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CONSECO VARIABLE INSURANCE COMPANY
FORMERLY
GREAT AMERICAN RESERVE INSURANCE COMPANY
SEMIANNUAL REPORT
TO CONTRACT OWNERS
JUNE 30, 1999
Conseco Variable Annuity Account G
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SEMIANNUAL REPORT TO CONTRACT OWNERS
TABLE OF CONTENTS
JUNE 30, 1999
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CONSECO VARIABLE ANNUITY ACCOUNT G PAGE
Statement of Assets and Liabilities as of June 30, 1999....................... 2
Statements of Operations for the Six Months Ended June 30, 1999,
and the Period April 29, 1998 through December 31, 1998.................... 4
Statements of Changes in Net Assets for the Six Months Ended June 30, 1999,
and the Period April 29, 1998 through December 31, 1998.................... 4
Notes to Financial Statements................................................. 5
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CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
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NET ASSET
SHARES COST VALUE
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Assets:
Investments in portfolio shares (Note 2):
The Alger American Fund:
Growth Portfolio................................................................ 3,566.4 $ 186,781 $ 199,150
Leveraged AllCap Portfolio...................................................... 6,028.9 228,879 246,402
MidCap Growth Portfolio......................................................... 1,771.3 46,247 48,887
Small Capitalization Portfolio.................................................. 322.7 13,660 14,062
American Century Variable Portfolios, Inc.:
Income and Growth Fund.......................................................... 4,490.5 32,171 33,409
International Fund.............................................................. 1,583.3 11,985 12,951
Value Fund...................................................................... 9,305.8 60,416 63,187
Berger Institutional Products Trust:
100 Fund........................................................................ 653.2 8,477 9,276
Growth and Income Fund.......................................................... 7,675.7 131,123 151,057
Small Company Growth Fund....................................................... 226.2 2,795 3,214
BIAM International Fund......................................................... 49.2 571 586
Conseco Series Trust:
Balanced Portfolio.............................................................. 12,458.9 165,330 179,712
Equity Portfolio................................................................ 1,641.3 32,892 39,255
Fixed Income Portfolio.......................................................... 12,520.2 125,199 119,897
Government Securities Portfolio................................................. 5,177.8 61,806 58,466
Money Market Portfolio.......................................................... 2,014,173.6 2,014,174 2,014,174
Dreyfus Stock Index Fund.......................................................... 7,186.1 251,671 259,489
The Dreyfus Socially Responsible Growth Fund, Inc................................. 718.5 22,672 25,184
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio..................................................... 995.4 23,301 25,233
International Value Portfolio................................................... 523.8 7,137 7,600
Federated Insurance Series:
High Income Bond Fund II........................................................ 21,236.9 223,389 218,103
International Equity Fund II.................................................... 182.6 2,829 2,908
Utility Fund II................................................................. 5,640.2 81,802 81,952
Invesco Variable Investment Funds, Inc.:
High Yield Fund................................................................. 704.0 8,732 8,463
Equity Income Fund.............................................................. 598.1 11,535 12,663
Janus Aspen Series:
Aggressive Growth Portfolio..................................................... 2,596.3 86,436 89,884
Growth Portfolio................................................................ 6,311.8 169,160 172,248
Worldwide Growth Portfolio...................................................... 6,840.7 205,856 223,965
Lazard Retirement Series, Inc.:
Equity Portfolio................................................................ 1,803.2 20,517 22,287
Small Cap Portfolio............................................................. 89.1 850 950
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio..................................................... 2,329.8 47,570 55,239
Neuberger Berman Advisers Management Trust:
Limited Maturity Bond Portfolio................................................. 1,433.9 18,992 18,770
Partners Portfolio.............................................................. 445.4 8,338 9,228
Strong Variable Insurance Funds, Inc.:
Mid Cap Growth Fund II.......................................................... 3,203.0 59,814 65,340
Strong Opportunity Fund II, Inc................................................... 2,746.5 60,577 63,335
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund............................................................. 1,727.8 20,829 18,626
Worldwide Emerging Markets Fund................................................. 1,529.7 13,641 15,894
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Total assets............................................................................................... 4,591,046
Liabilities:
Amounts due to Conseco Variable Insurance Company................................................................ 4,786
