates serves as the Fund's index manager.
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus Variable Investment Fund is an open-end management investment company.
Trust shares are offered only to variable annuity and variable life insurance
separate accounts established by insurance companies to fund variable annuity
and variable life insurance contracts. The Dreyfus Corporation serves as the
investment adviser.
FEDERATED INSURANCE SERIES
Federated Insurance Series is an open-end management investment company
organized as a business trust under the laws of the Commonwealth of
Massachusetts on September 15, 1993. Trust shares are offered only to separate
accounts of various insurance companies to serve as the investment medium of
variable life insurance policies and variable annuity contracts issued by the
insurance companies. Federated Advisers serves as the investment adviser.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO Variable Investment Funds, Inc. is a registered, open-end management
investment company that was organized as a Maryland corporation on August 19,
1993. Fund shares are intended to be funding vehicles for variable annuity
contracts and variable life insurance contracts to be offered by separate
accounts of certain life insurance companies. Fund shares are not available for
purchase other than through the purchase of such contracts. INVESCO Funds Group,
Inc. is the investment adviser.
JANUS ASPEN SERIES
Janus Aspen Series is an open-end management investment company organized as a
business trust under the laws of the State of Delaware on May 20, 1993. Trust
shares are offered only to separate accounts of various insurance companies
to fund the benefits of variable life and variable annuity contracts, and to
qualified retirement plans. The investment adviser and manager is Janus
Capital Corporation.
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Series Inc. is a no-load, open-end management investment
company. The Portfolios are offered only to qualified pension and retirement
plans and variable annuity and variable life insurance separate accounts
established by insurance companies to fund variable annuity contracts and
variable life insurance policies. Lazard Asset Management, a division of
Lazard Freres & Co. LLC, manages each Portfolio.
LORD ABBETT SERIES FUND, INC.
Lord Abbett Series Fund, Inc. is a diversified open-end management investment
company incorporated under the laws of Maryland on August 28, 1989. Shares of
the Fund are only offered to separate accounts of life insurance companies to
fund benefits of variable annuity contracts and variable life insurance
policies. Lord, Abbett & Co. serves as the Fund's investment manager.
MITCHELL HUTCHINS SERIES TRUST
Mitchell Hutchins Series Trust is a professionally managed open-end investment
company. Mitchell Hutchins Asset Management Inc., a wholly owned subsidiary of
PaineWebber Incorporated, provides investment advisory and administrative
services to the Portfolio.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Neuberger & Berman Advisers Management Trust is a Delaware business trust
organized pursuant to a Trust instrument dated May 23, 1994. The Trust is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company and consists of nine separate portfolios. Each
portfolio of the Trust invests all of its net investable assets in a
corresponding series of Neuberger & Berman Advisers Managers Trust, whose
investment adviser is Neuberger & Berman Mangement Incorporated. Shares of the
Trust are offered to life insurance companies for allocation to certain of
their separate accounts established for the purpose of funding variable annuity
contracts and variable life insurance policies.
STRONG OPPORTUNITY FUND II, INC.
Strong Opportunity Fund II, Inc. is a diversified open-end management
investment company established as a corporation under Wisconsin law on
December 28, 1990. Shares of the Fund are only offered and sold to the
separate accounts of certain insurance companies for the purpose of
funding variable annuity and variable life insurance contracts. Strong
Capital Management, Inc. is the investment adviser for the Fund.
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Variable Insurance Funds, Inc., is an open-end management investment
company and was organized as a corporation under Wisconsin law on December 28,
1990. Shares of the Fund are only offered and sold to the separate accounts of
certain insurance companies for the purpose of funding variable annuity and
variable life insurance contracts. Strong Capital Management, Inc. is the
investment adviser for the fund.
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust is an open-end management investment company
organized as a business trust under the laws of the Commonwealth of
Massachusetts on January 7, 1987. Trust shares are offered only to separate
accounts of various insurance companies to fund the benefits of variable life
and variable annuity contracts. The investment adviser and manager is Van Eck
Associates Corporation.
A full description of each of the Eligible Funds, including the investment
objectives, policies and restrictions of each of the Portfolios, is contained in
the Prospectuses of the Eligible Funds which accompany this Prospectus and
should be read carefully by a prospective purchaser before investing.
PART B
Great American Reserve
Insurance Company
VARIABLE ANNUITY ACCOUNT E
INDIVIDUAL & GROUP VARIABLE DEFERRED ANNUITY CONTRACTS
STATEMENT OF ADDITIONAL INFORMATION
Dated May 1, 1998
Offered by Great American Reserve Insurance Company
11815 N. Pennsylvania St., Carmel, IN 46032
(317) 817-3700
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus for Great American Reserve Variable
Annuity Account E ("Variable Account") -- Individual Variable Deferred Annuity
Contracts or Group Variable Deferred Annuity Contracts, dated May 1, 1998. You
can obtain a copy of the Prospectus by contacting Great American Reserve
Insurance Company ("Great American Reserve") at the address or telephone number
given above.
TABLE OF CONTENTS Page
General Information and History.........................................
Independent Accountants.................................................
Distribution............................................................
Calculation of Yield Quotations.........................................
Calculation of Total Return Quotations..................................
Other Performance Data..................................................
Financial Statements....................................................
GENERAL INFORMATION AND HISTORY
Great American Reserve is an indirect wholly owned subsidiary of Conseco,
Inc. ("Conseco"). The operations of Great American Reserve are handled by
Conseco. Conseco is a publicly owned financial services holding company, the
principal operations of which are in the development, marketing and
administration of specialized annuity and life insurance products. Conseco has
its principal offices at 11815 N. Pennsylvania Street, Carmel, Indiana 46032.
The Variable Account was established by Great American Reserve.
INDEPENDENT ACCOUNTANTS
The financial statements of Great American Reserve Variable Annuity Account
E and Great American Reserve included in the Prospectus and the Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P.,
Indianapolis, Indiana, independent accountants, for the periods indicated in
their reports as stated in their opinion and have been so included in reliance
upon such opinion given upon the authority of that firm as experts in accounting
and auditing.
DISTRIBUTION
Great American Reserve continuously offers the Contracts through associated
persons of the principal underwriter for Variable Account, Conseco Equity Sales,
Inc. ("CES"), a registered broker-dealer and member of the National Association
of Securities Dealers, Inc. CES is located at 11815 N. Pennsylvania Street,
Carmel, Indiana 46032, and is an affiliate of Great American Reserve. For the
years ended December 31, 1997, 1996 and 1995, Great American Reserve paid CES
total underwriting commissions of $5,449,417, $2,195,600 and $ 684,533. In
addition, certain Contracts may be sold by life insurance/registered
representatives of other registered broker-dealers.
CES performs the sales functions relating to the Contracts and Great
American Reserve provides all administrative services. To cover the sales
expenses and administrative expenses (including such items as salaries,
rent, postage, telephone, travel, legal, actuarial, audit, office equipment and
printing), Great American Reserve makes sales and administrative deductions,
varying by type of Contract. See "Contract Charges" in the Prospectus.
CALCULATION OF YIELD QUOTATIONS
The Money Market Sub-account's standard yield quotations may appear in
sales material and advertising as calculated by the standard method prescribed
by rules of the Securities and Exchange Commission. Under this method, the yield
quotation is based on a seven-day period and computed as follows: The Money
Market Sub-account's daily net investment factor, minus one (1.00) is multiplied
by 365 to produce an annualized yield. The annualized yields of the seven-day
period are then averaged and carried to the nearest one-hundredth of one
percent. This yield reflects investment results less deductions for investment
advisory fees, mortality and expense risk fees and the administrative charge,
but does not include a deduction of any applicable annual administrative fees.
Because of these deductions, the yield for the Money Market Sub-account will be
lower than the yield for the corresponding Fund of the Conseco Series Trust.
The Money Market Sub-account's effective yield may appear in sales material
and advertising for the same seven-day period, determined on a compound basis.
The effective yield is calculated by compounding the unannualized base period
return by adding one to the base period return, raising the sum to a power equal
to 365 divided by 7, and subtracting one from the result.
The yield on the Money Market Sub-account will generally fluctuate on a
daily basis. Therefore, the yield for any given past period is not an indication
or representation of future yields or rates of return. The actual yield is
affected by changes in interest rates on money market securities, average
Sub-account maturity, the types and quality of Portfolio securities held by the
corresponding Fund of the Conseco Series Trust and its operating expenses.
The Portfolios of the eligible Funds may advertise investment performance
figures, including yield. Each Sub-account's yield will be based upon a stated
30-day period and will be computed by dividing the net investment income per
accumulation unit earned during the period by the maximum offering price per
accumulation unit on the last day of the period, according to the following
formula:
YIELD = 2 ((A - B/CD) + 1)6 - 1)
Where:
A = the net investment income earned during the period by the Portfolio.
B = the expenses accrued for the period (net of reimbursements, if any).
C = the average daily number of accumulation units outstanding during
the period.
D = the maximum offering price per accumulation unit on the last day of the
period.
CALCULATION OF TOTAL RETURN QUOTATIONS
Great American Reserve may include certain total return quotations for one
or more of the Portfolios of the eligible Funds in advertising, sales literature
or reports to Contract Owners or prospective purchasers. Such total return
quotations will be expressed as the average annual rate of total return over
one-, five- and 10-year periods ended as of the end of the immediately preceding
calendar quarter, and as the dollar amount of annual total return on a
year-to-year, rolling 12-month basis ended as of the end of the immediately
preceding calendar quarter.
Average annual total return quotations are computed according to the
following formula:
P (1+T)n = ERV
Where:
P = beginning purchase payment of $1,000
T = average annual total return
n = number of years in period
ERV = ending redeemable value of a hypothetical $1,000 purchase payment made at
the beginning of the one-, five- or 10-year period at the end of the one-,
five- or 10-year period (or fractional portion thereof).
INDIVIDUAL AND GROUP FLEXIBLE PREMIUM PAYMENT VARIABLE ANNUITY
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIOD ENDED 12/31/97:
Since
VARIABLE ACCOUNT SUB-ACCOUNTS (1) 1 Year Inception
======================================================================================================
<S> <C> <C>
CONSECO SERIES TRUST
Asset Allocation Portfolio ........................................... 5.82% 19.27(2)
Common Stock Portfolio ............................................... 6.54% 26.67(2)
Corporate Bond Portfolio ............................................. (1.30)% 5.74(2)
Government Securities Portfolio ...................................... (2.79)% 4.31(2)
THE ALGER AMERICAN FUND
Alger American Leveraged AllCap Portfolio ............................ 7.53% 22.43%(3)
Alger American Growth Portfolio ...................................... 12.98% 10.38%(4)
Alger American MidCap Growth Portfolio ............................... 3.32% 1.15%(4)
Alger American Small Capitalization Portfolio ........................ .07% 9.43%(3)
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
International ........................................................ N/A (.004)%(5)
Value ................................................................ N/A 18.75%
BERGER IPT
Berger IPT - 100 Fund ................................................ 2.17% 3.07%(4)
Berger IPT - Growth and Income Fund .................................. 12.28% 13.74%(4)
Berger IPT - Small Company Growth Fund ............................... 9.06% 4.35%(4)
Berger/BIAM IPT - International Fund ................................. N/A (16.38)%(5)
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio ...................................... N/A (6.75)%(5)
Partners Portfolio ................................................... N/A 20.77%(5)
STRONG OPPORTUNITY FUND II, INC
Opportunity Fund II .................................................. N/A 19.31%(5)
STRONG VARIABLE INSURANCE FUNDS, INC.
Growth Fund II ....................................................... N/A 25.21%(5)
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC........................ 15.33% 20.87%(3)
DREYFUS STOCK INDEX FUND ................................................ 19.46% 22.33%(3)
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ................................... 2.21% 8.58%(3)
Federated International Equity Fund II ............................... (1.13)% 3.35%(3)
Federated Utility Fund II ............................................ 13.77% 14.34%(3)
JANUS ASPEN SERIES
Aggressive Growth Portfolio .......................................... 1.22% 13.11%(3)
Growth Portfolio ..................................................... 10.31% 17.45%(3)
Worldwide Growth Portfolio ........................................... 9.73% 22.93%(3)
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund (11.76)% 4.28%(3)
Worldwide Bond Fund .................................................. (8.09)% (1.91)%(3)
Worldwide Emerging Markets Fund ...................................... (20.72)% (5.77)%(4)
======================================================================================================
</TABLE>
(1) No information is provided with respect to the Sub-accounts investing in
The American Century Variable Portfolios, Inc. Income and Growth Fund, the
INVESCO Variable Investment Funds, Inc. INVESCO VIF - High Yield and
INVESCO VIF - Industrial Income Portfolios; the Dreyfus Variable Investment
Fund, Inc. International Value and Disciplined Stock Portfolios; the Lazard
Retirement Series, Inc. Lazard Retirement Equity and Lazard Retirement
Small Cap Portfolios; the Mitchell Hutchins Series Trust Growth and Income
Portfolio; and the Van Eck Worldwide Insurance Trust Worldwide Hard Assets
and Worldwide Real Estate Funds, because these Funds were not available as
of December 31, 1997.
(2) Since inception (July 25, 1994).
(3) Since inception (June 1, 1995).
(4) Since inception (May 1, 1996).
(5) Since inception (May 1, 1997).
OTHER PERFORMANCE DATA
Great American Reserve may from time to time also illustrate average annual
total returns in a non-standard format, as appears in the following "Gross
Average Annual Total Returns" table, in conjunction with the standard format
described above. The non-standard format will be identical to the standard
format except that the withdrawal charge percentage will be assumed to be zero.
All non-standard performance data will only be advertised if the standard
performance data for the same period, as well as for the required periods, is
also illustrated.
Performance data for the Variable Account investment options may be
compared in advertisements, sales literature and reports to contract owners,
with the investment returns on various mutual funds, stocks, bonds, certificates
of deposit, tax free bonds, or common stock and bond indices, and other groups
of variable annuity separate accounts or other investment products tracked by
Morningstar, Inc., a widely used independent research firm which ranks mutual
funds and other investment companies by overall performance, investment
objectives, and assets, or tracked by other services, companies, publications,
or persons who rank such investment companies on overall performance or other
criteria.
Reports and promotional literature may also contain other information,
including the effect of tax-deferred compounding on an investment option's
performance returns, or returns in general, which may be illustrated by graphs,
charts or otherwise, and which may include a comparison, at various points in
time, of the return from an investment in a Contract (or returns in general) on
a tax-deferred basis (assuming one or more tax rates) with the return on a
taxable basis.
Reports and promotional literature may also contain the ratings Great
American Reserve has received from independent rating agencies. However, Great
American Reserve does not guarantee the investment performance of the Variable
Account investment options.
INDIVIDUAL AND GROUP FLEXIBLE PREMIUM PAYMENT VARIABLE ANNUITY
<TABLE>
<CAPTION>
GROSS AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 12/31/97:
Since
VARIABLE ACCOUNT SUB-ACCOUNTS (1) 1 Year Inception
======================================================================================================
CONSECO SERIES TRUST
<S> <C> <C> <C>
Asset Allocation Portfolio ........................................... 16.21% 21.88%(2)
Common Stock Portfolio ............................................... 17.04% 29.40%(2)
Corporate Bond Portfolio ............................................. 8.39% 8.12%(2)
Government Securities Portfolio ...................................... 6.76% 6.67%(2)
THE ALGER AMERICAN FUND
Alger American Leveraged AllCap Portfolio ............................ 18.02% 26.47%(3)
Alger American Growth Portfolio ...................................... 24.00% 16.68%(4)
Alger American MidCap Growth Portfolio ............................... 13.41% 6.96%(4)
Alger American Small Capitalization Portfolio ........................ 9.84% 3.12%(3)
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
International ........................................................ N/A 14.16%(5)
Value ................................................................ N/A 35.48%(5)
BERGER IPT
Berger IPT - 100 Fund ................................................ 12.18% 8.99%(4)
Berger IPT - Growth and Income Fund .................................. 23.26% 20.22%(4)
Berger IPT - Small Company Growth Fund ............................... 19.64% 10.31%(4)
Berger/BIAM IPT - International Fund ................................. N/A (4.46)%(5)
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio ...................................... N/A 6.50%(5)
Partners Portfolio ................................................... N/A 37.77%(5)
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II .................................................. N/A 36.12%(5)
STRONG VARIABLE INSURANCE FUNDS, INC.
