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. 8 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 8 [X]
CONSECO VARIABLE ANNUITY ACCOUNT E*
(Exact Name of Registrant)
CONSECO VARIABLE 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, 1999 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
* Formerly, Great American Reserve Variable Annuity Account E
CONSECO 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.............. Appendix-Condensed Financial Information
5. General Description of Registrant,........... Conseco Variable, The Variable Account, and
Depositor and Portfolio Companies Investment Options
6. Deductions and Expense....................... Charges and Deductions
7. General Description of Variable.............. The Contracts
Annuity Contracts
8. Annuity Period .............................. Annuity Phase
Settlement Provisions
9. Death Benefit................................ Death Benefit on or
After Maturity Date
10. Purchase and Contract Values................. Conseco Variable, The Variable
Account, and Investment Options;
Accumulation Provisions
11. Redemptions.................................. The Contracts
Section B. Settlement Provisions
12. Taxes........................................ Federal Tax Status
13. Legal Proceedings............................ Legal Proceedings
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............................. Annuity Provisions
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
CONSECO VARIABLE ANNUITY ACCOUNT E
(formerly, Great American Reserve Variable Annuity Account E)
INDIVIDUAL & GROUP VARIABLE DEFERRED ANNUITY CONTRACTS
offered by
CONSECO VARIABLE INSURANCE COMPANY
(formerly, Great American Reserve Insurance Company)
Administrative Office:
11815 N. Pennsylvania Street
Carmel, IN 46032
(317)817-3700
This prospectus describes the individual and group flexible purchase payment
variable deferred annuity contracts (Contracts) issued by Conseco Variable
Insurance Company (Conseco Variable). The Contracts are designed for use in
retirement planning.
You can invest your Purchase Payments in one of the Variable Account Investment
Options listed below. Depending on market conditions, you can make or lose money
in any of these Variable Account Investment Options. You can also invest in the
Fixed Account of Conseco Variable.
CONSECO SERIES TRUST
o Balanced Portfolio (formerly, Asset Allocation Portfolio)
o Equity Portfolio (formerly, Common Stock Portfolio)
o Fixed Income Portfolio (formerly, Corporate Bond Portfolio)
o Government Securities Portfolio
o Money Market Portfolio
THE ALGER AMERICAN FUND
o Alger American Growth Portfolio
o Alger American Leveraged AllCap Portfolio
o Alger American MidCap Growth Portfolio
o Alger American Small Capitalization Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
o VP Income & Growth
o VP International
o VP Value
BERGER INSTITUTIONAL PRODUCTS TRUST
o Berger IPT - 100 Fund
o Berger IPT - Growth and Income Fund
o Berger IPT - Small Company Growth Fund
o Berger/BIAM IPT - International Fund
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC.
DREYFUS STOCK INDEX FUND
DREYFUS VARIABLE INVESTMENT FUND
o Disciplined Stock Portfolio
o International Value Portfolio
FEDERATED INSURANCE SERIES
o Federated High Income Bond Fund II
o Federated International Equity Fund II
o Federated Utility Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
o INVESCO VIF-High Yield Fund
o INVESCO VIF-Equity Income Fund (formerly, INVESCO VIF-Industrial Income
Portfolio)
JANUS ASPEN SERIES
o Aggressive Growth Portfolio
o Growth Portfolio
o Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC.
o Lazard Retirement Equity Portfolio
o Lazard Retirement Small Cap Portfolio
LORD ABBETT SERIES FUND, INC.
o Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST
o Growth and Income Portfolio
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
o Limited Maturity Bond Portfolio
o Partners Portfolio
STRONG OPPORTUNITY FUND II, INC.
o Opportunity Fund II
STRONG VARIABLE INSURANCE FUNDS, INC.
o Strong Mid Cap Growth Fund II (formerly, Growth Fund II)
VAN ECK WORLDWIDE INSURANCE TRUST
o Worldwide Bond Fund
o Worldwide Emerging Markets Fund
o Worldwide Hard Assets Fund
o Worldwide Real Estate Fund
Please read this prospectus carefully before investing and keep it on file for
future reference. It contains important information about the individual and
group fixed and variable annuity contracts issued by Conseco Variable.
To learn more about the Contract, you can obtain a copy of the Statement of
Additional Information (SAI) dated May 1, 1999. The SAI has been filed with the
Securities and Exchange Commission (SEC) and is legally a part of this
Prospectus. The SEC has a Web site (http://www.sec.gov) that contains the SAI,
material incorporated by reference, and other information regarding companies
that file electronically with the SEC. The Table of Contents of the SAI is on
Page __ of this prospectus. For a free copy of the SAI, call us or write to us
at the address or telephone number given above.
The Contracts:
* are not bank deposits
* are not federally insured
* are not endorsed by any bank or government agency
* are not guaranteed and may be subject to loss of principal
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
[Note to Command Printers: when printed - above paragraph must appear on page 1]
May 1, 1999
Table of Contents
Page
DEFINITIONS.............................
SUMMARY.................................
FEE TABLE...............................
CONSECO VARIABLE, THE VARIABLE ACCOUNT
INVESTMENT OPTIONS.....................
Conseco Variable.....................
The Variable Account.................
Investment Options...................
Voting Rights.....................
THE CONTRACTS...........................
ACCUMULATION PROVISIONS.................
Purchase Payments....................
Allocation of Purchase Payments......
Accumulation Units ..................
Transfers............................
Dollar Cost Averaging................
Rebalancing..........................
Sweeps...............................
Withdrawals..........................
RESTRICTIONS UNDER OPTIONAL RETIREMENT
PROGRAMS.............................
RESTRICTIONS UNDER SECTION 403(b).......
Systematic Withdrawal Plan...........
Loans................................
CHARGES AND DEDUCTIONS..................
Withdrawal Charge....................
Administrative Charges...............
Mortality and Expense Risk Charge....
Reduction or Elimination of
Contract Charges....................
Premium Taxes........................
Fund Expenses........................
Other Charges........................
DEATH BENEFIT BEFORE MATURITY DATE......
OPTIONS WHEN YOU TERMINATE YOUR
PARTICIPATION IN THE PLAN (FOR GROUP
THE ANNUITY PHASE - SETTLEMENT PROVISIONS.
Annuity Options......................
Proceeds Applied to an Annuity
Option..............................
Transfers After Maturity Date........
Death on or After Maturity Date......
OTHER CONTRACT PROVISIONS...............
10 Day Right to Review...............
Ownership............................
Modification.........................
FEDERAL TAX STATUS...................
Annuity Contracts in General.........
Qualified and Non-Qualified Contracts
Withdrawals - Non-Qualified
Contracts...........................
Withdrawals - Qualified Contracts....
Withdrawals - Tax-Sheltered
Annuities...........................
Diversification......................
Investor Control.....................
GENERAL MATTERS.........................
Performance Information..............
Year 2000............................
Distribution of Contracts............
Legal Proceedings....................
TABLE OF CONTENTS OF THE SAI............
APPENDIX................................
DEFINITIONS
Accumulation Unit: An accounting unit of measure we use to calculate the value
of your Contract before the Maturity Date.
Annuitant: The person upon whose life the Contract is issued.
Annuity Payments: A series of income payments under an annuity option.
Contract Owner: The person(s) (including Co-Owners) or entity entitled to
ownership rights under the Contract. The Contract Owner is also referred to as
"you" in this prospectus.
Contract Value: The total value 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 beginning with the effective date of your
Contract.
Code: Internal Revenue Code of 1986, as amended.
Fixed Account: The general account of Conseco Variable. You may choose to
allocate Purchase Payments and Contract Value to the Fixed Account. It provides
guaranteed values and periodically adjusted interest rates.
Fund: The underlying mutual funds (or portfolios of a mutual fund) which the
sub-accounts of the Variable Account invest in.
Individual Account: The record we establish to represent your interest in an
Investment Option before the Maturity Date.
Investment Options: The investment choices available to Contract Owners.
Maturity Date: The date on which annuity payments begin.
Purchase Payments: The money you invest in 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: The separate account we established known as Conseco Variable
Annuity Account E. Prior to May 1, 1999, it was known as Great American Reserve
Variable Annuity Account E. The Variable Account is divided into sub-accounts.
SUMMARY
The Contracts: The Contracts described in this prospectus are tax deferred
individual and group flexible purchase payment variable annuity contracts. The
Contracts also offer you a Fixed Account Option. The Contracts provide for the
accumulation of Contract Values and the payment of annuity benefits on a
variable and/or fixed basis. In general, 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
Code. Examples of the plans qualifying for special tax treatment are: 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 you to make Purchase Payments on a
flexible basis. This means that you can make payments at any time you like
before the Maturity Date. For TSAs, the minimum initial Purchase Payment and the
amount of each subsequent Purchase Payment is $50 per month. For IRAs, the
minimum initial Purchase Payment is $2,000 and the minimum amount of each
additional Purchase Payment is $50. For non-qualified Contracts, the minimum
initial Purchase Payment is $5,000 and the minimum amount of each additional
Purchase Payment is $2,000 (or $200 each month). If your Purchase Payment is
more than $500,000, it requires our prior approval.
Investment Options: You can allocate your Purchase Payment to the Fixed Account
of Conseco Variable or the following Variable Account Investment Options:
CONSECO SERIES TRUST
o Balanced Portfolio (formerly, Asset Allocation Portfolio)
o Equity Portfolio (formerly, Common Stock Portfolio)
o Fixed Income Portfolio (formerly, Corporate Bond Portfolio)
o Government Securities Portfolio
o Money Market Portfolio
THE ALGER AMERICAN FUND
o Alger American Growth Portfolio
o Alger American Leveraged AllCap Portfolio
o Alger American MidCap Growth Portfolio
o Alger American Small Capitalization Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
o VP Income & Growth
o VP International
o VP Value
BERGER INSTITUTIONAL PRODUCTS TRUST
o Berger IPT - 100 Fund
o Berger IPT - Growth and Income Fund
o Berger IPT - Small Company Growth Fund
o Berger/BIAM IPT - International Fund
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC.
DREYFUS STOCK INDEX FUND
DREYFUS VARIABLE INVESTMENT FUND
o Disciplined Stock Portfolio
o International Value Portfolio
FEDERATED INSURANCE SERIES
o Federated High Income Bond Fund II
o Federated International Equity Fund II
o Federated Utility Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
o INVESCO VIF-High Yield Fund
o INVESCO VIF-Equity Income Fund (formerly, INVESCO VIF - Industrial
Income Portfolio)
JANUS ASPEN SERIES
o Aggressive Growth Portfolio
o Growth Portfolio
o Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC.
o Lazard Retirement Equity Portfolio
o Lazard Retirement Small Cap Portfolio
LORD ABBETT SERIES FUND, INC.
o Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST
o Growth and Income Portfolio
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
o Limited Maturity Bond Portfolio
o Partners Portfolio
STRONG OPPORTUNITY FUND II, INC.
o Opportunity Fund II
STRONG VARIABLE INSURANCE FUNDS, INC.
o Strong Mid Cap Growth Fund II (formerly, Growth Fund II)
VAN ECK WORLDWIDE INSURANCE TRUST
o Worldwide Bond Fund
o Worldwide Emerging Markets Fund
o Worldwide Hard Assets Fund
o Worldwide Real Estate Fund
The portion of your Contract value allocated to the Variable Account Investment
Options will reflect the investment performance of the Funds you select.
Transfers: Prior to the Maturity Date, you may make transfers among the Variable
Account Investment Options and from the Variable Account Investment Options to
the Fixed Account without charge. Under certain circumstances, you may also
transfer amounts from the Fixed Account to the Variable Account Investment
Options. You may also make transfers under certain programs we offer known as
the dollar cost averaging program, sweep program, and rebalancing. After the
Maturity Date, you may not make transfers from a variable annuity to a fixed
annuity or from a fixed annuity to a variable annuity.
Withdrawals: You may make withdrawals from your Contract before the earlier of
the Maturity Date or the death of the Annuitant. We may impose a withdrawal
charge and an administrative charge when you make a withdrawal. You may also
make withdrawals pursuant to the systematic withdrawal plan. A withdrawal may be
subject to income taxes and tax penalties. In addition, certain restrictions
apply to withdrawals from TSA Contracts.
Loans: Under certain circumstances, you may make loans from your Contract.
Death Benefit: Generally, if the Annuitant or Contract Owner dies before the
Maturity Date, we will pay a death benefit to your beneficiary.
Annuity Payments: We offer a variety of fixed and variable annuity options which
you can select to receive your Annuity Payments. Your Annuity Payments will
begin on the Maturity Date. You can select the Maturity Date, the frequency of
the payments and the annuity option.
Ten-Day Review: If you cancel the Contract within 10 days after receiving it (or
whatever period is required in your state) we will refund your Purchase Payment.
Taxes: Your earnings are not taxed until you take them out. If you take money
out before the Maturity Date, earnings come out first and are taxed as income.
If you are younger than 59 1/2 when you take money out, you may be charged a 10%
federal tax penalty on the earnings. The Contract provides that if the Annuitant
dies before the Maturity Date, we will pay a death benefit 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.
For TSA Contracts, you can only make withdrawals of amounts attributable to
contributions you made pursuant to a salary reduction agreement (as defined in
the Code) when:
(i) you attain age 59 1/2;
(ii) you separate from service;
(iii) you die;
(iv) you become disabled;
(v) made in the case of hardship; or
(vi) made pursuant to a qualified domestic relations order if otherwise
permitted.
Withdrawals for hardship are restricted to a portion of the Contract Owner's
Contract Value which represents contributions made by the Contract Owner and
does not include any investment results.
Payments after the Maturity Date are considered partly a return of your original
investment. That part of each payment is not taxable as income. If your Contract
was purchased under a tax-qualified plan, your payments may be fully taxable.
Charges and Deductions:
* Each year Conseco Variable deducts a $30 Annual Administrative Fee from
your Contract (this charge is waived if your Individual Account value is $25,000
or more).
* Conseco Variable deducts a Mortality and Expense Risk Fee which is equal,
on an annual basis, to 1.25% of the average daily net assets of the Variable
Account. Conseco Variable also deducts an Administrative Charge which is equal,
on an annual basis, to .15% of the average daily net assets of the Variable
Account.
* If you take money out of the Contract, Conseco Variable may assess a
deferred sales load which ranges from 0% to 9%, depending on how long your
Contract has been outstanding.
* You may be assessed a premium tax charge which generally ranges from
0%-3.5%, depending on the state.
* As with other professionally managed investments, there are also investment
charges which currently range from .26% to 1.50%, on an annual basis, of the
average daily value of the portfolio, depending upon the Variable Account
Investment Option you select.
CONSECO VARIABLE ANNUITY ACCOUNT E FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES(a)
Sales Charge Imposed on Purchases........................... None
Exchange Fee................................................ None
Surrender Fee............................................... None
Deferred Sales Load (as a percentage of purchase payments)(b)
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(b)..................... $30
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Charge........................... 1.25%
Administrative Charge....................................... 0.15%
-----
Total Annual Expenses of the Variable Account(b).............. 1.40%
====================================================================
(a) Premium taxes are not shown. We will deduct for any premium tax due when
you make a Purchase Payment or from Individual Account values at the
Maturity Date or at such other time based on our sole discretion. The
current range of premium taxes in jurisdictions in which we make the
Contracts available is from 0% to 3.5%.
(b) Conseco Variable may reduce or eliminate the sales, administrative, or
other expenses with certain Contracts in cases when it expects to incur
lower sales and administrative expenses or perform fewer services (see
"Reduction or Elimination of Contract Charges"). We will waive the Annual
Administrative Fee if your Individual Account value is $25,000 or greater.
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Annual Fund Expenses
(as a percentage of the average daily net assets of a portfolio)
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)
Balanced Portfolio (2)............................................... 0.75% -- 0.00% 0.75%
Equity Portfolio (2)................................................. 0.80% -- 0.00% 0.80%
Fixed Income Portfolio............................................... 0.70% -- 0.00% 0.70%
Government Securities Portfolio...................................... 0.70% -- 0.00% 0.70%
Money Market Portfolio (2)........................................... 0.45% -- 0.00% 0.45%
THE ALGER AMERICAN FUND
Alger American Growth Portfolio...................................... 0.75% -- 0.04% 0.79%
Alger American Leveraged AllCap Portfolio (3)........................ 0.85% -- 0.11% 0.96%
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% -- 0.00% 0.70%
VP International..................................................... 1.50% -- 0.00% 1.50%
VP Value............................................................. 1.00% -- 0.00% 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% -- 0.05% 0.80%
DREYFUS STOCK INDEX FUND............................................. 0.25% -- 0.01% 0.26%
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio.......................................... 0.75% -- 0.13% 0.88%
International Value Portfolio........................................ 1.00% -- 0.29% 1.29%
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II .................................. 0.60% -- 0.18% 0.78%
Federated International Equity Fund II (5)........................... 0.53% -- 0.72% 1.25%
Federated Utility Fund II (5)........................................ 0.68% -- 0.25% 0.93%
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield Fund (6).................................... 0.60% -- 0.47% 1.07%
INVESCO VIF - Equity Income Fund (6)(7).............................. 0.75% -- 0.18% 0.93%
JANUS ASPEN SERIES
Aggressive Growth Portfolio ......................................... 0.72% -- 0.03% 0.75%
Growth Portfolio (8)................................................. 0.65% -- 0.03% 0.68%
Worldwide Growth Portfolio (8)....................................... 0.65% -- 0.07% 0.72%
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity Portfolio (9)............................... 0.75% 0.25% 0.25% 1.25%
Lazard Retirement Small Cap Portfolio (9)............................ 0.75% 0.25% 0.25% 1.25%
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio ......................................... 0.50% -- 0.26% 0.76%
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio.......................................... 0.70% -- 0.34% 1.04%
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST (10)
Limited Maturity Bond Portfolio...................................... 0.65% -- 0.11% 0.76%
Partners Portfolio................................................... 0.78% -- 0.06% 0.84%
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II.................................................. 1.00% -- 0.16% 1.16%
STRONG VARIABLE INSURANCE FUNDS, INC
Strong Mid Cap Growth Fund II (11)................................... 1.00% -- 0.20% 1.20%
VAN ECK WORLDWIDE INSURANCE TRUST (12)
Worldwide Bond Fund.................................................. 1.00% -- 0.15% 1.15%
Worldwide Emerging Markets Fund...................................... 1.00% -- 0.50% 1.50%
Worldwide Hard Assets Fund........................................... 1.00% -- 0.16% 1.16%
Worldwide Real Estate Fund........................................... 0.89% -- 0.00% 0.89%
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(1) The expense information in the table has been restated to reflect
current fees. Pursuant to a contractual arrangement with the Trust, Conseco
Capital Management, Inc., the adviser, has agreed to waive fees and/or reimburse
portfolio expenses through 4/30/00, so that the annual operating expenses of
each portfolio are limited to the Total Annual Expenses for each respective
portfolio, as set forth above. This arrangement does not cover interest, taxes,
brokerage commissions, and extraordinary expenses. The total percentages in the
above table are after reimbursement. In the absence of expense reimbursement,
the total estimated fees and expenses for 1999 would total: 0.83% for the Money
Market Portfolio; 0.97% for the Government Securities Portfolio; 0.89% for the
Fixed Income Portfolio; 1.01% for the Balanced Portfolio and 0.95% for the
Equity Portfolio.
(2) Conseco Capital Management, Inc., since January 1, 1993, has waived its
management fees in excess of the annual rates set forth above. Absent such fee
waivers, the management fees would be: .85% for the Balanced Portfolio; .85% for
the Equity Portfolio; and .70% for the Money Market Portfolio.
(3) The Alger American Leveraged AllCap Portfolio's "Other Expenses"
includes .03% of interest expense.
(4) The Funds' investment advisers have agreed to waive their advisory fee
and reimburse 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%, 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 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 2.88%, 1.99%, 2.19% and 2.85%, respectively.
(5) In the absence of a voluntary waiver by Federated Investment Management
Company, the Funds' investment adviser, the Management Fee and Total Annual
Portfolio Expenses would have been 0.75% and 1.00%, respectively, for Utility
Fund II. Absent a voluntary waiver of the management fee and the voluntary
reimbursement of certain other operating expenses by Federated Investment
Management Company, the Management Fee and Total Annual Portfolio Expenses for
International Equity Fund II would have been 1.00% and 1.72%, respectively.
(6) The Fund's actual Total Annual Fund Operating Expenses were lower than
the figures shown because its transfer agent and/or custodian fees were reduced
under expense offset arrangements. Because of an SEC requirement, the figures
shown do not reflect these reductions.
(7) Certain expenses of the Fund are being absorbed voluntarily by INVESCO
Funds Group, Inc. pursuant to a commitment to the Fund. In the absence of such
absorption, Other Expenses and Total Annual Fund Operating Expenses for the year
ended December 31, 1998 were 0.42% and 1.17%, respectively. This commitment may
be changed at any time following consultation with the board of directors.
(8) 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 1998
would have totaled: 0.75% for Growth and 0.74% for Worldwide Growth.
(9) Lazard Asset Management, the Fund's investment adviser, has voluntarily
agreed to reimburse all expenses through December 31, 1999 to the extent total
annual portfolio expenses exceed in any fiscal year 1.25% of the Portfolio's
average daily net assets. Absent such an agreement with the adviser, the total
annual portfolio expenses for the year ended December 31, 1998 would have been
21.32% for the Lazard Retirement Equity Portfolio and 16.20% for the Lazard
Retirement Small Cap Portfolio.
(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 ("Series") of Advisers Managers Trust. The figures reported
under "Management Fees" include the aggregate 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
Mid Cap Growth Fund II, has voluntarily agreed to cap the Fund's total operating
expenses at 1.20%. In the absence of the expense cap, total annual portfolio
expenses for the year ended December 31, 1998 were 1.55%. 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) Van Eck Associates Corporation (the "Adviser") agreed to assume
expenses exceeding 1.50% of the Worldwide Emerging Markets Fund's average daily
net assets. Absent this expense reimbursement, Other Expenses would have been
0.61% and Total Portfolio Expenses would have been 1.61%. The Worldwide Hard
Assets Fund's Other Expenses was reduced by a fee arrangement based on cash
balances left on deposit with the custodian and a directed brokerage arrangement
where the Fund directs certain portfolio trades to a broker that, in turn, pays
a portion of the Fund's expenses. Absent these arrangements, the Other Expenses
would have been 0.20% and Total Portfolio Expenses would have been 1.20%. For
the Worldwide Real Estate Fund the Adviser agreed to waive its management fees
and assume certain expenses for the period January 1, 1998 to February 28, 1998.
The Adviser also agreed to assume expenses exceeding 1.00% of the Worldwide Real
Estate Fund's average daily net assets for the period March 1, 1998 to December
31, 1998. The Worldwide Real Estate Fund expenses were also reduced by a fee
arrangement based on cash balances left on deposit with the custodian and a
directed brokerage arrangement where the Fund directs certain portfolio trades
to a broker that, in turn, pays a portion of the Fund's expenses. Absent these
arrangements, the management fee would have been 1.00%, the Other Expenses would
have been 4.32% and Total Portfolio Expenses would have been 5.32% for the
Worldwide Real Estate Fund.
EXAMPLES:
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return on assets:
<TABLE>
<CAPTION>
Example 1 - If you surrender the Contract at the end of the time periods:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio $108 $143 $166 $261
Equity Portfolio 109 144 169 266
Fixed Income Portfolio 108 141 164 256
Government Securities
Portfolio 108 141 164 256
Money Market Portfolio 105 133 151 230
THE ALGER AMERICAN FUND
Alger American Growth
Portfolio 109 144 168 265
Alger American Leveraged
AllCap Portfolio 110 149 177 282
Alger American MidCap
Growth Portfolio 109 145 171 270
Alger American Small
Capitalization Portfolio 110 147 173 275
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
VP Income and Growth 108 141 164 256
VP International 116 165 204 334
VP Value 111 150 179 286
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT - 100 Fund 111 150 179 286
Berger IPT - Growth and
Income Fund 111 150 179 286
Berger IPT - Small Company
Growth Fund 112 155 186 301
Berger/BIAM IPT -
International Fund 113 156 189 306
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC 109 144 169 266
DREYFUS STOCK INDEX FUND 103 128 141 210
DREYFUS VARIABLE INVESTMENT FUND, INC.