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Net assets (Note 6)........................................................................................ $4,586,260
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</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
JUNE 30, 1999
(UNAUDITED)
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UNIT TOTAL VALUE
UNITS VALUE OF UNITS
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Net assets attributable to:
Contract owners' deferred annuity reserves
The Alger American Fund:
Growth Portfolio................................................................ 9,813.9 $ 20.245983 $ 198,693
Leveraged AllCap Portfolio...................................................... 10,620.9 23.175671 246,148
MidCap Growth Portfolio......................................................... 2,828.0 17.267291 48,831
Small Capitalization Portfolio.................................................. 867.0 16.199663 14,046
American Century Variable Portfolios, Inc.:
Income and Growth Fund.......................................................... 2,802.9 11.806661 33,093
International Fund.............................................................. 1,249.1 10.356311 12,936
Value Fund...................................................................... 6,024.8 10.475523 63,113
Berger Institutional Products Trust:
100 Fund........................................................................ 871.7 10.628735 9,265
Growth and Income Fund.......................................................... 11,477.5 13.149886 150,928
Small Company Growth Fund....................................................... 316.2 10.154043 3,210
BIAM International Fund......................................................... 55.5 10.547551 586
Conseco Series Trust:
Balanced Portfolio.............................................................. 12,771.1 14.055317 179,502
Equity Portfolio................................................................ 2,411.1 16.262197 39,209
Fixed Income Portfolio.......................................................... 10,926.6 10.960096 119,757
Government Securities Portfolio................................................. 5,358.1 10.897791 58,391
Money Market Portfolio.......................................................... 185,920.4 10.829919 2,013,503
Dreyfus Stock Index Fund.......................................................... 21,199.1 12.215951 258,967
The Dreyfus Socially Responsible Growth Fund, Inc................................. 2,026.6 12.413123 25,156
Dreyfus Variable Investment Fund:
Disciplined Stock Portfolio..................................................... 2,141.0 11.772201 25,204
International Value Portfolio................................................... 739.2 10.268734 7,591
Federated Insurance Series:
High Income Bond Fund II........................................................ 21,796.7 9.996530 217,891
International Equity Fund II.................................................... 203.1 14.303483 2,905
Utility Fund II................................................................. 7,336.1 11.158046 81,857
Invesco Variable Investment Funds, Inc,:
High Yield Fund................................................................. 704.4 12.000062 8,453
Equity Income Fund.............................................................. 814.4 15.531268 12,648
Janus Aspen Series:
Aggressive Growth Portfolio..................................................... 5,911.4 15.189576 89,792
Growth Portfolio................................................................ 12,812.8 13.405735 171,765
Worldwide Growth Portfolio...................................................... 19,001.4 11.775927 223,759
Lazard Retirement Series, Inc.:
Equity Portfolio................................................................ 1,896.9 11.735863 22,261
Small Cap Portfolio............................................................. 99.6 9.531854 949
Lord Abbett Series Fund, Inc.:
Growth and Income Portfolio..................................................... 3,727.3 14.802600 55,174
Neuberger Berman Advisers Management Trust:
Limited Maturity Bond Portfolio................................................. 1,850.5 10.131350 18,748
Partners Portfolio.............................................................. 882.4 10.445516 9,217
Strong Variable Insurance Funds, Inc.:
Mid Cap Growth Fund II.......................................................... 4,464.6 14.615769 65,254
Strong Opportunity Fund II, Inc................................................... 5,546.7 11.354093 62,977
Van Eck Worldwide Insurance Trust:
Worldwide Bond Fund............................................................. 1,856.5 10.020650 18,604
Worldwide Emerging Markets Fund................................................. 2,090.1 7.596000 15,877
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Net assets attributable to contract owners' deferred annuity reserves ..................................... $4,586,260
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</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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CONSECO VARIABLE ANNUITY ACCOUNT G
STATEMENTS OF OPERATIONS
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PERIOD FROM
SIX MONTHS APRIL 29, 1998
ENDED THROUGH
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
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Investment income:
Dividends from investments in portfolio shares ................................................... $ 103,506 $ 14,460
Expenses:
Mortality and expense risk fees .................................................................. 15,254 4,243
Administrative fees .............................................................................. 1,990 509
