[Logo omitted]
CONSECO(R)
Step up.(SM)
CONSECO VARIABLE INSURANCE COMPANY
ANNUAL REPORT
TO CONTRACT OWNERS
December 31, 1999
Rydex Advisor Variable Annuity Account
<PAGE>
ANNUAL REPORT TO CONTRACT OWNERS
TABLE OF CONTENTS
DECEMBER 31, 1999
================================================================================
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT PAGE
Statement of Assets and Liabilities as of December 31, 1999 ................ 1
Statements of Operations and Statements of Changes in Net
Assets for the Year Ended December 31, 1999 .............................. 2
Statements of Operations and Statements of Changes in Net
Assets for the Year Ended December 31, 1998 .............................. 4
Notes to Financial Statements .............................................. 6
Report of Independent Accountants .......................................... 8
<PAGE>
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
NET ASSET
SHARES COST VALUE
----------------------------------------
<S> <C> <C> <C>
Assets:
Investments in Rydex Variable Trust
portfolio shares, at net asset value
(Note 2):
Juno Fund............................ 32,758.6 $ 323,327 $ 324,638
Money Market I Fund.................. 99,472,591.6 99,472,592 99,472,592
Nova Fund............................ 1,558,600.7 27,856,548 28,943,215
OTC Fund............................. 1,187,895.2 39,756,609 45,757,725
Precious Metals Fund................. 1,281,499.0 6,781,449 6,958,539
Ursa Fund............................ 2,595,306.8 14,261,585 13,884,891
U.S. Government Bond Fund............ 111,687.8 1,160,223 1,135,865
- ------------------------------------------------------------------------------------
Total assets .................................................. 196,477,465
Liabilities:
Amounts due to Conseco Variable Insurance Company ................. 231,859
- ------------------------------------------------------------------------------------
Net assets (Note 6) ............................................. $196,245,606
====================================================================================
</TABLE>
<TABLE>
<CAPTION>
TOTAL VALUE
UNITS UNIT VALUE OF UNITS
-----------------------------------------
<S> <C> <C> <C>
Net assets attributable to:
Contract owners' deferred annuity reserves:
Juno Fund.............................. 32,805.3 $ 9.888853 $ 324,407
Money Market I Fund.................... 9,198,111.1 10.803201 99,369,046
Nova Fund.............................. 1,500,001.0 19.261022 28,891,553
OTC Fund............................... 1,179,067.2 38.764810 45,706,316
Precious Metals Fund................... 1,261,461.3 5.511048 6,951,974
Ursa Fund.............................. 2,634,307.7 5.264442 13,868,159
U.S. Government Bond Fund.............. 108,631.5 10.44035 41,134,151
- ------------------------------------------------------------------------------------
Net assets .................................................... $196,245,606
====================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
1
<PAGE>
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
JUNO MONEY MARKET I NOVA
------------- ------------------ ----------------
<S> <C> <C> <C>
Investment income:
Dividends from investments in portfolio shares.......................... $ 1,259 $2,473,015 $1,432,826
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees......................................... 4,052 844,997 403,849
Administrative fees..................................................... 486 101,400 48,462
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses........................................................ 4,538 946,397 452,311
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) ..................................... (3,279) 1,526,618 980,515
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized appreciation (depreciation)
on investments:
Net realized gains (losses) on sales of investments in portfolio shares 52,150 -- 4,588,033
Net change in unrealized appreciation (depreciation) of investments
in portfolio shares................................................. 1,256 -- (101,520)
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in portfolio shares................ 53,406 -- 4,486,513
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations........... $50,127 $1,526,618 $5,467,028
====================================================================================================================================
</TABLE>
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
===============================================================================
<TABLE>
<CAPTION>
JUNO MONEY MARKET I NOVA
------------- ------------------ ----------------
<S> <C> <C> <C>
Changes from operations:
Net investment income (loss) .......................................... $ (3,279) $ 1,526,618 $ 980,515
Net realized gains (losses) on sales of investments.................... 52,150 -- 4,588,033