Disciplined Stock Portfolio 109 146 173 274
International Value Portfolio 114 159 193 314
FEDERATED INSURANCE SERIES
Federated High Income
Bond Fund II 108 143 168 264
Federated International
Equity Fund II 113 158 191 310
Federated Utility Fund II 110 148 175 279
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield
Fund 111 152 182 293
INVESCO VIF - Equity
Income Fund 110 148 175 279
JANUS ASPEN SERIES
Aggressive Growth Portfolio 108 143 166 261
Growth Portfolio 107 140 163 254
Worldwide Growth Portfolio 108 142 165 258
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity
Portfolio 113 158 191 310
Lazard Retirement Small
Cap Portfolio 113 158 191 310
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio 108 143 167 262
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio 111 151 181 290
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond
Portfolio 108 143 167 262
Partners Portfolio 109 145 171 270
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II 112 155 187 302
STRONG VARIABLE INSURANCE
FUNDS, INC.
Strong Mid Cap Growth Fund II 113 156 189 306
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund 112 155 186 301
Worldwide Emerging
Markets Fund 116 165 204 334
Worldwide Hard Assets Fund 112 155 187 302
Worldwide Real Estate Fund 110 147 173 275
</TABLE>
EXAMPLE 2-If you elect to annuitize your Contract:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio $108 $143 $122 $265
Equity Portfolio 109 144 124 266
Fixed Income Portfolio 108 141 119 256
Government Securities
Portfolio 108 141 119 256
Money Market Portfolio 105 133 107 230
THE ALGER AMERICAN FUND
Alger American Growth
Portfolio 109 144 124 265
Alger American Leveraged
AllCap Portfolio 110 149 132 282
Alger American MidCap
Growth Portfolio 109 145 126 270
Alger American Small
Capitalization Portfolio 110 147 129 275
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.
VP Income and Growth 108 141 119 256
VP International 116 165 159 334
VP Value 111 150 134 286
BERGER INSTITUTIONAL PRODUCTS
TRUST
Berger IPT - 100 Fund 111 150 134 286
Berger IPT - Growth and
Income Fund 111 150 134 286
Berger IPT - Small Company
Growth Fund 112 155 142 301
Berger/BIAM IPT -
International Fund 113 156 144 306
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC 109 144 124 266
DREYFUS STOCK INDEX FUND 103 128 97 210
DREYFUS VARIABLE INVESTMENT
FUND, INC.
Disciplined Stock Portfolio 109 146 128 274
International Value
Portfolio 114 159 149 314
FEDERATED INSURANCE SERIES
Federated High Income
Bond Fund II 108 143 123 264
Federated International
Equity Fund II 113 158 147 310
Federated Utility Fund II 110 148 131 279
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield
Fund 111 152 138 293
INVESCO VIF - Equity
Income Fund 110 148 131 279
JANUS ASPEN SERIES
Aggressive Growth Portfolio 108 143 122 261
Growth Portfolio 107 140 118 254
Worldwide Growth Portfolio 108 142 120 258
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity
Portfolio 113 158 147 310
Lazard Retirement Small
Cap Portfolio 113 158 147 310
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio 108 143 122 262
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio 111 151 136 290
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond
Portfolio 108 143 122 262
Partners Portfolio 109 145 126 270
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II 112 155 142 302
STRONG VARIABLE INSURANCE FUNDS,
INC.
Strong Mid Cap Growth
Fund II 113 156 144 306
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund 112 155 142 301
Worldwide Emerging
Markets Fund 116 165 159 334
Worldwide Hard Assets Fund 112 155 142 302
Worldwide Real Estate Fund 110 147 129 275
</TABLE>
EXAMPLE 3-If you do not surrender your Contract at the end of each time
period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CONSECO SERIES TRUST
Balanced Portfolio $ 23 $ 71 $122 $261
Equity Portfolio 24 73 124 266
Fixed Income Portfolio 23 70 119 256
Government Securities
Portfolio 23 70 119 256
Money Market Portfolio 20 62 107 230
THE ALGER AMERICAN FUND
Alger American Growth
Portfolio 24 72 124 265
Alger American Leveraged
AllCap Portfolio 25 77 132 282
Alger American MidCap
Growth Portfolio 24 74 126 270
Alger American Small
Capitalization Portfolio 25 75 129 275
AMERICAN CENTURY VARIABLE PORTFOLIOS,
INC.
VP Income and Growth 23 70 119 256
VP International 31 94 159 334
VP Value 26 79 134 286
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT - 100 Fund 26 79 134 286
Berger IPT - Growth and
Income Fund 26 79 134 286
Berger IPT - Small Company
Growth Fund 27 83 142 301
Berger/BIAM IPT -
International Fund 28 85 144 306
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC 24 73 124 266
DREYFUS STOCK INDEX FUND 18 56 97 210
DREYFUS VARIABLE INVESTMENT FUND, INC.
Disciplined Stock Portfolio 24 75 128 274
International Value Portfolio 29 87 149 314
FEDERATED INSURANCE SERIES
Federated High Income Bond
Fund II 23 72 123 264
Federated International
Equity Fund II 28 86 147 310
Federated Utility Fund II 25 77 131 279
INVESCO VARIABLE INVESTMENT
FUNDS, INC.
INVESCO VIF - High Yield
Fund 26 81 138 293
INVESCO VIF - Equity
Income Fund 25 77 131 279
JANUS ASPEN SERIES
Aggressive Growth Portfolio 23 71 122 261
Growth Portfolio 22 69 118 254
Worldwide Growth Portfolio 23 70 120 258
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity
Portfolio 28 86 147 310
Lazard Retirement Small
Cap Portfolio 28 86 147 310
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio 23 71 122 262
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio 26 80 136 290
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio 23 71 122 262
Partners Portfolio 24 74 126 270
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II 27 83 142 302
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Mid Cap Growth Fund II 28 85 144 306
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund 27 83 142 301
Worldwide Emerging Markets Fund 31 94 159 334
Worldwide Hard Assets Fund 27 83 142 302
Worldwide Real Estate Fund 25 75 129 275
</TABLE>
* Please remember that the examples above should not be considered a
representation of past or future expenses. Actual expenses may be greater
or less than those shown. Similarly, the 5% annual rate of return is not an
estimate or a guarantee of future investment performance.
* This Contract is designed for retirement planning. Surrenders prior to the
Maturity 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 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% annual asset
charge.
THERE IS AN ACCUMULATION UNIT VALUE HISTORY (CONDENSED FINANCIAL INFORMATION)
CONTAINED IN THE APPENDIX.
CONSECO VARIABLE, THE VARIABLE ACCOUNT AND INVESTMENT OPTIONS
CONSECO VARIABLE
Conseco Variable Insurance Company (Conseco Variable or the Company) was
originally organized in 1937. Prior to October 7, 1998, the Company was known as
Great American Reserve Insurance Company. In certain states, we may continue to
use the name Great American Reserve Insurance Company until our name change is
approved in that state. The Company is principally engaged in the life insurance
business in 49 states and the District of Columbia. Conseco Variable is a stock
company organized under the laws of the state of Texas and is an indirect
wholly-owned subsidiary of Conseco, Inc. Conseco, Inc. is a publicly owned
financial services organization headquartered in Carmel, Indiana. Through its
subsidiaries, Conseco, Inc. is one of the nation's leading providers of
supplemental health insurance, retirement annuities and universal life
insurance.
Contract Owner Inquiries
You should direct any inquiries you have regarding your Individual Account, the
Contracts, or any related matter to the Company's Variable Annuity Department at
the address and telephone number shown under "Administrative Office" on page 1
of this Prospectus.
Financial Statements
The financial statements of Conseco Variable and the Variable Account are
contained in the Statement of Additional Information. You should consider the
financial statements of Conseco Variable only as bearing upon the ability of
Conseco Variable to meet its obligations under the Contracts. Neither the assets
of Conseco Variable nor those of any company in the Conseco group of companies
other than Conseco Variable support these obligations.
THE VARIABLE ACCOUNT
Conseco Variable has established Conseco Variable Annuity Account E (the
Variable Account) to hold the assets that underlie the Contracts. Prior to May
1, 1999, the Variable Account was known as Great American Reserve Variable
Annuity Account E. The Board of Directors of Conseco Variable adopted a
resolution to establish the Variable Account under Texas Insurance law on
November 12, 1993. The Variable Account is registered with the Securities and
Exchange Commission (SEC) as a unit investment trust under the Investment
Company Act of 1940 (the 1940 Act). Registration under the 1940 Act does not
involve the supervision by the SEC of the management or investment policies or
practices of the Variable Account. 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 assets of the Variable Account are held in Conseco Variable's name on behalf
of the Variable Account and legally belong to Conseco Variable. However, those
assets that underlie the Contracts, are not available to be used to pay
liabilities arising out of any other business Conseco Variable may conduct. All
the income, gains and losses (realized or unrealized) resulting from these
assets are credited to or charged against the Contracts and not against any
other Contracts Conseco Variable may issue.
The Variable Account is divided into sub-accounts. Each sub-account invests in
shares of one of the Funds. We reserve 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 us or by one of our
affiliates. We will not eliminate any existing sub-accounts or combine
sub-accounts without any required prior approval of the SEC.
INVESTMENT OPTIONS
The Contract offers 40 Variable Account Investment Options which are listed
below. You bear the investment risk for amounts you allocate to the Variable
Account Investment Options. We may make additional Investment Options available
in the future.
Shares of the Funds are also offered in connection with certain variable annuity
contracts and variable life insurance policies of various life insurance
companies which may or may not be affiliated with Conseco Variable. Certain
Funds are also sold directly to qualified plans. The Funds believe that offering
their shares in this manner will not be disadvantageous to you.
Conseco Variable may enter into certain arrangements under which it is
reimbursed by the Funds' advisers, distributors and/or affiliates for the
administrative services which it provides to the Funds.
YOU SHOULD READ THE PROSPECTUSES FOR THESE FUNDS CAREFULLY BEFORE INVESTING.
COPIES OF THESE PROSPECTUSES ARE ATTACHED TO THIS PROSPECTUS. CERTAIN PORTFOLIOS
CONTAINED IN THE FUND PROSPECTUSES MAY NOT BE AVAILABLE WITH YOUR CONTRACT.
CONSECO SERIES TRUST
Conseco Series Trust is a mutual fund with multiple portfolios. Conseco Series
Trust is managed by Conseco Capital Management, Inc. The following portfolios
are available under the Contract:
Balanced Portfolio (formerly, Asset Allocation Portfolio)
Equity Portfolio (formerly, Common Stock Portfolio)
Fixed Income Portfolio (formerly, Corporate Bond Portfolio)
Government Securities Portfolio
Money Market Portfolio
THE ALGER AMERICAN FUND
The Alger American Fund is a mutual fund with multiple portfolios. Fred Alger
Management, Inc. serves as the Fund's investment adviser. The following
portfolios are available under the Contract:
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
American Century Variable Portfolios, Inc. is a series of funds managed by
American Century Investment Management, Inc. The following portfolios are
available under the Contract:
VP Income & Growth
VP International
VP Value (long-term capital growth with income as a secondary objective)
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger Institutional Products Trust is a mutual fund with multiple portfolios.
Berger Associates, Inc. is the investment adviser to all portfolios except the
Berger/BIAM IPT--International Fund. BBOI Worldwide, LLC is the adviser to the
Berger/BIAM IPT--International Fund. The following portfolios are available
under the Contract:
Berger IPT--100 Fund (long-term capital appreciation)
Berger IPT--Growth and Income Fund
Berger IPT--Small Company Growth Fund
Berger/BIAM IPT--International Fund
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
The Dreyfus Socially Responsible Growth Fund, Inc. is managed by The Dreyfus
Corporation. Dreyfus has hired NCM Capital Management Group, Inc. to serve as
sub-investment adviser and to provide day-to-day management of the Fund's
investments.
DREYFUS STOCK INDEX FUND
The Dreyfus Corporation serves as the Fund's manager. Dreyfus has hired its
affiliate, Mellon Equity Associates, to serve as the Fund's index fund manager
and to provide day-to-day management of the Fund's investments.
DREYFUS VARIABLE INVESTMENT FUND
The Dreyfus Variable Investment Fund is a mutual fund with multiple portfolios.
The Dreyfus Corporation serves as the investment adviser. The following
portfolios are available under the Contract:
Disciplined Stock Portfolio (seeks to outperform the total return
performance of the Standard & Poor's 500 Composite Stock Price Index)
International Value Portfolio
FEDERATED INSURANCE SERIES
Federated Insurance Series is a mutual fund with multiple portfolios. Federated
Investment Management Company is the investment adviser. The adviser changed its
name from Federated Advisers to Federated Investment Mangement Company on March
31, 1999. Federated Global Investment Management Corp. is the sub-adviser of the
Federated International Equity Fund II. The following portfolios are available
under the Contract:
Federated High Income Bond Fund II
Federated International Equity Fund II
Federated Utility Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO Variable Investment Funds, Inc. is a mutual fund with multiple
portfolios. INVESCO Funds Group, Inc. is the investment adviser. The following
portfolios are available under the Contract:
INVESCO VIF - High Yield Fund (seeks high level of current income)
INVESCO VIF - Equity Income Fund (seeks high current income with growth of
capital as a secondary goal) (formerly, INVESCO VIF -
Industrial Income Portfolio)
JANUS ASPEN SERIES
The Janus Aspen Series is a mutual fund with multiple portfolios which are
advised by Janus Capital Corporation. The following portfolios are available
under the Contract:
Aggressive Growth Portfolio
Growth Portfolio
Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Series, Inc. is a mutual fund with multiple portfolios. Lazard
Asset Management, a division of Lazard Freres & Co. LLC, is the investment
manager for each portfolio. The following portfolios are available under the
Contract:
Lazard Retirement Equity Portfolio
Lazard Retirement Small Cap Portfolio
LORD ABBETT SERIES FUND, INC.
Lord Abbett Series Fund, Inc. is a mutual fund managed by Lord, Abbett & Co. The
following portfolio is available under the Contract:
Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST
Mitchell Hutchins Series Trust is a mutual fund with multiple portfolios.
Mitchell Hutchins Asset Management Inc. provides advisory and administrative
services to the Fund. The following portfolio is available under the Contract:
Growth and Income Portfolio
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Each portfolio of Neuberger Berman Advisers Management Trust invests in a
corresponding series of Advisers Managers Trust. All series of Advisers Managers
Trust are managed by Neuberger Berman Management Inc. The following are
available under the Contract:
Limited Maturity Bond Portfolio
Partners Portfolio (capital growth)
STRONG OPPORTUNITY FUND II, INC.
Strong Opportunity Fund II is a mutual fund managed by Strong Capital
Management, Inc. The following portfolio is available under the Contract:
Opportunity Fund II (capital growth)
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Variable Insurance Funds, Inc. is a mutual fund with multiple series.
Strong Capital Management, Inc. serves as the investment adviser. The following
series is available under the Contract:
Strong Mid Cap Growth Fund II (formerly, Growth Fund II)
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust is a mutual fund with multiple portfolios
which are managed by Van Eck Associates Corporation. The following portfolios
are available under the Contract:
Worldwide Bond Fund
Worldwide Emerging Markets Fund
Worldwide Hard Assets Fund
Worldwide Real Estate Fund
VOTING RIGHTS
Conseco Variable is the legal owner of the Fund shares. However, Conseco
Variable believes that when a Fund solicits proxies in conjunction with a vote
of shareholders, it is required to obtain from you and other owners instructions
as to how to vote those shares. When we receive those instructions, we will vote
all of the shares we own in proportion to those instructions. If we determine
that we are no longer required to comply with the above, we will vote the shares
as we choose without obtaining instructions from you. We have provided a further
discussion of voting rights in the Statement of Additional Information.
Fixed Account
The Fixed Account is not registered with the SEC because of certain exemptive
and exclusionary provisions. Conseco Variable has been advised that the staff of
the SEC has not reviewed the disclosure in this Prospectus relating to the Fixed
Account. The disclosure may, however, be subject to certain generally applicable
provisions of the federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.
Purchase Payments and transfers to the Fixed Account become part of the general
account of Conseco Variable. You can transfer Contract Values between the Fixed
and Variable Accounts, but the transfers are subject to the following:
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% of the Fixed
Account value;
3. You may not make transfers from the Fixed Account once Annuity Payments
begin.
The Administrative Charge and the Mortality and Expense Risk Charge do not apply
to values allocated to the Fixed Account.
If you buy the Contract as a TSA or under certain other qualified plans, the
Contract may contain a provision that allows you to take a loan against the
Contract Value you have allocated to the Fixed Account. Loan provisions are
described in detail in your Contract.
THE CONTRACTS
The Contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the annuity phase. When you are making Purchase Payments
to the Contract, it is called the accumulation phase. During the accumulation
phase, earnings accumulate on a tax deferred basis and are taxed as income when
you make a withdrawal. On the Maturity Date, you will begin receiving Annuity
Payments from your Contract. When you are receiving Annuity Payments from the
Contract, it is called the annuity phase.
ACCUMULATION PROVISIONS
Purchase Payments
You can make Purchase Payments to Conseco Variable at its Administrative Office.
You can make Purchase Payments at any time before the Maturity Date. Conseco
Variable reserves the right to refuse any Purchase Payment. The Purchase Payment
requirements are as follows:
* 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).
* If your Purchase Payment would exceed $500,000, the Purchase Payment will
only be accepted with our prior approval.
Conseco Variable must approve each application. When Conseco Variable accepts
your application, it will issue you a Contract and allocate your Purchase
Payment as described below.
We may, at our 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.
When the Contract is canceled, we will pay you the Contract Value determined as
of the Valuation Period during which the Contract was canceled, less any
outstanding loans, any Withdrawal Charge, and the $30 Annual Administrative Fee.
If your Contract is canceled, there may be adverse tax consequences (see
"Federal Tax Status").
Allocation of Purchase Payments
You may elect to have Purchase Payments accumulate:
(a) on a fully variable basis, which means they are invested in the sub-
accounts of the Variable Account (Variable Account Investment Options);
(b) on a fully fixed basis, which means they are invested in our general
account and receive a periodically adjusted interest rate guaranteed by
Conseco Variable (Fixed Account); or
(c) a combination of both.
You may request to change your allocation of future Purchase Payments 30 days
after either we establish your Individual Account, or 30 days after you have
made a prior change in allocation.
Once we receive your Purchase Payment and the necessary information, we will
issue your Contract and allocate your first Purchase Payment within 2 business
days. If you do not provide us all of the information needed, we will contact
you. If for some reason we are unable to complete this process within 5 business
days, we will either send back your money or get your permission to keep it
until we get all of the necessary information. If you add more money to your
Contract by making additional Purchase Payments, we will credit these amounts to
your Contract within one business day. Our business day closes when the New York
Stock Exchange closes, usually 4:00 P.M. Eastern time.
Accumulation Units
We credit Purchase Payments that you allocate to the sub-accounts with
Accumulation Units. We do this at the end of the Valuation Period when we
receive your Purchase Payment at our Administrative Office. We determine the
number of Accumulation Units credited to your Contract by dividing the Purchase
Payment amount by the value of an Accumulation Unit at the end of that Valuation
Period. We value Accumulation Units for each sub-account separately.
Accumulation Unit Values
Every day we determine the value of an Accumulation Unit for each of the sub-
accounts by multiplying the Accumulation Unit value for the previous Valuation
Period by a factor for the current Valuation Period. The factor is determined
by:
1. dividing the value of a Fund share at the end of the current Valuation
Period (and any charges for taxes) by the value of a Fund share for the previous
Valuation Period; and
2. subtracting the daily amount of the Mortality and Expense Risk Charge
and Administrative Charges.
The value of an Accumulation Unit may go up or down from Valuation Period to
Valuation Period. There is no guarantee that the value of your Individual
Account will equal or exceed the Purchase Payments you have made.
We will tell you at least once each year the number of Accumulation Units which
we credited to your Individual Account, the current Accumulation Unit values and
the value of your Individual Account.
Transfers
Before the Maturity Date, you may make transfers from one sub-account to another
sub-account and/or to the Fixed Account. The Contract allows Conseco Variable to
limit the number of transfers that can be made in a specified time period. You
should be aware that transfer limitations may prevent you from making a transfer
on the date you desire, with the result that your future Contract Value may be
lower than it would have been had the transfer been made on the desired date.
Conseco Variable'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. Conseco Variable
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 Fund for the sub-account involved. The movement of
sub-account values from one sub-account to another may prevent an underlying
Fund 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
Contract Owners.
How You Can Make Transfers:
Conseco Variable is not charging a transfer fee. However, we limit transfers to
one every 30 days and to a maximum of 20% of the Fixed Account value per any
six-month period from the Fixed Account. All transfers requested for a Contract
on the same day will be treated as a single transfer in that period.
You can make transfers by written authorization. Written transfer requests may
be made by a person acting for or on your behalf as an attorney-in-fact under a
power-of-attorney if permitted by state law. By authorizing Conseco Variable to
accept telephone transfer instructions, you agree to accept and be bound by the
conditions and procedures established by Conseco Variable from time to time. We
have instituted reasonable procedures to confirm that any instructions
communicated by telephone are genuine. We will record all telephone calls and
will ask the caller 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 Conseco Variable nor Conseco Equity Sales, Inc.
will be liable for following telephone instructions which it reasonably believes
to be genuine.
Transfer requests received by Conseco Variable 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. If we receive a request later it will be
initiated at the close of the next business day.
Dollar Cost Averaging
Conseco Variable offers a Dollar Cost Averaging (DCA) program which enables you
to transfer values from the Fixed Account or Money Market sub-account to another
Investment Option on a predetermined and systematic basis. The DCA program
allows you to make investments in equal installments over time in an effort to
potentially reduce the risk of market fluctuations. There is no guarantee that
this will happen. The transfers under this program do not count toward the
number of transfers you can make in a year. Currently, there is no charge for
participating in this program.
Rebalancing
Rebalancing is a program, which if elected, permits you to pre-authorize
periodic automatic transfers prior to the Maturity Date among the sub-accounts
pursuant to your written instructions. The transfers under this program are made
to maintain a particular percentage allocation among the sub-accounts you
select. Any amount you have in the Fixed Account will not be transferred
pursuant to the rebalancing program. You must have at least $5,000 to have
transfers made pursuant to this program. Transfers must be in whole percentages
in one (1%) percent allocation increments. The maximum number of sub-accounts
you can use for rebalancing is 15. You can request that rebalancing occur
quarterly, semi-annually or annually on a date you select. There is no fee for
participating in the program. Conseco Variable reserves the right to terminate,
modify or suspend the rebalancing program at any time. The transfers under this
program do not count toward the number of transfers you can make in a year.
Sweeps
Sweeps is a program which provides for the automatic transfer of the earnings
from the Fixed Account into the sub-accounts on a periodic and
systematic basis. The transfers under this program do not count toward the
number of transfers you can make in a year. Currently, there is no charge for
participating in this program.
Withdrawals
Prior to the earlier of the Maturity Date or the death of the Annuitant, you may
withdraw all or a portion of the Contract Value upon written request. You must
complete all the necessary information and send it to Conseco Variable's
Administrative Office. For certain qualified Contracts, your withdrawal rights
may be restricted and may require the consent of your spouse as required under
the Code.
Total Withdrawals:
If you make a total withdrawal, we will pay the Contract Value as of the date we
receive your request at our Administrative Office, less:
* the $30 Annual Administrative Fee,
* any outstanding loans (plus the pro rata interest accrued), and
* any applicable Withdrawal Charge.
If you make a total withdrawal, we will cancel the Contract.
Partial Withdrawals:
If you make a partial withdrawal, we 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 you withdraw from each
Investment Option plus any applicable Withdrawal Charge deducted from such
Investment Option. You can make certain withdrawals free of Withdrawal Charges,
see "Charges and Deductions."
When you make a partial withdrawal, you must specify the Investment Options from
which the withdrawal is to be made. You may not request an amount from an
Investment Option that exceeds the value of that Investment Option less any
applicable Withdrawal Charge. If you do not specify the Investment Options from
which a partial withdrawal is to be taken, we will take the partial withdrawal
from the Fixed Account until it is exhausted and then from the sub- accounts. If
the partial withdrawal is less than the total value in the Variable Account
Investment Options, the withdrawal will be taken pro rata from all the Variable
Account Investment Options. Any partial withdrawal 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, we reserve the right to treat the partial withdrawal as a total withdrawal
of the Contract Value.
Withdrawals may be subject to income taxes, penalty taxes and certain
restrictions.
Suspension of Payments:
We will pay the amount of any withdrawal from the Variable Account promptly, and
in any event within seven days of receipt of the request. Conseco Variable
reserves the right to defer the right of withdrawal or postpone payments for any
period 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) an 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 will govern as to
whether the conditions described in (2) and (3) exist.
RESTRICTIONS UNDER OPTIONAL RETIREMENT PROGRAMS
If you participate in certain Optional Retirement Programs (ORP), you can
withdraw your 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, you (as a participant in ORP) may be required to obtain a
certificate of termination from your employer before you can withdraw your
interest. Certain plans may have additional restrictions on distributions.