Growth Fund II ....................................................... N/A 42.82%(5)
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC........................ 26.60% 24.92%(3)
DREYFUS STOCK INDEX FUND ................................................ 3.11% 26.43%(3)
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ................................... 12.25% 12.29%(3)
Federated International Equity Fund II ............................... 8.55% 6.90%(3)
Federated Utility Fund II ............................................ 24.88% 18.21%(3)
JANUS ASPEN SERIES
Aggressive Growth Portfolio .......................................... 11.10% 16.90%(3)
Growth Portfolio ..................................................... 21.04% 21.38%(3)
Worldwide Growth Portfolio ........................................... 20.46% 27.02%(3)
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund ........................................... (3.05)% 7.85%(3)
Worldwide Bond Fund .................................................. .96% 1.50%(3)
Worldwide Emerging Markets Fund ...................................... (12.83)% (.59)%(4)
======================================================================================================
</TABLE>
(1) No information is provided with respect to the Sub-accounts investing in
The American Century Variable Portfolios, Inc. Income and Growth Fund, the
INVESCO Variable Investment Funds, Inc. INVESCO VIF - High Yield and
INVESCO VIF - Industrial Income Portfolios; the Dreyfus Variable Investment
Fund, Inc. International Value and Disciplined Stock Portfolios; the Lazard
Retirement Series, Inc. Lazard Retirement Equity and Lazard Retirement
Small Cap Portfolios, the Mitchell Hutchins Series Trust Growth and Income
Portfolio; and the Van Eck Worldwide Insurance Trust Worldwide Hard Assets
and Worldwide Real Estate Funds, because these Funds were not available
as of December 31, 1997.
(2) Since inception (July 25, 1994).
(3) Since inception (June 1, 1995).
(4) Since inception (May 1, 1996).
(5) Since inception (May 1,1997).
FINANCIAL STATEMENTS
Audited Financial Statements of Great American Reserve Annuity Account E
and Great American Reserve Insurance Company as of December 31, 1997 are
included herein.
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
================================================================================================================================
SHARES COST VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in portfolio shares, at net asset value (Note 2):
The Alger American Fund:
Growth Portfolio ........................................................... 22,486.9 $ 932,278 $ 961,539
Leveraged AllCap Portfolio ................................................. 101,469.1 2,061,354 2,351,038
MidCap Portfolio ........................................................... 31,470.0 761,602 760,944
Small Capitalization Portfolio ............................................. 125,541.1 5,188,588 5,492,424
American Century Variable Portfolios, Inc.:
International Fund ......................................................... 26,123.1 177,814 178,682
Value Fund ................................................................. 73,653.2 505,492 510,417
Berger Institutional Products Trust:
100 Fund ................................................................... 65,249.2 752,521 724,918
Growth and Income Fund ..................................................... 81,602.4 1,076,683 1,092,656
Small Company Growth Fund .................................................. 18,340.0 208,826 221,181
BIAM International Fund .................................................... 201,289.5 2,012,558 1,970,624
Conseco Series Trust:
Asset Allocation Portfolio ................................................. 851,457.8 11,661,996 11,341,977
Common Stock Portfolio ..................................................... 958,490.9 20,655,014 19,326,216
Corporate Bond Portfolio ................................................... 525,377.4 5,259,245 5,324,957
Government Securities Portfolio ............................................ 36,843.7 439,928 443,603
Money Market Portfolio ..................................................... 3,543,929.1 3,543,929 3,543,929
Dreyfus Stock Index Fund ....................................................... 633,476.5 14,861,552 16,312,021
The Dreyfus Socially Responsible Growth Fund, Inc. ............................. 85,225.6 1,995,972 2,128,083
Federated Insurance Series:
High Income Bond Fund II ................................................... 269,559.6 2,798,328 2,951,677
International Equity Fund II ............................................... 32,009.8 386,779 392,760
Utility Fund II ............................................................ 72,988.5 879,413 1,043,005
The Janus Aspen Series:
Aggressive Growth Portfolio ................................................ 136,236.9 2,519,649 2,799,669
Growth Portfolio ........................................................... 461,464.6 7,810,949 8,527,866
Worldwide Growth Portfolio ................................................. 654,303.1 14,040,224 15,304,149
Neuberger & Berman Advisers Management Trust:
Limited Maturity Bond Portfolio ............................................ 1,855.7 26,017 26,203
Partners Portfolio ......................................................... 60,287.5 1,223,446 1,241,922
Strong Variable Insurance Funds, Inc.:
Growth Fund II ............................................................. 8,151.2 103,672 101,483
Strong Opportunity Fund II ..................................................... 14,104.5 304,667 306,069
The Van Eck Worldwide Insurance Trust:
Worldwide Hard Asset Fund (formerly Gold and Natural Resource Fund) (Note 1) 288,721.6 4,534,307 4,538,703
Worldwide Bond Fund ........................................................ 315,450.1 3,404,758 3,466,797
Worldwide Emerging Markets Fund ............................................ 174,418.2 2,359,098 1,918,600
================================================================================================================================
Total assets ......................................................................................... 115,304,112
Liabilities:
Amounts due to Great American Reserve Insurance Company ........................................................ 140,354
- --------------------------------------------------------------------------------------------------------------------------------
Net assets (Note 6) .................................................................................. $115,163,758
================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
Statement of Assets and Liabilities - Continued
December 31, 1997
<TABLE>
<CAPTION>
================================================================================================================================
UNITS UNIT VALUE REPORTED VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net assets attributable to:
Contract owners' deferred annuity reserves:
The Alger American Fund:
Growth Portfolio ............................................................. 742,232.6 $1.293971 $ 960,427
Leveraged AllCap Portfolio ................................................... 1,279,295.5 1.835511 2,348,160
MidCap Portfolio ............................................................. 679,329.8 1.118979 760,156
Small Capitalization Portfolio ............................................... 3,988,447.7 1.375354 5,485,527
American Century Variable Portfolios, Inc.:
International Fund ........................................................... 163,369.8 1.092954 178,556
Value Fund ................................................................... 415,890.9 1.225987 509,877
Berger Institutional Products Trust:
100 Fund ..................................................................... 627,056.2 1.154662 724,038
Growth and Income Fund ....................................................... 802,420.3 1.360249 1,091,491
Small Company Growth Fund .................................................... 187,471.2 1.178105 220,861
BIAM International Fund ...................................................... 2,029,229.7 0.969881 1,968,111
Conseco Series Trust:
Asset Allocation Portfolio ................................................... 5,740,115.3 1.973445 11,327,800
Common Stock Portfolio ....................................................... 7,962,515.1 2.424118 19,302,081
Corporate Bond Portfolio ..................................................... 4,066,811.9 1.307768 5,318,446
Government Securities Portfolio .............................................. 354,897.0 1.248382 443,047
Money Market Portfolio ....................................................... 3,116,004.9 1.136082 3,540,038
Dreyfus Stock Index Fund ......................................................... 8,884,648.6 1.833764 16,292,345
The Dreyfus Socially Responsible Growth Fund, Inc. ............................... 1,195,614.4 1.777912 2,125,697
Federated Insurance Series:
High Income Bond Fund II ..................................................... 2,184,738.8 1.349419 2,948,127
International Equity Fund II ................................................. 329,971.3 1.188469 392,161
Utility Fund II .............................................................. 675,836.3 1.541347 1,041,698
The Janus Aspen Series:
Aggressive Growth Portfolio .................................................. 1,867,131.1 1.497524 2,796,074
Growth Portfolio ............................................................. 5,160,717.8 1.650431 8,517,407
Worldwide Growth Portfolio ................................................... 8,234,605.0 1.856255 15,285,524
Neuberger & Berman Advisers Management Trust:
Limited Maturity Bond Portfolio .............................................. 25,088.9 1.043140 26,171
Partners Portfolio ........................................................... 1,000,599.9 1.239881 1,240,625
Strong Variable Insurance Funds, Inc.:
Growth Fund II ............................................................... 79,814.6 1.270148 101,376
Strong Opportunity Fund II ....................................................... 248,615.4 1.229863 305,763
The Van Eck Worldwide Investment Trust:
Worldwide Hard Assets Fund (formerly Gold and Natural Resources Fund) (Note 1) 3,728,758.3 1.215736 4,533,186
Worldwide Bond Fund .......................................................... 3,332,067.1 1.039146 3,462,503
Worldwide Emerging Markets Fund .............................................. 1,935,324.5 0.990151 1,916,263
Worldwide Hard Assets Fund (Note 1) .......................................... 156.5 1.417413 222
- --------------------------------------------------------------------------------------------------------------------------------
Net assets (Note 6) ................................................................................. $115,163,758
================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
Statements of Operations
For the Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
==============================================================================================================
1997 1996
==============================================================================================================
<S> <C> <C>
Investment income:
Dividends from investments in portfolio shares ..................................... $7,456,439 $1,880,859
Expenses:
Mortality and expense risk fees .................................................... 848,167 211,735
Administrative fees ................................................................ 101,780 24,908
- --------------------------------------------------------------------------------------------------------------
Total expenses .................................................................. 949,947 236,643
- --------------------------------------------------------------------------------------------------------------
Net investment income ......................................................... 6,506,492 1,644,216
- --------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation) on investments:
Net realized gains on sales of investments in portfolio shares ..................... 284,803 90,408
Net change in unrealized appreciation of investments in portfolio shares ........... 1,446,801 1,416,628
- --------------------------------------------------------------------------------------------------------------
Net gain on investments in portfolio shares ..................................... 1,731,604 1,507,036
- --------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations .................................... $8,238,096 $3,151,252
==============================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Statements of Changes in Net Assets
For the Years Ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
=============================================================================================
1997 1996
=============================================================================================
<S> <C> <C>
Changes from operations:
Net investment income ....................................... $ 6,506,492 $ 1,644,216
Net realized gains on sales of investments .................. 284,803 90,408
Net change in unrealized appreciation of investments ........ 1,446,801 1,416,628
- ---------------------------------------------------------------------------------------------
Net increase in net assets from operations ............... 8,238,096 3,151,252
- ---------------------------------------------------------------------------------------------
Changes from principal transactions:
Net contract purchase payments .............................. 75,117,717 26,259,253
Contract redemptions ........................................ (2,305,982) (523,287)
Net transfers (to) from fixed account ....................... 146,732 (239,681)
- ---------------------------------------------------------------------------------------------
Net increase in net assets from principal transactions ... 72,958,467 25,496,285
- ---------------------------------------------------------------------------------------------
Net increase in net assets ............................. 81,196,563 28,647,537
Net assets, beginning of year ................................. 33,967,195 5,319,658
- ---------------------------------------------------------------------------------------------
Net assets, end of year (Note 6) ....................... $ 115,163,758 $ 33,967,195
=============================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
Notes to Financial Statements
December 31, 1997
================================================================================
(1) General
Great American Reserve Variable Annuity Account E ("Account E") is
registered under the Investment Company Act of 1940, as amended, as a unit
investment trust. Account E was established on November 12, 1993 and commenced
operations on July 25, 1994 as a segregated investment account for individual
and group variable annuity contracts which are registered under the Securities
Act of 1933. The operations of Account E are included in the operations of Great
American Reserve Insurance Company (the "Company") pursuant to the provisions of
the Texas Insurance Code. The Company is an indirect wholly owned subsidiary of
Conseco, Inc., a publicly-held specialized financial services holding company
listed on the New York Stock Exchange.
Prior to June 1, 1995, Account E invested solely in shares of the
portfolios of the Conseco Series Trust. Currently, the following investment
options are available (effective date in parenthesis):
THE ALGER AMERICAN FUND
Growth Portfolio (June 1, 1996)
Leveraged AllCap Portfolio (June 1, 1995)
MidCap Portfolio (June 1, 1996)
Small Capitalization Portfolio (June 1, 1995)
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. (MAY 1, 1997)
International Fund
Value Fund
BERGER INSTITUTIONAL PRODUCTS TRUST
100 Fund (June 1, 1996)
Growth and Income Fund (June 1, 1996)
Small Company Growth Fund (June 1, 1996)
BIAM International Fund (May 1, 1997)
CONSECO SERIES TRUST
Asset Allocation Portfolio
Common Stock Portfolio
Corporate Bond Portfolio
Government Securities Portfolio
Money Market Portfolio
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
(JUNE 1, 1995)
DREYFUS STOCK INDEX FUND (JUNE 1, 1995)
FEDERATED INSURANCE SERIES (JUNE 1, 1995)
High Income Bond Fund II
International Equity Fund II
Utility Fund II
THE JANUS ASPEN SERIES (JUNE 1, 1995)
Aggressive Growth Portfolio
Growth Portfolio
Worldwide Growth Portfolio
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST (MAY 1, 1997)
Limited Maturity Bond Portfolio
Partners Portfolio
STRONG VARIABLE INSURANCE FUNDS, INC.
Growth Fund II (May 1, 1997)
STRONG OPPORTUNITY FUND II (MAY 1, 1997)
THE VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Hard Assets Fund
(formerly Gold and Natural Resources Fund) (June 1, 1995)
Worldwide Bond Fund (June 1, 1995)
Worldwide Emerging Markets Fund (June 1, 1996)
Van Eck Worldwide Insurance Trust terminated the Worldwide Hard Assets
Fund on May 1, 1997 and the Gold and Natural Resources Fund was renamed the
Worldwide Hard Assets Fund. The remaining units in the terminated fund relate to
contract owners who have not transferred out.
The financial statements have been prepared in accordance with generally
accepted accounting principles and, as such, include amounts based on informed
estimates and judgements of management with consideration given to materiality.
Actual results could differ from those estimates.
(2) Summary of Significant Accounting Policies
INVESTMENT VALUATION, TRANSACTIONS AND INCOME
Investments in portfolio shares are valued using the net asset value of
the respective portfolios at the end of each New York Stock Exchange business
day. Investment share transactions are accounted for on a trade date basis (the
date the order to purchase or redeem shares is executed) and dividend income is
recorded on the ex-dividend date. The cost of investments in portfolio shares
sold is determined on a first-in first-out basis. Account E does not hold any
investments which are restricted as to resale.
Net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments are allocated to the contracts on
each valuation date based on each contract's pro rata share of the assets of
Account E as of the beginning of each valuation date.
FEDERAL INCOME TAXES
No provision for federal income taxes has been made in the accompanying
financial statements because the operations of Account E are included in the
total operations of the Company, which is treated as a life insurance company
for federal income tax purposes under the Internal Revenue Code. Net investment
income and realized gains (losses) are retained in Account E and are not taxable
until received by the contract owner or beneficiary in the form of annuity
payments or other distributions.
ANNUITY RESERVES
Deferred annuity contract reserves are comprised of net contract purchase
payments less redemptions and benefits. These reserves are adjusted daily for
the net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments.
5
<PAGE>
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
Notes to Financial Statements - Continued
December 31, 1997
================================================================================
(3) Purchases and Sales of Investments in Portfolio Shares
The aggregate cost of purchases of investments in portfolio shares were
$90,025,395 and $29,565,192 for the years ended December 31, 1997 and 1996,
respectively. The aggregate proceeds from sales of investments in portfolio
shares were $10,491,816 and $2,741,697 for the years ended December 31, 1997 and
1996, respectively.
(4) Deductions and Expenses
Although periodic retirement payments to contract owners vary according to
the investment performance of the portfolios, such payments are not affected by
mortality or expense experience because the Company assumes the mortality and
expense risks under the contracts.
The mortality risk assumed by the Company results from the life annuity
payment option in the contracts in which the Company agrees to make annuity
payments regardless of how long a particular annuitant or other payee lives. The
annuity payments are determined in accordance with annuity purchase rate
provisions established at the time the contracts are issued. Based on the
actuarial determination of expected mortality, the Company is required to fund
any deficiency in the annuity payment reserves from its general account assets.
The expense risk assumed by the Company is the risk that the deductions
for sales and administrative expenses may prove insufficient to cover the actual
sales and administrative expenses. The Company deducts daily from Account E a
fee, which is equal on an annual basis to 1.25 percent of the daily value of the
total investments of Account E, for assuming the mortality and expense risks.
These fees were $848,167 and $211,735 for the years ended December 31, 1997 and
1996, respectively.
Pursuant to an agreement between Account E and the Company (which may be
terminated by the Company), the Company provides sales and administrative
services to Account E, as well as a guaranteed minimum death benefit prior to
retirement for the contracts. The Company may deduct a percentage of amounts
surrendered to cover sales expenses. The percentage varies up to 9.00 percent
based upon the number of years the contract has been held. In addition, the
Company deducts units from individual contracts annually and upon full surrender
to cover an administrative fee of $30. Sales and administrative charges were
$120,852 and $21,774 for the years ended December 31, 1997 and 1996,
respectively. The Company also deducts daily from Account E a fee, which is
equal on an annual basis to 0.15 percent of the daily value of the total
investments of Account E, for administrative expenses. These expenses were
$101,780 and $24,908 for the years ended December 31, 1997 and 1996,
respectively.