Net change in unrealized appreciation (depreciation) of investments 1,256 -- (101,520)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from operations................ 50,127 1,526,618 5,467,028
- ------------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments......................................... (21,262) 85,873,912 296,134
Contract redemptions................................................... (12,498) (11,608,174) (5,296,942)
Net transfers (to) from fixed account.................................. 239,455 (17,338,357) (815,374)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from contract owners' transactions 205,695 56,927,381 (5,816,182)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets............................ 255,822 58,453,999 (349,154)
Net assets, beginning of year............................................. 68,585 40,915,047 29,240,707
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year.......................................... $324,407 $99,369,046 $28,891,553
====================================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
================================================================================================
U.S. GOVERNMENT COMBINED
OTC PRECIOUS METALS URSA BOND TOTAL
- ----------------- --------------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
$ 861,450 $ 119,893 $ 4,809 $ 99,546 $ 4,992,798
- ------------------------------------------------------------------------------------------------
365,599 26,638 157,352 34,166 1,836,653
43,872 3,197 18,882 4,100 220,399
- ------------------------------------------------------------------------------------------------
409,471 29,835 176,234 38,266 2,057,052
- ------------------------------------------------------------------------------------------------
451,979 90,058 (171,425) 61,280 2,935,746
- ------------------------------------------------------------------------------------------------
15,895,402 (475,456) (1,852,494) (891,286) 17,316,349
4,633,471 165,850 (387,125) 20,040 4,331,972
- ------------------------------------------------------------------------------------------------
20,528,873 (309,606) (2,239,619) (871,246) 21,648,321
- ------------------------------------------------------------------------------------------------
$20,980,852 $(219,548) $ (2,411,044) $ (809,966) $ 24,584,067
================================================================================================
</TABLE>
================================================================================
<TABLE>
<CAPTION>
================================================================================================
U.S. GOVERNMENT COMBINED
OTC PRECIOUS METALS URSA BOND TOTAL
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 451,979 $ 90,058 $ (171,425) $ 61,280 $ 2,935,746
15,895,402 (475,456) (1,852,494) (891,286) 17,316,349
4,633,471 165,850 (387,125) 20,040 4,331,972
- ------------------------------------------------------------------------------------------------
20,980,852 (219,548) (2,411,044) (809,966) 24,584,067
- ------------------------------------------------------------------------------------------------
161,658 16,130 52,449 (69) 86,378,952
(1,441,469) (84,954) (1,041,446) (250,760) (19,736,243)
3,995,020 4,547,102 11,762,414 (2,773,324) (383,064)
- ------------------------------------------------------------------------------------------------
2,715,209 4,478,278 10,773,417 (3,024,153) 66,259,645
- ------------------------------------------------------------------------------------------------
23,696,061 4,258,730 8,362,373 (3,834,119) 90,843,712
22,010,255 2,693,244 5,505,786 4,968,270 105,401,894
- ------------------------------------------------------------------------------------------------
$45,706,316 $6,951,974 $13,868,159 $ 1,134,151 $196,245,606
================================================================================================
</TABLE>
3
<PAGE>
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
=================================================================================================================================
JUNO MONEY MARKET I NOVA
----------------------- ----------------------- ----------------------
1998(1) 1998(2) 1998(1) 1998(2) 1998 (1) 1998 (2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Interest received from investments in securities $ 8,048 $ -- $1,176,135 $ -- $ 422,178 --
Dividends from investments in securities....... -- -- -- -- 9,338 --
Dividends from investments in portfolio shares. -- -- -- 213,242 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total investment income.................. 8,048 -- 1,176,135 213,242 431,516 --
- ---------------------------------------------------------------------------------------------------------------------------------
Expenses:
Mortality and expense risk fees................ 1,918 301 271,471 82,392 151,616 38,807
Administrative fees............................ 230 36 32,576 9,887 18,194 4,657