RESTRICTIONS UNDER SECTION 403(b) PLANS
If you own the Contract under a TSA-403(b) plan, you can only make withdrawals
of amounts attributable to contributions you made pursuant to a salary reduction
agreement (as defined in Section 403(b)(11) of the Code) under the following
circumstances:
(1) when you attain age 59 1/2,
(2) when you separate from service,
(3) when you die,
(4) when you become 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, if otherwise
permitted.
Withdrawals for hardship are restricted to the portion of your Contract Value
which represents contributions you made 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;
* income attributable to such contributions; and
* 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.
Systematic Withdrawal Plan
Conseco Variable offers a Systematic Withdrawal Plan (SWP) which enables you to
pre-authorize periodic withdrawals. You can participate in this program by
sending a written request to our Administrative Office. You can instruct Conseco
Variable to withdraw a level dollar amount from specified Investment Options on
a periodic basis. All systematic withdrawals will be withdrawn from the Variable
Account Investment Option and the Fixed Account on a pro-rata basis. The total
SWP withdrawals in a Contract Year which you are permitted to make is limited to
amounts that can be withdrawn without a withdrawal charge. This will ensure that
no withdrawal charge will ever apply to a SWP withdrawal (see "Charges and
Deductions - Withdrawal Charge"). If you are participating in this program and
you make a withdrawal subject to the withdrawal charge, the SWP will terminate
automatically and may be reinstated only on or after we receive a written
request.
SWP is not available if you participate in the dollar cost averaging program or
if you have Purchase Payments automatically deducted from a bank account on a
periodic basis.
SWP withdrawals may be subject to income taxes, penalty taxes and certain
restrictions.
Loans
Your Contract may contain a loan provision issued in connection with certain
qualified plans. If you own a Contract which contains a loan provision, you 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.
You should consult a tax adviser and retirement plan fiduciary before exercising
loan privileges. Loan provisions are described in detail in your Contract.
The amount of any loan will be deducted from the minimum death benefit. In
addition, a loan, whether or not repaid, will have a permanent effect on the
Contract Value because the investment performance of the Variable Account
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 performance
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 the investment
performance results are below that rate, the Contract Value will be higher than
it would have been if no loan had been outstanding.
CHARGES AND DEDUCTIONS
Withdrawal Charge
Conseco Variable does not make a deduction when you make a Purchase Payment for
sales expenses. However, Conseco Variable may assess a Withdrawal Charge against
the Purchase Payments when you withdraw them. The amount of the Withdrawal
Charge, if applicable, will affect the amount we will pay to you.
If you make a withdrawal 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.
We never assess a charge for Purchase Payments that have been in the Contract
for more than six complete Contract Years. The length of time from when we
receive your Purchase Payment to the time you make a withdrawal will determine
the Withdrawal Charge. Certain other withdrawals described below under "Free
Withdrawal Amount" are not subject to a withdrawal charge.
The charge is a percentage of the amount you withdraw (not to exceed 8.5% of the
aggregate amount of the Purchase Payments made) and equals:
YEARS SINCE PAYMENT CHARGE PERCENTAGE
- ---------------------------------------------------------------------
1 .............................................. 9%
2 .............................................. 9%
3 .............................................. 8%
4 .............................................. 7%
5 .............................................. 5%
6 .............................................. 3%
7 and thereafter................................ 0%
In addition, the following circumstances further limit or reduce Withdrawal
Charges:
* if you are age 52 or younger when we issue your Contract, we will not
assess a Withdrawal Charge for withdrawals you make after the 15th
Contract Year and later;
* if you are 53 to 56 when we issue your Contract, we will not assess a
Withdrawal Charge for withdrawals you make after you reach age 67 and
later;
* if you are age 57 or older when we issue your Contract, the Withdrawal
Charge we assess for withdrawals you make will be multiplied by a
factor ranging from .9 to 0 for Contract Years 1 - 10 and later,
respectively.
Free Withdrawal Amount: You may make a withdrawal without the Withdrawal Charge
described above (a "free withdrawal") in an amount up to the greater of:
(i) 10% of the Contract Value (as determined on the date we receive your
request to make a withdrawal), or
(ii) the Contract Value divided by the Annuitant's life expectancy based on
the Code, or
(iii) the amount of any Purchase Payments that have been in the Contract
more than six complete Contract Years.
If you make additional withdrawals in excess of the free withdrawal amount in
any Contract Year during the period when the Withdrawal Charge applies, the
withdrawals will be subject to the appropriate charge as set forth above. From
time to time, we may permit you to pre-authorize partial withdrawals subject to
certain limitations then in effect.
On or after the Maturity Date, we may assess Withdrawal Charges for withdrawals
made under the Fourth and Fifth Annuity Options. We will not assess withdrawal
charges which would otherwise apply:
(i) if the Annuitant dies,
(ii) if you die, or
(iii)if we make payments under an annuity option 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.
If you make a complete withdrawal of the entire amount in your Individual
Account with a certain dollar amount, we will deduct the Withdrawal Charge from
the portion of your Individual Account you withdraw and pay the balance to you.
Example: You request a total withdrawal of $2,000 and the applicable
Withdrawal Charge is 5%. 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% free withdrawal less the 5% Withdrawal Charge and $30 Annual
Administrative Fee).
If you make a partial withdrawal 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 you requested.
Example: You request to receive $1,000 with a free withdrawal amount
of $200 and the applicable Withdrawal Charge is 5%. Your Individual Account
will be reduced by $1,042.11. In order to make a withdrawal of $1,000, the
amount you withdraw must be greater than the amount you request by the
amount of the Withdrawal Charge. The amount you withdraw is calculated by
dividing (a) the amount you requested ($1,000 less the free withdrawal
amount of $200) by (b) 1.00, minus the applicable deduction rate of 5% (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, we deduct an Annual Administrative Fee of $30 on
each Contract anniversary from the Individual Account value. We will waive the
Annual Administrative Fee if your Individual Account value is $25,000 or
greater. If you make a complete withdrawal of your Individual Account value
prior to the Maturity Date, Conseco Variable will deduct the Annual
Administrative Fee from the proceeds it pays.
We deduct the Annual Administrative Fee 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.
We make a deduction for a daily charge in an amount equal to 0.15%, on an annual
basis, of the value of each sub-account of the Variable Account. This charge
reimburses Conseco Variable for administrative expenses. We will not deduct this
charge from any amount you have allocated to the Fixed Account. The charge will
be deducted pro rata from Contract Value of each sub-account of the Variable
Account.
Conseco Variable has set this administrative fee at a level that will recover no
more than the actual costs it incurs which are associated with administering the
Contracts. Conseco Variable does not expect to recover any amount in excess of
its accumulated administrative expenses from such fees. Even though
administrative expenses may increase, Conseco Variable will not increase the
amount of the administrative fees.
Mortality and Expense Risk Charge
Conseco Variable assumes two risks under the Contract: the mortality risk and
the expense risk. Conseco Variable makes daily deductions from the sub- accounts
of the Variable Account equal, on an annual basis, to 1.25% of the value of your
assets of the Variable Account for the mortality and expense risks it assumes.
The mortality risk is Conseco Variable'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 accumulated to provide such payment.
Conseco Variable 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 Conseco Variable'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, Conseco Variable may realize a gain. We do not assess
the Mortality and Expense Risk Charge against the Fixed Account.
Reduction or Elimination of Contract Charges
In some cases, Conseco Variable may expect to incur lower sales and
administrative expenses or perform fewer services due to the size of the
Contract, the average Purchase Payment and the use of group enrollment
procedures. Then, Conseco Variable may be able to reduce or eliminate the
contract charges for administrative charges and Withdrawal Charges.
Premium Taxes
We may make a deduction for any premium taxes due from Purchase Payments, other
values on the Maturity Date, or at such other time as we determine. The current
range of premium taxes in jurisdictions where we make the Contracts available is
0% - 3.5%.
Fund Expenses
There are deductions from and expenses paid out of the assets of the Funds,
which are described in the attached Fund prospectuses.
Other Charges
Currently, Conseco Variable does not make a charge against the Variable Account
for its federal income taxes, or provisions for such taxes, that may be as a
result of the Variable Account. Conseco Variable 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, Conseco Variable 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, Conseco Variable 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 performance of the
sub-accounts.
DEATH BENEFIT BEFORE MATURITY DATE
If a Contract Owner, Co-Owner or the Annuitant dies prior to the Maturity Date,
Conseco Variable will pay the minimum death benefit to the beneficiary. Conseco
Variable will pay the minimum death benefit 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 Contract 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 Contract Owner in lieu of receiving the distribution. In such a case, the
distribution rules which apply when a Contract Owner dies will apply when that
spouse, as the Contract 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 and if the Contract is
owned by a non-individual the death of the Annuitant shall be treated as the
death of the Contract Owner. Additional requirements may apply to qualified
contracts.
The minimum death benefit during the first seven contract years will be equal to
the greater of:
(a) the Contract Value on the date Conseco Variable receives at its
Administrative Office due proof of death, 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 Conseco Variable receives due proof of
death at its 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 Purchase Payments paid, less any partial withdrawals. If
the Annuitant or Contract Owner dies after reaching the age of 80, the death
benefit will be the Contract Value on the date Conseco Variable receives due
proof of death at its Administrative Office. The minimum death benefit will be
reduced by any outstanding loans.
Death benefits generally will be paid within seven days of the date Conseco
Variable receives due proof of death at its Administrative Office, subject to
postponement under the same circumstances that payment or withdrawals may be
postponed (see "Withdrawals").
OPTIONS WHEN YOU TERMINATE YOUR PARTICIPATION IN THE PLAN (FOR GROUP CONTRACTS
ONLY).
If you terminate your participation in a Plan before the Maturity Date, you 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
Investment Option(s) you select. On the Maturity Date, you will begin to receive
Annuity Payments. During the interim, you may elect any of the options described
below. This option will automatically apply, unless you file a written election
of another option.
(b) apply the Individual Account to provide Annuity Payments which begin
immediately.
(c) convert the Individual Account to an individual variable annuity
contract of the type we are then offering.
(d) terminate the Individual Account and receive the Contract Value less
any applicable charges and outstanding loans.
THE ANNUITY PHASE - SETTLEMENT PROVISIONS
You select a Maturity Date and an annuity option. You may select the Maturity
Date at any time, subject to state requirements.
The annuity option may be on a fixed basis (which means that payments come from
the Fixed Account) or a variable basis (which means that payments come from the
sub-accounts of the Variable Account), or a combination of both. If you do not
select an Annuity Option, we will make payments under a lifetime annuity with
120 monthly payments guaranteed. Payments will be made based on the allocations
to the Fixed Account and Variable Account on the Maturity Date.
You may elect to change the annuity option or basis of payment (fixed or
variable) with written notice to Conseco Variable at least 30 days before the
Maturity Date. Once Annuity Payments begin, you may not make any changes (except
you may make transfers under certain circumstances).
You cannot elect an annuity option which would result in the first monthly
annuity payment of less than $50 if payments are to be on a fully fixed basis or
variable basis, or less than $50 on each basis if a combination of fixed and
variable annuity payments are elected. If, at any time, Annuity Payments are or
become less than $50 per month, Conseco Variable reserves the right to change
the frequency of payments to an interval which will result in Annuity Payments
of at least $50 each (except that we will make payments at least annually).
Prior to the Maturity Date, you may terminate your Individual Account and
receive its value in a lump sum. Once Annuity Payments begin, you and the
Annuitant cannot terminate the annuity benefit and receive a lump sum settlement
instead.
Annuity Options
You may select one of the following annuity options:
FIRST OPTION - LIFE ANNUITY. Under this option, we will make monthly
payments during the lifetime of the Annuitant. The payments will cease 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. Under this option, we will make monthly payments during the lifetime
of the Annuitant with the guarantee that if, at the death of the Annuitant, we
have made payments for less than 120, 180 or 240 months, as elected, we will
continue to make Annuity Payments during the remainder of such period to your
beneficiary. If no beneficiary is designated, Conseco Variable will, in
accordance with the Contract provisions, pay the Annuitant's estate a lump sum
equal to the present value, as of the date of death, of the number of guaranteed
annuity payments remaining after that date, computed on the basis of the assumed
net investment rate used in determining the first monthly payment. Because this
option provides a specified minimum number of Annuity Payments, this option
results in somewhat lower payments per month than the First Option.
THIRD OPTION - INSTALLMENT REFUND LIFE ANNUITY. Under this option, we will
make monthly payments for the installment refund period. This 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. Under this option, we will
make monthly payments for the number of years selected. The period may be from 3
through 20. If you elect to receive payments under this option on a variable
basis, payments will vary monthly in accordance with the net investment rate of
the sub-accounts of the Variable Account. If the Annuitant dies before we have
made the specified number of monthly payments, the present value of the
remaining payments will be paid to the designated beneficiary in a lump sum
payment.
To the extent that you select this option on a variable basis, at any time
during the payment period you may elect that the remaining value:
(1) be paid in one sum, or
(2) be applied to effect a lifetime annuity under one of the first two
options described above, provided that the value is at least $5,000.
Since you may elect a lifetime annuity at any time, the annuity rate and expense
risks continue after the Maturity Date. Accordingly, we will continue to make
deductions for these risks from the Individual Account values.
FIFTH OPTION - PAYMENTS OF A FIXED AMOUNT. Under this option, we will make
payments of a designated dollar amount on a monthly, quarterly, semi-annual, or
annual basis until the Individual Account value you 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. If the Annuitant dies
before the value is exhausted, we will pay the remaining value 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 will result in a rate of
payment at least as rapid as the rate of payment during the life of the
Annuitant.
If you elect the Fourth or Fifth Option on a variable basis, at any time during
the payment period you may elect the remaining value be applied to provide a
lifetime annuity under one of the first two options described above, as long as
the distribution will be made at least as rapidly as during the life of the
Annuitant. Since you may elect a lifetime annuity at any time, the annuity rate
and expense risks continue during the payment period. Accordingly, we will
continue to make deductions for these risks from the Individual Account values.
PROCEEDS APPLIED TO AN ANNUITY OPTION. You may apply all or part of the Contract
Value 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.
The SAI contains a further discussion of Annuity Provisions including how
annuity unit values are calculated.
TRANSFERS AFTER MATURITY DATE
You can make transfers after the Maturity Date by giving us written notice at
least 30 days before the due date of the first Annuity Payment for which the
change will apply. We will make transfers 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. The next Annuity Payment, if it were made at that
time, would be the same amount that it would have been without the transfer.
After that, Annuity Payments will reflect changes in the value of the new
annuity units.
Conseco Variable reserves the right to limit, upon notice, the maximum number of
transfers you can make to one in any six-month period once Annuity Payments have
begun. In addition, on or after the Maturity Date, you may not make transfers
from a fixed annuity option to a variable annuity option or from a variable
annuity option to a fixed annuity option.
Conseco Variable reserves the right to defer the transfer privilege at any time
that it is unable to purchase or redeem shares of the Funds. Conseco Variable
also reserves the right to modify or terminate the transfer privilege at any
time in accordance with applicable law.
DEATH ON OR AFTER MATURITY DATE
If you selected Annuity Payments based on an annuity option providing payments
for a guaranteed period, and the Annuitant or an Owner dies on or after the
Maturity Date, Conseco Variable 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, Conseco Variable 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.
OTHER CONTRACT PROVISIONS
TEN-DAY RIGHT TO REVIEW. The Contract provides a "10-day free look" (in some
states, the period may be longer). This allows you to revoke the Contract by
returning it to either a Conseco Variable representative or to Conseco
Variable's Administrative Office within 10 days (or the period required in your
state) of delivery of the Contract. Conseco Variable deems this period as ending
15 days after it mails a Contract from our Administrative Office. If you return
the Contract under the terms of the free look provision, Conseco Variable will
refund the Purchase Payments you have made.
OWNERSHIP. You, as the Contract Owner, are 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.
The Contract is either a group contract or an individual contract, depending on
the state where we issued it. The individual contract is issued directly to the
Contract Owner. A group contract is identical to the individual Contract except
that it is issued to a contract holder, for the benefit of the participants in
the group. You are a participant in the group and will receive a certificate
evidencing your ownership. You, as the owner of a certificate, are entitled to
all the rights and privileges of ownership. As used in this Prospectus, the term
Contract refers to your certificate.
Change of Ownership
Non-Qualified Contracts:
In the case of non-qualified Contracts, you may change ownership of the Contract
or you may collaterally assign it 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 a taxable event. Any change of ownership or assignment must be made in
writing. Conseco Variable must approve any change of ownership or assignment.
Any assignment and any change, if approved, will be effective as of the date on
which it is written.
Conseco Variable assumes no liability for any payments made or actions it takes
before a change is approved or an assignment is accepted, or responsibility for
the validity of any assignment.
Qualified Contracts:
In the case of qualified Contracts, you generally may not change ownership of
the Contract nor may you transfer it, except by the trustee of an exempt
employee's trust which is part of a retirement plan qualified under Section 401
of the Code. Except as noted, if you own a qualified Contract, you may not sell,
assign, transfer, discount, or pledge (as collateral for a loan or as security
for the performance of an obligation or for any other purpose) the Contract.
MODIFICATION. Conseco Variable may modify the Contract with your approval unless
provided otherwise by the Contract. After the Contract has been in force,
Conseco Variable may modify it except that the Mortality and Expense Risk
Charge, the withdrawal charges and the administrative fees cannot be increased.
A group Contract will be suspended automatically on the effective date of any
modification initiated by Conseco Variable if you fail to accept the
modification. Effective with suspension, no new participants may enter the Plan
but further Purchase Payments may be made on your behalf and on the behalf of
other 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.
FEDERAL TAX STATUS
NOTE: Conseco Variable has prepared the following information on taxes as a
general discussion of the subject. It is not intended as tax advice to any
individual. You should consult your own tax adviser about your own
circumstances. Conseco Variable has included an additional discussion regarding
taxes in the Statement of Additional Information.
ANNUITY CONTRACTS IN GENERAL
Annuity contracts are a means of setting aside money for future needs, usually
retirement. Congress recognized how important saving for retirement was and
provided special rules in the Internal Revenue Code (Code) for annuities.
Simply stated, these rules provide that you will not be taxed on the earnings on
the money held in your annuity contract until you take the money out. This is
referred to as tax-deferral. There are different rules as to how you will be
taxed depending on how you take the money out and the type of Contract -
Qualified or Non-Qualified (see following sections).
You, as the Contract Owner, will not be taxed on increases in the value of your
Contract until a distribution occurs -- either as a withdrawal or as annuity
payments. When you make a withdrawal you are taxed on the amount of the
withdrawal that is earnings. For annuity payments, different rules apply. A
portion of each annuity payment is treated as a partial return of your purchase
payments and will not be taxed. The remaining portion of the annuity payment
will be treated as ordinary income. How the annuity payment is divided between
taxable and non-taxable portions depends upon the period over which the annuity
payments are expected to be made. Annuity payments received after you have
received all of your Purchase Payments are fully includible in income.
When a non-qualified Contract is owned by a non-natural person (e.g.,
corporation or certain other entities other than a trust holding the Contract as
an agent for a natural person), the Contract will generally not be treated as an
annuity for tax purposes.
QUALIFIED AND NON-QUALIFIED CONTRACTS
If you purchase the Contract as an individual and not under any pension plan,
specially sponsored program or an individual retirement annuity, your Contract
is referred to as a non-qualified Contract.
If you purchase the Contract under a pension plan, specially sponsored program
or an individual retirement annuity, your Contract is referred to as a qualified
Contract.
WITHDRAWALS--NON-QUALIFIED CONTRACTS
If you make a withdrawal from your Contract, the Code generally treats such a
withdrawal as first coming from earnings and then from your Purchase Payments.
Such withdrawn earnings are includible in income.
The Code also provides that any amount received under an annuity contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. Some withdrawals will
be exempt from the penalty. They include any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in the
Code);
(4) paid in a series of substantially equal payments made annually (or
more frequently) for life or a period not exceeding life expectancy;
(5) paid under an immediate annuity; or
(6) which are allocable to purchase payments made prior to August 14,
1982.
The Contract provides that upon the death of the Annuitant prior to the Maturity
Date, Conseco Variable will pay the death proceeds to the beneficiary. Such
payments made when the Annuitant, who is not the Contract Owner, dies do not
qualify for the death of the Contract Owner exception (described in (2) above)
and will be subject to the 10% distribution penalty unless the beneficiary is 59
1/2 years old or one of the other exceptions to the penalty applies.
WITHDRAWALS--QUALIFIED CONTRACTS
If you make a withdrawal from your qualified Contract, a portion of the
withdrawal is treated as taxable income. This portion depends on the ratio of
the pre-tax Purchase Payments to the after-tax Purchase Payments in your
Contract. If all of your Purchase Payments were made with pre-tax money then the
full amount of any withdrawal is includible in taxable income. Special rules may
apply to withdrawals from certain types of qualified Contracts.
The Code also provides that any amount received under a qualified Contract which
is included in income may be subject to a penalty. The amount of the penalty is
equal to 10% of the amount that is includible in income. This penalty will be
increased to 25% for withdrawals from SIMPLE IRA's within the first two years of
your Contract. Some withdrawals will be exempt from the penalty. They include
any amounts:
(1) paid on or after you reach age 59 1/2;
(2) paid after you die;
(3) paid if you become totally disabled (as that term is defined in Code);
(4) paid to you after leaving your employment in a series of substantially
equal payments made annually (or more frequently) under a lifetime
annuity;
(5) paid to you after you have attained age 55 and left your employment;
(6) paid for certain allowable medical expenses (as defined in the Code);
(7) paid pursuant to a qualified domestic relations order;
(8) paid from an IRA for medical insurance (as defined in the Code);
(9) paid from an IRA for qualified higher education expenses; or
(10) up to $10,000 for qualified first time homebuyer expenses (as defined
in the Code).
The exceptions in (5) and (7) above do not apply to IRAs. The exception in (4)
above applies to IRAs but without the requirement of leaving employment.
We have provided a more complete discussion in the Statement of Additional
Information.
WITHDRAWALS - TAX-SHELTERED ANNUITIES
The Code limits the withdrawal of amounts attributable to purchase payments made
by owners under a salary reduction agreement. Withdrawals can only be made when
a Contract Owner:
(1) reaches age 59 1/2;
(2) leaves his or her job;
(3) dies;
(4) becomes disabled (as that term is defined in the Code);
(5) in the case of hardship; or
(6) pursuant to a qualified domestic relations order, if otherwise
permitted.
However, in the case of hardship, the owner can only withdraw the purchase
payments and not any earnings.
DIVERSIFICATION
The Code provides that the underlying investments for a variable annuity must
satisfy certain diversification requirements in order to be treated as an
annuity contract. Conseco Variable believes that the Funds are being managed
so as to comply with the requirements.
INVESTOR CONTROL
Neither the Code nor the Internal Revenue Service Regulations issued to date
provide guidance as to the circumstances under which you, because of the degree
of control you exercise over the underlying investments, and not Conseco
Variable would be considered the owner of the shares of the portfolios. If you
are considered the owner of the shares, it will result in the loss of the
favorable tax treatment for the contract. It is unknown to what extent under
federal tax law owners are permitted to select portfolios, to make transfers
among the portfolios or the number and type of portfolios owners may select from
without being considered the owner of the shares. If any guidance is provided
which is considered a new position, then the guidance would generally be applied
prospectively. However, if such guidance is considered not to be a new position,
it may be applied retroactively. This would mean that you, as the owner of the
Contract, could be treated as the owner of the portfolios.
Due to the uncertainty in this area, Conseco Variable reserves the right to
modify the Contract as reasonably deemed necessary to maintain favorable tax
treatment.
GENERAL MATTERS
PERFORMANCE INFORMATION. Conseco Variable may advertise performance information
for the Variable Account Investment Options (sub-accounts) 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. We may show additional total return
quotations that do not reflect a Withdrawal Charge deduction. We may show
performance information by means of schedules, charts or graphs. The Statement
of Additional Information contains a description of the methods we use to
determine yield and total return information for the sub-accounts.
YEAR 2000
Many existing computer programs had been designed and developed to use only two
digits to identify a year in the date field. If not corrected, these computer
programs could cause system failures in the year 2000, with possible adverse
effects on Conseco Variable's operations. In 1996, Conseco, Inc. initiated a
comprehensive corporate-wide program designed to ensure that its computer
programs (including those relating to Conseco Variable) function properly in the
year 2000. A number of Conseco, Inc.'s employees (including several officers),
as well as external consultants and contract programmers, are working on various
year-2000 projects.