(5) Other Transactions With Affiliates
Conseco Equity Sales, Inc., an affiliate of the Company, is the principal
underwriter and performs all variable annuity sales functions on behalf of the
Company through various retail broker/dealers including Conseco Financial
Services, Inc., an affiliate of the Company.
(6) Net Assets
Net assets consisted of the following at December 31, 1997:
================================================================================
Proceeds from the sales of units since organization,
less proceeds of units redeemed .............................. $103,499,006
Undistributed net investment income ............................ 8,400,076
Undistributed net realized gains on sales of investments ....... 447,223
Net unrealized appreciation of investments ..................... 2,817,453
- --------------------------------------------------------------------------------
Total net assets ............................. $115,163,758
================================================================================
6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To The Board of Directors of Great American Reserve Insurance Company and
Contract Owners of Great American Reserve Variable Annuity Account E
We have audited the accompanying statement of assets and liabilities of
Great American Reserve Variable Annuity Account E (the "Account") as of December
31, 1997, and the related statements of operations and changes in net assets for
each of the two years in the period then ended. These financial statements are
the responsibility of the Accounts' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of portfolio shares owned at December 31, 1997 by correspondence
with custodians. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Great American Reserve
Variable Annuity Account E as of December 31, 1997, and the results of its
operations and changes in its net assets for each of the two years in the period
then ended, in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Indianapolis, Indiana
February 23, 1998
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Great American Reserve Insurance Company
We have audited the accompanying balance sheet of Great American Reserve
Insurance Company (the "Company") as of December 31, 1997 and 1996, and the
related statements of operations, shareholder's equity and cash flows for the
years ended December 31, 1997 and 1996 and the four months ended December 31,
1995. We have also audited the accompanying statement of operations,
shareholder's equity and cash flows of the Company for the eight months ended
August 31, 1995 based on the basis of accounting applicable to periods prior to
the adoption of push down accounting upon Conseco, Inc.'s purchase of all common
shares of the Company it did not previously own (see note 1 of the notes to
financial statements regarding the adoption of push down accounting). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Great American Reserve
Insurance Company as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years ended December 31, 1997 and 1996,
the four months ended December 31, 1995 and the eight months ended August 31,
1995, in conformity with generally accepted accounting principles.
/S/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Indianapolis, Indiana
April 20, 1998
GREAT AMERICAN RESERVE INSURANCE COMPANY
BALANCE SHEET
December 31, 1997 and 1996
(Dollars in millions)
ASSETS
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Investments:
Actively managed fixed maturities at fair value (amortized cost:
1997 - $1,705.2; 1996 - $1,810.8)............................................... $1,734.0 $1,795.1
Mortgage loans..................................................................... 57.2 77.3
Credit-tenant loans................................................................ 88.9 93.4
Policy loans....................................................................... 80.6 80.8
Other invested assets ............................................................. 88.2 89.0
Short-term investments............................................................. 49.5 14.8
Assets held in separate accounts................................................... 402.1 232.4
-------- --------
Total investments............................................................ 2,500.5 2,382.8
Accrued investment income.............................................................. 30.5 32.9
Cost of policies purchased............................................................. 101.6 143.0
Cost of policies produced.............................................................. 60.7 38.2
Reinsurance receivables................................................................ 21.9 25.7
Goodwill (net of accumulated amortization: 1997 - $13.2; 1996 - $11.7)................. 48.2 49.7
Other assets........................................................................... 8.3 8.2
-------- --------
Total assets................................................................. $2,771.7 $2,680.5
======== ========
(continued on next page)
The accompanying notes are an
integral part of the financial
statements.
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
BALANCE SHEET (Continued)
December 31, 1997 and 1996
(Dollars in millions, except per share amount)
LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Liabilities:
Insurance liabilities:
Interest sensitive products...................................................... $1,522.1 $1,636.5
Traditional products............................................................. 248.3 251.5
Claims payable and other policyholder funds...................................... 62.5 69.5
Liabilities related to separate accounts......................................... 402.1 232.4
Income tax liabilities............................................................. 44.2 29.8
Investment borrowings.............................................................. 61.0 48.4
Other liabilities.................................................................. 14.6 15.5
-------- --------
Total liabilities.......................................................... 2,354.8 2,283.6
-------- --------
Shareholder's equity:
Common stock and additional paid-in capital (par value $4.80 per share, 1,065,000
shares authorized, 1,043,565 shares issued and outstanding).................... 380.8 380.8
Accumulated other comprehensive income:
Unrealized appreciation (depreciation) of fixed maturity securities (net of
applicable deferred income taxes: 1997 - $4.4; 1996 - $(2.4))............... 8.2 (4.4)
Unrealized appreciation (depreciation) of other investments (net of applicable
deferred income taxes: 1997 - $.3; 1996 - $(.1))............................ .5 (.2)
Retained earnings.................................................................. 27.4 20.7
-------- --------
Total shareholder's equity................................................. 416.9 396.9
-------- --------
Total liabilities and shareholder's equity................................. $2,771.7 $2,680.5
======== ========
The accompanying notes are an
integral part of the financial
statements.
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
STATEMENT OF OPERATIONS
(Dollars in millions)
<TABLE>
<CAPTION>
Prior basis
------------
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Insurance policy income............................... $ 75.7 $ 81.4 $ 31.8 $ 60.5
Net investment income................................. 222.6 218.4 74.2 136.4
Net investment gains.................................. 13.3 2.7 12.5 7.3
------- ------- ------ -------
Total revenues............................... . 311.6 302.5 118.5 204.2
------- ------- ------ -------
Benefits and expenses:
Insurance policy benefits............................. 56.5 54.9 18.9 45.9
Change in future policy benefits...................... (4.8) (3.7) .2 (4.3)
Amounts added to annuity and financial product
policyholder account balances:
Interest......................................... 83.6 93.8 32.9 66.7
Other amounts added to variable annuity products 55.7 35.6 11.3 7.9
Interest expense on investment borrowings............. 4.0 6.2 1.0 3.6
Amortization.......................................... 27.1 20.3 15.3 16.0
Other operating costs and expenses.................... 28.2 54.3 13.1 23.7
------- ------- ------ -------
Total benefits and expenses...................... 250.3 261.4 92.7 159.5
------- ------- ------ -------
Income before income taxes....................... 61.3 41.1 25.8 44.7
Income tax expense........................................ 22.1 15.4 9.7 16.5
------- ------- ------ -------
Net income....................................... $ 39.2 $ 25.7 $ 16.1 $ 28.2
======= ======= ====== ======
The accompanying notes are an
integral part of the financial
statements.
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
STATEMENT OF SHAREHOLDER'S EQUITY
(Dollars in millions)
<TABLE>
<CAPTION>
Common stock Accumulated other
and additional comprehensive Retained
Total paid-in capital income earnings
----- --------------- ------ --------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 (a)............................. $364.9 $339.7 $(55.1) $80.3
Comprehensive income, net of tax:
Net income (a)........................................ 28.2 - - 28.2
Change in unrealized appreciation (depreciation) of
securities (net of applicable income taxes of
34.1) (a).......................................... 59.0 - 59.0 -
------
Total comprehensive income (a).................... 87.2
Dividends on common stock (a)........................... (41.2) - - (41.2)
Adjustment of balance due to new accounting basis....... 5.1 41.1 (2.0) (34.0)
------ ------ ------ -----
Balance, August 31, 1995................................... 416.0 380.8 1.9 33.3
Comprehensive income, net of tax:
Net income............................................ 16.1 - - 16.1
Change in unrealized appreciation (depreciation) of
securities (net of applicable income
taxes of $6.1)................................... 10.5 - 10.5 -
------
Total comprehensive income........................ 26.6
------ ------ ------ -----
Balance, December 31, 1995................................. 442.6 380.8 12.4 49.4
Comprehensive income, net of tax:
Net income............................................ 25.7 - - 25.7
Change in unrealized appreciation (depreciation) of
securities (net of applicable income
taxes of ($9.7)).................................... (17.0) - (17.0) -
------
Total comprehensive income........................ 8.7
Dividends on common stock............................... (54.4) - - (54.4)
------ ------ ------ ------
Balance, December 31, 1996................................. 396.9 380.8 (4.6) 20.7
Comprehensive income, net of tax:
Net income............................................ 39.2 - - 39.2
Change in unrealized appreciation (depreciation) of
securities (net of applicable income taxes of $7.2). 13.3 - 13.3 -
------
Total comprehensive income........................ 52.5 - - -
Dividends on common stock............................... (32.5) - - (32.5)
------ ------ ------ -----
Balance, December 31, 1997................................. $416.9 $380.8 $ 8.7 $ 27.4
====== ====== ====== ======
<FN>
(a) Prior basis.
</FN>
The accompanying notes are an
integral part of the financial
statements.
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
(Dollars in millions)
<TABLE>
<CAPTION>
Prior basis
------------
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 39.2 $ 25.7 $ 16.1 $ 28.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization..................................... 27.1 20.3 15.3 16.0
Income taxes..................................... 6.7 (3.9) 2.3 2.9
Insurance liabilities............................ (60.9) (40.5) (25.8) (14.0)
Amounts added to annuity and financial
product policyholder account balances......... 139.3 129.4 44.2 74.6
Fees charged to insurance liabilities............ (31.3) (32.8) (10.3) (22.2)
Accrual and amortization of investment income.... .3 3.1 3.2 (1.8)
Deferral of cost of policies produced............ (31.8) (13.2) (3.0) (6.6)
Investment gains................................. (13.3) (2.7) (12.5) (7.3)
Other............................................ (4.6) (8.8) (8.9) (3.2)
--------- -------- ------ -------
Net cash provided by operating
activities................................. 70.7 76.6 20.6 66.6
--------- -------- ------ -------
Cash flows from investing activities:
Sales of investments.................................. 755.2 988.9 513.2 406.5
Maturities and redemptions............................ 150.4 101.7 60.4 57.5
Purchases of investments.............................. (753.6) (954.2) (532.2) (476.2)
--------- -------- ------- -------
Net cash provided (used) by investing
activities................................ 152.0 136.4 41.4 (12.2)
--------- -------- ------ -------
Cash flows from financing activities:
Deposits to insurance liabilities..................... 255.9 169.8 50.8 104.4
Cash paid in reinsurance recapture ................... - - (71.1) -
Investment borrowings................................. 12.6 (35.8) (36.8) 121.0
Withdrawals from insurance liabilities................ (424.0) (306.7) (71.9) (166.3)
Dividends paid on common stock........................ (32.5) (44.5) - (41.2)
--------- ------- -------- -------
Net cash provided (used) by
financing activities...................... (188.0) (217.2) (129.0) 17.9
--------- -------- -------- -------
Net increase (decrease) in short-term
investments............................... 34.7 (4.2) (67.0) 72.3
Short-term investments, beginning of period............... 14.8 19.0 86.0 13.7
--------- -------- -------- -------
Short-term investments, end of period..................... $ 49.5 $ 14.8 $ 19.0 $ 86.0
========= ======== ======== =======
The accompanying notes are an
integral part of the financial
statements.
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
Great American Reserve Insurance Company (the "Company") markets
tax-qualified annuities and certain employee benefit- related insurance products
through professional independent agents. Since August 1995, the Company has been
a wholly owned subsidiary of Conseco, Inc. ("Conseco"), a financial services
holding company engaged in the development, marketing and administration of
supplemental health insurance, annuity, individual life insurance, individual
and group major medical insurance and other insurance products. During 1994,
Conseco effectively owned 36 percent of the Company, through its ownership
interest in CCP Insurance, Inc. ("CCP"), a holding company organized for
companies previously acquired by Conseco Capital Partners, Inc. (the
"Partnership"), a limited partnership organized by Conseco. The Company was
acquired by the Partnership in 1990 (the "Partnership Acquisition"). During
1995, Conseco's ownership in CCP (and in the Company) increased to 49 percent as
a result of purchases of CCP common stock by CCP and Conseco. In August 1995,
Conseco completed the purchase of the remaining shares of CCP common stock it
did not already own in a transaction pursuant to which CCP was merged with
Conseco, with Conseco being the surviving corporation (the "Conseco
Acquisition").
The accompanying financial statements give effect to "push down" purchase
accounting to reflect the Partnership Acquisition and the Conseco Acquisition.
As a result of applying "push down" purchase accounting: (i) the Company's
financial position and results of operations for periods subsequent to the
Partnership Acquisition and before the Conseco Acquisition (the "prior basis")
reflect the Partnership's cost to acquire the Company's asset and liability
accounts based upon their estimated fair values at the purchase date; and (ii)
the Company's financial position and results of operations for periods
subsequent to the Conseco Acquisition reflect Conseco's cost to acquire the
Company's asset and liability accounts based upon their estimated fair values at
the purchase dates.
The effect of the adoption of the new basis of accounting on the Company's
balance sheet accounts on August 31, 1995, was as follows (dollars in millions):
<TABLE>
<CAPTION>
Debit
(Credit)
--------
<S> <C>
Cost of policies purchased.............................................. $ 59.0
Cost of policies produced .............................................. (27.0)
Goodwill................................................................ (15.1)
Insurance liabilities................................................... (1.2)
Income tax liabilities.................................................. (11.9)
Other................................................................... 1.3
Common stock and additional paid-in capital............................. (41.1)
Net unrealized appreciation of fixed maturity securities................ 1.4
Net unrealized appreciation of other investments........................ .6
Retained earnings....................................................... 34.0
</TABLE>
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP"), which differ in some respects
from statutory accounting practices followed in the preparation of financial
statements submitted to state insurance departments. As such, they include
amounts based on informed estimates and judgment, with consideration given to
materiality. Many estimates and assumptions are utilized in calculating
amortized value and recoverability of securities, cost of policies produced,
cost of policies purchased, goodwill, insurance liabilities, guaranty fund
assessment accruals, liabilities for litigation and deferred income taxes.
Actual results could differ from reported results using those estimates. Certain
amounts from the 1996 financial statements and notes have been reclassified to
conform with the 1997 presentation.
Investments
Fixed maturity investments are securities that mature more than one year
after issuance. They include bonds, notes receivable and preferred stocks with
mandatory redemption features and are classified as follows:
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Actively managed - fixed maturity securities that may be sold prior to
maturity due to changes that might occur in market interest rates,
issuer credit quality or the Company's liquidity requirements. Actively
managed fixed maturity securities are carried at estimated fair value
and the unrealized gain or loss is recorded net of tax and related
adjustments described below as a component of shareholder's equity.
Trading - fixed maturity securities are bought and held principally for
the purpose of selling them in the near term. Trading securities are
carried at estimated fair value. Unrealized gains or losses are
included in net investment gains (losses). The Company held $.9 million
of trading securities at December 31, 1997, which are included in other
invested assets. The Company did not hold any trading securities at
December 31, 1996 or 1995.
Held to maturity - fixed maturity securities which the Company has the
ability and positive intent to hold to maturity, and are carried at
amortized cost. The Company may dispose of these securities if the
credit quality of the issuer deteriorates, if regulatory requirements
change or under other unforeseen circumstances. The Company has not
held any securities in this classification during 1997, 1996 or 1995.
Anticipated returns, including investment gains and losses, from the
investment of policyholder balances are considered in determining the
amortization of the cost of policies purchased and the cost of policies
produced. When actively managed fixed maturity securities are stated at
estimated fair value, an adjustment to the cost of policies purchased and the
cost of policies produced may be necessary if a change in amortization would
have been recorded if such securities had been sold at their fair value and the
proceeds reinvested at current yields. Furthermore, if future yields expected to
be earned on such securities decline, it may be necessary to increase certain
insurance liabilities. Adjustments to such liabilities are required when their
balances, in addition to future net cash flows (including investment income),
are insufficient to cover future benefits and expenses.