Other expenses................................. 3,505 -- 347,483 -- 263,278 --
- ---------------------------------------------------------------------------------------------------------------------------------
Total expenses............................. 5,653 337 651,530 92,279 433,088 43,464
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) ............ 2,395 (337) 524,605 120,963 (1,572) (43,464)
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) and unrealized
appreciation (depreciation) on investments:
Net realized gains (losses) on sales of
investments in securities.................. (21,692) -- -- -- (1,384,843) --
Net change in unrealized appreciation
(depreciation) of investments in securities 1,819 -- -- -- 944,617 --
- ---------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in securities (19,873) -- -- -- (440,226) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized gains (losses) on sales of
investments in portfolio shares............ -- 3,144 -- -- -- 3,861,765
Net change in unrealized appreciation
(depreciation) of investments in portfolio
shares......... -- (1,765) -- -- -- 44,652
- ---------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments in portfolio
shares -- 1,379 -- -- -- 3,906,417
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets from
operations $ (17,478) $1,042 $ 524,605 $120,963 $(441,798) $3,862,953
=================================================================================================================================
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
- -----------------------------------------------------=------------------------------------------------------------------------------
JUNO MONEY MARKET I NOVA
--------------------- --------------------------- ------------------------
1998(1) 1998(2) 1998(1) 1998(2) 1998 (1) 1998 (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Changes from operations:
Net investment income (loss) .................. $ 2,395 $ (337) $ 524,605 $ 120,963 $ (1,572) $ (43,464)
Net realized gains (losses) on sales
of investments .............................. (21,692) 3,144 -- -- (1,384,843) 3,861,765
Net change in unrealized appreciation
(depreciation) of investments................ 1,819 (1,765) -- -- 944,617 44,652
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations.......................... (17,478) 1,042 524,605 120,963 (441,798) 3,862,953
- ------------------------------------------------------------------------------------------------------------------------------------
Changes from contract owners' transactions:
Net contract purchase payments................. 2,976 (1,219) 53,901,012 15,009,398 79,915 15,146
Contract redemptions........................... (1,268) -- (4,910,715) (1,866,343) (810,397) (181,590)
Net transfers (to) from fixed account.......... 111,042 (26,510) (35,290,688) (4,476,557) 15,083,137 1,185,305
Net assets combined with Rydex Variable........ (95,272) 95,272 (32,127,586) 32,127,586 (24,358,893) 24,358,893
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from contract owners' transactions....... 17,478 67,543 (18,427,977) 40,794,084 (10,006,238) 25,377,754
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets.. -- 68,585 (17,903,372) 40,915,047 (10,448,036) 29,240,707
Net assets, beginning of period................... -- -- 17,903,372 -- 10,448,036 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period...................... $ -- $68,585 $ -- $40,915,047 $ -- $29,240,707
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Period from January 1, 1998 through November 1, 1998.
(2) Period from November 2, 1998 through December 31, 1998.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================== ==============
OTC PRECIOUS METALS URSA U.S. GOVERNMENT BOND
- ------------------------- ----------------------- ------------------------- ------------------------ COMBINED
1998 (1) 1998 (2) 1998 (1) 1998 (2) 1998 (1) 1998 (2) 1998 (1) 1998 (2) TOTAL
- -------------------------------------------------------------------------------------------------------------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 22,106 $ -- $ 220 $ -- $ 219,060 $ -- $ 12,680 $ -- $ 1,860,427
5,412 -- 6,396 -- -- -- 48,402 -- 69,548
-- -- -- -- -- -- -- 18,808 232,050
- -------------------------------------------------------------------------------------------------------------------- --------------
27,518 -- 6,616 -- 219,060 -- 61,082 18,808 2,162,025
- -------------------------------------------------------------------------------------------------------------------- --------------
119,669 44,062 9,169 3,179 64,878 6,133 16,279 8,821 818,695
14,360 5,287 1,100 381 7,785 736 1,953 1,059 98,241
199,277 -- 16,991 -- 107,515 -- 23,416 -- 961,465
- -------------------------------------------------------------------------------------------------------------------- --------------
333,306 49,349 27,260 3,560 180,178 6,869 41,648 9,880 1,878,401