Conseco, Inc. also has been working with vendors and other external business
relations to help avoid year-2000 problems related to the software or services
they provide to us. Under the program, our application systems, operating
systems, hardware, networks, electronic data interfaces and infrastructure
devices (such as facsimile machines and telephone systems) are being analyzed.
Our year-2000 projects are currently on schedule. The year-2000 projects are
being conducted in three phases:
(i) an audit and assessment phase, designed to identify year-2000 issues;
(ii) a modification phase, designed to correct year-2000 issues; and
(iii)a testing phase, designed to test the modifications after they have
been installed.
We have completed the audit and assessment phase for all critical systems and
the second phase of our program is substantially complete. The testing phase of
our program will be conducted throughout 1999. We have provided for significant
contingency time in order to complete any additional modifications before
December 31, 1999.
The year-2000 issues are being addressed in three ways. For some, work is being
done to complete the previously planned conversions of older systems to the more
modern, year-2000 compliant systems already used in other areas. In other cases,
new, more modern systems are being purchased. In the remaining cases,
modifications are being made to existing systems. We currently estimate that the
total expense of our year-2000 projects are not material to Conseco Variable's
financial position.
The impact of year-2000 issues will depend, not only on the corrective actions
we take, but also on the way in which year-2000 issues are addressed by
governmental agencies, business and other third parties
(i) that provide services, utilities or data to Conseco Variable;
(ii) that receive services or data from Conseco Variable; or
(iii)whose financial condition or operating capability is important to
Conseco Variable.
We are in the process of identifying risks and assessing potential year-2000
risks associated with our external business relationships, including those with
agents, financial institutions and the mutual funds underlying the variable
annuity contracts we issue. These procedures are necessarily limited to matters
over which we are able to reasonably exercise control. We have been informed by
our key financial institutions and utilities that they will be year-2000
compliant in early 1999.
We are also assessing what contingency plans will be needed if any of our
critical systems or those of external business relationships are not year-2000
compliant at year-end 1999. We do not currently anticipate such a situation, but
our consideration of contingency plans will continue to evolve as new
information becomes available.
The failure to correct a material year-2000 problem could result in an
interruption in, or failure of, a number of normal business activities or
operations. Such failures could materially and adversely affect Conseco
Variable's results of operations, liquidity and financial condition. Due to the
general uncertainty inherent in the year-2000 problem, including the uncertainty
of the preparedness of our external business relationships, we are not able to
currently determine whether the consequences of year-2000 failures will have a
material impact on Conseco Variable's results of operations, liquidity and
financial condition. However, we believe our year-2000 compliance efforts will
reduce the likelihood of a material adverse impact.
DISTRIBUTION OF CONTRACTS. Conseco Equity Sales, Inc. (Conseco Equity Sales),
11815 N. Pennsylvania Street, Carmel, IN 46032, an affiliate of Conseco
Variable, 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. The registered representatives
will also be licensed insurance representatives of Conseco Variable. See the
Statement of Additional Information for more information.
Commissions will be paid to broker-dealers who sell the Contracts. Broker-
dealers may be paid commissions up to 8.50% of Purchase Payments and may include
reimbursement of promotional or distribution expenses associated with marketing
the Contracts. The commission rate paid to the broker-dealer will depend upon
the nature and level of services provided by the broker-dealer.
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
Conseco Variable 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.
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------
General Information and History
Independent Accountants
Distribution
Calculation of Yield Quotations
Calculation of Total Return Quotations
Other Performance Data
Federal Tax Status
Annuity Provisions
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:
Conseco Variable 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
Conseco Variable Annuity Account E at the following address:
Name: _______________________________________________
Mailing Address: ____________________________________
_____________________________________________________
Sincerely,
_____________________________________________________
(Signature)
APPENDIX
==============================================================================
CONDENSED FINANCIAL INFORMATION
The table below provides per unit information about the financial history
of the sub-accounts for the periods indicated.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONSECO SERIES TRUST
BALANCED (A)
Accumulation unit value at beginning of period $1.973 $1.698 $1.342 $1.035 $1.000
Accumulation unit value at end of period $2.148 $1.973 $1.698 $1.342 $1.035
Percentage change in accumulation unit value 8.84% 16.21% 26.50% 29.67% 3.52%
Number of accumulation units outstanding at
end of period 10,615,723 5,740,115 2,475,992 461,876 21,037
EQUITY (A)
Accumulation unit value at beginning of period $2.424 $2.071 $1.449 $1.078 $1.000
Accumulation unit value at end of period $2.764 $2.424 $2.071 $1.449 $1.078
Percentage change in accumulation unit value 14.01% 17.04% 42.96% 34.42% 7.79%
Number of accumulation units outstanding at
end of period 11,148,308 7,962,515 3,374,110 1,009,305 41,601
FIXED INCOME (A)
Accumulation unit value at beginning of period $1.308 $1.207 $1.166 $1.000 $1.000
Accumulation unit value at end of period $1.369 $1.308 $1.207 $1.166 $1.000
Percentage change in accumulation unit value 4.70% 8.39% 3.50% 16.61% (0.03)%
Number of accumulation units outstanding at end of
period 4,326,193 4,066,812 1,540,494 350,623 12,553
GOVERNMENT SECURITIES (A)
Accumulation unit value at beginning of period $1.248 $1.169 $1.154 $0.997 $1.000
Accumulation unit value at end of period $1.318 $1.248 $1.169 $1.154 $0.997
Percentage change in accumulation unit value 5.58% 6.76% 1.31% 15.72% (0.26)%
Number of accumulation units outstanding at
end of period 1,543,011 354,897 135,680 30,614 0
MONEY MARKET (A)
Accumulation unit value at beginning of period $1.136 $1.095 $1.056 $1.014 $1.000
Accumulation unit value at end of period $1.179 $1.136 $1.095 $1.056 $1.014
Percentage change in accumulation unit value 3.76% 3.80% 3.67% $4.14% 1.38%
Number of accumulation units outstanding at
end of period 5,969,565 3,116,005 1,144,951 641,747 0
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH (C)
Accumulation unit value at beginning of period $1.294 $1.044 $1.000 N/A N/A
Accumulation unit value at end of period $1.889 $1.294 $1.044 N/A N/A
Percentage change in accumulation unit value 46.02% 24.00% 4.35% N/A N/A
Number of accumulation units outstanding at
end of period 2,650,328 742,233 73,227 N/A N/A
ALGER AMERICAN LEVERAGED ALLCAP (B)
Accumulation unit value at beginning of period $1.836 $1.555 $1.408 $1.000 N/A
Accumulation unit value at end of period $2.857 $1.836 $1.555 $1.408 N/A
Percentage change in accumulation unit value 55.64% 18.02% 10.47% 40.79% N/A
Number of accumulation units outstanding at
end of period 1,757,689 1,279,296 832,794 207,147 N/A
ALGER AMERICAN MIDCAP GROWTH (C)
Accumulation unit value at beginning of period $1.119 $0.987 $1.000 N/A N/A
Accumulation unit value at end of period $1.438 $1.119 $0.987 N/A N/A
Percentage change in accumulation unit value 28.49% 13.41% (1.33)% N/A N/A
Number of accumulation units outstanding at
end of period 1,718,378 679,330 42,736 N/A N/A
ALGER AMERICAN SMALL CAPITALIZATION (B)
Accumulation unit value at beginning of period $1.375 $1.252 $1.21 $1.000 N/A
Accumulation unit value at end of period $1.567 $1.375 $1.252 $1.219 N/A
Percentage change in accumulation unit value 13.92% 9.84% 2.72% 21.89% N/A
Number of accumulation units outstanding at
end of period 3,775,577 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 $1.155 $1.029 $1.000 N/A N/A
Accumulation unit value at end of period $1.324 $1.155 $1.029 N/A N/A
Percentage change in accumulation unit value 14.68% 12.18% 2.93% N/A N/A
Number of accumulation units outstanding at
end of period 1,458,645 627,056 69,521 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
CONDENSED FINANCIAL INFORMATION - Continued
1998 1997 1996 1995 1994
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BERGER INSTITUTIONAL PRODUCTS TRUST - CONTINUED
BERGER IPT - GROWTH AND INCOME (C)
Accumulation unit value at beginning of period $1.360 $1.104 $1.000 N/A N/A
Accumulation unit value at end of period $1.677 $1.360 $1.104 N/A N/A
Percentage change in accumulation unit value 23.29% 23.26% 10.36% N/A N/A
Number of accumulation units outstanding at end of period 3,900,875 802,420 59,956 N/A N/A
BERGER IPT - SMALL COMPANY GROWTH (C)
Accumulation unit value at beginning of period $1.178 $0.985 $1.000 N/A N/A
Accumulation unit value at end of period $1.183 $1.178 $0.985 N/A N/A
Percentage change in accumulation unit value 0.45% 19.64% (1.53)% N/A N/A
Number of accumulation units outstanding at end of period 892,905 187,471 42,982 N/A N/A
BERGER/BIAM IPT - INTERNATIONAL (C)
Accumulation unit value at beginning of period $0.970 $1.000 N/A N/A N/A
Accumulation unit value at end of period $1.111 $0.970 N/A N/A N/A
Percentage change in accumulation unit value 14.52% -3.01% N/A N/A N/A
Number of accumulation units outstanding at end of period 2,075,531 2,029,230 N/A N/A N/A
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC. (B)
Accumulation unit value at beginning of period $1.778 $1.404 $1.175 $1.000 N/A
Accumulation unit value at end of period $2.268 $1.778 $1.404 $1.175 N/A
Percentage change in accumulation unit value 27.58% 26.60% 19.53% 17.49% N/A
Number of accumulation units outstanding at end of period 2,868,834 1,195,614 221,018 21,878 N/A
DREYFUS STOCK INDEX FUND (B)
Accumulation unit value at beginning of period $1.834 $1.393 $1.158 $1.000 N/A
Accumulation unit value at end of period $2.318 $1.834 $1.393 $1.158 N/A
Percentage change in accumulation unit value 26.43% 31.67% 20.31% 15.76% N/A
Number of accumulation units outstanding at end of period 13,802,783 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 $1.349 $1.202 $1.067 $1.000 N/A
Accumulation unit value at end of period $1.367 $1.349 $1.202 $1.067 N/A
Percentage change in accumulation unit value 1.27% 12.25% 12.71% 6.66% N/A
Number of accumulation units outstanding at end of period 4,956,911 2,184,739 508,205 26,380 N/A
FEDERATED INTERNATIONAL EQUITY II (B)
Accumulation unit value at beginning of period $1.188 $1.095 $1.025 $1.000 N/A
Accumulation unit value at end of period $1.472 $1.888 $1.095 $1.025 N/A
Percentage change in accumulation unit value 23.83% 8.55% 6.80% 2.51% N/A
Number of accumulation units outstanding at end of period 1,216,876 329,971 93,215 36,798 N/A
FEDERATED UTILITY II (B)
Accumulation unit value at beginning of period $1.541 $1.234 $1.122 $1.000 N/A
Accumulation unit value at end of period $1.732 $1.541 $1.234 $1.122 N/A
Percentage change in accumulation unit value 12.37% 24.88% 10.00% 12.21% N/A
Number of accumulation units outstanding at end of period 1,955,544 675,836 294,882 11,711 N/A
JANUS ASPEN SERIES
AGGRESSIVE GROWTH (B)
Accumulation unit value at beginning of period $1.498 $1.348 $1.266 $1.000 N/A
Accumulation unit value at end of period $1.983 $1.498 $1.348 $1.266 N/A
Percentage change in accumulation unit value 32.39% 11.10% 6.44% 26.64% N/A
Number of accumulation units outstanding at end of period 2,503,351 1,867,131 1,041,050 122,278 N/A
GROWTH (B)
Accumulation unit value at beginning of period $1.650 $1.364 $1.167 $1.000 N/A
Accumulation unit value at end of period $2.208 $1.650 $1.364 $1.167 N/A
Percentage change in accumulation unit value 33.77% 21.00% 16.79% 16.75% N/A
Number of accumulation units outstanding at end of period 5,285,448 5,160,718 1,466,042 138,532 N/A
WORLDWIDE GROWTH (B)
Accumulation unit value at beginning of period $1.856 $1.541 $1.211 $1.000 N/A
Accumulation unit value at end of period $2.360 $1.856 $1.541 $1.211 N/A
Percentage change in accumulation unit value 27.13% 20.46% 27.23% 21.12% N/A
Number of accumulation units outstanding at end of period 11,703,338 8,234,605 2,173,781 155,653 N/A
</TABLE>
<TABLE>
<CAPTION>
==============================================================================================================================
CONDENSED FINANCIAL INFORMATION - Continued
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THE VAN ECK WORLDWIDE INSURANCE TRUST
WORLDWIDE BOND (B)
Accumulation unit value at beginning of period $1.039 $1.029 $1.018 $1.000 N/A
Accumulation unit value at end of period $1.155 $1.039 $1.029 $1.018 N/A
Percentage change in accumulation unit value 11.19% 0.96% 1.09% 1.82% N/A
Number of accumulation units outstanding at end of period 2,826,107 3,332,067 1,790,259 130,071 N/A
WORLDWIDE EMERGING MARKETS (C)
Accumulation unit value at beginning of period $0.990 $1.136 $1.000 N/A N/A
Accumulation unit value at end of period. $0.643 $0.990 $1.136 N/A N/A
Percentage change in accumulation unit value -35.06% -12.83% 13.59% N/A N/A
Number of accumulation units outstanding at end of period 1,728,988 1,935,325 132,953 N/A N/A
WORLDWIDE HARD ASSETS (B)
Accumulation unit value at beginning of period $1.216 $1.254 $1.077 $1.000 N/A
Accumulation unit value at end of period $0.828 $1.216 $1.254 $1.077 N/A
Percentage change in accumulation unit value -31.89% -3.05% 16.41% 7.72% N/A
Number of accumulation units outstanding at end of period 1,485,880 3,728,758 651,603 68,730 N/A
WORLDWIDE REAL ESTATE (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $0.851
Percentage change in accumulation unit value -14.90%
Number of accumulation units outstanding at end of period 41,417
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
INTERNATIONAL (D)
Accumulation unit value at beginning of period $1.093 $1.000 N/A N/A N/A
Accumulation unit value at end of period $1.280 $1.093 N/A N/A N/A
Percentage change in accumulation unit value 17.11% 9.30% N/A N/A N/A
Number of accumulation units outstanding at end of period 1,104,956 163,370 N/A N/A N/A
VALUE (D)
Accumulation unit value at beginning of period $1.226 $1.000 N/A N/A N/A
Accumulation unit value at end of period $1.267 $1.226 N/A N/A N/A
Percentage change in accumulation unit value 3.35% 22.60% N/A N/A N/A
Number of accumulation units outstanding at end of period 2,689,736 415,891 N/A N/A N/A
INCOME & GROWTH (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $1.082
Percentage change in accumulation unit value 8.20%
Number of accumulation units outstanding at end of period 214,243
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
LIMITED MATURITY BOND (D)
Accumulation unit value at beginning of period $1.043 $1.000 N/A N/A N/A
Accumulation unit value at end of period $1.074 $1.043 N/A N/A N/A
Percentage change in accumulation unit value 2.94% 4.31% N/A N/A N/A
Number of accumulation units outstanding at end of period 1,076,377 25,089 N/A N/A N/A
PARTNERS (D)
Accumulation unit value at beginning of period $1.240 $1.000 N/A N/A N/A
Accumulation unit value at end of period $1.274 $1.240 N/A N/A N/A
Percentage change in accumulation unit value 2.76% 23.99% N/A N/A N/A
Number of accumulation units outstanding at end of period 6,369,007 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 $1.230 $1.000 N/A N/A N/A
Accumulation unit value at end of period $1.377 $1.230 N/A N/A N/A
Percentage change in accumulation unit value 11.96% 22.99% N/A N/A N/A
Number of accumulation units outstanding at end of period 1,264,364 248,615 N/A N/A N/A
STRONG VARIABLE INSURANCE FUNDS, INC.
STRONG MID CAP GROWTH II (D)
Accumulation unit value at beginning of period $1.270 $1.000 N/A N/A N/A
Accumulation unit value at end of period $1.612 $1.270 N/A N/A N/A
Percentage change in accumulation unit value 26.89% 27.01% N/A N/A N/A
Number of accumulation units outstanding at end of period 559,106 79,815 N/A N/A N/A
DREYFUS VARIABLE INVESTMENT FUND
DISCIPLINED STOCK (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $1.072 N/A N/A N/A N/A
Percentage change in accumulation unit value 7.19% N/A N/A N/A N/A
Number of accumulation units outstanding at end of period 273,971 N/A N/A N/A N/A
INTERNATIONAL VALUE (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $0.942 N/A N/A N/A N/A
Percentage change in accumulation unit value -5.83% N/A N/A N/A N/A
Number of accumulation units outstanding at end of period 47,625 N/A N/A N/A N/A
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF-HIGH YIELD (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $0.951 N/A N/A N/A N/A
Percentage change in accumulation unit value -4.94% N/A N/A N/A N/A
Number of accumulation units outstanding at end of period 149,344 N/A N/A N/A N/A
INVESCO VIF-EQUITY INCOME (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $1.029 N/A N/A N/A N/A
Percentage change in accumulation unit value 2.93% N/A N/A N/A N/A
Number of accumulation units outstanding at end of period 141,540 N/A N/A N/A N/A
LAZARD RETIREMENT SERIES, INC.
LAZARD RETIREMENT EQUITY (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $1.055 N/A N/A N/A N/A
Percentage change in accumulation unit value 5.53% N/A N/A N/A N/A
Number of accumulation units outstanding at end of period 1,126,898 N/A N/A N/A N/A
LAZARD RETIREMENT SMALL CAP (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $0.855 N/A N/A N/A N/A
Percentage change in accumulation unit value -14.46% N/A N/A N/A N/A
Number of accumulation units outstanding at end of period 174,151 N/A N/A N/A N/A
LORD ABBETT SERIES FUND, INC.
GROWTH AND INCOME (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $1.005 N/A N/A N/A N/A
Percentage change in accumulation unit value 0.46% N/A N/A N/A N/A
Number of accumulation units outstanding at end of period 312,997 N/A N/A N/A N/A
MITCHELL HUTCHINGS SERIES TRUST
GROWTH & INCOME (E)
Accumulation unit value at beginning of period $1.000 N/A N/A N/A N/A
Accumulation unit value at end of period $0.990 N/A N/A N/A N/A
Percentage change in accumulation unit value -1.02% N/A N/A N/A N/A
Number of accumulation units outstanding at end of period 197,925 N/A 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.
(E) Inception date was May 1, 1998.
PART B
STATEMENT OF ADDITIONAL INFORMATION
INDIVIDUAL & GROUP VARIABLE DEFERRED ANNUITY CONTRACTS
issued by
CONSECO VARIABLE INSURANCE COMPANY
(formerly Great American Reserve Insurance Company)
and
CONSECO VARIABLE ANNUITY ACCOUNT E
(formerly Great American Reserve Variable Annuity Account E)
11815 N. PENNSYLVANIA ST., CARMEL, IN 46032
(317) 817-3700
MAY 1, 1999
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ
IN CONJUNCTION WITH THE PROSPECTUS DATED MAY 1, 1999 FOR CONSECO VARIABLE
ANNUITY ACCOUNT E (FORMERLY, GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E)
- -- INDIVIDUAL AND GROUP VARIABLE DEFERRED ANNUITY CONTRACTS. YOU CAN OBTAIN A
COPY OF THE PROSPECTUS BY CONTACTING CONSECO VARIABLE INSURANCE COMPANY AT THE
ADDRESS TELEPHONE NUMBER GIVEN ABOVE.
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION AND HISTORY......................................
INDEPENDENT ACCOUNTANTS..............................................
DISTRIBUTION..........................................................
VOTING RIGHTS........................................................
CALCULATION OF YIELD QUOTATIONS.......................................
CALCULATION OF TOTAL RETURN QUOTATIONS................................
OTHER PERFORMANCE DATA................................................
FEDERAL TAX STATUS ...................................................
ANNUITY PROVISIONS ...................................................
FINANCIAL STATEMENTS..................................................
GENERAL INFORMATION AND HISTORY
Conseco Variable Insurance Company (the "Company") is an indirect wholly owned
subsidiary of Conseco, Inc. On or about October 7, 1998, the Company changed its
name from Great American Reserve Insurance Company to its present name. In
certain states, the Company may continue to use the name Great American Reserve
Insurance Company until the name change is approved in that state. Conseco, Inc.
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. The Company has its principal offices at
11815 N. Pennsylvania Street, Carmel, Indiana 46032. The Variable Account was
established by the Company.
INDEPENDENT ACCOUNTANTS
The financial statements of Conseco Variable Annuity Account E and Conseco
Variable Insurance Company included in the Prospectus and the Statement of
Additional Information have been examined by PricewaterhouseCoopers LLP,
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
The Company continuously offers the Contracts through associated persons of the
principal underwriter for the Variable Account, Conseco Equity Sales, Inc.
("CES"). CES is 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 the Company. For the years
ended December 31, 1998, 1997 and 1996, the Company paid CES total underwriting
commissions of $7,577,873, $449,417 and $2,195,600. 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 the Company
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), the
Company makes sales and administrative deductions, varying by type of Contract.
See "Charges and Deductions" in the Prospectus.
VOTING RIGHTS
Contract Owners may instruct the Company 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. The Company 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 the Company for or against any
proposition or the Company will abstain, in the same proportion as shares in
that sub-account for which instructions are received. The Company 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 the Company 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 the 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
Owner's 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.
CALCULATION OF YIELD QUOTATIONS
MONEY MARKET SUB-ACCOUNT
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 yield 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.
OTHER SUB-ACCOUNTS
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
The Company 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:
n
P (1+T) = 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).
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 12/31/98:
Since
Variable Account Sub-Accounts 1 Year Inception
- - ------------------------------------- ------ ---------
CONSECO SERIES TRUST
Balanced Portfolio (.54)% 17.44%(2)
Equity Portfolio 4.20% 24.33%(2)
Fixed Income Portfolio (4.32)% 6.07%(2)
Government Securities Portfolio (3.50)% 5.16%(2)
==============================================================================
THE ALGER AMERICAN FUND
Alger American Growth Portfolio ...... 33.55% 23.20%(4)
Alger American Leveraged
AllCap Portfolio .................. 42.32% 31.42%(3)
Alger American MidCap Growth Portfolio 17.49% 11.21%(4)
Alger American Small Capitalization
Portfolio ......................... 4.14% 11.11%(3)
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.
VP International ..................... 7.08% 9.90%(5)
VP Value ............................. (5.56)% 9.24%(5)
VP Income and Growth ................. N/A (1.25)%(1)
BERGER INSTITUTIONAL PRODUCTS TRUST
Berger IPT
Berger IPT - 100 Fund ................ 4.83% 7.82%(4)
Berger IPT - Growth and Income Fund .. 12.71% 17.82%(4)
Berger IPT - Small Company Growth Fund (8.24)% 3.38%(4)
Berger/BIAM IPT - International Fund . 4.71% 1.08%(5)
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio ...... (5.66)% (.95)%(5)
Partners Portfolio ................... (5.83)% 9.75%(5)
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II .................. 2.63% 14.99%(5)
STRONG VARIABLE INSURANCE
FUNDS, INC. .......................
Strong Mid Cap Growth Fund II ........ 16.34% 26.36%(5)
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC .................. 16.65% 23.20%(3)
DREYFUS STOCK INDEX FUND ............. 15.59% 23.95%(3)
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ... (7.46)% 6.92%(3)
Federated International Equity Fund II 13.24% 9.16%(3)
Federated Utility Fund II ............ 2.68% 10.58%(3)
JANUS ASPEN SERIES
Aggressive Growth Portfolio .......... 21.06% 18.66%(3)
Growth Portfolio ..................... 22.33% 22.28%(3)
Worldwide Growth Portfolio ........... 16.25% 24.57%(3)
VAN ECK WORLDWIDE INSURANCE
TRUST
Worldwide Bond Fund .................. 1.48% 1.95%(3)
Worldwide Emerging Markets Fund ...... (40.81)% (17.76)%(4)
Worldwide Hard Assets Fund ........... (37.96)% (7.11)%(3)
Worldwide Real Estate Fund ........... N/A (31.07)%(1)
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio ....... N/A (2.61)%(1)
International Value Portfolio ..... N/A (19.75)%(1)
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield
Fund............................. N/A (18.61)%(1)
INVESCO VIF - Equity Income
Fund............................. N/A (8.34)%(1)
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity
Portfolio ....................... N/A (4.86)%(1)
Lazard Retirement Small Cap
Portfolio ....................... N/A (30.49)%(1)
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio ...... N/A (11.61)%(1)
MITCHELL HUTCHINS SERIES TRUST
Growth & Income Portfolio ....... N/A (13.54)%(1)
- ------------
(1) Since inception (May 1, 1998).