Unrealized gains and losses and the related adjustments described in the
preceding paragraph have no effect on earnings, but are recorded, net of tax, as
a component of shareholder's equity. The following tables summarize the effect
of these adjustments as of December 31, 1997:
<TABLE>
<CAPTION>
Effect of fair
Balance value adjustment to
before actively managed Reported
adjustment fixed maturity securities amount
---------- ------------------------- --------
(Dollars in millions)
<S> <C> <C> <C>
Actively managed fixed maturity securities.................... $1,705.2 $ 28.8 $1,734.0
Cost of policies purchased.................................... 115.0 (13.4) 101.6
Cost of policies produced..................................... 63.5 (2.8) 60.7
Income tax liabilities........................................ 39.8 4.4 44.2
Net unrealized appreciation of fixed maturity securities, net. - 8.2 8.2
</TABLE>
When changes in conditions cause a fixed maturity investment to be
transferred to a different category (e.g. actively managed, held to maturity or
trading), the security is transferred to the new category at its fair value at
the date of the transfer. There were no such transfers in 1997, 1996 or 1995. At
the transfer date, the security's unrealized gain or loss is recorded as
follows:
- For transfers to the trading category, the unrealized gain or loss is
recognized in earnings;
- For transfers from the trading category, the unrealized gain or loss
already recognized in earnings is not reversed;
- For transfers to actively managed from held to maturity, the unrealized
gain or loss is recognized in shareholder's equity; and
- For transfers to held to m aturity from actively managed, the unrealized
gain or loss at the date of transfer continues to be recognized in
shareholder's equity, but is amortized as a yield adjustment until
ultimately sold.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Credit-tenant loans ("CTLs") are loans for commercial properties which
require: (i) the lease of the principal tenant to be assigned to the Company;
(ii) the lease to produce adequate cash flow to fund substantially all the cash
requirements of the loan; and (iii) the principal tenant, or the guarantor of
such tenant's obligations, to have an investment-grade credit rating when the
loan is made. These loans also must be secured by the value of the related
property. Underwriting guidelines take into account such factors as: (i) the
lease term of the property; (ii) the borrower's management ability, including
business experience, property management capabilities and financial soundness;
and (iii) such economic, demographic or other factors that may affect the income
generated by the property or its value. The underwriting guidelines generally
require a loan-to-value ratio of 75 percent or less. Credit-tenant loans and
traditional mortgage loans are carried at amortized cost.
Policy loans are stated at their current unpaid principal balance.
Short-term investments include commercial paper, invested cash and other
investments purchased with maturities of less than three months and are carried
at amortized cost, which approximates fair value. The Company considers all
short-term investments to be cash equivalents.
Fees received and costs incurred in connection with origination of
investments, principally CTLs and mortgage loans, are deferred. Fees, costs,
discounts and premiums are amortized as yield adjustments over the contractual
life of the investments. Anticipated prepayments on mortgage-backed securities
are taken into consideration in determining estimated future yields on such
securities.
The specific identification method is used to account for the disposition
of investments. The differences between sale proceeds and carrying values are
reported as investment gains and losses, or as adjustments to investment income
if the proceeds are prepayments by issuers prior to maturity.
The Company regularly evaluates investment securities, credit-tenant loans
and mortgage loans based on current economic conditions, past credit loss
experience and other circumstances of the investee. A decline in a security's
net realizable value that is other than temporary is treated as an investment
loss and the cost basis of the security is reduced to its estimated fair value.
Impaired loans are revalued at the present value of expected cash flows
discounted at the loan's effective interest rate when it is probable that the
Company will be unable to collect all amounts due according to the contractual
terms of the agreement. The Company accrues interest on the net carrying amount
of impaired loans.
As part of the Company's investment strategy, the Company may enter into
reverse repurchase agreements and dollar-roll transactions to increase its
investment return or to improve liquidity. These transactions are accounted for
as collateral borrowings, where the amount borrowed is equal to the sales price
of the underlying securities.
Separate Accounts
Separate accounts are funds on which investment income and gains or losses
accrue directly to certain policyholders. The assets of these accounts are
legally segregated. They are not subject to the claims which may arise out of
any other business of the Company. The Company reports separate account assets
at market value; the underlying investment risks are assumed by the contract
holders. The Company records the related liabilities at amounts equal to the
underlying assets; the fair value of these liabilities equals their carrying
amount.
Cost of Policies Purchased
The cost of policies purchased represents the portion of the acquisition
cost that was allocated to the value of the right to receive future cash flows
from insurance contracts existing at the date such insurance contracts were
acquired. The value of cost of policies purchased is the actuarially determined
present value of the projected future cash flows from the insurance contracts
existing at the acquisition date. The method used to value the cost of policies
purchased is consistent with the valuation methods used most commonly to value
blocks of insurance business, which is also consistent with the basic
methodology generally used to value assets. The method used is summarized as
follows:
- Identify the expected future cash flows from the blocks of business.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
- Identify the risks inherent in realizing those cash flows (i.e., what is
the probability that the cash flows will be realized).
- Identify the rate of return necessary to accept these risks, based on
consideration of the factors summarized below.
- Determine the value of the policies purchased by discounting the expected
future cash flows by the discount rate required.
The expected future cash flows used in determining such value are based on
actuarially determined projections of future premium collections, mortality,
surrenders, operating expenses, changes in insurance liabilities, investment
yields on the assets held to back the policy liabilities and other factors.
These projections take into account all factors known or expected at the
valuation date, based on the collective judgment of the Company's management.
Actual experience on purchased business may vary from projections due to
differences in renewal premiums collected, investment spread, investment gains
or losses, mortality and morbidity costs and other factors.
The discount rate used to determine the value of the cost of policies
purchased is the rate of return needed to earn in order to invest in the
business being acquired. In determining this required rate of return, the
following factors are considered:
- The magnitude of the risks associated with each of the actuarial
assumptions used in determining expected future cash flows.
- The cost of capital required to fund the acquisition.
- The likelihood of changes in projected future cash flows that might
occur if there are changes in insurance regulations and tax laws.
- The acquired business compatibility with other activities of the Company
that may favorably affect future cash flows.
- The complexity of the acquired business.
- Recent prices (i.e., discount rates used in determining valuations)
paid by others to acquire similar blocks of business.
After the cost of policies purchased is determined, it is amortized based
on the incidence of the expected cash flows. This asset is amortized using the
interest rate credited to the underlying policies.
If renewal premiums collected, investment spread, investment gains or
losses, mortality and morbidity costs or other factors differ from expectations,
amortization of the cost of policies purchased is adjusted. For example, the
sale of a fixed maturity investment may result in a gain (or loss). If the sale
proceeds are reinvested at a lower (or higher) earnings rate, there may also be
a reduction (or increase) in future investment spread. Amortization must be
increased (decreased) to reflect the change in the incidence of expected cash
flows consistent with the methods used with the cost of policies produced
(described below).
Each year, the recoverability of the cost of policies purchased is
evaluated by line of business within each block of purchased insurance business.
If current estimates indicate that the existing insurance liabilities, together
with the present value of future net cash flows from the blocks of business
purchased, will be insufficient to recover the cost of policies purchased, the
difference is charged to expense. Amortization is adjusted consistent with the
methods used with the cost of policies produced (as described below).
The cost of policies purchased related to the original acquisition of the
Company by the Partnership in 1990 is amortized under a slightly different
method than that described above. However, the effect of the different method on
1997 net income was insignificant.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Cost of Policies Produced
Costs which vary with and are primarily related to the acquisition of new
business are deferred to the extent that such costs are deemed recoverable.
These costs include commissions, certain costs of policy issuance and
underwriting and certain agency expenses. For traditional life and health
contracts, deferred costs are amortized with interest in relation to future
anticipated premium revenue using the same assumptions that are used in
calculating the insurance liabilities. For immediate annuities with mortality
risks, deferred costs are amortized in relation to the present value of benefits
to be paid. For universal life-type, interest-sensitive and investment-type
contracts, deferred costs are amortized in relation to the present value of
expected gross profits from these contracts, discounted using the interest rate
credited to the policy (currently, 5 percent to 8 percent).
Recoverability of the unamortized balance of cost of policies produced is
evaluated regularly and considers anticipated investment income. For universal
life-type contracts and investment-type contracts, the accumulated amortization
is adjusted (whether an increase or a decrease) whenever there is a change in
the estimated gross profits expected over the life of a block of business in
order to maintain a constant relationship between amortization and the present
value (discounted at the rate of interest that accrues to the policies) of
expected gross profits. For traditional and most other contracts, the
unamortized asset balance is reduced by a charge to income only when the sum of
the present value of discounted future cash flows and the policy liabilities is
not sufficient to cover such asset balance.
Goodwill
Goodwill is the excess of the amount paid to acquire a company over the
fair value of its net assets. Goodwill is amortized on the straight-line basis
over a 40-year period. The Company continually monitors the value of the
goodwill based on estimates of future earnings. The Company determines whether
goodwill is fully recoverable from projected undiscounted net cash flows from
earnings of the subsidiaries over the remaining amortization period. If it is
determined that changes in such projected cash flows no longer supported the
recoverability of goodwill over the remaining amortization period, the Company
would reduce its carrying value with a corresponding charge to expense or
shorten the amortization period (no such changes have occurred). Cash flows
considered in such an analysis are those of the business acquired, if separately
identifiable, or the business segment that acquired the business if such
earnings are not separately identifiable.
Insurance Liabilities, Recognition of Insurance Policy Income and Related
Benefits and Expenses
Reserves for traditional and limited-payment life insurance contracts are
generally calculated using the net level premium method based on assumptions as
to investment yields, mortality, morbidity, withdrawals and dividends. The
assumptions are based on projections using past and expected experience and
include provisions for possible adverse deviation. These assumptions are made at
the time the contract is issued or, in the case of contracts acquired by
purchase, at the purchase date.
Reserves for universal life-type and investment-type contracts are based on
the contract account balance, if future benefit payments in excess of the
account balance are not guaranteed, or on the present value of future benefit
payments when such payments are guaranteed. Additional increases to insurance
liabilities are made if future cash flows including investment income are
insufficient to cover future benefits and expenses.
For investment-type contracts without mortality risk (such as deferred
annuities and immediate annuities with benefits paid for a period certain) and
for contracts that permit the Company or the insured to make changes in the
contract terms (such as single- premium whole life and universal life), premium
deposits and benefit payments are recorded as increases or decreases in a
liability account rather than as revenue and expense. Amounts charged against
the liability account for the cost of insurance, policy administration and
surrender penalties are recorded as revenues. Interest credited to the liability
account and benefit payments made in excess of the contract liability account
balance are charged to expense.
For traditional life insurance contracts, premiums are recognized as income
when due. Benefits and expenses are associated with earned premiums resulting in
their level recognition over the premium paying period of the contracts. Such
recognition is accomplished through the provision for future policy benefits and
the amortization of deferred policy acquisition costs.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
For contracts with mortality risk, but with premiums paid for only a
limited period (such as single-premium immediate annuities with benefits paid
for the life of the annuitant), the accounting treatment is similar to
traditional contracts. However, the excess of the gross premium over the net
premium is deferred and recognized in relation to the present value of expected
future benefit payments.
Liabilities for incurred claims are determined using historical experience
and represent an estimate of the present value of the ultimate net cost of all
reported and unreported claims. Management believes these estimates are
adequate. Such estimates are periodically reviewed and any adjustments are
reflected in current operations.
For participating policies, the amount of dividends to be paid (which are
not significant) is determined annually by the Company. The portion of the
earnings allocated to participating policyholders is recorded as an insurance
liability.
Reinsurance
In the normal course of business, the Company seeks to limit its exposure
to loss on any single insured and to recover a portion of benefits paid over
such limit by ceding reinsurance to other insurance enterprises or reinsurers
under excess coverage and coinsurance contracts. The Company has set its
retention limit for acceptance of risk on life insurance policies at various
levels up to $.5 million.
Assets and liabilities related to insurance contracts are reported before
the effects of reinsurance. Reinsurance receivables and prepaid reinsurance
premiums (including amounts related to insurance liabilities) are reported as
assets. Estimated reinsurance receivables are recognized in a manner consistent
with the liabilities relating to the underlying reinsured insurance contracts.
Income Taxes
Income tax expense includes deferred taxes arising from temporary
differences between the tax and financial reporting basis of assets and
liabilities. This liability method of accounting for income taxes also requires
the Company to reflect in income the effect of a tax rate change on accumulated
deferred income taxes in the period in which the change is enacted.
In assessing the realization of deferred tax assets, the Company considers
whether it is more likely than not that the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which temporary
differences become deductible. If future income does not occur as expected,
deferred income taxes may need to be written off.
Comprehensive Income
As of December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 establishes standards for reporting and presentation of comprehensive
income and its components in a full set of financial statements. Comprehensive
income includes all changes in shareholders' equity (except those arising from
transactions with shareholders) and includes net income and net unrealized gains
(losses) on securities. The new standard requires only additional disclosures in
the consolidated financial statements; it does not affect the financial position
or results of operations.
Comprehensive income excludes net investment gains (losses) included in net
income of: (i) $(3.9) million (after income taxes of $(2.1) million) in 1997;
(ii) $.2 million (after income taxes of $.1 million) in 1996; (iii) $1.4 million
(after income taxes of $.7 million) in the four months ended December 31, 1995;
and (iv) $2.2 million (after income taxes of $1.2 million) in the eight months
ended August 31, 1995.
Fair Values of Financial Instruments
The following methods and assumptions were used by the Company in
determining estimated fair values of financial instruments:
Investment securities: The estimated fair values of fixed maturity
securities (including redeemable preferred stocks), equity
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
securities and trading securities are based on quotes from independent
pricing services, where available. For investment securities for which such
quotes are not available, the estimated fair values are obtained from
broker-dealer market makers or by discounting expected future cash flows
using current market interest rates appropriate for the yield, credit
quality of the investments and for fixed maturities, the maturity of the
investments being priced.
Mortgage loans, credit-tenant loans and policy loans: The estimated fair
values of mortgage loans, credit-tenant loans and policy loans are
determined by discounting future expected cash flows using interest rates
currently being offered for similar loans to borrowers with similar credit
ratings. Loans with similar characteristics are aggregated for purposes of
the calculations.
Other invested assets: The estimated fair values of these assets have been
assumed to be equal to their carrying value. Such value is believed to be a
reasonable approximation of the fair value of these investments.
Short-term investments: The estimated fair values of short-term investments
are based on quoted market prices, where available. The carrying amount
reported on the balance sheet for these assets approximates their estimated
fair value.
Insurance liabilities for investment contracts: The estimated fair values
of liabilities under investment-type insurance contracts are determined
using discounted cash flow calculations based on interest rates currently
being offered for similar contracts with maturities consistent with the
contracts being valued.
Investment borrowings: Due to the short-term nature of these borrowings
(terms generally less than 30 days), estimated fair values are assumed to
approximate the carrying amount reported in the balance sheet.
The estimated fair values of financial instruments are as follows:
<TABLE>
<CAPTION>
1997 1996
---------------------- ----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
Financial assets held for purposes other than trading:
Actively managed fixed maturity securities........... $1,734.0 $1,734.0 $1,795.1 $1,795.1
Mortgage loans....................................... 57.2 61.2 77.3 77.0
Credit-tenant loans.................................. 88.9 93.4 93.4 92.5
Policy loans......................................... 80.6 80.6 80.8 80.8
Other invested assets................................ 88.2 88.2 89.0 89.0
Short-term investments............................... 49.5 49.5 14.8 14.8
Financial liabilities held for purposes other than
trading:
Insurance liabilities for investment contracts (1). 1,177.5 1,177.5 $1,282.1 $1,282.1
Investment borrowings.............................. 61.0 61.0 48.4 48.4
<FN>
(1) The estimated fair value of the liabilities for investment contracts
was approximately equal to its carrying value at December 31, 1997
and 1996, because interest rates credited on the vast majority of
account balances approximate current rates paid on similar
investments and because these rates are not generally guaranteed
beyond one year. The Company is not required to disclose fair values
for insurance liabilities, other than those for investment contracts.
However, the Company takes into consideration the estimated fair
values of all insurance liabilities in its overall management of
interest rate risk. The Company attempts to minimize exposure to
changing interest rates by matching investment maturities with
amounts due under insurance contracts.
</FN>
</TABLE>
Recently Issued Accounting Standards
Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
("SFAS 125") was issued in June 1996 and provides accounting and reporting
standards for transfers of financial assets and extinguishments of liabilities.
SFAS 125 is effective for 1997 financial statements; however, certain provisions
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
relating to accounting for repurchase agreements and securities lending are not
effective until January 1, 1998. Provisions effective in 1997 did not have any
effect on the Company's financial position or results of operations. The
adoption of provisions effective in 1998 are not expected to have a material
effect on the Company's financial position or results of operations.
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131") establishes new
standards for reporting about operating segments and products and services,
geographic areas and major customers. Under SFAS 131, segments are to be defined
consistent with the basis management uses internally to assess performance and
allocate resources. Implementing SFAS 131 will have no impact on the
consolidated amounts the Company reports. SFAS 131 is effective for the
Company's December 31, 1998 financial statements.
Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" ("SFAS 132") was
issued in February 1998 and revises current disclosure requirements for
employers' pensions and other retiree benefits. SFAS 132 will have no effect on
the Company's financial position or results of operations. SFAS 132 is effective
for the Company's December 31, 1998 financial statements.