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Total expenses ................................................................................. 17,244 4,752
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Net investment income ........................................................................ 86,262 9,708
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Net realized gains (losses) and unrealized appreciation (depreciation) on
investments:
Net realized gains (losses) on sales of investments in portfolio shares .......................... 58,896 (17,454)
Net change in unrealized appreciation of investments in portfolio shares ......................... 39,338 83,555
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Net gain on investments in portfolio shares .................................................... 98,234 66,101
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Net increase in net assets from operations ................................................... $ 184,496 $ 75,809
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STATEMENTS OF CHANGES IN NET ASSETS
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<CAPTION>
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PERIOD FROM
SIX MONTHS APRIL 29, 1998
ENDED THROUGH
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
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<S> <C> <C>
Changes from operations:
Net investment income ............................................................................ $ 86,262 $ 9,708
Net realized gains (losses) on sales of investments in portfolio shares .......................... 58,896 (17,454)
Net change in unrealized appreciation of investments in portfolio shares ......................... 39,338 83,555
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Net increase in net assets from operations ..................................................... 184,496 75,809
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Changes from contract owners' transactions:
Net contract purchase payments ................................................................... 3,209,744 1,205,517
Contract redemptions ............................................................................. (57,378) (31,928)
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Net increase in net assets from contract owners' transactions .................................. 3,152,366 1,173,589
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Net increase in net assets ................................................................... 3,336,862 1,249,398
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Net assets, beginning of period .................................................................... 1,249,398 --
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Net assets, end of period .................................................................... $4,586,260 $1,249,398
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</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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CONSECO VARIABLE ANNUITY ACCOUNT G
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
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(1) GENERAL
Conseco Variable Insurance Company (the "Company") established two separate
accounts within Conseco Variable Annuity Account G (formerly Great American
Reserve Account G) ("Account G"). Both accounts were established on September
26, 1997, and commenced operations on April 29, 1998. Account G is a segregated
investment account for individual and group variable annuity contracts which are
registered under the Securities Act of 1933. One account, also named Conseco
Variable Annuity Account G ("Variable Account"), which serves the variable
annuity portion of the contract, is registered under the Investment Company Act
of 1940, as amended, as a unit investment trust. The other account, Conseco
Variable Market Value Adjustment Account ("MVA"), offers investment options
which pay fixed rates of interest as declared by the Company for specified
periods (one, three and five years) from the date amounts are allocated to the
MVA. The MVA is not registered as an investment company under the Investment
Company Act of 1940. The operations of the separate accounts are included in the
operations of 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.
Besides the three investment options of the MVA, the following investment
Variable Account options are currently available:
THE ALGER AMERICAN FUND
Growth Portfolio
Leveraged AllCap Portfolio
MidCap Portfolio
Small Capitalization Portfolio
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
Income and Growth Fund
International Fund
Value Fund
BERGER INSTITUTIONAL PRODUCTS TRUST
100 Fund
Growth and Income Fund
Small Company Growth Fund
BIAM International Fund
CONSECO SERIES TRUST
Balanced Portfolio
Equity Portfolio
Fixed Income Portfolio
Government Securities Portfolio
Money Market Portfolio
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
DREYFUS STOCK INDEX FUND
DREYFUS VARIABLE INVESTMENT FUND
International Value Portfolio
Disciplined Stock Portfolio
FEDERATED INSURANCE SERIES
High Income Bond Fund II
International Equity Fund II
Utility Fund II
INVESCO VARIABLE INVESTMENT FUNDS, INC.
High Yield Fund
Equity Income Fund
JANUS ASPEN SERIES
Aggressive Growth Portfolio
Growth Portfolio
Worldwide Growth Portfolio
LAZARD RETIREMENT SERIES, INC.
Equity Portfolio
Small Cap Portfolio
LORD ABBETT SERIES FUND, INC.
Growth and Income Portfolio
MITCHELL HUTCHINS SERIES TRUST
Growth and Income Portfolio
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Limited Maturity Bond Portfolio
Partners Portfolio
STRONG VARIABLE INSURANCE FUNDS, INC.