(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
The Company 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 the Company has
received from independent rating agencies. However, the Company does not
guarantee the investment performance of the Variable Account investment options.
GROSS AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED 12/31/98:
Since
Variable Account Sub-Accounts 1 Year Inception
- - ------------------------------------- ------ ----------
CONSECO SERIES TRUST
Balanced Portfolio............................ 8.84% 18.81%(2)
Equity Portfolio.............................. 14.01% 25.76%(2)
Fixed Income Portfolio........................ 4.70% 7.34%(2)
Government Securities Portfolio .............. 5.59% 6.42%(2)
THE ALGER AMERICAN FUND
Alger American Growth Portfolio .............. 46.02% 26.90%(4)
Alger American Leveraged AllCap Portfolio .... 55.64% 34.01%(3)
Alger American MidCap Growth Portfolio ....... 28.49% 14.56%(4)
Alger American Small Capitalization
Portfolio ................................. 13.92% 13.34%(3)
AMERICAN CENTURY VARIABLE
PORTFOLIOS, INC.
VP International ............................. 17.11% 15.92%(5)
VP Value ..................................... 3.36% 15.22%(5)
VP Income and Growth ......................... N/A 12.45%(1)
BERGER INSTITUTIONAL PRODUCTS TRUST
BERGER IPT
Berger IPT - 100 Fund ........................ 14.68% 11.08%(4)
Berger IPT - Growth and Income Fund .......... 23.29% 21.36%(4)
Berger IPT - Small Company Growth Fund ....... .45% 6.51%(4)
Berger/BIAM IPT - International Fund ......... 14.52% 6.48%(5)
NEUBERGER BERMAN ADVISERS
MANAGEMENT TRUST
Limited Maturity Bond Portfolio .............. 2.94% 4.35%(5)
Partners Portfolio ........................... 2.76% 15.60%(5)
STRONG OPPORTUNITY FUND II, INC.
Opportunity Fund II .......................... 11.97% 21.10%(5)
STRONG VARIABLE INSURANCE
FUNDS, INC.
Strong Mid Cap Growth Fund II................. 26.89% 33.06%(5)
THE DREYFUS SOCIALLY RESPONSIBLE
GROWTH FUND, INC .......................... 27.58% 25.66%(3)
DREYFUS STOCK INDEX FUND ..................... 26.43% 26.43%(3)
FEDERATED INSURANCE SERIES
Federated High Income Bond Fund II ........... 1.27% 9.10%(3)
Federated International Equity Fund II ....... 23.83% 11.38%(3)
Federated Utility Fund II .................... 12.37% 12.82%(3)
JANUS ASPEN SERIES
Aggressive Growth Portfolio .................. 32.39% 21.03%(3)
Growth Portfolio ............................. 33.77% 24.72%(3)
Worldwide Growth Portfolio ................... 27.13% 27.05%(3)
VAN ECK WORLDWIDE INSURANCE TRUST
WORLDWIDE BOND FUND .......................... 11.19% 4.11%(3)
Worldwide Emerging Markets Fund .............. (35.06)% (15.24)%(4)
Worldwide Hard Assets Fund ................... (31.89)% (5.13)%(3)
Worldwide Real Estate Fund ................... N/A (21.31)%(1)
DREYFUS VARIABLE INVESTMENT FUND
Disciplined Stock Portfolio ............... N/A 10.91%(1)
International Value Portfolio ............. N/A (8.56)%(1)
INVESCO VARIABLE INVESTMENT FUNDS, INC.
INVESCO VIF - High Yield
Fund..................................... N/A (7.27)%(1)
INVESCO VIF - Equity Income
Fund..................................... N/A 4.40%(1)
LAZARD RETIREMENT SERIES, INC.
Lazard Retirement Equity
Portfolio ............................... N/A 8.35%(1)
Lazard Retirement Small Cap
Portfolio ............................... N/A (20.77)%(1)
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio ............... N/A .68%(1)
MITCHELL HUTCHINS SERIES TRUST
Growth & Income Portfolio ................. N/A (1.51)%(1)
- ------------
(1) Since inception (May 1, 1998).
(2) Since inception (July 25, 1994).
(3) Since inception (June 1, 1995).
(4) Since inception (May 1, 1996).
(5) Since inception (May 1,1997).
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.
The Company is taxed as a life insurance company under the Code. For federal
income tax purposes, the Variable Account is not a separate entity from the
Company, and its operations form a part of the Company.
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.
Regulations issued by the Treasury Department (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."
The Company 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 Variable 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. For purposes of this rule, contracts received in a
Section 1035 exchange will be considered issued in the year of the exchange.
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.
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) or d) hardship withdrawals. 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. With respect to (d) above, if the series of
substantially equal periodic payments is modified before the later of your
attaining age 59 1/2 or 5 years from the date of the first periodic payment,
then the tax for the year of the modification is increased by an amount equal to
the tax which would have been imposed (the 10% penalty tax) but for the
exception, plus interest for the tax years in which the exception was used.
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 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 are designed to be suitable for use under various types of
Qualified Plans. Taxation of participants in each Qualified Plan varies with the
type of plan and terms and conditions of each specific plan. 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 taxable income. These IRAs are subject to limitations on
eligibility, contributions, transferability and distributions. (See "Tax
Treatment of Withdrawals - Qualified Contracts" below.) Under certain
conditions, distributions from other IRAs and other Qualified Plans may be
rolled over or transferred on a tax-deferred basis into an IRA. Sales of
Contracts for use with IRAs are subject to special requirements imposed by the
Code, including the requirement that certain informational disclosure be given
to persons desiring to establish an IRA. Purchasers of Contracts to be qualified
as Individual Retirement Annuities should obtain competent tax advice as to the
tax treatment and suitability of such an investment.
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
Section 408A of the Code provides that 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 and are not
deductible from taxable income. 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 a Roth IRA for at
least five taxable years and, in addition, that the distribution is made: (i)
after the individual reaches age 59 1/2, (ii) on the individual's death or
disability, or (iii) 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 and conversions 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, ("conversion deposits") 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. In addition, distribution of amounts
attributable to conversion deposits held for less than 5 taxable years will also
be subject to the penalty tax.
Purchasers of Contracts intended 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 PLAN
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. Furthermore, the Code provides additional requirements and restrictions
regarding eligibility and distributions.
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 and 408A (Individual Retirement
Annuities). This penalty is increased 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. With respect to (c) above, if the series of
substantially equal periodic payments is modified before the later of your
attaining age 59 1/2 or 5 years from the date of the first periodic payment,
then the tax for the year of the modification is increased by an amount equal to
the tax which would have been imposed (the 10% penalty tax) but for the
exception, plus interest for the tax years in which the exception was used.
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.
ANNUITY PROVISIONS
DETERMINATION OF AMOUNT OF THE FIRST MONTHLY VARIABLE ANNUITY PAYMENT. On or
after the Maturity Date when annuity payments commence, we determine the value
of the Individual Account 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 before 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. We
will deduct any applicable premium taxes from the Individual Account value.
We then calculate the amount of the first monthly variable annuity payment 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 amount of the first monthly payment varies according to the
form of annuity you select, the age of the annuitant (for certain options) and
the assumed net investment rate you select. The standard assumed investment rate
(AIR) is 3%. However, you may select a 5% AIR or such other rate as the Company
may offer prior to the Maturity Date.
The AIR 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. If you select a 5% rate, rather than the standard 3% rate,
it 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, Conseco 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 for the immediately preceding Valuation Period and
(ii) a factor to neutralize the assumed net investment rate built into the
annuity tables, 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 second Valuation Period 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 second
Valuation Period 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.
FINANCIAL STATEMENTS
Audited financial statements of Conseco Variable Annuity Account E and Conseco
Variable Insurance Company as of December 31, 1998 are included herein.
Table of Contents
December 31, 1998
================================================================================
Great American Reserve Variable Annuity Account E Page
Statement of Assets and Liabilities as of December 31, 1998 ................ 2
Statements of Operations for the Years Ended December 31,
1998 and 1997 ............................................................ 4
Statements of Changes in Net Assets for the Years Ended
December 31, 1998 and 1997 ............................................... 4
Notes to Financial Statements .............................................. 5
Report of Independent Accountants .......................................... 7
<PAGE>
GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT E
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
====================================================================================================================================
SHARES COST VALUE
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<S> <C> <C> <C>
Assets:
Investments in portfolio shares, at net asset value (Note 2):
The Alger American Fund:
Growth Portfolio................................................................ 94,197.9 $ 4,307,257 $ 5,013,213
Leveraged AllCap Portfolio...................................................... 144,045.4 3,706,701 5,027,186
MidCap Growth Portfolio......................................................... 85,673.7 2,160,402 2,473,401
Small Capitalization Portfolio.................................................. 134,702.2 5,731,138 5,922,856
American Century Variable Portfolios, Inc.:
International Fund.............................................................. 185,819.9 1,372,236 1,415,948
Value Fund...................................................................... 507,034.7 3,461,317 3,412,344
Income and Growth Fund.......................................................... 34,226.9 205,328 232,059
Berger Institutional Products Trust:
100 Fund........................................................................ 150,018.5 1,835,260 1,933,738
Growth and Income Fund.......................................................... 393,863.3 5,792,302 6,549,946
Small Company Growth Fund....................................................... 86,150.9 1,092,217 1,057,933
BIAM International Fund......................................................... 205,876.7 2,065,215 2,307,878
Conseco Series Trust:
Asset Allocation Portfolio...................................................... 1,670,205.7 23,112,722 22,828,352
Common Stock Portfolio.......................................................... 1,429,174.4 30,509,525 30,849,762
Corporate Bond Portfolio........................................................ 590,377.5 5,990,334 5,930,358
Government Securities Portfolio................................................. 167,645.2 2,030,678 2,036,226
Money Market Portfolio.......................................................... 7,044,817.8 7,044,818 7,044,818
Dreyfus Stock Index Fund.......................................................... 985,198.5 26,149,533 32,038,656
The Dreyfus Socially Responsible Growth Fund, Inc................................. 209,628.6 5,749,997 6,515,256
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio..................................................... 12,824.9 256,054 294,331
International Value Portfolio................................................... 3,337.7 48,421 44,892
Federated Insurance Series:
High Income Bond Fund II........................................................ 621,059.8 6,746,156 6,781,973
International Equity Fund II.................................................... 116,501.8 1,860,309 1,792,962
Utility Fund II................................................................. 222,058.9 3,101,469 3,390,839
Invesco Variable Investment Funds, Inc.:
High Yield Portfolio............................................................ 12,555.4 154,071 142,128
Industrial Income Portfolio..................................................... 7,837.5 141,445 145,855
Janus Aspen Series:
Aggressive Growth Portfolio..................................................... 180,096.3 3,633,774 4,968,857
Growth Portfolio................................................................ 496,319.9 9,670,117 11,683,369
Worldwide Growth Portfolio...................................................... 950,521.0 23,257,295 27,650,656
Lazard Retirement Series, Inc.:
Equity Portfolio................................................................ 107,745.9 1,105,896 1,190,592
Small Cap Portfolio............................................................. 15,664.9 144,345 149,130
Lord Abbett Series Fund, Inc.
Growth and Income Portfolio..................................................... 15,243.8 307,640 314,769
Mitchell Hutchins Series Trust:
Growth and Income Portfolio..................................................... 13,261.5 183,877 196,402
Neuberger & Berman Advisers Management Trust:
Limited Maturity Bond Portfolio................................................. 83,729.8 1,140,552 1,157,146
Partners Portfolio.............................................................. 429,199.7 8,430,818 8,124,750
Strong Variable Insurance Funds, Inc.:
Growth Fund II.................................................................. 56,314.8 773,582 902,163
Strong Opportunity Fund II, Inc................................................... 80,253.0 1,730,447 1,743,095
Van Eck Worldwide Insurance Trust:
Worldwide Hard Assets Fund (formerly Gold and Natural Resources Fund) (Note 1).. 133,894.7 1,795,112 1,231,831
Worldwide Bond Fund............................................................. 266,219.5 2,901,273 3,269,176
Worldwide Emerging Markets Fund................................................. 156,317.1 1,512,723 1,112,978
Worldwide Real Estate Fund...................................................... 3,700.7 35,650 35,305
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets............................................................................................... 218,913,129
Liabilities:
Amounts due to Conseco Variable Insurance Company................................................................ 258,497
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets (Note 6)........................................................................................ $218,654,632
====================================================================================================================================
</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, 1998
<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................................................................ 2,650,327.7 $ 1.889410 $ 5,007,557
Leveraged AllCap Portfolio...................................................... 1,757,689.1 2.856798 5,021,363
MidCap Growth Portfolio......................................................... 1,718,378.4 1.437775 2,470,641
Small Capitalization Portfolio.................................................. 3,775,576.6 1.566862 5,915,809
American Century Variable Portfolios, Inc.:
International Fund.............................................................. 1,104,956.1 1.279955 1,414,294
Value Fund...................................................................... 2,689,736.3 1.267116 3,408,208
Income and Growth Fund.......................................................... 214,243.0 1.081920 231,794
Berger Institutional Products Trust:
100 Fund........................................................................ 1,458,644.8 1.324112 1,931,410
Growth and Income Fund.......................................................... 3,900,875.4 1.677071 6,542,045
Small Company Growth Fund....................................................... 892,904.9 1.183412 1,056,675
BIAM International Fund......................................................... 2,075,530.7 1.110669 2,305,228
Conseco Series Trust:
Asset Allocation Portfolio...................................................... 10,615,722.9 2.147855 22,801,038
Common Stock Portfolio.......................................................... 11,148,307.8 2.763812 30,811,824
Corporate Bond Portfolio........................................................ 4,326,193.1 1.369208 5,923,457
Government Securities Portfolio................................................. 1,543,010.8 1.318099 2,033,841
Money Market Portfolio.......................................................... 5,969,565.3 1.178748 7,036,615
Dreyfus Stock Index Fund.......................................................... 13,802,783.1 2.318443 32,000,971
The Dreyfus Socially Responsible Growth Fund, Inc................................. 2,868,834.2 2.268331 6,507,465
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio..................................................... 273,971.4 1.071933 293,679
International Value Portfolio................................................... 47,624.5 0.941707 44,848
Federated Insurance Series:
High Income Bond Fund II........................................................ 4,956,911.2 1.366573 6,773,980
International Equity Fund II.................................................... 1,216,875.7 1.471681 1,790,852
Utility Fund II................................................................. 1,955,544.4 1.731943 3,386,891
Invesco Variable Investment Funds, Inc.:
High Yield Portfolio............................................................ 149,344.3 0.950601 141,967
Industrial Income Portfolio..................................................... 141,539.9 1.029287 145,685
Janus Aspen Series:
Aggressive Growth Portfolio..................................................... 2,503,350.5 1.982620 4,963,194
Growth Portfolio................................................................ 5,285,447.5 2.207852 11,669,487
Worldwide Growth Portfolio...................................................... 11,703,337.6 2.359887 27,618,549
Lazard Retirement Series, Inc.:
Equity Portfolio................................................................ 1,126,898.4 1.055270 1,189,182
Small Cap Portfolio............................................................. 174,150.7 0.855373 148,964
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio..................................................... 312,997.0 1.004593 314,434
Mitchell Hutchins Series Trust:
Growth and Income Portfolio..................................................... 197,924.6 0.989814 195,909
Neuberger & Berman Advisers Management Trust:
Limited Maturity Bond Portfolio................................................. 1,076,377.0 1.073805 1,155,819
Partners Portfolio.............................................................. 6,369,007.3 1.274108 8,114,802
Strong Variable Insurance Funds, Inc.:
Growth Fund II.................................................................. 559,106.3 1.611675 901,098
Strong Opportunity Fund II, Inc................................................... 1,264,364.4 1.377011 1,741,043
Van Eck Worldwide Insurance Trust:
Worldwide Hard Assets Fund (formerly Gold and Natural Resources Fund) (Note 1).. 1,485,879.8 0.828049 1,230,382
Worldwide Bond Fund............................................................. 2,826,107.0 1.155392 3,265,261
Worldwide Emerging Markets Fund................................................. 1,728,987.9 0.642969 1,111,686
Worldwide Hard Assets Fund (Note 1)............................................. 1,015.7 1.397707 1,420
Worldwide Real Estate Fund...................................................... 41,417.3 0.851446 35,265
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets................................................................................................. $218,654,632
====================================================================================================================================
</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, 1998 and 1997
<TABLE>
<CAPTION>
====================================================================================================================================
1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income:
Dividends from investments in portfolio shares.................................................... $ 8,749,779 $ 7,456,439
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees................................................................... 2,119,799 848,167
Administrative fees............................................................................... 254,376 101,780
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses.................................................................................. 2,374,175 949,947
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income......................................................................... 6,375,604 6,506,492
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation) on investments:
Net realized gains on sales of investments in portfolio shares.................................... 2,964,511 284,803
Net change in unrealized appreciation of investments in portfolio shares.......................... 14,847,690 1,446,801
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain on investments in portfolio shares..................................................... 17,812,201 1,731,604
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations.................................................... $ 24,187,805 $ 8,238,096
====================================================================================================================================
</TABLE>
Statements of Changes in Net Assets
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
====================================================================================================================================
1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Changes from operations:
Net investment income............................................................................. $ 6,375,604 $ 6,506,492
Net realized gains on sales of investments in portfolio shares.................................... 2,964,511 284,803
Net change in unrealized appreciation of investments in portfolio shares.......................... 14,847,690 1,446,801
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations...................................................... 24,187,805 8,238,096
- ------------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments.................................................................... 85,403,562 75,117,717
Contract redemptions.............................................................................. (6,164,480) (2,305,982)
Net transfers from fixed account.................................................................. 63,987 146,732
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets from contract owners' transactions................................... 79,303,069 72,958,467
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets.................................................................... 103,490,874 81,196,563
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, beginning of year........................................................................ 115,163,758 33,967,195
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (Note 6).............................................................. $218,654,632 $115,163,758
====================================================================================================================================
</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, 1998
================================================================================
(1) General
Conseco Variable Insurance Company (formerly Great American Reserve
Insurance Company prior to its name change in October 1998) Variable Annuity
Account E ("Account E") is registered under the Investment Company Act of 1940,
as amended, as a unit investment trust. It is anticipated that on May 1, 1999, a
filing will be made with the Securities and Exchange Commission to change the
name of Great American Reserve Variable Account E to Conseco Variable Account E.
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 Conseco Variable
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 Growth Portfolio (June 1, 1996)
Small Capitalization Portfolio (June 1, 1995)
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
Income and Growth Fund (May 1, 1998)
International Fund (May 1, 1997)
Value Fund (May 1, 1997)
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)
DREYFUS VARIABLE INVESTMENT FUND (MAY 1, 1998)
International Value Portfolio
Disciplined Stock Portfolio
FEDERATED INSURANCE SERIES (JUNE 1, 1995)
High Income Bond Fund II
International Equity Fund II
Utility Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC. (MAY 1, 1998)
High Yield Portfolio
Industrial Income Portfolio
JANUS ASPEN SERIES (JUNE 1, 1995)
Aggressive Growth Portfolio
Growth Portfolio
Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC. (MAY 1, 1998)
Equity Portfolio
Small Cap Portfolio
LORD ABBETT SERIES FUND, INC. (MAY 1, 1998)
Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST (MAY 1, 1998)
Growth and Income 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, Inc. (MAY 1, 1997)
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)
Worldwide Real Estate Fund (May 1, 1998)
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
a contract owner who has not transferred out.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported increases and decreases in net assets from
operations during the reporting period. 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 the 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.
5
<PAGE>
(2) Summary of Significant Accounting Policies (Continued)
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.
(3) Purchases and Sales of Investments in Portfolio Shares
The aggregate cost of purchases of investments in portfolio shares were
$137,408,045 and $90,025,395 for the years ended December 31, 1998 and 1997,
respectively. The aggregate proceeds from sales of investments in portfolio
shares were $51,611,210 and $10,491,816 for the years ended December 31, 1998
and 1997, 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 $2,119,799 and $848,167 for the years ended December 31, 1998
and 1997, respectively.
Pursuant to an agreement between Account E and the Company (which may be
terminated by the Company at any time), the Company provides sales and
administrative services to Account E, as well as a 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 unless the value of the contract is
$25,000 or greater. This fee is recorded as a redemption in the accompanying
Statement of Changes of Net Assets. Sales and administrative charges were
$489,585 and $120,852 for the years ended December 31, 1998 and 1997,
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
$254,376 and $101,780 for the years ended December 31, 1998 and 1997,
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, 1998:
================================================================================
Proceeds from the sales of units since organization,
less cost of units redeemed ................................ $182,802,095
Undistributed net investment income ........................... 14,775,680
Undistributed net realized gains on sales of investments ...... 3,411,734
Net unrealized appreciation of investments .................... 17,665,123
- --------------------------------------------------------------------------------
Net assets ............................................... $218,654,632
================================================================================
6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
To The Board of Directors of Conseco Variable
Insurance Company and Contract Owners of
Great American Reserve Variable Annuity
Account E
In our opinion, the accompanying statement of assets and liabilities and
the related statements of operations and of changes in net assets present
fairly, in all material respects, the financial position of the Great American
Reserve Variable Annuity Account E (the "Account") at December 31, 1998, and the
results of its operations and the changes in its net assets for each of the two
years in the period then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Account's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of portfolio shares owned at December 31, 1998 by correspondence
with the custodians, provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Indianapolis, Indiana
February 10, 1999
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Conseco Variable Insurance Company
In our opinion, the accompanying balance sheet and the related statements
of operations, shareholder's equity and cash flows present fairly, in all
material respects, the financial position of Conseco Variable Insurance Company
(the "Company") at December 31, 1998 and 1997, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles. 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 of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Indianapolis, Indiana
March 30, 1999
F-1
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
BALANCE SHEET
December 31, 1998 and 1997
(Dollars in millions)
ASSETS
1998 1997
---- ----
Investments:
Actively managed fixed maturities at fair value (amortized cost:
<S> <C> <C> <C> <C> <C> <C>
1998 - $1,520.5; 1997 - $1,705.2)............................................... $1,524.1 $1,734.0
Equity securities at fair value (cost: 1998 - $46.0 million; 1997 - $25.1 million). 45.7 25.4
Mortgage loans..................................................................... 110.2 146.1
Policy loans....................................................................... 79.6 80.6
Other invested assets ............................................................. 103.1 62.8
Short-term investments............................................................. 48.4 49.5
Assets held in separate accounts................................................... 696.4 402.1
---------- ----------
Total investments............................................................ 2,607.5 2,500.5
Accrued investment income.............................................................. 30.5 30.5
Cost of policies purchased............................................................. 98.0 106.4
Cost of policies produced.............................................................. 82.5 55.9
Reinsurance receivables................................................................ 22.2 21.9
Goodwill (net of accumulated amortization: 1998 - $14.7; 1997 - $13.2)................. 46.7 48.2
Other assets........................................................................... 24.3 8.3
----------- ------------
Total assets................................................................. $2,911.7 $2,771.7
======== ========
</TABLE>
(continued on next page)
The accompanying notes are an integral part
of the financial statements.