Statement of Position 97-3, "Accounting by Insurance and Other Enterprises
for Insurance-Related Assessments" ("SOP 97-3") was issued by the American
Institute of Certified Public Accountants in December 1997 and provides guidance
for determining when an insurance company or other enterprise should recognize a
liability for guaranty-fund assessments and guidance for measuring the
liability. The statement is effective for 1999 financial statements with early
adoption permitted. The adoption of this statement is not expected to have a
material effect on the Company's financial position or results of operations.
2. INVESTMENTS
At December 31, 1997, the amortized cost and estimated fair value of
actively managed fixed maturity securities were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
United States Treasury securities and obligations
of United States government corporations and
agencies............................................ $ 28.0 $ .7 $ - $ 28.7
Obligations of state and political subdivisions........ 20.5 1.1 .1 21.5
Debt securities issued by foreign governments.......... 18.5 .1 1.2 17.4
Public utility securities.............................. 184.6 3.5 2.3 185.8
Other corporate securities............................. 902.0 26.6 7.8 920.8
Mortgage-backed securities............................. 551.6 8.6 .4 559.8
-------- ----- ----- --------
Total............................................... $1,705.2 $40.6 $11.8 $1,734.0
======== ===== ===== ========
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
At December 31, 1996, the amortized cost and estimated fair value of
actively managed fixed maturity securities were as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
---- ----- ------ -----
(Dollars in millions)
<S> <C> <C> <C> <C>
United States Treasury securities and obligations
of United States government corporations and
agencies............................................ $ 29.9 $ .3 $ .3 $ 29.9
Obligations of state and political subdivisions........ 6.1 .1 .1 6.1
Debt securities issued by foreign governments.......... 11.6 - .5 11.1
Public utility securities.............................. 234.8 2.4 7.0 230.2
Other corporate securities............................. 950.1 10.9 17.6 943.4
Mortgage-backed securities............................. 578.3 2.3 6.2 574.4
-------- ----- ----- --------
Total............................................... $1,810.8 $16.0 $31.7 $1,795.1
======== ===== ===== ========
</TABLE>
Actively managed fixed maturity securities, summarized by the source of
their estimated fair value, were as follows at December 31, 1997:
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
---- -----
(Dollars in millions)
<S> <C> <C>
Nationally recognized pricing services.......................................... $1,416.9 $1,441.2
Broker-dealer market makers..................................................... 143.6 146.2
Internally developed methods (calculated based
on a weighted-average current market yield of 8.0 percent)................... 144.7 146.6
-------- --------
Total ................................................................. $1,705.2 $1,734.0
======== ========
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
The following table sets forth actively managed fixed maturity securities
at December 31, 1997, classified by rating categories. The category assigned is
the highest rating by a nationally recognized statistical rating organization
or, as to $42.4 million fair value of fixed maturity securities not rated by
such firms, the rating assigned by the National Association of Insurance
Commissioners ("NAIC"). For the purposes of this table, NAIC Class 1 is included
in the "A" rating; Class 2, "BBB-"; Class 3, "BB-"; and Classes 4-6, "B+ and
below":
<TABLE>
<CAPTION>
Percent of Percent of
Investment fixed total
Rating maturities investments
------ ---------- -----------
<S> <C> <C>
AAA................................................................................... 39% 27%
AA.................................................................................... 7 5
A..................................................................................... 18 13
BBB+.................................................................................. 8 6
BBB................................................................................... 12 8
BBB-.................................................................................. 8 5
--- --
Investment-grade................................................................. 92 64
--- ---
BB+................................................................................... 2 1
BB.................................................................................... 2 1
BB-................................................................................... 1 1
B+ and below ......................................................................... 3 2
--- --
Below investment-grade........................................................... 8 5
--- --
Total actively managed fixed maturities...................................... 100% 69%
=== ==
</TABLE>
Below investment-grade actively managed fixed maturity securities,
summarized by the amount their amortized cost exceeds fair value, were as
follows at December 31, 1997:
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
---- -----
(Dollars in millions)
<S> <C> <C>
Amortized cost exceeds fair value by more than 30%.................................. $ 1.0 $ .5
Amortized cost exceeds fair value by more than 15% but not more than 30%............ 14.8 11.8
Amortized cost exceeds fair value by more than 5% but not more than 15%............. 15.5 14.0
All others.......................................................................... 104.5 106.0
------ ------
Total below investment-grade fixed maturity investments.................... $135.8 $132.3
====== ======
</TABLE>
The Company had $.3 million of fixed maturity investments in substantive
default and no fixed maturities in technical default as of December 31, 1997.
The Company recorded writedowns of fixed maturity investments and other invested
assets totaling $.3 million in 1997, $.8 million in 1996 and $1.6 million in
1995, as a result of changes in conditions which caused it to conclude the
decline in the fair value of the investment was other than temporary. As of
December 31, 1997, there were no fixed maturity investments about which the
Company had serious doubts as to the ability of the issuer to comply with the
contractual terms of their obligations on a timely basis. Investment income
foregone due to defaulted securities was not significant in 1997, 1996 or 1995.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Actively managed fixed maturity securities at December 31, 1997, summarized
by contractual maturity date, are shown below. Actual maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties and because most
mortgage-backed securities provide for periodic payments throughout their lives.
<TABLE>
<CAPTION>
Estimated
Amortized fair
cost value
---- -----
(Dollars in millions)
<S> <C> <C>
Due in one year or less......................................................... $ 5.8 $ 5.9
Due after one year through five years........................................... 103.0 101.3
Due after five years through ten years.......................................... 357.4 360.5
Due after ten years............................................................. 687.4 706.5
-------- --------
Subtotal................................................................. 1,153.6 1,174.2
Mortgage-backed securities...................................................... 551.6 559.8
-------- --------
Total ................................................................... $1,705.2 $1,734.0
======== ========
</TABLE>
Net investment income consisted of the following:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Actively managed fixed maturity securities....... $133.6 $146.4 $53.9 $110.2
Mortgage loans................................... 8.8 11.8 4.8 8.0
Credit-tenant loans ............................. 7.6 7.2 1.7 4.1
Policy loans..................................... 5.4 5.0 1.9 3.5
Short-term investments........................... 3.4 2.3 .8 1.9
Other invested assets............................ 9.4 11.4 .3 1.6
Separate accounts................................ 55.7 35.6 11.3 7.9
----- ------ ----- ------
Gross investment income..................... 223.9 219.7 74.7 137.2
Investment expenses.............................. 1.3 1.3 .5 .8
------ ------ ----- ------
Net investment income....................... $222.6 $218.4 $74.2 $136.4
====== ====== ===== ======
</TABLE>
The Company had insignificant fixed maturity investments and mortgage loans
that were not accruing investment income in 1997, 1996 and 1995.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
The proceeds from sales of actively managed fixed maturity securities were
$739.4 million in 1997, $938.3 million in 1996 and $918.5 million in 1995. Net
investment gains consisted of the following:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Fixed maturities:
Gross gains................................... $20.6 $16.6 $16.5 $14.4
Gross losses.................................. (5.1) (9.2) (2.2) (2.3)
Other than temporary decline in fair value.... (.3) (.2) (.4) (1.2)
----- ----- ----- -----
Net investment gains from fixed maturities
before expenses........................... 15.2 7.2 13.9 10.9
Mortgage loans................................... (.2) - - (.2)
Other .......................................... 2.4 - - (1.0)
Other than temporary decline in fair value....... - (.6) - -
----- ----- ----- -----
Net investment gains before expenses........ 17.4 6.6 13.9 9.7
Investment gain expenses......................... 4.1 3.9 1.4 2.4
----- ----- ----- -----
Net investment gains........................ $13.3 $ 2.7 $12.5 $ 7.3
===== ===== ===== =====
</TABLE>
The change in net unrealized appreciation (depreciation) on investments
consisted of the following:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Actively managed fixed maturities................ $ 44.5 $(66.5) $45.5 $164.1
Other invested assets............................ 1.1 (1.3) .1 5.1
------- ------ ------ ------
Subtotal................................ 45.6 (67.8) 45.6 169.2
Less effect on other balance sheet accounts:
Cost of policies purchased.................... (21.2) 36.6 (26.3) (64.1)
Cost of policies produced..................... (3.9) 4.5 (2.7) (12.0)
Income taxes.................................. (7.2) 9.7 (6.1) (34.1)
------- ------ ------ ------
Change in net unrealized appreciation
(depreciation) of securities.................. $ 13.3 $(17.0) $10.5 $ 59.0
======= ====== ===== ======
</TABLE>
Investments in mortgage-backed securities at December 31, 1997, included
collateralized mortgage obligations ("CMOs") of $194.2 million and
mortgage-backed pass-through securities of $365.6 million. CMOs are securities
backed by pools of pass-through securities and/or mortgages that are segregated
into sections or "tranches." These securities provide for sequential retirement
of principal, rather than the pro rata share of principal return which occurs
through regular monthly principal payments on pass-through securities.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
The following table sets forth the par value, amortized cost and estimated
fair value of investments in mortgage-backed securities including CMOs at
December 31, 1997, summarized by interest rates on the underlying collateral:
<TABLE>
<CAPTION>
Par Amortized Estimated
value cost fair value
----- ---- -----------
(Dollars in millions)
<S> <C> <C> <C>
Below 7 percent ..................................................... $218.9 $216.2 $218.9
7 percent - 8 percent................................................ 228.4 232.5 235.5
8 percent - 9 percent................................................ 63.9 62.6 64.2
9 percent and above.................................................. 38.9 40.3 41.2
------ ------ ------
Total mortgage-backed securities................................ $550.1 $551.6 $559.8
====== ====== ======
</TABLE>
The amortized cost and estimated fair value of mortgage-backed securities
including CMOs at December 31, 1997, summarized by type of security were as
follows:
<TABLE>
<CAPTION>
Estimated fair value
--------------------
Percent
Amortized of fixed
cost Amount maturities
---- ------ ----------
Type (Dollars in millions)
- ----
<S> <C> <C> <C>
Pass-throughs and sequential and targeted amortization classes........... $455.4 $462.2 26%
Planned amortization classes and accretion directed bonds................ 67.6 68.7 4
Subordinated classes .................................................... 28.6 28.9 2
------ ------- --
Total mortgage-backed securities................................ $551.6 $559.8 32%
====== ====== ==
</TABLE>
At December 31, 1997, approximately 84 percent of the estimated fair value
of the Company's mortgage-backed securities was determined by nationally
recognized pricing services, 6 percent was determined by broker-dealer market
makers, and 10 percent was determined by internally developed methods. The
call-adjusted modified duration of the Company's mortgage-backed securities was
4.8 years at December 31, 1997.
At December 31, 1997, no mortgage loans or credit-tenant loans had
defaulted as to principal or interest for more than 60 days, had been converted
to foreclosed real estate or had been restructured while the Company owned them.
Mortgage loans of $1.1 million were in foreclosure at December 31, 1997. At
December 31, 1997, the Company had a loan loss reserve of $.8 million.
Approximately 35 percent, 20 percent, 9 percent and 9 percent of the mortgage
loan balance were on properties located in California, Texas, Kentucky and
Florida, respectively. No other state comprised greater than 5 percent of the
mortgage loan balance.
As part of its investment strategy, the Company enters into reverse
repurchase agreements and dollar roll transactions to increase its return on
investments and improve its liquidity. These transactions are accounted for as
short-term borrowings collateralized by pledged securities with book values
approximately equal to the loan value. Such borrowings averaged approximately
$90.4 million during 1997 compared with $115.3 million during 1996. The weighted
average interest rate on short-term collateralized borrowings was 4.4 percent
and 5.3 percent during 1997 and 1996, respectively. The primary risk associated
with short-term collateralized borrowings is that the counterparty will be
unable to perform under the terms of the contract. The Company's exposure is
limited to the excess of the net replacement cost of the securities over the
value of the short-term investments (which was not material at December 31,
1997). The Company believes that the counterparties to its reverse repurchase
and dollar roll agreements are financially responsible and that the counterparty
risk is minimal.
Investments on deposit for regulatory authorities as required by law were
$18.3 million at December 31, 1997.
No investments of a single issuer were in excess of 10 percent of
shareholder's equity at December 31, 1997, other than investments issued or
guaranteed by the United States government.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
3. INSURANCE LIABILITIES
Insurance liabilities consisted of the following:
<TABLE>
<CAPTION>
Interest
Withdrawal Mortality rate December 31, December 31,
assumption assumption assumption 1997 1996
---------- ---------- ---------- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Future policy benefits:
Interest-sensitive products:
Investment contracts .............. N/A N/A (b) $1,177.5 $1,282.1
Universal life-type contracts...... N/A N/A N/A 344.6 354.4
-------- --------
Total interest-sensitive
products..................... 1,522.1 1,636.5
-------- --------
Traditional products:
Traditional life insurance Company
contracts........................ experience (a) 8% 142.8 146.2
Limited-payment contracts.......... None (a) 8% 105.5 105.3
-------- --------
Total traditional products..... 248.3 251.5
-------- --------
Claims payable and other policyholder
funds................................. N/A N/A N/A 62.5 69.5
Liabilities related to separate
accounts.............................. N/A N/A N/A 402.1 232.4
-------- --------
Total insurance liabilities.... $2,235.0 $2,189.9
======== ========
- --------------------
<FN>
(a) Principally modifications of the 1975-80 Basic Table, Select and Ultimate
Table.
(b) At December 31, 1997 and 1996, approximately 97 percent of this liability
represented account balances where future benefits were not guaranteed. The
weighted average interest rate on the remainder of the liabilities,
representing the present value of guaranteed future benefits, was
approximately 6.4 percent at December 31, 1997.
</FN>
</TABLE>
Participating policies represented approximately 4.1 percent, 3.5 percent
and 3.7 percent of total life insurance in force at December 31, 1997, 1996 and
1995, respectively, and approximately 2.9 percent, 2.7 percent and 2.4 percent
of premium income for 1997, 1996 and 1995, respectively. Dividends on
participating policies amounted to $2.1 million, $1.9 million and $1.8 million
in 1997, 1996 and 1995, respectively.
4. REINSURANCE
Cost of reinsurance ceded where the reinsured policy contains mortality
risks totaled $24.2 million in 1997, $24.6 million in 1996, and $29.1 million in
1995. This cost was deducted from insurance premium revenue. The Company is
contingently liable for claims reinsured if the assuming company is unable to
pay. Reinsurance recoveries netted against insurance policy benefits totaled
$14.9 million in 1997, $19.4 million in 1996 and $19.5 million in 1995.
Effective October 1, 1995, Western National Life Insurance Company, a
former subsidiary of Conseco, recaptured certain annuity businesses ceded to the
Company through a reinsurance agreement. Reserves related to these policies
totaled $72.8 million. Recapture fees of $.7 million were recognized as income
during the four months ended December 31, 1995.
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
The Company's reinsurance receivable balance at December 31, 1997 relates
to many reinsurers. No balance from a single reinsurer exceeds $6.5 million.
5. INCOME TAXES
Income tax liabilities consisted of the following:
<TABLE>
<CAPTION>
December 31,
-------------------------
1997 1996
---- ----
(Dollars in millions)
<S> <C> <C>
Deferred income tax liabilities:
Cost of policies purchased and produced................................... $ 52.2 $60.3
Investments............................................................... 9.8 (3.3)
Insurance liabilities..................................................... (19.5) (19.7)
Unrealized appreciation (depreciation).................................... 4.7 (2.5)
Other..................................................................... (4.0) (5.0)
------ -----
Deferred income tax liabilities....................................... 43.2 29.8
Current income tax liabilities............................................... 1.0 -
------ -----
Income tax liabilities................................................ $ 44.2 $29.8
======= =====
</TABLE>
Income tax expense was as follows:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Current tax provision............................... $16.3 $10.5 $11.9 $19.9
Deferred tax provision (benefit).................... 5.8 4.9 (2.2) (3.4)
----- ----- ----- -----
Income tax expense........................... $22.1 $15.4 $ 9.7 $16.5
===== ===== ====== =====
</TABLE>
Income tax expense differed from that computed at the applicable statutory
rate of 35 percent for the following reasons:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Federal tax on income before income taxes at
statutory rate.................................... $21.5 $14.4 $9.0 $15.6
State taxes and other................................ .4 .6 .5 .4
Nondeductible items.................................. .2 .4 .2 .5
----- ----- ---- -----
Income tax expense.............................. $22.1 $15.4 $9.7 $16.5
===== ===== ==== =====
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
During 1997, the Internal Revenue Service completed its examination of the
Company for the 1994 tax year and such examination did not result in any
significant adjustments.