Mid Cap Growth Fund II
STRONG OPPORTUNITY FUND II, INC.
VAN ECK WORLDWIDE INSURANCE TRUST
Worldwide Bond Fund
Worldwide Emerging Markets Fund
Worldwide Hard Assets Fund
Worldwide Real Estate Fund
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 G 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 the
Variable Account 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 the separate account 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 the Variable
Account and are not taxable until received by the contract owner or beneficiary
in the form of annuity payments or other distributions.
5
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GREAT AMERICAN RESERVE VARIABLE ANNUITY ACCOUNT G
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
JUNE 30, 1999
(UNAUDITED)
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(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
$6,971,333 and $1,908,738 for the six months ended June 30, 1999, and for the
period April 29, 1998 through December 31, 1998, respectively. The aggregate
proceeds from sales of investments in portfolio shares were $3,729,247 and
$724,111 for the six months ended June 30, 1999, and for the period April 29,
1998 through December 31, 1998, 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 the Variable Account a fee, which is equal on
an annual basis to 1.15 percent of the daily value of the total investments of
the Variable Account, for assuming the mortality and expense risks. These fees
were $15,254 and $4,243 for the six months ended June 30, 1999, and for the
period April 29, 1998 through December 31, 1998, respectively.
Pursuant to an agreement between the Variable Account and the Company (which
may be terminated by the Company at any time), the Company provides sales and
administrative services to Account G, as well as a minimum death benefit prior
to retirement for the contracts. 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 Statements of Changes in Net
Assets. There were no sales and administrative charges for six months ended June
30, 1999, and for the period April 29, 1998, through December 31, 1998. The
Company also deducts daily from the Variable Account a fee, which is equal on an
annual basis to 0.15 percent of the daily value of the total investments of the
Variable Account, for administrative expenses. These expenses were $1,990 and
$509 for the six months ended June 30, 1999, and for the period April 29, 1998,
through December 31, 1998, respectively.
The MVA account is subject to a market value adjustment if the amounts are
withdrawn prior to the end of the specified period with certain exceptions. This
adjustment can be positive or negative depending on the changes in the U.S.
Treasury rates during the holding period of the MVA contract. There were no
charges for the six months ended June 30, 1999, and for the period April 29,
1998, through December 31, 1998.
(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 June 30, 1999:
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Proceeds from the sales of units since organization,
less cost of units redeemed.................................... $ 4,325,956
Undistributed net investment income............................... 95,970
Undistributed net realized gain on sales of investments .......... 41,442
Net unrealized appreciation of investments........................ 122,892
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Net assets................................................. $ 4,586,260
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CONSECO VARIABLE ANNUITY ACCOUNT G
SPONSOR
Conseco Variable Insurance Company - Carmel, Indiana.
DISTRIBUTOR
Conseco Equity Sales, Inc. - Carmel, Indiana.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP - Indianapolis, Indiana.
9
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VARIABLE ANNUITY ACCOUNT G IS ISSUED BY CONSECO VARIABLE INSURANCE COMPANY.
THE PRODUCT IS UNDERWRITTEN, AND THE SECURITIES WITHIN ARE OFFERED, BY CONSECO
EQUITY SALES, INC., A BROKER-DEALER FOR CONSECO VARIABLE INSURANCE COMPANY.
BOTH COMPANIES ARE SUBSIDIARIES OF CONSECO, INC., A FINANCIAL SERVICES
ORGANIZATION HEADQUARTERED IN CARMEL, INDIANA. CONSECO, THROUGH ITS SUBSIDIARY
COMPANIES, IS ONE OF MIDDLE AMERICA'S LEADING SOURCES FOR INSURANCE, INVESTMENT
AND LENDING PRODUCTS, HELPING 12 MILLION CUSTOMERS STEP UP TO A BETTER, MORE
SECURE FUTURE.
CONSECO EQUITY SALES, INC., IS A MEMBER OF THE NASD.
CONSECO VARIABLE INSURANCE COMPANY
11815 North Pennsylvania Street
Carmel, Indiana 46032
05-8437 (8/99) 05963
(C) 1999 Conseco Variable Insurance Company
www.conseco.com
INSURANCE INVESTMENTS LENDING
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