F-2
CONSECO VARIABLE INSURANCE COMPANY
BALANCE SHEET (Continued)
December 31, 1998 and 1997
(Dollars in millions, except per share amount)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
1998 1997
---- ----
<S> <C> <C>
Liabilities:
Insurance liabilities:
Interest sensitive products..................................................... $1,365.2 $1,522.1
Traditional products............................................................ 246.2 248.3
Claims payable and other policyholder funds..................................... 62.6 62.5
Liabilities related to separate accounts........................................ 696.4 402.1
Income tax liabilities............................................................. 37.5 44.2
Investment borrowings.............................................................. 65.7 61.0
Other liabilities.................................................................. 33.0 14.6
----------- -----------
Total liabilities.......................................................... 2,506.6 2,354.8
--------- ---------
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 gains of fixed maturity securities (net of applicable deferred
income taxes: 1998 - $.5; 1997 - $4.4)...................................... 1.0 8.2
Unrealized gains (losses) of other investments (net of applicable deferred
income taxes: 1998 - $(.9); 1997 - $.3)..................................... (1.8) .5
Retained earnings.................................................................. 25.1 27.4
----------- -----------
Total shareholder's equity................................................. 405.1 416.9
---------- ----------
Total liabilities and shareholder's equity................................. $2,911.7 $2,771.7
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
CONSECO VARIABLE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
for the years ended December 31, 1998, 1997 and 1996
(Dollars in millions)
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
Insurance policy income.......................................... $ 73.6 $ 75.7 $ 81.4
Net investment income............................................ 198.0 222.6 218.4
Net investment gains............................................. 18.5 13.3 2.7
-------- -------- ---------
Total revenues............................................. 290.1 311.6 302.5
------- ------- -------
Benefits and expenses:
Insurance policy benefits........................................ 170.6 191.0 180.6
Amortization..................................................... 33.6 27.1 20.3
Other operating costs and expenses............................... 38.7 32.2 60.5
-------- -------- --------
Total benefits and expenses................................ 242.9 250.3 261.4
------- ------- -------
Income before income taxes................................. 47.2 61.3 41.1
Income tax expense................................................... 16.6 22.1 15.4
-------- -------- --------
Net income................................................. $ 30.6 $ 39.2 $ 25.7
======= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
CONSECO VARIABLE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF SHAREHOLDER'S EQUITY
for the years ended December 31, 1998, 1997 and 1996
(Dollars in millions)
Common stock Accumulated other
and additional comprehensive Retained
Total paid-in capital income (loss) earnings
----- --------------- ------------- --------
<S> <C> <C> <C> <C>
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
Comprehensive income, net of tax:
Net income............................................ 30.6 - - 30.6
Change in unrealized appreciation (depreciation) of
securities (net of applicable income taxes of $(5.1)) (9.5) - (9.5) -
--------
Total comprehensive income........................ 21.1
Dividends on common stock............................... (32.9) - - (32.9)
------- ---------- ----------- ------
Balance, December 31, 1998................................. $405.1 $380.8 $ (.8) $ 25.1
====== ====== ======== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<TABLE>
<CAPTION>
CONSECO VARIABLE INSURANCE COMPANY
STATEMENT OF CASH FLOWS
for the years ended December 31, 1998, 1997 and 1996
(Dollars in millions)
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................................$ 30.6 $ 39.2 $ 25.7
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization................................................ 43.0 27.1 20.3
Income taxes................................................ (1.2) 6.7 (3.9)
Insurance liabilities....................................... 120.0 95.2 112.5
Accrual and amortization of investment income................. 1.6 .3 3.1
Deferral of cost of policies produced ....................... (35.3) (31.8) (13.2)
Investment gains.............................................. (18.5) (13.3) (2.7)
Other......................................................... (38.3) (4.6) (8.8)
--------- ---------- ------------
Net cash provided by operating activities................... 101.9 118.8 133.0
----------- -------- -----------
Cash flows from investing activities:
Sales of investments.............................................. 1,185.0 755.2 988.9
Maturities and redemptions........................................ 145.5 150.4 101.7
Purchases of investments.......................................... (1,420.7) (923.5) (1,049.6)
---------- -------- ---------
Net cash provided (used) by investing activities............ (90.2) (17.9) 41.0
----------- --------- ------------
Cash flows from financing activities:
Deposits to insurance liabilities................................. 400.4 255.9 169.8
Investment borrowings............................................. 4.7 12.6 (35.8)
Withdrawals from insurance liabilities............................ (385.0) (302.2) (267.7)
Dividends paid on common stock.................................... (32.9) (32.5) (44.5)
------------ -------- -----------
Net cash used by financing activities....................... (12.8) (66.2) (178.2)
------------ --------- ----------
Net increase (decrease) in short-term
investments............................................... (1.1) 34.7 (4.2)
Short-term investments, beginning of year............................ 49.5 14.8 19.0
------------- --------- ------------
Short-term investments, end of year..................................$ 48.4 $ 49.5 $ 14.8
============= ======== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Conseco Variable Insurance Company ("we" or the "Company") markets
tax-qualified annuities and certain employee benefit-related insurance products
through professional independent agents. Prior to its name change in October
1998, the Company was named Great American Reserve Insurance Company. Since
August 1995, the Company has been a wholly owned subsidiary of Conseco, Inc.
("Conseco"), a financial services holding company operating throughout the
United States. Conseco's life insurance subsidiaries develop, market and
administer supplemental health insurance, annuity, individual life insurance,
individual and group major medical insurance and other insurance products.
Conseco's finance subsidiaries originate, purchase, sell and service consumer
and commercial finance loans.
The following summary explains the accounting policies we use to arrive at
the more significant numbers in our financial statements. We prepare our
financial statements in accordance with generally accepted accounting principles
("GAAP"). We follow the accounting standards established by the Financial
Accounting Standards Board, the American Institute of Certified Public
Accountants and the Securities and Exchange Commission. We reclassified certain
amounts in our 1997 and 1996 financial statements and notes to conform with the
1998 presentation.
Investments
Fixed maturities are securities that mature more than one year after
issuance and include bonds, notes receivable and redeemable preferred stock.
Fixed maturities that we may sell prior to maturity are classified as actively
managed and are carried at estimated fair value, with any unrealized gain or
loss, net of tax and related adjustments, recorded as a component of
shareholder's equity. Fixed maturity securities that we intend to sell in the
near term are classified as trading and included in other invested assets. We
include any unrealized gain or loss on trading securities in net investment
gains.
Equity securities include investments in common stocks and non-redeemable
preferred stock. We carry these investments at estimated fair value. We record
any unrealized gain or loss, net of tax and related adjustments, as a component
of shareholder's equity.
Mortgage loans held in our investment portfolio are carried at amortized
unpaid balances, net of provisions for estimated losses.
Policy loans are stated at their current unpaid principal balances.
Other invested assets include trading securities and certain
non-traditional investments. Non-traditional investments include investments in
venture capital funds, limited partnerships, mineral rights and promissory
notes; we account for them using either the cost method, or for investments in
partnerships over whose operations the Company exercises significant influence,
the equity method.
Short-term investments include commercial paper, invested cash and other
investments purchased with maturities of less than three months. We carry them
at amortized cost, which approximates their estimated fair value. We consider
all short-term investments to be cash equivalents.
We defer any fees received or costs incurred when we originate investments
(primarily mortgage loans). We amortize fees, costs, discounts and premiums as
yield adjustments over the contractual lives of the investments. We consider
anticipated prepayments on mortgage-backed securities in determining estimated
future yields on such securities.
F-7
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
When we sell a security (other than a trading security), we report the
difference between our sale proceeds and its amortized cost (determined based on
specific identification) as an investment gain or loss.
We regularly evaluate all of our investments based on current economic
conditions, credit loss experience and other investee-specific developments. If
there is a decline in a security's net realizable value that is other than
temporary, we treat it as a realized loss and reduce our cost basis of the
security to its estimated fair value.
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 that may arise out of any
other business of the Company. We report separate account assets at market
value; the underlying investment risks are assumed by the contract holders. We
record the related liabilities at amounts equal to the market value of the
underlying assets.
Cost of Policies Produced
The costs that vary with, and are primarily related to, producing new
insurance business are referred to as cost of policies produced. We amortize
these costs using the interest rate credited to the underlying policy; (I) in
relation to the estimated gross profits for universal life-type and
investment-type products; or (ii) in relation to future anticipated premium
revenue for other products.
When we sell investments backing our universal life or investment-type
product business at a gain or loss, we adjust the amortization to reflect the
change in future investment yields resulting from the sale (thereby changing the
future amortization to offset the change in yield). We also adjust the cost of
policies produced for the change in amortization that would have been recorded
if actively managed fixed maturity securities had been sold at their stated
aggregate fair value and the proceeds reinvested at current yields. We include
the impact of this adjustment in net unrealized appreciation (depreciation)
within shareholder's equity.
Each year, we evaluate the recoverability of the unamortized balance of the
cost of policies produced. We consider estimated future gross profits or future
premiums, expected mortality or morbidity, interest earned and credited rates,
persistency and expenses in determining whether the balance is recoverable.
Cost of Policies Purchased
The cost assigned to the right to receive future cash flows from contracts
existing at the date of an acquisition is referred to as cost of policies
purchased. This balance is amortized, evaluated for recoverability, and adjusted
for the impact of realized and unrealized gains (losses) in the same manner as
the cost of policies produced described above.
Goodwill
Goodwill is the excess of the amount paid to acquire the Company over the
fair value of its net assets. We amortize goodwill on the straight-line basis
over a 40-year period. We continually monitor the value of our goodwill based on
our estimates of future earnings. We determine whether goodwill is fully
recoverable from projected undiscounted net cash flows over the remaining
amortization period. If we were to determine that changes in such projected cash
flows no longer support the recoverability of goodwill over the remaining
amortization period, we would reduce its carrying value with a corresponding
charge to expense or shorten the amortization period (no such changes have
occurred).
Recognition of Insurance Policy Income and Related Benefits and Expenses on
Insurance Contracts
Generally, we recognize insurance premiums for traditional life and
accident and health contracts as earned over the
F-8
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
premium-paying periods. We establish reserves for future benefits on a net-level
premium method based upon assumptions as to investment yields, mortality,
morbidity, withdrawals and dividends. We record premiums for universal life-type
and investment-type contracts that do not involve significant mortality or
morbidity risk as deposits to insurance liabilities. Revenues for these
contracts consist of mortality, morbidity, expense and surrender charges. We
establish reserves for the estimated present value of the remaining net costs of
all reported and unreported claims.
Reinsurance
In the normal course of business, we seek to limit our exposure to loss on
any single insured or to certain groups of policies by ceding reinsurance to
other insurance enterprises. We currently retain no more than $.5 million of
mortality risk on any one policy. We diversify the risk of reinsurance loss by
using a number of reinsurers that have strong claims-paying ratings. If any
reinsurer could not meet its obligations, the Company would assume the
liability. The likelihood of a material loss being incurred as the result of the
failure of one of our reinsurers is considered remote. The cost of reinsurance
ceded totaled $21.0 million, $24.2 million and $24.6 million in 1998, 1997 and
1996, respectively. Reinsurance recoveries netted against insurance policy
benefits totaled $21.8 million, $14.9 million and $19.4 million in 1998, 1997
and 1996, respectively.
Income Taxes
Our income tax expense includes deferred income taxes arising from
temporary differences between the tax and financial reporting bases of assets
and liabilities. In assessing the realization of deferred income tax assets, we
consider whether it is more likely than not that the deferred income tax assets
will be realized. The ultimate realization of deferred income tax assets depends
upon generating future taxable income during the periods in which temporary
differences become deductible. If future income is not generated as expected,
deferred income tax assets may need to be written off (no such write-offs have
occurred).
Investment Borrowings
As part of our investment strategy, we may enter into reverse repurchase
agreements and dollar-roll transactions to increase our investment return or to
improve our liquidity. We account for these transactions as collateral
borrowings, where the amount borrowed is equal to the sales price of the
underlying securities. Reverse repurchase agreements involve a sale of
securities and an agreement to repurchase the same securities at a later date at
an agreed-upon price. Dollar rolls are similar to reverse repurchase agreements
except that, with dollar rolls, the repurchase involves securities that are only
substantially the same as the securities sold. We account for these transactions
as short-term collateralized borrowings. Such borrowings averaged approximately
$66.0 million during 1998 (compared with an average of $90.4 million during
1997) and were collateralized by investment securities with fair values
approximately equal to the loan value. The weighted average interest rate on
short-term collateralized borrowings was 4.4 percent in both 1998 and 1997. The
primary risk associated with short-term collateralized borrowings is that a
counterparty will be unable to perform under the terms of the contract. Our
exposure is limited to the excess of the net replacement cost of the securities
over the value of the short-term investments (such excess was not material at
December 31, 1998). We believe the counterparties to our reverse repurchase and
dollar-roll agreements are financially responsible and that the counterparty
risk is minimal.
Use of Estimates
When we prepare financial statements in conformity with GAAP, we are
required to make estimates and assumptions that significantly affect various
reported amounts of assets and liabilities, and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting periods. For example, we use significant estimates
and assumptions in calculating values for the cost of policies produced, the
cost of policies purchased, goodwill, liabilities for insurance and deposit
products, liabilities related to litigation, guaranty fund assessment accruals,
gain on sale of finance receivables and deferred income taxes. If our future
experience differs materially from these estimates and assumptions, our
financial statements could be affected.
F-9
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Fair Values of Financial Instruments
We use the following methods and assumptions to determine the estimated
fair values of financial instruments:
Investment securities. For fixed maturity securities (including redeemable
preferred stocks) and for equity and trading securities, we use quotes from
independent pricing services, where available. For investment securities
for which such quotes are not available, we use values obtained from
broker-dealer market makers or by discounting expected future cash flows
using a current market rate appropriate for the yield, credit quality, and
(for fixed maturity securities) the maturity of the investment being
priced.
Short-term investments. We use quoted market prices. The carrying amount
for these instruments approximates their estimated fair value.
Mortgage loans and policy loans. We discount future expected cash flows for
loans included in our investment portfolio based on interest rates
currently being offered for similar loans to borrowers with similar credit
ratings. We aggregate loans with similar characteristics in our
calculations.
Other invested assets. We use quoted market prices, where available.
When quotes are not available, we assume a market value equal to carrying
value.
Insurance liabilities for investment contracts. We discount future expected
cash flows based on interest rates currently being offered for similar
contracts with similar maturities.
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.
Here are the estimated fair values of our financial instruments:
<TABLE>
<CAPTION>
1998 1997
----------------------- ------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
(Dollars in millions)
<S> <C> <C> <C> <C>
Financial assets:
Actively managed fixed maturities............................ $1,524.1 $1,524.1 $1,734.0 $1,734.0
Equity securities ........................................... 45.7 45.7 25.4 25.4
Mortgage loans............................................... 110.2 119.0 146.1 154.6
Policy loans................................................. 79.6 79.6 80.6 80.6
Other invested assets........................................ 103.1 103.1 62.8 62.8
Short-term investments....................................... 48.4 48.4 49.5 49.5
Financial liabilities:
Insurance liabilities for investment contracts (1)........... 1,036.0 1,036.0 1,177.5 1,177.5
Investment borrowings........................................ 65.7 65.7 61.0 61.0
<FN>
(1) The estimated fair value of the liabilities for investment contracts was
approximately equal to its carrying value at December 31, 1998 and 1997.
This was because interest rates credited on the vast majority of account
balances approximate current rates paid on similar investment contracts
and because these rates are not generally guaranteed beyond one year. We
are not required to disclose fair values for insurance liabilities, other
than those for investment contracts. However, we take into consideration
the estimated fair values of all insurance liabilities in our overall
management of interest rate risk. We attempt 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. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133") was issued in
June 1998. SFAS 133 requires all derivative instruments to be recorded on
the balance sheet at estimated fair value. Changes in the fair value of
derivative instruments are to be recorded each period either in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and, if it is, on the type of hedge
transaction. SFAS 133 is effective for year 2000. We are currently evaluating
the impact of SFAS 133; at present, we do not believe it will have a material
effect on our financial position or results of operations.
F-10
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
2. INVESTMENTS:
At December 31, 1998, the amortized cost and estimated fair value of
actively managed fixed maturities and equity 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>
Investment grade:
Corporate securities................................................ $ 860.4 $20.7 $15.0 $ 866.1
United States Treasury securities and obligations of
United States government corporations and agencies................ 26.9 .8 .2 27.5
States and political subdivisions................................... 17.3 .3 - 17.6
Debt securities issued by foreign governments....................... 11.7 - .8 10.9
Mortgage-backed securities ......................................... 487.4 8.0 1.2 494.2
Below-investment grade (primarily corporate securities)................ 116.8 1.2 10.2 107.8
---------- ------- ------ ----------
Total actively managed fixed maturities........................... $1,520.5 $31.0 $27.4 $1,524.1
======== ===== ===== ========
Equity securities......................................................$ 46.0 $ .8 $ 1.1 $ 45.7
========== ======= ====== ==========
</TABLE>
At December 31, 1997, the amortized cost and estimated fair value of
actively managed fixed maturities and equity 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>
Investment grade:
Corporate securities................................................ $ 955.8 $28.3 $ 5.3 $ 978.8
United States Treasury securities and obligations of
United States government corporations and agencies................ 28.0 .7 - 28.7
States and political subdivisions................................... 20.4 1.1 .1 21.4
Debt securities issued by foreign governments....................... 13.5 .1 .7 12.9
Mortgage-backed securities ......................................... 551.6 8.6 .4 559.8
Below-investment grade (primarily corporate securities)................ 135.9 1.8 5.3 132.4
---------- ------- ------- ----------
Total actively managed fixed maturities........................... $1,705.2 $40.6 $11.8 $1,734.0
======== ===== ===== ========
Equity securities......................................................$ 25.1 $ .5 $ .2 $ 25.4
========== ======= ======= ==========
</TABLE>
Net unrealized gains (losses) on actively managed fixed maturity
investments included in shareholders' equity as of December 31, 1998 and 1997,
were as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
(Dollars in millions)
<S> <C> <C>
Net unrealized gains on actively managed fixed maturity investments.................................. $ 3.6 $ 28.8
Adjustments to cost of policies purchased and cost of policies produced.............................. (2.1) (16.2)
Deferred income tax benefit.......................................................................... (.5) (4.4)
------- --------
Net unrealized gain on actively managed fixed maturity investments........................... $ 1.0 $ 8.2
====== ========
</TABLE>
F-11
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
The following table sets forth the amortized cost and estimated fair value
of actively managed fixed maturities at December 31, 1998, by contractual
maturity. 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. Most of the mortgage-backed securities shown below
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........................................................................ $ 14.5 $ 14.5
Due after one year through five years.......................................................... 132.1 133.4
Due after five years through ten years......................................................... 249.3 245.6
Due after ten years............................................................................ 637.2 636.4
---------- ----------
Subtotal.................................................................................. 1,033.1 1,029.9
Mortgage-backed securities..................................................................... 487.4 494.2
---------- ----------
Total actively managed fixed maturities ............................................... $1,520.5 $1,524.1
======== ========
</TABLE>
Net investment income consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Actively managed fixed maturity securities........................................... $118.4 $133.6 $146.4
Equity securities.................................................................... 3.2 1.7 1.6
Mortgage loans....................................................................... 12.1 16.4 19.0
Policy loans......................................................................... 5.1 5.4 5.0
Other invested assets................................................................ 13.3 7.7 9.8
Short-term investments............................................................... 2.9 3.4 2.3
Separate accounts.................................................................... 44.1 55.7 35.6
-------- -------- --------
Gross investment income.......................................................... 199.1 223.9 219.7
Investment expenses.................................................................. 1.1 1.3 1.3
--------- --------- ---------
Net investment income......................................................... $198.0 $222.6 $218.4
====== ====== ======
</TABLE>
The Company had no significant fixed maturity investments and mortgage
loans that were not accruing investment income in 1998, 1997 and 1996.
F-12
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Investment gains (losses), net of investment expenses, were included in
revenue as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Fixed maturities:
Gross gains........................................................................ $ 34.0 $20.6 $16.6
Gross losses....................................................................... (12.4) (5.1) (9.2)
Other than temporary decline in fair value......................................... - (.3) (.2)
----------- -------- -------
Net investment gains from fixed maturities before expenses.................... 21.6 15.2 7.2
Other.................................................................................. .1 2.2 (.6)
---------- ------- -------
Net investment gains before expenses.......................................... 21.7 17.4 6.6
Investment expenses.................................................................... 3.2 4.1 3.9
--------- ------- -------
Net investment gains.......................................................... $ 18.5 $13.3 $ 2.7
======= ===== ======
</TABLE>
At December 31, 1998, the mortgage loan balance was primarily comprised of
commercial loans. Approximately 15 percent, 12 percent, 12 percent, 11 percent
and 8 percent of the mortgage loan balance were on properties located in
California, Michigan, Florida, Texas and Georgia, respectively. No other state
comprised greater than 8 percent of the mortgage loan balance. Noncurrent
mortgage loans were insignificant at December 31, 1998. At December 31, 1998,
our allowance for loss on mortgage loans was $.8 million.
Life insurance companies are required to maintain certain investments on
deposit with state regulatory authorities. Such assets had an aggregate carrying
value of $16.1 million at December 31, 1998.
The Company had no investments in any single entity in excess of 10 percent
of shareholder's equity at December 31, 1998, other than investments issued or
guaranteed by the United States government or a United States government agency.
3. INSURANCE LIABILITIES:
These liabilities consisted of the following:
<TABLE>
<CAPTION>
Interest
Withdrawal Mortality rate
assumption assumption assumption 1998 1997
---------- ---------- ---------- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Future policy benefits:
Interest-sensitive products:
Investment contracts............................ N/A N/A (C) $1,036.0 $1,177.5
Universal life-type contracts................... N/A N/A 4.8% 329.2 344.6
---------- ----------
Total interest-sensitive products............. 1,365.2 1,522.1
--------- ---------
Traditional products:
Traditional life insurance contracts............ Company (a) 7.6% 139.9 142.8
experience
Limited-payment contracts....................... None (b) 7.6% 106.3 105.5
---------- ----------
Total traditional products.................... 246.2 248.3
---------- ----------
Claims payable and other policyholder funds ........ N/A N/A N/A 62.6 62.5
Liabilities related to separate accounts............ N/A N/A N/A 696.4 402.1
---------- ----------
Total........................................... $2,370.4 $2,235.0
======== ========
F-13
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
<FN>
- -------------
(a) Principally modifications of the 1975 - 80 Basic, Select and Ultimate
Tables.
(b) Principally the 1984 United States Population Table and the NAIC 1983
Individual Annuitant Mortality Table.
(c) At December 31, 1998 and 1997, approximately 95 percent and 97 percent,
respectively, of this liability represented account balances where future
benefits are not guaranteed. The weighted average interest rate on the
remainder of the liabilities representing the present value of guaranteed
future benefits was approximately 6 percent at December 31, 1998.
</FN>
</TABLE>
4. INCOME TAXES:
Income tax liabilities were comprised of the following:
<TABLE>
<CAPTION>
1998 1997
---- ----
(Dollars in millions)
Deferred income tax liabilities (assets):
<S> <C> <C>
Investments (primarily actively managed fixed maturities).................................. $ 5.4 $ 9.8
Cost of policies purchased and cost of policies produced................................... 56.7 52.2
Insurance liabilities...................................................................... (28.2) (19.5)
Unrealized appreciation (depreciation)..................................................... (.4) 4.7
Other...................................................................................... (2.2) (4.0)
-------- ------
Deferred income tax liabilities....................................................... 31.3 43.2
Current income tax liabilities (assets)........................................................ 6.2 1.0
--------- -------
Income tax liabilities................................................................ $ 37.5 $ 44.2
======= ======
</TABLE>
Income tax expense was as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Current tax provision..................................................................... $20.8 $16.3 $10.5
Deferred tax provision (benefit).......................................................... (4.2) 5.8 4.9
------ ------- -------
Income tax expense............................................................... $16.6 $22.1 $15.4
===== ===== =====
</TABLE>
A reconciliation of the income tax provisions based on the U.S. statutory
corporate tax rate to the provisions reflected in the statement of operations is
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Tax on income before income taxes at statutory rate....................................... 35.0% 35.0% 35.0%
State taxes............................................................................... 1.0 .7 1.5
Other..................................................................................... (.8) .3 1.0
----- ------ -------
Income tax expense............................................................... 35.2% 36.0% 37.5%
==== ==== ====
</TABLE>
5. OTHER DISCLOSURES:
Litigation
The Company is involved on an ongoing basis in lawsuits related to its
operations. Although the ultimate outcome of certain of such matters cannot be
predicted, none of such lawsuits currently pending against the Company is
expected, individually or in the aggregate, to have a material adverse effect
on the Company's financial condition, cash flows or results of operations.
F-14
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Guaranty Fund Assessments
The balance sheet at December 31, 1998, includes: (i) accruals of $2.4
million, representing our estimate of all known assessments that will be levied
against the Company by various state guaranty associations based on premiums
written through December 31, 1998; and (ii) receivables of $1.9 million that we
estimate will be recovered through a reduction in future premium taxes as a
result of such assessments. These estimates are subject to change when the
associations determine more precisely the losses that have occurred and how such
losses will be allocated among the insurance companies. We recognized expense
for such assessments of $1.1 million in 1998, $1.2 million in 1997 and $1.4
million in 1996.
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) are based on Conseco's direct and directly allocable costs plus a 10
percent margin. Total fees incurred by the Company under such agreements were
$37.8 million in 1998, $36.7 million in 1997 and $44.1 million in 1996.
During 1998 and 1997, the Company purchased $13.0 million and $11.2 million
par value, respectively, of senior subordinated notes issued by subsidiaries of
Conseco. Such notes had a carrying value of $45.5 million and $29.8 million at
December 31, 1998 and 1997, 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.