6. RELATED PARTY TRANSACTIONS
The Company operates without direct employees through management and
service agreements with subsidiaries of Conseco. Fees for such services
(including data processing, executive management and investment management
services) were based on negotiated rates for periods prior to January 1, 1996.
Pursuant to new service agreements effective January 1, 1996, such fees are
based on Conseco's direct and directly allocable costs plus a 10 percent margin.
Total fees incurred by the Company under such agreement were $36.7 million in
1997, $44.1 million in 1996 and $26.6 million in 1995.
During 1997 and 1996, the Company purchased $11.2 million and $31.5 million
par value, respectively, of senior subordinated notes issued by subsidiaries of
Conseco. Such notes had a carrying value of $29.8 million and $34.7 million at
December 31, 1997 and 1996, respectively, and are classified as "other invested
assets" in the accompanying balance sheet. In addition, during 1997, a
subsidiary of Conseco redeemed $16.5 million par value of such notes which were
purchased in 1996. During 1996, the Company forgave receivables from Conseco
totaling $9.9 million. This transaction is reflected as a dividend to Conseco in
the accompanying statement of shareholder's equity.
7. OTHER OPERATING INFORMATION
Insurance policy income consisted of the following:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Direct premiums collected............................ $ 309.6 $241.3 $ 82.8 $158.6
Reinsurance assumed.................................. 14.9 1.7 .7 2.0
Reinsurance ceded.................................... (24.2) (24.6) (11.2) (17.9)
-------- ------ ----- ------
Premiums collected, net of reinsurance.......... 300.3 218.4 72.3 142.7
Less premiums on universal life and products without
mortality risk which are recorded as additions to
insurance liabilities............................. (255.9) (169.8) (50.8) (104.4)
-------- ------ ----- ------
Premiums on products with mortality and
morbidity risk, recorded as insurance policy
income........................................ 44.4 48.6 21.5 38.3
Fees and surrender charges........................... 31.3 32.8 10.3 22.2
-------- ------ ----- ------
Insurance policy income....................... $ 75.7 $ 81.4 $ 31.8 $ 60.5
======== ====== ====== ======
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
The four states with the largest shares of the Company's premiums
collected in 1997 were Texas (27 percent), Florida (17 percent), California (13
percent) and Michigan (6 percent). No other state's premiums collected exceeded
5 percent.
Other operating costs and expenses were as follows:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Policy maintenance expense........................... $18.1 $37.8 $ 6.5 $14.0
State premium taxes and guaranty assessments......... 2.0 4.4 1.6 1.1
Commission expense................................... 8.1 12.1 5.0 8.6
----- ----- ----- -----
Other operating costs and expenses............ $28.2 $54.3 $13.1 $23.7
===== ===== ===== =====
</TABLE>
Anticipated returns from the investment of policyholder balances are
considered in determining the amortization of the cost of policies purchased and
cost of policies produced. The sales of fixed maturity investments during 1997,
1996 and 1995 changed the incidence of profits on such policies because
investment gains and losses were recognized currently and the expected future
yields on the investment of policyholder balances were affected. Accordingly,
amortization of the cost of policies purchased and cost of policies produced was
increased by $14.2 million in 1997, $2.5 million in 1996, $10.0 million in the
four months ended December 31, 1995 and $4.3 million for the eight months ended
August 31, 1995.
The changes in the cost of policies purchased were as follows:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Balance, beginning of period........................... $143.0 $120.0 $159.0 $173.9
Amortization related to operations:
Cash flow realized................................ (18.2) (26.2) (9.4) (19.1)
Interest added.................................... 11.8 13.1 5.0 12.7
Amortization related to sales of fixed maturity
investments....................................... (13.8) (2.2) (8.3) (3.4)
Amounts related to fair value adjustment of
actively managed fixed maturity securities........ (21.2) 36.6 (26.3) (64.1)
Adjustment of balance due to new accounting
basis and other................................... - 1.7 - 59.0
------ ------ ------ ------
Balance, end of period................................. $101.6 $143.0 $120.0 $159.0
====== ====== ====== ======
</TABLE>
GREAT AMERICAN RESERVE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Based on current conditions and assumptions as to future events on all
policies in force, approximately 10 percent, 10 percent, 10 percent, 10 percent
and 11 percent of the cost of policies purchased as of December 31, 1997, are
expected to be amortized in each of the next five years, respectively. The
discount rates used to determine the amortization of the cost of policies
purchased ranged from 3.6 percent to 8.0 percent and averaged 5.8 percent.
The changes in the cost of policies produced were as follows:
<TABLE>
<CAPTION>
Year Year Four months Eight months
ended ended ended ended
December 31, December 31, December 31, August 31,
1997 1996 1995 1995
---- ---- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C>
Balance, beginning of period.......................... $38.2 $24.0 $25.9 $ 63.2
Additions.......................................... 31.8 13.2 3.0 6.6
Amortization related to operations................. (5.0) (3.2) (.5) (4.0)
Amortization related to sales of fixed maturity
investments...................................... (.4) (.3) (1.7) (.9)
Amounts related to fair value adjustment of
actively managed fixed maturity securities....... (3.9) 4.5 (2.7) (12.0)
Adjustment of balance due to new accounting basis.. - - - (27.0)
----- ----- ----- -------
Balance, end of period................................ $60.7 $38.2 $24.0 $ 25.9
===== ===== ===== =======
</TABLE>
8. STATEMENT OF CASH FLOWS
Income taxes paid during 1997, 1996, and 1995, were $14.8 million, $18.1
million and $19.3 million, respectively.
Short-term investments having original maturities of three months or less
are considered to be cash equivalents. All cash is invested in short-term
investments.
9. STATUTORY INFORMATION
Statutory accounting practices prescribed or permitted for insurance
companies by regulatory authorities differ from generally accepted accounting
principles. The Company reported the following amounts to regulatory agencies:
<TABLE>
<CAPTION>
December 31,
--------------------
1997 1996
---- ----
(Dollars in millions)
<S> <C> <C>
Statutory capital and surplus.................................................. $140.7 $140.3
Asset valuation reserve........................................................ 29.2 28.7
Interest maintenance reserve................................................... 68.8 63.1
------ ------
Total...................................................................... $238.7 $232.1
====== ======
</TABLE>
The Company's statutory net income was $32.7 million, $32.6 million and
$38.4 million in 1997, 1996 and 1995, respectively.
State insurance laws generally restrict the ability of insurance companies
to pay dividends or make other distributions. Approximately $32.9 million of the
Company's net assets at December 31, 1997, are available for distribution in
1998 without permission of state regulatory authorities.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The financial statements of Great American Reserve Insurance Company
and Great American Reserve Variable Annuity Account E are contained in
Part B of this Registration Statement.
(b) Exhibits
(1) -Resolution of the Board of Directors of Great American
Reserve authorizing the establishment of Variable Account
dated November 12, 1993, incorporated herein by reference to
Exhibit 1 to the Registration Statement on Form N-4 (File
No. 33-74092) filed on January 13, 1994.
(2) -Not Applicable.
(3) -Form of Principal Underwriting Agreement by and among
Great American Reserve, Variable Account and GARCO Equity
Sales, incorporated herein by reference to Exhibit 3 to the
Registration Statement on Form N-4 (File No. 33-74092) filed
on January 13, 1994.
(4)(a) -- Form of Individual Fixed/Variable Annuity
Contract, incorporated herein by reference to Exhibit 4(a)
to the Registration Statement on Form N-4 (File No. 33-
74092) filed on January 13, 1994.
(4)(b) -- Form of Group Fixed/Variable Annuity Contract,
incorporated herein by reference to Exhibit 4(b) to the
Registration Statement on Form N-4 (File No. 33-74092) filed
on January 13, 1994.
(5) -Application for Contracts, incorporated herein by
reference to Exhibit 5 to the Registration Statement on Form
N-4 (File No. 33-74092) filed on January 13, 1994.
(6) (i)-Articles of Incorporation of Great American
Reserve.**
(6) (ii) -Bylaws of Great American Reserve.**
(7) -Not Applicable.
(8) (i)-Form of Fund Participation Agreement by and among the
Alger American Fund, Great American Reserve Insurance Company
and Fred Alger and Company, Incorporated.*
(8) (ii)-Form of Fund Participation Agreement by and among
Great American Reserve Insurance Company, Berger Institutional
Products Trust and BBOI Worldwide LLC.*
(8) (iii)-Form of Fund Participation by and between Great
American Reserve Insurance Company, Insurance Mangement Series
and Federated Securities Corp.*
(8) (iv)-Form of Fund Participation between Great American
Reserve Insurance Company, Van Eck Worldwide Insurance Trust
and Van Eck Associates Corporation.*
(8) (v)-Form of Fund Participation Agreement by and between
Lord Abbett Series Fund, Inc., Lord, Abbett & Co. and Great
American Reserve Insurance Company.*
(8) (vi)-Form of Fund Participation Agreement between
American Century Investment Services, Inc. and Great American
Reserve Insurance Company.*
(8) (vii)-Form of Fund Participation Agreement between INVESCO
Variable Investment Funds, Inc., INVESCO Funds Group, Inc. and
the Company.**
(9) -- Opinion and Consent of Counsel.
(10) -- Consent of Independent Accountants.
(11) -- Not Applicable.
(12) -- None.
(13) -- Schedule for computation of performance quotations.
(27) -- Not Applicable
*Incorporated by reference to Pre-Effective Amendment No. 1 to Form N-4,
Great American Reserve Variable Annuity Account F, File Nos. 333-40309/811-08483
filed electronically on February 3, 1998.
**Incorporated by reference to Form N-4, Great American Reserve Variable
Annuity Account G, File Nos. 333-00373/811-07501, filed electronically on
January 23, 1996.
ITEM 25. DIRECTORS AND OFFICERS OF GREAT AMERICAN RESERVE
The following table sets forth certain information regarding the
executive officers of Great American Reserve who are engaged directly or
indirectly in activities relating to the Variable Account or the Contracts.
Their principal business address is 11815 N. Pennsylvania Street, Carmel, IN
46032.
Name and Principal Position and Offices
Business Address* with Depositor
- ------------------- ---------------------------------------
Ngaire E. Cuneo Director
Stephen C. Hilbert Director and Chairman of the Board
Rollin M. Dick Director, Executive Vice President and
Chief Financial Officer
Thomas J. Kilian Director and President
John J. Sabl Director, Executive Vice President, General
Counsel and Secretary
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The following information concerns those companies that may be deemed to be
controlled by or under common control with Registrant (all 100% owned unless
indicated otherwise):
CONSECO, INC. (Indiana) - (publicly traded)
CIHC, Incorporated (Delaware)
Bankers National Life Insurance Company (Texas)
National Fidelity Life Insurance Company (Missouri)
Bankers Life Insurance Company of Illinois (Illinois)
Bankers Life & Casualty Company (Illinois)
Certified Life Insurance Company (California)
Jefferson National Life Insurance Company of Texas (Texas)
Beneficial Standard Life Insurance Company (California)
Great American Reserve Insurance Company (Texas)
American Life Holdings, Inc. (Delaware)
American Life Holding Company (Delaware)
American Life and Casualty Insurance Company (Iowa)
Vulcan Life Insurance Company (Alabama) - (98%)
Life Partners Group, Inc. (Delaware)
Wabash Life Insurance Company (Kentucky)
Massachusetts General Life Insurance Company (Massachusetts)
Philadelphia Life Insurance Company (Pennsylvania)
Lamar Life Insurance Company (Mississippi)
American Travellers Life Insurance Company (Pennsylvania)
United General Life Insurance Company (Texas)
American Travellers Insurance Company of New York (New York)
Intermediate Holdings, Inc. (Delaware)
THD, Inc. (Delaware)
TLIC Life Insurance Company (Texas)
Transport Life Insurance Company (Texas)
Continental Life Insurance Company (Texas)
Capitol American Financial Corporation (Ohio)
Capitol Insurance Company of Ohio (Ohio)
Capitol American Life Insurance Company (Arizona)
Frontier National Life Insurance Company (Ohio)
Capitol National Life Insurance Company (Ohio)
Conseco Capital Management, Inc. (Delaware)
Conseco Equity Sales, Inc. (Texas)
Conseco Financial Services, Inc. (Pennsylvania)
Conseco Marketing, LLC (Indiana)
Conseco Services, LLC (Indiana)
Lincoln American Life Insurance Company (Tennessee)
Marketing Distribution Systems, Consulting Group, Inc. (Delaware)
MDS of New Jersey, Inc. (New Jersey)
MDS Securities Incorporated (Delaware)
Bankmark School of Business, Inc. (Delaware)
Conseco Series Trust (Massachusetts)*
Conseco Fund Group (Massachusetts) (publicly held)**
* The shares of Conseco Series Trust currently are sold to Bankers National
Variable Account B, Great American Reserve Variable Annuity Account C, and
Great American Reserve Variable Annuity Account E, each being segregated
asset accounts established pursuant to Texas law by Bankers National Life
Insurance Company and Great American Reserve Insurance Company,
respectively.
** The shares of the Conseco Fund Group are sold to the public; Conseco
affiliates currently hold in excess of 95% of its shares.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of March 31, 1998, there were 7,612 Qualified Contract Owners and 1,513
Non-Qualified Contract Owners.
ITEM 28. INDEMNIFICATION
The Board of Directors of Great American Reserve is indemnified by Great
American Reserve against claims and liabilities to which such person may become
subject by reason of having been a member of such Board or by reason of any
action alleged to have been taken or omitted by him as such member, and the
member shall be indemnified for all legal and other expenses reasonably incurred
by him in connection with any such claim or liability; however, no
indemnification shall be made in connection with any claim or liability unless
such person (i) conducted himself in good faith, (ii) in the case of conduct in
his official capacity as a member of the Board of Directors, reasonably believed
that his conduct was in the best interests of Variable Account, and, in all
other cases reasonably believed that his conduct was at least not opposed to the
best interests of Variable Account, and (iii) in the case of any criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to members of Great American Reserve's Board of
Directors, officers and controlling persons of the Registrant pursuant to the
provisions described under "Indemnification" or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the Registrant of expenses incurred or
paid by a member of the Board of Directors, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such member of the Board of Directors, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The Variable Account has no officers or employees. Employees of an
affiliated company who perform administrative services for the Variable Account
are covered by an officers and directors liability policy.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Conseco Equity Sales, Inc. ("Conseco Equity Sales") is the principal
underwriter for the following investment companies (other than Registrant):
Great American Reserve Variable Annuity Account C
Great American Reserve Variable Annuity Account F
Great American Reserve Variable Annuity Account G
Conseco Fund Group.
(b) The following table sets forth certain information regarding the
officers and directors of Conseco Equity Sales. Their address is 11815
N. Pennsylvania Street, Carmel, IN 46032.
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH CONSECO EQUITY SALES, INC.
- - -------------------- --------------------------------
L. Gregory Gloeckner President and Director
Senior Vice President, Treasurer
James S. Adams and Director
Vice President, Senior Counsel,
William P. Latimer Secretary, and Director
William T. Devanney, Jr. Senior Vice President, Corporate Taxes
Christene H. Darnell Vice President, Management Reporting
Lisa M. Zimmerman Assistant Vice President, Corporate
Taxes
Christine E. Monical Second Vice President and Assistant
General Counsel
<TABLE>
<CAPTION>
NET UNDERWRITING
NAME OF DISCOUNTS AND COMPENSATION ON BROKERAGE
PRINCIPAL UNDERWRITER COMMISSIONS REDEMPTION COMMISSIONS COMPENSATION*
- - --------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Conseco Equity None None None None
Sales, Inc.
</TABLE>
*Fees paid by Great American Reserve for serving as underwriter
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books, or other documents required to be maintained by the
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and
the rules promulgated thereunder are in the possession of Great American Reserve
Insurance Company, 11825 N. Pennsylvania Street, Carmel, Indiana 46032.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
1. 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 variable annuity contracts may
be accepted.
2. The Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
postcard or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information.
3. The Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
Form N-4 promptly upon written or oral request.
4. The Securities and Exchange Commission (the "SEC") issued the American
Counsel of Life Insurance an industry wide no-action letter dated November 28,
1988, stating that the SEC would not recommend any enforcement action if
registered separate accounts funding tax-sheltered annuity contracts restrict
distributions to plan participants in accordance with the requirements of
Section 403(b)(11), provided certain conditions and requirements were met. Among
these conditions and requirements, any registered separate account relying on
the no-action position of the SEC must:
(1) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in each registration
statement, including the prospectus, used in connection with the offer
of the contract;
(2) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403 (b)(11) in any sales literature
used in connection with the offer in the contract;
(3) Instruct sales representatives who solicit participants to
purchase the contract specifically to bring the redemption restrictions
imposed by Section 403(b)(11) to the attention of the potential
participants; and
(4) Obtain from each plan participant who purchases a Section
403(b) annuity contract, prior to or at the time of such purchase, a
signed statement acknowledging the participant's understanding of (i)
the restrictions on redemption imposed by Section 403(b)(11), and (ii)
the investment alternatives available under the employer's Section
403(b) arrangement, to which the participant may elect to transfer his
contract value.