6. OTHER OPERATING STATEMENT DATA:
Insurance policy income consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Traditional products:
Direct premiums collected......................................................... $445.8 $309.6 $241.3
Reinsurance assumed............................................................... 15.6 14.9 1.7
Reinsurance ceded................................................................. (21.0) (24.2) (24.6)
------- ------- -------
Premiums collected, net of reinsurance...................................... 440.4 300.3 218.4
Less premiums on universal life and products
without mortality and morbidity risk which are
recorded as additions to insurance liabilities ................................ 400.4 255.9 169.8
------- ------- -------
Premiums on traditional products with mortality or morbidity risk,
recorded as insurance policy income...................................... 40.0 44.4 48.6
Fees and surrender charges on interest sensitive products............................. 33.6 31.3 32.8
-------- -------- --------
Insurance policy income..................................................... $ 73.6 $ 75.7 $ 81.4
======= ======= =======
</TABLE>
The five states with the largest shares of 1998 collected premiums were
Texas (17 percent), Florida (16 percent), California (13 percent), Michigan (7.1
percent) and Indiana (6.2 percent). No other state accounted for more than 5.0
percent of total collected premiums.
F-15
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
Changes in the cost of policies purchased were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Balance, beginning of year............................................................ $106.4 $143.0 $120.0
Amortization...................................................................... (21.1) (15.4) (15.3)
Amounts related to fair value adjustment of actively managed fixed maturities..... 11.8 (21.2) 36.6
Other ............................................................................ .9 - 1.7
---------- ----------- ---------
Balance, end of year.................................................................. $ 98.0 $106.4 $143.0
======= ====== ======
</TABLE>
Based on current conditions and assumptions as to future events on all
policies in force, the Company expects to amortize approximately 10 percent of
the December 31, 1998, balance of cost of policies purchased in 1999, 9 percent
in 2000, 9 percent in 2001, 8 percent in 2002 and 8 percent in 2003. 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.
Changes in the cost of policies produced were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Balance, beginning of year............................................................ $ 55.9 $38.2 $24.0
Additions......................................................................... 35.3 31.8 13.2
Amortization...................................................................... (11.0) (10.2) (3.5)
Amounts related to fair value adjustment of actively managed fixed maturities..... 2.3 (3.9) 4.5
--------- ------- -------
Balance, end of year.................................................................. $ 82.5 $55.9 $38.2
======= ===== =====
</TABLE>
7. STATEMENT OF CASH FLOWS:
Income taxes paid during 1998, 1997, and 1996, were $17.1 million, $14.8
million and $18.1 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.
8. 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>
1998 1997
---- ----
(Dollars in millions)
<S> <C> <C>
Statutory capital and surplus.................................................. $134.0 $140.7
Asset valuation reserve........................................................ 30.9 29.2
Interest maintenance reserve................................................... 73.1 68.8
-------- --------
Total...................................................................... $238.0 $238.7
====== ======
</TABLE>
F-16
CONSECO VARIABLE INSURANCE COMPANY
Notes to Financial Statements
------------------------------
The Company's statutory net income was $32.7 million, $32.7 million and
$32.6 million in 1998, 1997 and 1996, 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, 1998, are available for distribution in
1999 without permission of state regulatory authorities.
F-17
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The financial statements of the Separate Account and Conseco Variable
Insurance Company (the "Company") are included in Part B hereof.
(b) Exhibits
(1) -Resolution of the Board of Directors of Great American Reserve
authorizing the establishment of Variable Account dated November
12, 1993.***
(2) -Not Applicable.
(3) -Form of Principal Underwriting Agreement by and among Great
American Reserve, Variable Account and GARCO Equity Sales.***
(4)(a) -- Form of Individual Fixed/Variable Annuity Contract.***
(4)(b) -- Form of Group Fixed/Variable Annuity Contract.***
(5) -Application for Contracts.***
(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 Management 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.
***Incorporated by reference to Post-Effective Amendment No. 6 to Form N-4
(File Nos. 33-74092 and 811-08288) filed electronically on May 15, 1998.
ITEM 25. DIRECTORS AND OFFICERS OF CONSECO VARIABLE
The following table sets forth certain information regarding the executive
officers of the Company who are engaged directly or indirectly in activities
relating to the Variable Account or the Contracts. Their principal business
address is 11825 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
James S. Adams Senior Vice President and Treasurer
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)
Green Tree Financial Corporation
Washington National Corporation
Washington National Insurance Company
United Presidential Life Insurance Company
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)
Conseco Variable Insurance Company (Texas)
Conseco Annuity Assurance Company (Illinois)
Vulcan Life Insurance Company (Indiana) - (98%)
Conseco Senior Health Insurance Company (Pennsylvania)
United General Life Insurance Company (Texas)
Conseco Life Insurance Company of New York (New York)
Wabash Life Insurance Company (Kentucky)
Conseco Life Insurance Company (Indiana)
Pioneer Financial Services, Inc.
Pioneer Life Insurance Company
Health and Life Insurance Company
Manhattan National Life Insurance Company
Conseco Medical Insurance Company
Conseco Direct Life Insurance Company
Providential Life Insurance Company
Capitol American Financial Corporation (Ohio)
Conseco Health Insurance Company (Arizona)
Frontier National Life Insurance Company (Ohio)
Conseco Capital Management, Inc. (Delaware)
Conseco Equity Sales, Inc. (Texas)
Conseco Financial Services, Inc. (Delaware)
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)
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, Conseco Variable Annuity Account C, Conseco Variable
Annuity Account E, Conseco Variable Annuity Account F, and Conseco Variable
Annuity Account G, each being segregated asset accounts established
pursuant to Texas law by Bankers National Life Insurance Company and
Conseco Variable Insurance Company, respectively. Shares of Conseco Series
Trust are also sold to BMA Variable Life Account A of Business Men's
Assurance Company of America.
** 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 April 13, 1999, there were 11,120 Qualified Contract Owners and
1,951 Non-Qualified Contract Owners.
ITEM 28. INDEMNIFICATION
The Board of Directors of the Company is indemnified by the Company 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 the Company'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):
Conseco Variable Annuity Account C
Conseco Variable Annuity Account F
Conseco Variable Annuity Account G
Conseco Fund Group
Rydex Advisor Variable Annuity Account
BMA Variable Life Account A
(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. Kovacs Secretary, and Director
William T. Devanney, Jr. Senior Vice President, Corporate Taxes
Christene H. Darnell Vice President, Management Reporting
Donald B. Johnston Vice President, National Sales Director
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 the Company 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 Conseco Variable
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. The Company 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 the
Company.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, as amended, 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 22nd day of April, 1999.
CONSECO VARIABLE ANNUITY
ACCOUNT E
(Registrant)
By: Conseco Variable Insurance Company
By: /S/ THOMAS J. KILIAN
----------------------------------------
CONSECO VARIABLE 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/ NGAIRE E. CUNEO Director 4/22/99
- -------------------------- ---------------
Ngaire E. Cuneo
/S/ THOMAS J. KILIAN 4/22/99
- -------------------------- Director ----------------
Thomas J. Kilian
/S/ STEPHEN C. HILBERT Director and Chairman of the Board 4/22/99
- -------------------------- (Principal Executive Officer) ---------------
Stephen C. Hilbert
/S/ ROLLIN M. DICK Director, Executive Vice President 4/22/99
- -------------------------- and Chief Financial Officer (Principal ----------------
Rollin M. Dick Financial Officer)
/S/ JOHN J. SABL Director 4/22/99
- --------------------------- ----------------
John J. Sabl
/S/ JAMES S. ADAMS Senior Vice President and Treasurer 4/22/99
- --------------------------- (Chief Accounting Officer) ----------------
James S. Adams
</TABLE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- -------- -------
EX-99.B9 Opinion and Consent of Counsel
EX-99.B10 Consent of Independent Accountants
EX-99.B13 Schedule for Computation of Performance Quotations
April 23, 1999
Board of Directors
Conseco Variable Insurance Company
Re: Conseco Variable Annuity Account E
Registration Statement on Form N-4
Gentlemen and Madam:
I am Executive Vice President, General Counsel and Secretary of Conseco Variable
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 Conseco Variable Annuity Account E (formerly 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 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;
and
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.
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
of the Prospectus included therein.
Very truly yours,
/s/ John J. Sabl
- ----------------
John J. Sabl
Executive Vice President,
General Counsel and Secretary
JJS:jjs
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 8 to the
Registration Statement of Conseco Variable Annuity Account E (the "Account") on
Form N-4 (File Nos. 33-74092 and 811-8288) of:
(1) Our report dated February 10, 1999, on our audits of the financial
statements of the Account; and
(2) Our report dated March 30, 1999, on our audits of the financial statements
of Conseco Variable Insurance Company.
We also consent to the reference to our Firm under the caption "Independent
Accountants".
/S/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Indianapolis, Indiana
April 23, 1999
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE ASSET ALLOCATION - FUTURE RESERVE
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\AA1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Unit Value Accum
Accum For Units
Units Year of Annual (Deducted) Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.973445 506.728 1997 1.789669 (1.486) 505.242 2.147855 1,085.19 90 % X 9%
1996 1.698128 588.884 1996 1.502295 (1.771) 587.113 2.147855 1,261.03 90 % X 9%
1995 1.342379 744.946 1995 1.196932 (2.222) 740.953 2.147855 1,591.46 90 % X 8%
1994 1.035219 965.979 1994 0.000000 0.000 961.986 2.147855 2,066.21 90 % X 7%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 996.007 2.147855 2,139.28 90 % X 5%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Total Accum Average
Total Accum Value After Annual
Value After Full Deduction Total
Deduction Surrender For Return
Surrender For Surr Admin Admin Fee ^n
Charge Charge Fee ^(ERV) ^P(1+T) = ERV
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
(87.90) 997.29 (2.66) 994.63 -0.54%
(102.14) 1,158.89 (2.66) 1,156.23 7.53%
(114.59) 1,476.87 (2.66) 1,474.21 13.81%
(130.17) 1,936.04 (2.66) 1,933.38 17.92%
(96.27) 2,043.01 (2.66) 2,040.35 17.44%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE CORPORATE BOND - FUTURE RESERVE
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\BD1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Unit Value Accum
Accum For Units
Units Year of Annual (Deducted) Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.307768 764.662 1997 1.250599 (2.127) 762.535 1.369208 1,044.07 90 % X 9%
1996 1.206516 828.833 1996 1.146780 (2.320) 826.513 1.369208 1,131.67 90 % X 9%
1995 1.165727 857.834 1995 1.109643 (2.397) 853.117 1.369208 1,168.10 90 % X 8%
1994 0.999698 1,000.302 1994 0.000000 0.000 995.585 1.369208 1,363.16 90 % X 7%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 995.283 1.369208 1,362.75 90 % X 5%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Total Accum Average
Total Accum Value After Annual
Value After Full Deduction Total
Deduction Surrender For Return
Surrender For Surr Admin Admin Fee ^n
Charge Charge Fee ^(ERV) ^P(1+T) = ERV
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
(84.57) 959.50 (2.66) 956.84 -4.32%
(91.67) 1,040.00 (2.66) 1,037.34 1.85%
(84.10) 1,084.00 (2.66) 1,081.34 2.64%
(85.88) 1,277.28 (2.66) 1,274.62 6.25%
(61.32) 1,301.43 (2.66) 1,298.77 6.07%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE GOVERNMENT SECURITIES - FUTURE RESERVE
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/98
Unit Value Accum
Accum For Units
Units Year of Annual (Deducted) Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.248382 801.037 1997 1.200356 (2.216) 798.821 1.318099 1,052.93 90 % X 9%
1996 1.169361 855.168 1996 1.125354 (2.364) 852.804 1.318099 1,124.08 90 % X 9%
1995 1.154244 866.368 1995 1.102841 (2.412) 861.592 1.318099 1,135.66 90 % X 8%
1994 0.997441 1,002.566 1994 0.000000 0.000 997.790 1.318099 1,315.19 90 % X 7%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 995.224 1.318099 1,311.80 90 % X 5%
</TABLE>
<TABLE>
<CAPTION>
Total Accum Average
Total Accum Value After Annual
Value After Full Deduction Total
Deduction Surrender For Return
Surrender For Surr Admin Admin Fee ^n
Charge Charge Fee ^(ERV) ^P(1+T) = ERV
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
(85.29) 967.64 (2.66) 964.98 -3.50%
(91.05) 1,033.03 (2.66) 1,030.37 1.51%
(81.77) 1,053.89 (2.66) 1,051.23 1.68%
(82.86) 1,232.33 (2.66) 1,229.67 5.30%
(59.03) 1,252.77 (2.66) 1,250.11 5.16%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE COMMON STOCK - FUTURE RESERVE
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ST1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Unit Value Accum
Accum For Units
Units Year of Annual (Deducted) Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 2.424118 412.521 1997 2.143257 (1.241) 411.280 2.763812 1,136.70 90 % X 9%
1996 2.071274 482.795 1996 1.735964 (1.532) 481.263 2.763812 1,330.12 90 % X 9%
1995 1.448804 690.224 1995 1.253068 (2.123) 686.569 2.763812 1,897.55 90 % X 8%
1994 1.077853 927.770 1994 0.000000 0.000 924.115 2.763812 2,554.08 90 % X 7%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 996.345 2.763812 2,753.71 90 % X 5%
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Total Accum Average
Total Accum Value After Annual
Value After Full Deduction Total
Deduction Surrender For Return
Surrender For Surr Admin Admin Fee ^n
Charge Charge Fee ^(ERV) ^P(1+T) = ERV
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
(92.07) 1,044.63 (2.66) 1,041.97 4.20%
(107.74) 1,222.38 (2.66) 1,219.72 10.44%
(136.62) 1,760.93 (2.66) 1,758.27 20.70%
(160.91) 2,393.17 (2.66) 2,390.51 24.34%
(123.92) 2,629.79 (2.66) 2,627.13 24.33%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN LEVERAGE ALLCAP
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ALG1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.835511 544.807 1997 1.559995 (1.705) 543.102 2.856798 1,551.53 90 % X 9%
1996 1.555302 642.962 1996 1.557314 (1.708) 641.254 2.856798 1,831.93 90 % X 9%
1995 1.407908 710.274 1995 1.185715 (2.243) 706.323 2.856798 2,017.82 90 % X 8%
Incep 1.000000 1,000.000 N/A 0.000000 996.049 2.856798 2,845.51 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(125.67) 1,425.86 (2.66) 1,423.20 42.32%
(148.39) 1,683.54 (2.66) 1,680.88 29.65%
(145.28) 1,872.54 (2.66) 1,869.88 23.20%
(179.27) 2,666.24 (2.66) 2,663.58 31.42%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN SMALL CAPITALIZATION
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ALG1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.375354 727.086 1997 1.303837 (2.040) 725.046 1.566862 1,136.05 90 % X 9%
1996 1.252107 798.654 1996 1.307434 (2.035) 796.619 1.566862 1,248.19 90 % X 9%
1995 1.218931 820.391 1995 1.136306 (2.341) 816.016 1.566862 1,278.58 90 % X 8%
Incep 1.000000 1,000.000 N/A 0.000000 995.625 1.566862 1,560.01 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(92.02) 1,044.03 (2.66) 1,041.37 4.14%
(101.10) 1,147.09 (2.66) 1,144.43 6.98%
(92.06) 1,186.52 (2.66) 1,183.86 5.79%
(98.28) 1,461.73 (2.66) 1,459.07 11.11%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ALG1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.293971 772.815 1997 1.232942 (2.157) 770.658 1.889410 1,456.09 90 % X 9%
1996 1.043521 958.294 1996 0.997269 (2.667) 955.627 1.889410 1,805.57 90 % X 9%
Incep 1.000000 1,000.000 N/A 0.000000 997.333 1.889410 1,884.37 90 % X 8%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(117.94) 1,338.15 (2.66) 1,335.49 33.55%
(146.25) 1,659.32 (2.66) 1,656.66 28.71%
(135.67) 1,748.70 (2.66) 1,746.04 23.20%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN MIDCAP GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ALG1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.118979 893.672 1997 1.061108 (2.507) 891.165 1.437775 1,281.30 90 % X 9%
1996 0.986695 1,013.484 1996 1.000000 (2.660) 1,010.824 1.437775 1,453.34 90 % X 9%
Incep 1.000000 1,000.000 N/A 0.000000 997.340 1.437775 1,433.95 90 % X 8%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(103.79) 1,177.51 (2.66) 1,174.85 17.49%
(117.72) 1,335.62 (2.66) 1,332.96 15.45%
(103.24) 1,330.71 (2.66) 1,328.05 11.21%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - INTERNATIONAL FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\AM1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.092954 914.952 1997 1.116702 (2.382) 912.570 1.279955 1,168.05 90 % X 9%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 997.618 1.279955 1,276.91 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(94.61) 1,073.44 (2.66) 1,070.78 7.0780%
(103.43) 1,173.48 (2.66) 1,170.82 9.8974%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - VALUE FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\AM1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.225987 815.669 1997 1.131242 (2.351) 813.318 1.267116 1,030.57 90 % X 9%
Incept 1.000000 1,000.000 N/A 0 0.000 997.649 1.267116 1,264.14 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(83.48) 947.09 (2.66) 944.43 -5.5570%
(102.40) 1,161.74 (2.66) 1,159.08 9.24%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - GROWTH AND INCOME
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\AM1298.WK4
- -------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.08192 1,081.92 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(87.64) 994.28 (2.66) 991.62 -1.25%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT 100 FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\BER1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.154662 866.054 1997 1.124387 (2.366) 863.689 1.324112 1,143.62 90 % X 9%
1996 1.029280 971.553 1996 0.981625 (2.710) 968.843 1.324112 1,282.86 90 % X 9%
Incep 1.000000 1,000.000 N/A 0.000000 997.290 1.324112 1,320.52 90 % X 8%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(92.63) 1,050.99 (2.66) 1,048.33 4.83%
(103.91) 1,178.95 (2.66) 1,176.29 8.46%
(95.08) 1,225.44 (2.66) 1,222.78 7.82%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT GROWTH AND INCOME FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\BER1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.360249 735.160 1997 1.234571 (2.155) 733.005 1.677071 1,229.30 90 % X 9%
1996 1.103582 906.140 1996 1.006565 (2.643) 903.497 1.677071 1,515.23 90 % X 9%
Incep 1.000000 1,000.000 N/A 0.000000 997.357 1.677071 1,672.64 90 % X 8%
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(99.57) 1,129.73 (2.66) 1,127.07 12.71%
(122.73) 1,392.50 (2.66) 1,389.84 17.89%
(120.43) 1,552.21 (2.66) 1,549.55 17.82%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT SMALL COMPANY
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\BER1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.178105 848.821 1997 1.019119 (2.610) 846.211 1.183412 1,001.42 90 % X 9%
1996 0.984692 1,015.546 1996 1.069417 (2.487) 1,013.059 1.183412 1,198.87 90 % X 9%
Incep 1.000000 1,000.000 N/A 0.000000 997.513 1.183412 1,180.47 90 % X 8%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(81.12) 920.30 (2.66) 917.64 -8.24%
(97.11) 1,101.76 (2.66) 1,099.10 4.84%
(84.99) 1,095.48 (2.66) 1,092.82 3.38%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT BIAM INTERNATIONAL
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\BER1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 0.969881 1,031.054 1997 1.031545 (2.579) 1,028.475 1.110669 1,142.30 90 % X 9%
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.110669 1,110.67 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(92.53) 1,049.77 (2.66) 1,047.11 4.71%
(89.96) 1,020.71 (2.66) 1,018.05 1.08%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS STOCK INDEX
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\DRY1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.833764 545.326 1997 1.709368 (1.556) 543.770 2.318443 1,260.70 90 % X 9%
1996 1.398634 714.983 1996 1.270011 (2.094) 712.889 2.318443 1,652.79 90 % X 9%
1995 1.157620 863.841 1995 1.026503 (2.591) 859.155 2.318443 1,991.90 90 % X 8%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 995.314 2.318443 2,307.58 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(102.12) 1,158.58 (2.66) 1,155.92 15.59%
(133.88) 1,518.91 (2.66) 1,516.25 23.14%
(143.42) 1,848.48 (2.66) 1,845.82 22.67%
(145.38) 2,162.20 (2.66) 2,159.54 23.95%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS SOCIALLY RESPONSIBLE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\DRY1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.777912 562.458 1997 1.635458 (1.626) 560.832 2.268331 1,272.15 90 % X 9%
1996 1.404343 712.077 1996 1.275694 (2.085) 709.992 2.268331 1,610.50 90 % X 9%
1995 1.174867 851.160 1995 1.042515 (2.552) 846.523 2.268331 1,920.20 90 % X 8%
Incept 1.000000 1,000.000 N/A 0 0.000 995.363 2.268331 2,257.81 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(103.04) 1,169.11 (2.66) 1,166.45 16.64%
(130.45) 1,480.05 (2.66) 1,477.39 21.55%
(138.25) 1,781.95 (2.66) 1,779.29 21.18%
(142.24) 2,115.57 (2.66) 2,112.91 23.20%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS DISCIPLINED STOCK
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\DRY1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.071933 1,071.93 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(86.83) 985.10 (2.66) 982.44 -2.61%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS INTERNATIONAL VALUE
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\DRY1298.WK4
- --------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 0.941707 941.71 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(76.28) 865.43 (2.66) 862.77 -19.75%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED HIGH INCOME BOND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\FED1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.349419 741.060 1997 1.266227 (2.101) 738.959 1.366573 1,009.84 90 % X 9%
1996 1.202161 831.835 1996 1.100256 (2.418) 829.417 1.366573 1,133.46 90 % X 9%
1995 1.066579 937.577 1995 0.996556 (2.669) 932.490 1.366573 1,274.32 90 % X 8%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 994.913 1.366573 1,359.62 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(81.80) 928.04 (2.66) 925.38 -7.46%
(91.81) 1,041.65 (2.66) 1,038.99 1.93%
(91.75) 1,182.57 (2.66) 1,179.91 5.67%
(85.66) 1,273.96 (2.66) 1,271.30 6.92%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED INTERNATIONAL EQUITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\FED1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.188469 841.419 1997 1.228009 (2.166) 839.253 1.471681 1,235.11 90 % X 9%
1996 1.094819 913.393 1996 1.082731 (2.457) 910.936 1.471681 1,340.61 90 % X 9%
1995 1.02508 975.534 1995 1.001652 (2.656) 970.422 1.471681 1,428.15 90 % X 8%
Incept 1.000000 1,000.000 N/A 0 0.000 994.888 1.471681 1,464.16 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(100.04) 1,135.07 (2.66) 1,132.41 13.24%
(108.59) 1,232.02 (2.66) 1,229.36 10.88%
(102.83) 1,325.32 (2.66) 1,322.66 9.77%
(92.24) 1,371.92 (2.66) 1,369.26 9.16%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\FED1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.541347 648.783 1997 1.344351 (1.979) 646.804 1.731943 1,120.23 90 % X 9%
1996 1.234309 810.170 1996 1.164675 (2.284) 807.886 1.541347 1,245.23 90 % X 9%
1995 1.12209 891.194 1995 0.996654 (2.669) 886.241 1.541347 1,366.01 90 % X 8%
Incept 1.000000 1,000.000 N/A 0 0.000 995.047 1.541347 1,533.71 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(90.74) 1,029.49 (2.66) 1,026.83 2.68%
(100.86) 1,144.37 (2.66) 1,141.71 6.85%
(98.35) 1,267.66 (2.66) 1,265.00 8.15%
(96.62) 1,437.09 (2.66) 1,434.43 10.58%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
INVESCO - HIGH YIELD FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\INV1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.950601 950.60 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(77.00) 873.60 (2.66) 870.94 -18.61%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
INVESCO - INDUSTRIAL INCOME
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\INV1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
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
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.029287 1,029.29 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(83.37) 945.92 (2.66) 943.26 -8.34%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS AGGRESSIVE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\JAN1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.497524 667.769 1997 1.397201 (1.904) 665.865 1.982620 1,320.16 90 % X 9%
1996 1.347927 741.880 1996 1.405008 (1.893) 739.987 1.982620 1,467.11 90 % X 9%
1995 1.266394 789.644 1995 1.075270 (2.474) 785.277 1.982620 1,556.91 90 % X 8%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 995.633 1.982620 1,973.96 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(106.93) 1,213.23 (2.66) 1,210.57 21.06%
(118.84) 1,348.27 (2.66) 1,345.61 16.00%
(112.10) 1,444.81 (2.66) 1,442.15 12.98%
(124.36) 1,849.60 (2.66) 1,846.94 18.66%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\JAN1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.650431 605.902 1997 1.565983 (1.699) 604.203 2.207852 1,333.99 90 % X 9%
1996 1.363534 733.388 1996 1.405008 (1.893) 731.495 2.207852 1,615.03 90 % X 9%
1995 1.167465 856.557 1995 1.037151 (2.565) 852.099 2.207852 1,881.31 90 % X 8%
Incept 1.000000 1,000.000 N/A 0 995.542 2.207852 2,198.01 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(108.05) 1,225.94 (2.66) 1,223.28 22.33%
(130.82) 1,484.21 (2.66) 1,481.55 21.72%
(135.45) 1,745.86 (2.66) 1,743.20 20.35%
(138.47) 2,059.54 (2.66) 2,056.88 22.28%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS WORLDWIDE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\JAN1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.856255 538.719 1997 1.833374 (1.451) 537.268 2.359887 1,267.89 90 % X 9%
1996 1.541029 648.917 1996 1.450125 (1.834) 647.083 2.359887 1,527.04 90 % X 9%
1995 1.211204 825.625 1995 1.057476 (2.515) 821.275 2.359887 1,938.12 90 % X 8%
Incept 1.000000 1,000.000 N/A 0 995.650 2.359887 2,349.62 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(102.70) 1,165.19 (2.66) 1,162.53 16.25%
(123.69) 1,403.35 (2.66) 1,400.69 18.35%
(139.54) 1,798.58 (2.66) 1,795.92 21.55%