The Registrant is relying on the no-action letter. Accordingly, the
provisions of paragraphs (1) - (4) above have been complied with.
5. Great American Reserve represents that the fees and charges deducted
under the Contracts, in the aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by Great American Reserve.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the city of Carmel, State
of Indiana, on this 16th day of April, 1998.
GREAT AMERICAN RESERVE VARIABLE ANNUITY
ACCOUNT E
(Registrant)
By: Great American Reserve Insurance Company
By: /S/ THOMAS J. KILIAN
----------------------------------------
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 below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - --------- ----- ----
<S> <C>
/S/ STEPHEN C. HILBERT Director, Chairman of the Board 4/16/98
- - -------------------------
Stephen C. Hilbert
/S/ THOMAS J. KILIAN Director and President 4/16/98
- - ------------------------- (Principal Executive Officer)
Thomas J. Kilian
/S/ ROLLIN M. DICK Director, Executive Vice President 4/16/98
- - ------------------------- and Chief Financial Officer (Principal
Rollin M. Dick Financial and Accounting Officer)
/S/ NGAIRE E. CUNEO Director 4/16/98
- - -------------------------
Ngaire E. Cuneo
/S/ JOHN J. SABL Director, Executive Vice President, 4/16/98
- --------------------------- General Counsel and Secretary
John J. Sabl
</TABLE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- - ------ -------
EX-99.B(9) Opinion and Consent of Counsel.
EX-99.B(10) Consent of Independent Accountants.
EX-99.B(13) Performance Quotations
April 27, 1998
Board of Directors
Great American Reserve Insurance Company
Re: Great American Reserve Variable Annuity Account E
Registration Statement on Form N-4
Gentlemen and Madam:
I am Executive Vice President, Secretary and General Counsel of Great
American Reserve Insurance Company (the "Company"). At your request, I have
examined or caused to be examined the Registration Statement on Form N-4, (the
"Registration Statement") of Great American Reserve Variable Annuity Account E
(the "Registrant" or "Account") with respect to the securities issued in
connection with the Account offering variable annuity contracts. The
Registrant's Form N-4 Registration Statement is filed pursuant to the Securities
Act of 1933 (the "Act") and the Investment Company Act of 1940 ("1940 Act").
This opinion is being furnished pursuant to the Act in connection with the
Registrant's Form N-4 Registration Statement. No fee is payable because the
Registrant files a declaration of indefinite registration pursuant to Rule 24f-2
under the 1940 Act.
In rendering this opinion, I, or attorneys under my supervision (together
referred to herein as "we"), have examined and relied upon a copy of the
Registration Statement. We have also examined originals, or copies of originals
certified to our satisfaction, of such agreements, documents, certificates and
statements of government officials and other instruments, and have examined such
questions of law and have satisfied ourselves as to such matters of fact, as we
have considered relevant and necessary as a basis for this opinion. We have
assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures, the legal capacity of all natural persons and the
conformity with the original documents of any copies thereof submitted to us for
examination.
Based on the foregoing, and subject to the qualifications and limitations
hereinafter set forth, I am of the opinion that:
1. The Account has been duly organized and is an existing separate account
pursuant to the applicable laws of the State of Texas;
2. The Account is a unit investment trust registered under the 1940 Act;
3. The securities issued in connection with the Account offering variable
annuity contracts, when issued as described in the Registration Statement, will
be duly authorized and upon issuance will be validly issued, fully paid and
non-assessable; and
I do not find it necessary for the purposes of this opinion to cover, and
accordingly I express no opinion as to, the application of the securities or
blue sky laws of the various states to the sale of the securities to be
registered pursuant to the Registration Statement. Without limiting the
generality of the foregoing, I express no opinion in connection with the matters
contemplated by the Registration Statement, and no opinion may be implied or
inferred, except as expressly set forth herein.
This opinion is limited to the laws of the State of Indiana and of the United
States of America to the extent applicable. If any of the securities included in
the Registration Statement are governed by the laws of a state other than
Indiana, I have assumed for the purposes of this opinion that the laws of such
other state are the same as those of the State of Indiana.
I hereby consent to the inclusion of the opinion as Exhibit B-9 to the
Registration Statement and to all references to me in the Registration Statement
or the Prospectus included therein.
Very truly yours,
/s/JOHN J. SABL
- ----------------------------------
John J. Sabl
Executive Vice President, Secretary,
and General Counsel
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 5 to the
Registration Statement of Great American Reserve Variable Annuity
Account E (the "Account") on Form N-4 (File Nos. 33-74092 and 811-8288)
of:
(1) Our report dated February 23, 1998, on our audits of the financial
statements of the Account; and
(2) Our report dated April 20, 1998, on our audits of the financial
statements of Great American Reserve Insurance Company.
We also consent to the reference to our Firm under the caption "Independent
Accountants."
/S/ COOPERS & LYBRAND L.L.P.
-----------------------------
Coopers & Lybrand L.L.P.
Indianapolis, Indiana
April 21, 1998
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE ASSET ALLOCATION - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.698128 588.884 1996 1.502295 (2.962) 585.922 1.973445 1,156.28 90 % X 9% (93.66)
1995 1.342379 744.946 1995 1.196932 (3.718) 738.266 1.973445 1,456.93 90 % X 9% (118.01)
1994 1.035219 965.979 1994 0.000000 0.000 959.299 1.973445 1,893.12 90 % X 8% (136.30)
Incept 1.000000 1,000.000 N/A 0.000000 0.000 993.320 1.973445 1,960.26 90 % X 7% (123.50)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE ASSET ALLOCATION - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- -------------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,062.62 (4.45) 1,058.17 5.82%
1995 1,338.92 (4.45) 1,334.47 15.52%
1994 1,756.82 (4.45) 1,752.37 20.56%
Incept 1,836.76 (4.45) 1,832.31 19.27%
Incep
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN LEVERAGE ALLCAP
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.555302 642.962 1996 1.557314 (2.857) 640.105 1.835511 1,174.92 90 % X 9% (95.17)
1995 1.407908 710.274 1995 1.185715 (3.753) 703.664 1.835511 1,291.58 90 % X 9% (104.62)
Incep 1.000000 1,000.000 N/A 0.000000 993.390 1.835511 1,823.38 90 % X 8% (131.28)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN LEVERAGE ALLCAP
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,079.75 (4.45) 1,075.30 7.53%
1995 1,186.96 (4.45) 1,182.51 8.74%
Incep 1,692.10 (4.45) 1,687.65 22.43%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN SMALL CAPITALIZATION
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.252107 798.654 1996 1.307434 (3.404) 795.250 1.375354 1,093.75 90 % X 9% (88.59)
1995 1.218931 820.391 1995 1.136306 (3.916) 813.071 1.375354 1,118.26 90 % X 9% (90.58)
Incep 1.000000 1,000.000 N/A 0.000000 992.680 1.375354 1,365.29 90 % X 8% (98.30)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN SMALL CAPITALIZATION
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245 Prepared by:
Approved by:
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,005.16 (4.45) 1,000.71 0.07%
1995 1,027.68 (4.45) 1,023.23 1.15%
Incep 1,266.99 (4.45) 1,262.54 9.43%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.043521 958.294 1996 0.997269 (4.462) 953.832 1.293971 1,234.23 90 % X 9% (99.97)
Incep 1.000000 1,000.000 N/A 0.000000 995.538 1.293971 1,288.20 90 % X 9% (104.34)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245 Prepared by:
Approved by:
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,134.26 (4.45) 1,129.81 12.98%
Incep 1,183.86 (4.45) 1,179.41 10.38%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN MIDCAP GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 0.986695 1,013.484 1996 1.000000 (4.450) 1,009.034 1.118979 1,129.09 90 % X 9% (91.46)
Incep 1.000000 1,000.000 N/A 0.000000 995.550 1.118979 1,114.00 90 % X 9% (90.23)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN MIDCAP GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245 Prepared by:
Approved by:
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,037.63 (4.45) 1,033.18 3.32%
Incep 1,023.77 (4.45) 1,019.32 1.15%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - INTERNATIONAL FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $4.45 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.092954 1,092.95 90 % X 9% (88.53)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - INTERNATIONAL FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,004.42 (4.45) 999.97 -0.0045%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - VALUE FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/97 Accum Charge Surrender
Qtr Value For $1,000 Fee ($4.45) Admin Fee Units Unit Value Value Calc Charge
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.225987 1,225.99 90 % X 9% (99.31)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - VALUE FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
End of Deduction for Surrender Admin Fee n
Qtr Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,126.68 (4.45) 1,122.23 18.75%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE CORPORATE BOND - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE URRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.206516 828.833 1996 1.146780 (3.880) 824.953 1.307768 1,078.85 90 % X 9% (87.39)
1995 1.165727 857.834 1995 1.109643 (4.010) 849.943 1.307768 1,111.53 90 % X 9% (90.03)
1994 0.999698 1,000.302 1994 0.000000 0.000 992.411 1.307768 1,297.84 90 % X 8% (93.44)
Incept 1.000000 1,000.000 N/A 0.000000 0.000 992.109 1.307768 1,297.45 90 % X 7% (81.74)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE CORPORATE BOND - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- -----------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 991.46 (4.45) 987.01 -1.30%
1995 1,021.50 (4.45) 1,017.05 0.85%
1994 1,204.40 (4.45) 1,199.95 6.26%
Incept 1,215.71 (4.45) 1,211.26 5.74%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT 100 FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.029280 971.553 1996 0.981625 (4.533) 967.020 1.154662 1,116.58 90 % X 9% (90.44)
Incep 1.000000 1,000.000 N/A 0.000000 995.467 1.154662 1,149.43 90 % X 9% (93.10)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT 100 FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,026.14 (4.45) 1,021.69 2.17%
Incep 1,056.33 (4.45) 1,051.88 3.07%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT GROWTH AND INCOME FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.103582 906.140 1996 1.006565 (4.421) 901.719 1.360249 1,226.56 90 % X 9% (99.35)
Incep 1.000000 1,000.000 N/A 0.000000 995.579 1.360249 1,354.24 90 % X 9% (109.69)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT GROWTH AND INCOME FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,127.21 (4.45) 1,122.76 12.28%
Incep 1,244.55 (4.45) 1,240.10 13.74%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT GROWTH AND INCOME FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.103582 906.140 1996 1.006565 (4.421) 901.719 1.360249 1,226.56 90 % X 9% (99.35)
Incep 1.000000 1,000.000 N/A 0.000000 995.579 1.360249 1,354.24 90 % X 9% (109.69)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT GROWTH AND INCOME FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,127.21 (4.45) 1,122.76 12.28%
Incep 1,244.55 (4.45) 1,240.10 13.74%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT SMALL COMPANY
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 0.984692 1,015.546 1996 1.069417 (4.161) 1,011.385 1.178105 1,191.52 90 % X 9% (96.51)
Incep 1.000000 1,000.000 N/A 0.000000 995.839 1.178105 1,173.20 90 % X 9% (95.03)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT SMALL COMPANY
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,095.01 (4.45) 1,090.56 9.06%
Incep 1,078.17 (4.45) 1,073.72 4.35%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT BIAM INTERNATIONAL
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 0.969881 969.88 90 % X 9% (78.56)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT BIAM INTERNATIONAL
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incep 891.32 (4.45) 886.87 -16.38%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS STOCK INDEX
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.398634 714.983 1996 1.270011 (3.504) 711.479 1.833764 1,304.68 90 % X 9% (105.68)
1995 1.157620 863.841 1995 1.026503 (4.335) 856.002 1.833764 1,569.71 90 % X 9% (127.15)
Incept 1.000000 1,000.000 N/A 0.000000 0.000 992.161 1.833764 1,819.39 90 % X 8% (131.00)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS STOCK INDEX
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,199.00 (4.45) 1,194.55 19.46%
1995 1,442.56 (4.45) 1,438.11 19.92%
Incept 1,688.39 (4.45) 1,683.94 22.33%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS SOCIALLY RESPONSIBLE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.404343 712.077 1996 1.275694 (3.488) 708.589 1.777912 1,259.81 90 % X 9% (102.04)
1995 1.174867 851.160 1995 1.042515 (4.269) 843.403 1.777912 1,499.50 90 % X 9% (121.46)
Incept 1.000000 1,000.000 N/A 0 0.000 992.243 1.777912 1,764.12 90 % X 8% (127.02)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS SOCIALLY RESPONSIBLE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,157.77 (4.45) 1,153.32 15.33%
1995 1,378.04 (4.45) 1,373.59 17.20%
Incept 1,637.10 (4.45) 1,632.65 20.87%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.234309 810.170 1996 1.164675 (3.821) 806.349 1.541347 1,242.86 90 % X 9% (100.67)
1995 1.12209 891.194 1995 0.996654 (4.465) 882.908 1.541347 1,360.87 90 % X 9% (110.23)
Incept 1.000000 1,000.000 N/A 0 0.000 991.714 1.541347 1,528.58 90 % X 8% (110.06)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,142.19 (4.45) 1,137.74 13.77%
1995 1,250.64 (4.45) 1,246.19 11.63%
Incept 1,418.52 (4.45) 1,414.07 14.34%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED INTERNATIONAL EQUITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.094819 913.393 1996 1.082731 (4.110) 909.283 1.188469 1,080.65 90 % X 9% (87.53)
1995 1.02508 975.534 1995 1.001652 (4.443) 966.981 1.188469 1,149.23 90 % X 9% (93.09)
Incept 1.000000 1,000.000 N/A 0 0.000 991.447 1.188469 1,178.30 90 % X 8% (84.84)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED INTERNATIONAL EQUITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 993.12 (4.45) 988.67 -1.13%
1995 1,056.14 (4.45) 1,051.69 2.55%
Incept 1,093.46 (4.45) 1,089.01 3.35%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.234309 810.170 1996 1.164675 (3.821) 806.349 1.541347 1,242.86 90 % X 9% (100.67)
1995 1.12209 891.194 1995 0.996654 (4.465) 882.908 1.541347 1,360.87 90 % X 9% (110.23)
Incept 1.000000 1,000.000 N/A 0 0.000 991.714 1.541347 1,528.58 90 % X 8% (110.06)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,142.19 (4.45) 1,137.74 13.77%
1995 1,250.64 (4.45) 1,246.19 11.63%
Incept 1,418.52 (4.45) 1,414.07 14.34%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE GOVERNMENT SECURITIES - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.169361 855.168 1996 1.125354 (3.954) 851.214 1.248382 1,062.64 90 % X 9% (86.07)
1995 1.154244 866.368 1995 1.102841 (4.035) 858.379 1.248382 1,071.58 90 % X 9% (86.80)
1994 0.997441 1,002.566 1994 0.000000 0.000 994.577 1.248382 1,241.61 90 % X 8% (89.40)
Incept 1.000000 1,000.000 N/A 0.000000 0.000 992.011 1.248382 1,238.41 90 % X 7% (78.02)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE GOVERNMENT SECURITIES - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- -----------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 976.57 (4.45) 972.12 -2.79%
1995 984.78 (4.45) 980.33 -0.99%
1994 1,152.21 (4.45) 1,147.76 4.70%
Incept 1,160.39 (4.45) 1,155.94 4.31%
Incep
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS AGGRESSIVE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.347927 741.880 1996 1.405008 (3.167) 738.713 1.497524 1,106.24 90 % X 9% (89.61)
1995 1.266394 789.644 1995 1.075270 (4.138) 782.338 1.497524 1,171.57 90 % X 9% (94.90)
Incept 1.000000 1,000.000 N/A 0.000000 0.000 992.694 1.497524 1,486.58 90 % X 8% (107.03)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS AGGRESSIVE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- -------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,016.63 (4.45) 1,012.18 1.22%
1995 1,076.67 (4.45) 1,072.22 3.55%
Incept 1,379.55 (4.45) 1,375.10 13.11%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.363534 733.388 1996 1.405008 (3.167) 730.221 1.650431 1,205.18 90 % X 9% (97.62)
1995 1.167465 856.557 1995 1.037151 (4.291) 849.099 1.650431 1,401.38 90 % X 9% (113.51)
Incept 1.000000 1,000.000 N/A 0 992.542 1.650431 1,638.12 90 % X 8% (117.94)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,107.56 (4.45) 1,103.11 10.31%
1995 1,287.87 (4.45) 1,283.42 13.29%
Incept 1,520.18 (4.45) 1,515.73 17.45%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS WORLDWIDE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.541029 648.917 1996 1.450125 (3.069) 645.848 1.856255 1,198.86 90 % X 9% (97.11)
1995 1.211204 825.625 1995 1.057476 (4.208) 818.348 1.856255 1,519.06 90 % X 9% (123.04)
Incept 1.000000 1,000.000 N/A 0 992.723 1.856255 1,842.75 90 % X 8% (132.68)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS WORLDWIDE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- -------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,101.75 (4.45) 1,097.30 9.73%
1995 1,396.02 (4.45) 1,391.57 17.96%
Incept 1,710.07 (4.45) 1,705.62 22.93%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - LIMITED MATURITY BOND FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.043140 1,043.14 90 % X 9% (84.49)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - LIMITED MATURITY BOND FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 958.65 (4.45) 954.20 -6.75%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - PARTNERS FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.239881 1,239.88 90 % X 9% (100.43)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - PARTNERS FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,139.45 (4.45) 1,135.00 20.77%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE COMMON STOCK - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 2.071274 482.795 1996 1.735964 (2.563) 480.232 2.424118 1,164.14 90 % X 9% (94.30)