(148.03) 2,201.59 (2.66) 2,198.93 24.57%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
LAZARD - EQUITY
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\LAZ1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.055270 1,055.27 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(85.48) 969.79 (2.66) 967.13 -4.86%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
LAZARD - SMALL
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\LAZ1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 0.855373 855.37 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(69.28) 786.09 (2.66) 783.43 -30.49%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
LORD ABBETT - GROWTH AND INCOME
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\LAB1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.004593 1,004.59 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(81.37) 923.22 (2.66) 920.56 -11.61%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
MITCHELL HUTCHINS - GROWTH AND INCOME
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\MH1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.989814 989.81 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(80.17) 909.64 (2.66) 906.98 -13.54%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - PARTNERS FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\NEU1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.239881 806.529 1997 1.121881 0.000 806.529 1.274108 1,027.61 90 % X 9%
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.274108 1,274.11 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(83.24) 944.37 (2.66) 941.71 -5.83%
(103.20) 1,170.91 (2.66) 1,168.25 9.75%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - LIMITED MATURITY BOND FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\NEU1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.043140 958.644 1997 1.015480 0.000 958.644 1.073805 1,029.40 90 % X 9%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.073805 1,073.81 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(83.38) 946.02 (2.66) 943.36 -5.66%
(86.98) 986.83 (2.66) 984.17 -0.95%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - GROWTH FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\STRG1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.270148 787.310 1997 1.139589 0.000 787.310 1.611675 1,268.89 90 % X 9%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.611675 1,611.68 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(102.78) 1,166.11 (2.66) 1,163.45 16.34%
(130.55) 1,481.13 (2.66) 1,478.47 26.36%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - OPPORTUNITY FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\STRG1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
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
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.229863 813.099 1997 1.115734 0.000 813.099 1.377011 1,119.65 90 % X 9%
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.377011 1,377.01 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(90.69) 1,028.96 (2.66) 1,026.30 2.63%
(111.54) 1,265.47 (2.66) 1,262.81 14.99%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK HARD ASSETS
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\VAN1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.215736 822.547 1997 1.247622 (2.757) 819.790 0.828049 678.83 90 % X 9%
1996 1.253925 797.496 1996 1.193226 (2.883) 794.613 0.828049 657.98 90 % X 9%
1995 1.077158 928.369 1995 1.015117 (3.389) 922.097 0.828049 763.54 90 % X 8%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 993.728 0.828049 822.86 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(54.99) 623.84 (3.44) 620.40 -37.96%
(53.30) 604.68 (3.44) 601.24 -22.46%
(54.97) 708.57 (3.44) 705.13 -10.99%
(51.84) 771.02 (3.44) 767.58 -7.11%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE EMERGING MARKETS
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\VAN1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 0.990151 1,009.947 1997 1.414081 (2.433) 1,007.514 0.642969 647.80 90 % X 9%
1996 1.13594 880.328 1996 1.076124 (3.197) 877.131 0.642969 563.97 90 % X 9%
Incep 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.642969 642.97 90 % X 8%
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(52.47) 595.33 (3.44) 591.89 -40.81%
(45.68) 518.29 (3.44) 514.85 -28.25%
(46.29) 596.68 (3.44) 593.24 -17.76%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE BOND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\VAN1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.039146 962.329 1997 1.015004 (3.389) 958.940 1.155392 1,107.95 90 % X 9%
1996 1.029224 971.606 1996 0.989898 (3.475) 968.131 1.155392 1,118.57 90 % X 9%
1995 1.018153 982.171 1995 1.001559 (3.435) 975.261 1.155392 1,126.81 90 % X 8%
Incept 1.000000 1,000.000 N/A 0.000000 0.000 993.090 1.155392 1,147.41 90 % X 7%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(89.74) 1,018.21 (3.44) 1,014.77 1.48%
(90.60) 1,027.97 (3.44) 1,024.53 1.22%
(81.13) 1,045.68 (3.44) 1,042.24 1.39%
(72.29) 1,075.12 (3.44) 1,071.68 1.95%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK REAL ESTATE
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\VAN1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee ($2.66) Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Incep 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.851446 851.45 90 % X 9%
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
(68.97) 782.48 (3.44) 779.04 -31.07%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE ASSET ALLOCATION - FUTURE RESERVE
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\AAX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Unit Value Accum
Accum For Units
Units Year of Annual (Deducted) Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.973445 506.728 1997 1.789669 0.000 506.728 2.147855 1,088.38
1996 1.698128 588.884 1996 1.502295 0.000 588.884 2.147855 1,264.84
1995 1.342379 744.946 1995 1.196932 0.000 744.946 2.147855 1,600.04
1994 1.035219 965.979 1994 0.000000 0.000 965.979 2.147855 2,074.78
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 2.147855 2,147.86
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Total Accum Average
Total Accum Value After Annual
Value After Full Deduction Total
Deduction Surrender For Return
Surrender For Surr Admin Admin Fee ^n
Charge Charge Fee ^(ERV) ^P(1+T) = ERV
- ----------------------------------------------------------------------
<S> <C> <C> <C>
1,088.38 0.00 1,088.38 8.84%
1,264.84 0.00 1,264.84 12.47%
1,600.04 0.00 1,600.04 16.96%
2,074.78 0.00 2,074.78 20.02%
2,147.86 0.00 2,147.86 18.81%
Incep
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE CORPORATE BOND - FUTURE RESERVE
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\BDX1298.WK4
- -------------------------------------------------------------------------------------------------------------------------------
Unit Value Accum
Accum For Units
Units Year of Annual (Deducted) Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.307768 764.662 1997 1.250599 0.000 764.662 1.369208 1,046.98
1996 1.206516 828.833 1996 1.146780 0.000 828.833 1.369208 1,134.84
1995 1.165727 857.834 1995 1.109643 0.000 857.834 1.369208 1,174.55
1994 0.999698 1,000.302 1994 0.000000 0.000 1,000.302 1.369208 1,369.62
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.369208 1,369.21
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Total Accum Average
Total Accum Value After Annual
Value After Full Deduction Total
Deduction Surrender For Return
Surrender For Surr Admin Admin Fee ^n
Charge Charge Fee ^(ERV) ^P(1+T) = ERV
- ----------------------------------------------------------------------
<S> <C> <C> <C>
1,046.98 0.00 1,046.98 4.70%
1,134.84 0.00 1,134.84 6.53%
1,174.55 0.00 1,174.55 5.51%
1,369.62 0.00 1,369.62 8.18%
1,369.21 0.00 1,369.21 7.34%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE GOVERNMENT SECURITIES - FUTURE RESERVE
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/98
- -----------------------------------------------------------------------------------------------------------------------------
Unit Value Accum
Accum For Units
Units Year of Annual (Deducted) Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.248382 801.037 1997 1.200356 0.000 801.037 1.318099 1,055.85
1996 1.169361 855.168 1996 1.125354 0.000 855.168 1.318099 1,127.20
1995 1.154244 866.368 1995 1.102841 0.000 866.368 1.318099 1,141.96
1994 0.997441 1,002.566 1994 0.000000 0.000 1,002.566 1.318099 1,321.48
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.318099 1,318.10
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Total Accum Average
Total Accum Value After Annual
Value After Full Deduction Total
Deduction Surrender For Return
Surrender For Surr Admin Admin Fee ^n
Charge Charge Fee ^(ERV) ^P(1+T) = ERV
- ---------------------------------------------------------------------
<S> <C> <C> <C>
1,055.85 0.00 1,055.85 5.59%
1,127.20 0.00 1,127.20 6.17%
1,141.96 0.00 1,141.96 4.52%
1,321.48 0.00 1,321.48 7.22%
1,318.10 0.00 1,318.10 6.42%
Incep
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE COMMON STOCK - FUTURE RESERVE
INDIVIDUAL AND GROUP
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\STX1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Unit Value Accum
Accum For Units
Units Year of Annual (Deducted) Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 2.424118 412.521 1997 2.143257 0.000 412.521 2.763812 1,140.13
1996 2.071274 482.795 1996 1.735964 0.000 482.795 2.763812 1,334.35
1995 1.448804 690.224 1995 1.253068 0.000 690.224 2.763812 1,907.65
1994 1.077853 927.770 1994 0.000000 0.000 927.770 2.763812 2,564.18
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 2.763812 2,763.81
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Total Accum Average
Total Accum Value After Annual
Value After Full Deduction Total
Deduction Surrender For Return
Surrender For Surr Admin Admin Fee ^n
Charge Charge Fee ^(ERV) ^P(1+T) = ERV
- -----------------------------------------------------------------------
<S> <C> <C> <C>
1,140.13 0.00 1,140.13 14.01%
1,334.35 0.00 1,334.35 15.51%
1,907.65 0.00 1,907.65 24.02%
2,564.18 0.00 2,564.18 26.54%
2,763.81 0.00 2,763.81 25.76%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN LEVERAGE ALLCAP
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ALGX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.835511 544.807 1997 1.559995 0.000 544.807 2.856798 1,556.40
1996 1.555302 642.962 1996 1.557314 0.000 642.962 2.856798 1,836.81
1995 1.407908 710.274 1995 1.185715 0.000 710.274 2.856798 2,029.11
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 2.856798 2,856.80
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,556.40 0.00 1,556.40 55.64%
1,836.81 0.00 1,836.81 35.53%
2,029.11 0.00 2,029.11 26.60%
2,856.80 0.00 2,856.80 34.01%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN SMALL CAPITALIZATION
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ALGX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.375354 727.086 1997 1.303837 0.000 727.086 1.566862 1,139.24
1996 1.252107 798.654 1996 1.307434 0.000 798.654 1.566862 1,251.38
1995 1.218931 820.391 1995 1.136306 0.000 820.391 1.566862 1,285.44
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.566862 1,566.86
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1,139.24 0.00 1,139.24 13.92%
1,251.38 0.00 1,251.38 11.87%
1,285.44 0.00 1,285.44 8.73%
1,566.86 0.00 1,566.86 13.34%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ALGX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.293971 772.815 1997 1.232942 0.000 772.815 1.889410 1,460.16
1996 1.043521 958.294 1996 0.997269 0.000 958.294 1.889410 1,810.61
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.889410 1,889.41
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1,460.16 0.00 1,460.16 46.02%
1,810.61 0.00 1,810.61 34.56%
1,889.41 0.00 1,889.41 26.90%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
ALGER AMERICAN MIDCAP GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\ALGX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.118979 893.672 1997 1.061108 0.000 893.672 1.437775 1,284.90
1996 0.986695 1,013.484 1996 1.000000 0.000 1,013.484 1.437775 1,457.16
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.437775 1,437.78
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C>
1,284.90 0.00 1,284.90 28.49%
1,457.16 0.00 1,457.16 20.71%
1,437.78 0.00 1,437.78 14.56%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - INTERNATIONAL FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\AMX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.092954 914.952 1997 1.116702 0.000 914.952 1.279955 1,171.10
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.279955 1,279.96
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,171.10 0.00 1,171.10 17.1100%
1,279.96 0.00 1,279.96 15.9180%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - VALUE FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\AMX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.225987 815.669 1997 1.131242 0.000 815.669 1.267116 1,033.55
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.267116 1,267.12
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1,033.55 0.00 1,033.55 3.3550%
1,267.12 0.00 1,267.12 15.22%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
AMERICAN CENTURY - GROWTH AND INCOME
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\AMX1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.08192 1,081.92
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
1,081.92 0.00 1,081.92 12.45%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT 100 FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\BERX1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.154662 866.054 1997 1.124387 0.000 866.054 1.324112 1,146.75
1996 1.029280 971.553 1996 0.981625 0.000 971.553 1.324112 1,286.44
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.324112 1,324.11
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1,146.75 0.00 1,146.75 14.68%
1,286.44 0.00 1,286.44 13.42%
1,324.11 0.00 1,324.11 11.08%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT GROWTH AND INCOME FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\BERX1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.360249 735.160 1997 1.234571 0.000 735.160 1.677071 1,232.92
1996 1.103582 906.140 1996 1.006565 0.000 906.140 1.677071 1,519.66
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.677071 1,677.07
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,232.92 0.00 1,232.92 23.29%
1,519.66 0.00 1,519.66 23.27%
1,677.07 0.00 1,677.07 21.36%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT SMALL COMPANY
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\BERX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.178105 848.821 1997 1.019119 0.000 848.821 1.183412 1,004.50
1996 0.984692 1,015.546 1996 1.069417 0.000 1,015.546 1.183412 1,201.81
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.183412 1,183.41
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,004.50 0.00 1,004.50 0.45%
1,201.81 0.00 1,201.81 9.63%
1,183.41 0.00 1,183.41 6.51%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
BERGER IPT BIAM INTERNATIONAL
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\BERX1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 0.969881 1,031.054 1997 1.031545 0.000 1,031.054 1.110669 1,145.16
Incep 1.000000 1,000.000 N/A 0.000000 1,000.000 1.110669 1,110.67
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C>
1,145.16 0.00 1,145.16 14.52%
1,110.67 0.00 1,110.67 6.48%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS STOCK INDEX
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\DRYX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.833764 545.326 1997 1.709368 0.000 545.326 2.318443 1,264.31
1996 1.398634 714.983 1996 1.270011 0.000 714.983 2.318443 1,657.65
1995 1.157620 863.841 1995 1.026503 0.000 863.841 2.318443 2,002.77
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 2.318443 2,318.44
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,264.31 0.00 1,264.31 26.43%
1,657.65 0.00 1,657.65 28.75%
2,002.77 0.00 2,002.77 26.05%
2,318.44 0.00 2,318.44 26.43%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS SOCIALLY RESPONSIBLE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\DRYX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.777912 562.458 1997 1.635458 0.000 562.458 2.268331 1,275.84
1996 1.404343 712.077 1996 1.275694 0.000 712.077 2.268331 1,615.23
1995 1.174867 851.160 1995 1.042515 0.000 851.160 2.268331 1,930.71
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 2.268331 2,268.33
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,275.84 0.00 1,275.84 27.58%
1,615.23 0.00 1,615.23 27.09%
1,930.71 0.00 1,930.71 24.52%
2,268.33 0.00 2,268.33 25.66%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS DISCIPLINED STOCK
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\DRYX1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.071933
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Total Accum Value after Average Annual
Total Surrender Value after Full Deduction for Total Return
Accum Charge Surrender Deduction for Surrender Admin Fee n
Value Calc Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1,071.93 1,071.93 0.00 1,071.93 10.91%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
DREYFUS INTERNATIONAL VALUE
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\DRYX1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 0.941707
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Total Accum Value after Average Annual
Total Surrender Value after Full Deduction for Total Return
Accum Charge Surrender Deduction for Surrender Admin Fee n
Value Calc Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
941.71 941.71 0.00 941.71 -8.56%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED HIGH INCOME BOND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\FEDX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.349419 741.060 1997 1.266227 0.000 741.060 1.366573 1,012.71
1996 1.202161 831.835 1996 1.100256 0.000 831.835 1.366573 1,136.76
1995 1.066579 937.577 1995 0.996556 0.000 937.577 1.366573 1,281.27
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.366573 1,366.57
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,012.71 0.00 1,012.71 1.27%
1,136.76 0.00 1,136.76 6.62%
1,281.27 0.00 1,281.27 8.61%
1,366.57 0.00 1,366.57 9.10%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED INTERNATIONAL EQUITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\FEDX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.188469 841.419 1997 1.228009 0.000 841.419 1.471681 1,238.30
1996 1.094819 913.393 1996 1.082731 0.000 913.393 1.471681 1,344.22
1995 1.02508 975.534 1995 1.001652 0.000 975.534 1.471681 1,435.67
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.471681 1,471.68
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
1,238.30 0.00 1,238.30 23.83%
1,344.22 0.00 1,344.22 15.94%
1,435.67 0.00 1,435.67 12.81%
1,471.68 0.00 1,471.68 11.38%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
FEDERATED UTILITY II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\FEDX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.541347 648.783 1997 1.344351 0.000 648.783 1.731943 1,123.66
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>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1,123.66 0.00 1,123.66 12.37%
1,248.75 0.00 1,248.75 11.75%
1,373.64 0.00 1,373.64 11.16%
1,541.35 0.00 1,541.35 12.82%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
INVESCO - HIGH YIELD FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\INVX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.950601 950.60
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
950.60 0.00 950.60 -7.27%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
INVESCO - INDUSTRIAL INCOME
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\INVX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
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
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.029287 1,029.29
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C>
1,029.29 0.00 1,029.29 4.40%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\JANX1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.650431 605.902 1997 1.565983 0.000 605.902 2.207852 1,337.74
1996 1.363534 733.388 1996 1.405008 0.000 733.388 2.207852 1,619.21
1995 1.167465 856.557 1995 1.037151 0.000 856.557 2.207852 1,891.15
Incept 1.000000 1,000.000 N/A 0 1,000.000 2.207852 2,207.85
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,337.74 0.00 1,337.74 33.77%
1,619.21 0.00 1,619.21 27.25%
1,891.15 0.00 1,891.15 23.66%
2,207.85 0.00 2,207.85 24.72%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\JANX1298.WK4
- --------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.650431 605.902 1997 1.565983 0.000 605.902 2.207852 1,337.74
1996 1.363534 733.388 1996 1.405008 0.000 733.388 2.207852 1,619.21
1995 1.167465 856.557 1995 1.037151 0.000 856.557 2.207852 1,891.15
Incept 1.000000 1,000.000 N/A 0 1,000.000 2.207852 2,207.85
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,337.74 0.00 1,337.74 33.77%
1,619.21 0.00 1,619.21 27.25%
1,891.15 0.00 1,891.15 23.66%
2,207.85 0.00 2,207.85 24.72%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS AGGRESSIVE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\JANX1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.497524 667.769 1997 1.397201 0.000 667.769 1.982620 1,323.93
1996 1.347927 741.880 1996 1.405008 0.000 741.880 1.982620 1,470.87
1995 1.266394 789.644 1995 1.075270 0.000 789.644 1.982620 1,565.56
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.982620 1,982.62
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C>
1,323.93 0.00 1,323.93 32.39%
1,470.87 0.00 1,470.87 21.28%
1,565.56 0.00 1,565.56 16.12%
1,982.62 0.00 1,982.62 21.03%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
JANUS WORLDWIDE GROWTH
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\JANX1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.856255 538.719 1997 1.833374 0.000 538.719 2.359887 1,271.32
1996 1.541029 648.917 1996 1.450125 0.000 648.917 2.359887 1,531.37
1995 1.211204 825.625 1995 1.057476 0.000 825.625 2.359887 1,948.38
Incept 1.000000 1,000.000 N/A 0 1,000.000 2.359887 2,359.89
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C>
1,271.32 0.00 1,271.32 27.13%
1,531.37 0.00 1,531.37 23.75%
1,948.38 0.00 1,948.38 24.90%
2,359.89 0.00 2,359.89 27.05%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
LAZARD - EQUITY
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\LAZX1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.055270 1,055.27
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1,055.27 0.00 1,055.27 8.35%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
LAZARD - SMALL
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\LAZX1298.WK4
- ------------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 0.855373 855.37
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C>
855.37 0.00 855.37 -20.77%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
LORD ABBETT - GROWTH AND INCOME
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\LABX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.004593 1,004.59
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,004.59 0.00 1,004.59 0.68%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
MITCHELL HUTCHINS - GROWTH AND INCOME
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\MHX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.989814 989.81
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
989.81 0.00 989.81 -1.51%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - LIMITED MATURITY BOND FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\NEUX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.043140 958.644 1997 1.015480 0.000 958.644 1.073805 1,029.40
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.073805 1,073.81
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- --------------------------------------------------------------------------
<S> <C> <C> <C>
1,029.40 0.00 1,029.40 2.94%
1,073.81 0.00 1,073.81 4.35%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
NEUBERGER & BERMAN - PARTNERS FUND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\NEUX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.239881 806.529 1997 1.121881 0.000 806.529 1.274108 1,027.61
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.274108 1,274.11
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,027.61 0.00 1,027.61 2.76%
1,274.11 0.00 1,274.11 15.60%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - GROWTH FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\STGX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.270148 787.310 1997 1.139589 0.000 787.310 1.611675 1,268.89
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.611675 1,611.68
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1,268.89 0.00 1,268.89 26.89%
1,611.68 0.00 1,611.68 33.06%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
STRONG - OPPORTUNITY FUND II
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
A:\STGX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.229863 813.099 1997 1.115734 0.000 813.099 1.377011 1,119.65
Incept 1.000000 1,000.000 N/A 0 0.000 1,000.000 1.377011 1,377.01
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
1,119.65 0.00 1,119.65 11.97%
1,377.01 0.00 1,377.01 21.10%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK REAL ESTATE
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\VANX1298.WK4
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Incep 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.851446 851.45
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ------------------------------------------------------------------------
<S> <C> <C> <C>
851.45 0.00 851.45 -21.31%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE EMERGING MARKETS
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\VANX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 0.990151 1,009.947 1997 1.414081 0.000 1,009.947 0.642969 649.36
1996 1.13594 880.328 1996 1.076124 0.000 880.328 0.642969 566.02
Incep 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.642969 642.97
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
649.36 0.00 649.36 -35.06%
566.02 0.00 566.02 -24.77%
642.97 0.00 642.97 -15.24%
</TABLE>
<TABLE>
<CAPTION>
GREAT AMERICAN RESERVE - ACCOUNT "E"
VAN ECK WORLDWIDE BOND
INDIVIDUAL & GROUP PROSPECTUS - FUTURE RESERVE
AVERAGE ANNUAL TOTAL RETURN
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\VANX1298.WK4
- ----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.039146 962.329 1997 1.015004 0.000 962.329 1.155392 1,111.87
1996 1.029224 971.606 1996 0.989898 0.000 971.606 1.155392 1,122.59
1995 1.018153 982.171 1995 1.001559 0.000 982.171 1.155392 1,134.79
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 1.155392 1,155.39
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
1,111.87 0.00 1,111.87 11.19%
1,122.59 0.00 1,122.59 5.95%
1,134.79 0.00 1,134.79 4.31%
1,155.39 0.00 1,155.39 4.11%
</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
12/31/98
G:\ACCTING\SEPARATE\GARCO\SEPACT2\SEC\VANX1298.WK4
- -----------------------------------------------------------------------------------------------------------------------------
Accumulated Unit Value Accumulated
Units Year of For Annual Units Deducted Total Total Surrender
End of Unit Purchased Admin Admin Fee For Annual Accum 12/31/98 Accum Charge
Qtr Value For $1,000 Fee $0.00 Admin Fee Units Unit Value Value Calc
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1.215736 822.547 1997 1.247622 0.000 822.547 0.828049 681.11
1996 1.253925 797.496 1996 1.193226 0.000 797.496 0.828049 660.37
1995 1.077158 928.369 1995 1.015117 0.000 928.369 0.828049 768.74
Incept 1.000000 1,000.000 N/A 0.000000 0.000 1,000.000 0.828049 828.05
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Total Accum Value after Average Annual
Value after Full Deduction for Total Return
Surrender Deduction for Surrender Admin Fee n
Charge Surr Charge Admin Fee (ERV) P(1+T) = ERV
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
681.11 0.00 681.11 -31.89%
660.37 0.00 660.37 -18.74%
768.74 0.00 768.74 -8.39%
828.05 0.00 828.05 -5.13%
</TABLE>