1995 1.448804 690.224 1995 1.253068 (3.551) 684.109 2.424118 1,658.36 90 % X 9% (134.33)
1994 1.077853 927.770 1994 0.000000 0.000 921.655 2.424118 2,234.20 90 % X 8% (160.86)
Incept 1.000000 1,000.000 N/A 0.000000 0.000 993.885 2.424118 2,409.30 90 % X 7% (151.79)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE COMMON STOCK - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,069.84 (4.45) 1,065.39 6.54%
1995 1,524.03 (4.45) 1,519.58 23.27%
1994 2,073.34 (4.45) 2,068.89 27.42%
Incept 2,257.51 (4.45) 2,253.06 26.67%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - GROWTH FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.270148 1,270.15 90 % X 9% (102.88)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - GROWTH FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,167.27 (4.45) 1,162.82 25.21%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - OPPORTUNITY FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.229863 1,229.86 90 % X 9% (99.62)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - OPPORTUNITY FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,130.24 (4.45) 1,125.79 19.31%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK HARD ASSETS (FORMERLY GOLD AND NATURAL RESOURCES)
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.253925 797.496 1996 1.193226 (3.729) 793.767 1.215736 965.01 90 % X 9% (78.17)
1995 1.077158 928.369 1995 1.015117 (4.384) 920.256 1.215736 1,118.79 90 % X 9% (90.62)
Incept 1.000000 1,000.000 N/A 0.000000 0.000 991.887 1.215736 1,205.87 90 % X 8% (86.82)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK HARD ASSETS (FORMERLY GOLD AND NATURAL RESOURCES)
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 886.84 (4.45) 882.39 -11.76%
1995 1,028.17 (4.45) 1,023.72 1.18%
Incept 1,119.05 (4.45) 1,114.60 4.28%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE BOND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.029224 971.606 1996 0.989898 (4.495) 967.111 1.039146 1,004.97 90 % X 9% (81.40)
1995 1.018153 982.171 1995 1.001559 (4.443) 973.233 1.039146 1,011.33 90 % X 9% (81.92)
Incept 1.000000 1,000.000 N/A 0.000000 0.000 991.062 1.039146 1,029.86 90 % X 8% (74.15)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE BOND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 923.57 (4.45) 919.12 -8.09%
1995 929.41 (4.45) 924.96 -3.83%
Incept 955.71 (4.45) 951.26 -1.91%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE EMERGING MARKETS
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE ($4.45) ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.13594 880.328 1996 1.076124 (4.135) 876.193 0.990151 867.56 90 % X 9% (70.27)
Incep 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.990151 990.15 90 % X 9% (80.20)
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE EMERGING MARKETS
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 797.29 (4.45) 792.84 -20.72%
Incep 909.95 (4.45) 905.50 -5.77%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE ASSET ALLOCATION - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.698128 588.884 1996 1.502295 0.000 588.884 1.973445 1,162.13
1995 1.342379 744.946 1995 1.196932 0.000 744.946 1.973445 1,470.11
1994 1.035219 965.979 1994 0.000000 0.000 965.979 1.973445 1,906.31
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.973445 1,973.45
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE ASSET ALLOCATION - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,162.13 0.00 1,162.13 16.21%
1995 1,470.11 0.00 1,470.11 21.25%
1994 1,906.31 0.00 1,906.31 23.99%
Incept 1,973.45 0.00 1,973.45 21.88%
Incep
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN LEVERAGE ALLCAP
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.555302 642.962 1996 1.557314 0.000 642.962 1.835511 1,180.16
1995 1.407908 710.274 1995 1.185715 0.000 710.274 1.835511 1,303.72
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.835511 1,835.51
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN LEVERAGE ALLCAP
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,180.16 0.00 1,180.16 18.02%
1995 1,303.72 0.00 1,303.72 14.18%
Incep 1,835.51 0.00 1,835.51 26.47%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN SMALL CAPITALIZATION
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.252107 798.654 1996 1.307434 0.000 798.654 1.375354 1,098.43
1995 1.218931 820.391 1995 1.136306 0.000 820.391 1.375354 1,128.33
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.375354 1,375.35
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN SMALL CAPITALIZATION
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,098.43 0.00 1,098.43 9.84%
1995 1,128.33 0.00 1,128.33 6.22%
Incep 1,375.35 0.00 1,375.35 13.12%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.043521 958.294 1996 0.997269 0.000 958.294 1.293971 1,240.00
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.293971 1,293.97
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,240.00 0.00 1,240.00 24.00%
Incep 1,293.97 0.00 1,293.97 16.68%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN MIDCAP GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 0.986695 1,013.484 1996 0.000000 0.000 1,013.484 1.118979 1,134.07
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.118979 1,118.98
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN MIDCAP GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,134.07 0.00 1,134.07 13.41%
Incep 1,118.98 0.00 1,118.98 6.96%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - INTERNATIONAL FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.092954 1,092.95
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - INTERNATIONAL FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,092.95 0.00 1,092.95 14.16%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - VALUE FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.225987 1,225.99
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - VALUE FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,225.99 0.00 1,225.99 35.48%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE CORPORATE BOND - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.206516 828.833 1996 1.146780 0.000 828.833 1.307768 1,083.92
1995 1.165727 857.834 1995 1.109643 0.000 857.834 1.307768 1,121.85
1994 0.999698 1,000.302 1994 0.000000 0.000 1,000.302 1.307768 1,308.16
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.307768 1,307.77
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE CORPORATE BOND - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,083.92 0.00 1,083.92 8.39%
1995 1,121.85 0.00 1,121.85 5.92%
1994 1,308.16 0.00 1,308.16 9.37%
Incept 1,307.77 0.00 1,307.77 8.12%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT 100 FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.029280 971.553 1996 0.981625 0.000 971.553 1.154662 1,121.82
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.154662 1,154.66
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT 100 FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,121.82 0.00 1,121.82 12.18%
Incep 1,154.66 0.00 1,154.66 8.99%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT GROWTH AND INCOME FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.103582 906.140 1996 1.006565 0.000 906.140 1.360249 1,232.58
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.360249 1,360.25
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT GROWTH AND INCOME FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- -------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,232.58 0.00 1,232.58 23.26%
Incep 1,360.25 0.00 1,360.25 20.22%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT SMALL COMPANY
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 0.984692 1,015.546 1996 1.069417 0.000 1,015.546 1.178105 1,196.42
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.178105 1,178.11
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT SMALL COMPANY
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- -------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,196.42 0.00 1,196.42 19.64%
Incep 1,178.11 0.00 1,178.11 10.31%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT BIAM INTERNATIONAL
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 0.969881 969.88
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT BIAM INTERNATIONAL
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incep 969.88 0.00 969.88 -4.46%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS STOCK INDEX
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.398634 714.983 1996 1.270011 0.000 714.983 1.833764 1,311.11
1995 1.157620 863.841 1995 1.026503 0.000 863.841 1.833764 1,584.08
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.833764 1,833.76
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS STOCK INDEX
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,311.11 0.00 1,311.11 31.11%
1995 1,584.08 0.00 1,584.08 25.86%
Incept 1,833.76 0.00 1,833.76 26.43%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS SOCIALLY RESPONSIBLE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.404343 712.077 1996 1.275694 0.000 712.077 1.777912 1,266.01
1995 1.174867 851.160 1995 1.042515 0.000 851.160 1.777912 1,513.29
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.777912 1,777.91
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS SOCIALLY RESPONSIBLE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,266.01 0.00 1,266.01 26.60%
1995 1,513.29 0.00 1,513.29 23.02%
Incept 1,777.91 0.00 1,777.91 24.92%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.234309 810.170 1996 1.164675 0.000 810.170 1.541347 1,248.75
1995 1.12209 891.194 1995 0.996654 0.000 891.194 1.541347 1,373.64
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.541347 1,541.35
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,248.75 0.00 1,248.75 24.88%
1995 1,373.64 0.00 1,373.64 17.20%
Incept 1,541.35 0.00 1,541.35 18.21%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED INTERNATIONAL EQUITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.094819 913.393 1996 1.082731 0.000 913.393 1.188469 1,085.54
1995 1.02508 975.534 1995 1.001652 0.000 975.534 1.188469 1,159.39
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.188469 1,188.47
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED INTERNATIONAL EQUITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,085.54 0.00 1,085.54 8.55%
1995 1,159.39 0.00 1,159.39 7.67%
Incept 1,188.47 0.00 1,188.47 6.90%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.234309 810.170 1996 1.164675 0.000 810.170 1.541347 1,248.75
1995 1.12209 891.194 1995 0.996654 0.000 891.194 1.541347 1,373.64
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.541347 1,541.35
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,248.75 0.00 1,248.75 24.88%
1995 1,373.64 0.00 1,373.64 17.20%
Incept 1,541.35 0.00 1,541.35 18.21%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE GOVERNMENT SECURITIES - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.169361 855.168 1996 1.125354 0.000 855.168 1.248382 1,067.58
1995 1.154244 866.368 1995 1.102841 0.000 866.368 1.248382 1,081.56
1994 0.997441 1,002.566 1994 0.000000 0.000 1,002.566 1.248382 1,251.59
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.248382 1,248.38
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE GOVERNMENT SECURITIES - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,067.58 0.00 1,067.58 6.76%
1995 1,081.56 0.00 1,081.56 4.00%
1994 1,251.59 0.00 1,251.59 7.77%
Incept 1,248.38 0.00 1,248.38 6.67%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE GOVERNMENT SECURITIES - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.169361 855.168 1996 1.125354 0.000 855.168 1.248382 1,067.58
1995 1.154244 866.368 1995 1.102841 0.000 866.368 1.248382 1,081.56
1994 0.997441 1,002.566 1994 0.000000 0.000 1,002.566 1.248382 1,251.59
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.248382 1,248.38
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE GOVERNMENT SECURITIES - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,067.58 0.00 1,067.58 6.76%
1995 1,081.56 0.00 1,081.56 4.00%
1994 1,251.59 0.00 1,251.59 7.77%
Incept 1,248.38 0.00 1,248.38 6.67%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS AGGRESSIVE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.347927 741.880 1996 1.405008 0.000 741.880 1.497524 1,110.98
1995 1.266394 789.644 1995 1.075270 0.000 789.644 1.497524 1,182.51
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.497524 1,497.52
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS AGGRESSIVE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,110.98 0.00 1,110.98 11.10%
1995 1,182.51 0.00 1,182.51 8.74%
Incept 1,497.52 0.00 1,497.52 16.90%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.363534 733.388 1996 1.405008 0.000 733.388 1.650431 1,210.41
1995 1.167465 856.557 1995 1.037151 0.000 856.557 1.650431 1,413.69
Incept 1.000000 1,000.000 N/A 0 1,000.000 1.650431 1,650.43
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- -------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,210.41 0.00 1,210.41 21.04%
1995 1,413.69 0.00 1,413.69 18.90%
Incept 1,650.43 0.00 1,650.43 21.38%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS WORLDWIDE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.541029 648.917 1996 1.450125 0.000 648.917 1.856255 1,204.56
1995 1.211204 825.625 1995 1.057476 0.000 825.625 1.856255 1,532.57
Incept 1.000000 1,000.000 N/A 0 1,000.000 1.856255 1,856.26
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS WORLDWIDE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- --------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,204.56 0.00 1,204.56 20.46%
1995 1,532.57 0.00 1,532.57 23.80%
Incept 1,856.26 0.00 1,856.26 27.02%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - LIMITED MATURITY BOND FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.043140 1,043.14
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - LIMITED MATURITY BOND FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,043.14 0.00 1,043.14 6.50%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - PARTNERS FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.239881 1,239.88
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - PARTNERS FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,239.88 0.00 1,239.88 37.77%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - GROWTH FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.270148 1,270.15
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - GROWTH FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,270.15 0.00 1,270.15 42.82%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - OPPORTUNITY FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.229863 1,229.86
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - OPPORTUNITY FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Incept 1,229.86 0.00 1,229.86 36.12%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE COMMON STOCK - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
UNIT VALUE ACCUM
ACCUM FOR UNITS
UNITS YEAR OF ANNUAL (DEDUCTED) TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 2.071274 482.795 1996 1.735964 0.000 482.795 2.424118 1,170.35
1995 1.448804 690.224 1995 1.253068 0.000 690.224 2.424118 1,673.18
1994 1.077853 927.770 1994 0.000000 0.000 927.770 2.424118 2,249.02
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 2.424118 2,424.12
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE COMMON STOCK - FUTURE RESERVE - ACCOUNT "E"
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ----------------------------------------------------------------------
TOTAL ACCUM AVERAGE
TOTAL ACCUM VALUE AFTER ANNUAL
VALUE AFTER FULL DEDUCTION TOTAL
DEDUCTION SURRENDER FOR RETURN
END OF FOR SURR ADMIN ADMIN FEE ^N
QTR CHARGE FEE ^(ERV) ^P(1+T) = ERV
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,170.35 0.00 1,170.35 17.04%
1995 1,673.18 0.00 1,673.18 29.35%
1994 2,249.02 0.00 2,249.02 31.02%
Incept 2,424.12 0.00 2,424.12 29.40%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK HARD ASSETS (FORMERLY GOLD AND NATURAL RESOURCES)
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.253925 797.496 1996 1.193226 0.000 797.496 1.215736 969.54
1995 1.077158 928.369 1995 1.015117 0.000 928.369 1.215736 1,128.65
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.215736 1,215.74
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK HARD ASSETS (FORMERLY GOLD AND NATURAL RESOURCES)
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 969.54 0.00 969.54 -3.05%
1995 1,128.65 0.00 1,128.65 6.24%
Incept 1,215.74 0.00 1,215.74 7.85%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE BOND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.029224 971.606 1996 0.989898 0.000 971.606 1.039146 1,009.64
1995 1.018153 982.171 1995 1.001559 0.000 982.171 1.039146 1,020.62
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.039146 1,039.15
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE BOND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 1,009.64 0.00 1,009.64 0.96%
1995 1,020.62 0.00 1,020.62 1.03%
Incept 1,039.15 0.00 1,039.15 1.50%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE EMERGING MARKETS
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNIT VALUE ACCUMULATED
UNITS YEAR OF FOR ANNUAL UNITS DEDUCTED TOTAL TOTAL SURRENDER
END OF UNIT PURCHASED ADMIN ADMIN FEE FOR ANNUAL ACCUM 12/31/97 ACCUM CHARGE SURRENDER
QTR VALUE FOR $1,000 FEE $0.00 ADMIN FEE UNITS UNIT VALUE VALUE CALC CHARGE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1.13594 880.328 1996 1.076124 0.000 880.328 0.990151 871.66
Incep 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.990151 990.15
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE EMERGING MARKETS
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/97
TO MEET COMPLIANCE REQUIREMENTS OF SEC RELEASE IC-16245
- ---------------------------------------------------------------------------
TOTAL ACCUM VALUE AFTER AVERAGE ANNUAL
VALUE AFTER FULL DEDUCTION FOR TOTAL RETURN
END OF DEDUCTION FOR SURRENDER ADMIN FEE N
QTR SURR CHARGE ADMIN FEE (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 871.66 0.00 871.66 -12.83%
Incep 990.15 0.00 990.15 -0.59%
</TABLE>