- -------------------------------------------------------------------------------------------------------------------- --------------
(305,788) (49,349) (20,644) (3,560) 38,882 (6,869) 19,434 8,928 283,624
- -------------------------------------------------------------------------------------------------------------------- --------------
465,853 -- 53,198 -- (1,045,533) -- 118,373 -- (1,814,644)
3,223,602 -- 19,034 -- (108,381) -- (46,092) -- 4,034,599
- -------------------------------------------------------------------------------------------------------------------- --------------
3,689,455 -- 72,232 -- (1,153,914) -- 72,281 -- 2,219,955
- -------------------------------------------------------------------------------------------------------------------- --------------
-- 6,486,749 -- (374,013) -- (698,391) -- (120,247) 9,159,007
-- (1,750,156) -- (47,697) -- 196,135 -- (14,939) (1,573,770)
- -------------------------------------------------------------------------------------------------------------------- ------------
-- 4,736,593 -- (421,710) -- (502,256) -- (135,186) 7,585,237
- -------------------------------------------------------------------------------------------------------------------- ------------
$3,383,667 $4,687,244 $51,588 $(425,270) $(1,115,032) $(509,125) $ 91,715 $(126,258) $10,088,816
==================================================================================================================== ============
<CAPTION>
=================================================================================================================== ===============
OTC PRECIOUS METALS URSA U.S. GOVERNMENT BOND
------------------------- ----------------------- ------------------------- ------------------------ COMBINED
1998 (1) 1998 (2) 1998 (1) 1998 (2) 1998 (1) 1998 (2) 1998 (1) 1998 (2) TOTAL
- ------------------------------------------------------------------------------------------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (305,788) $ (49,349) $ (20,644) $ (3,560) $ 38,882 $ (6,869) $ 19,434 $ 8,928 $ 283,624
465,853 6,486,749 53,198 (374,013) (1,045,533) (698,391) 118,373 (120,247) 7,344,363
3,223,602 (1,750,156) 19,034 (47,697) (108,381) 196,135 (46,092) (14,939) 2,460,829
- ------------------------------------------------------------------------------------------------------------------- ---------------
3,383,667 4,687,244 51,588 (425,270) (1,115,032) (509,125) 91,715 (126,258) 10,088,816
- ------------------------------------------------------------------------------------------------------------------- ---------------
30,385 110,289 (657) 116 22,859 27,689 69 5,674 69,203,652
(346,725) (142,043) (10,139) (1,984) (400,593) (3,285) (23,708) (8,977) (8,707,767)
10,730,100 1,189,933 608,988 1,952,692 4,285,421 319,008 4,269,799 (132,063) (190,393)
(16,164,832) 16,164,832 (1,167,690) 1,167,690 (5,671,499) 5,671,499 (5,229,894) 5,229,894 --
- ------------------------------------------------------------------------------------------------------------------- ---------------
(5,751,072) 17,323,011 (569,498) 3,118,514 (1,763,812) 6,014,911 (983,734) 5,094,528 60,305,492
- ------------------------------------------------------------------------------------------------------------------- ---------------
(2,367,405) 22,010,255 (517,910) 2,693,244 (2,878,844) 5,505,786 (892,019) 4,968,270 70,394,308
2,367,405 -- 517,910 -- 2,878,844 -- 892,019 -- 35,007,586
- ------------------------------------------------------------------------------------------------------------------- ---------------
$ -- $22,010,255 $ -- $2,693,244 $ -- $ 5,505,786 $ -- $4,968,270 $105,401,894
=================================================================================================================== ===============
</TABLE>
5
<PAGE>
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
================================================================================
(1) GENERAL
Rydex Advisor Variable Annuity Account (the "Account") is registered under
the Investment Company Act of 1940, as amended, as a unit investment trust. The
Account was established on April 15, 1996, as a segregated investment account
for individual variable annuity contracts issued by Conseco Variable Insurance
Company (the "Company") and commenced operations on May 7, 1997. The Account was
originally registered as a diversified, open-ended investment company. On
November 2, 1998, the Account was reorganized as a unit investment trust
pursuant to an Agreement and Plan of Reorganization approved by the contract
owners of the Account on October 26, 1998 (the "Reorganization"). On November 2,
1998, the Account transferred its assets into the corresponding portfolios of
the Rydex Variable Trust in exchange for shares of the portfolios. The
respective interests of the contract owners in the Account immediately after the
Reorganization were equal to their interests in the Juno, Money Market I, Nova,
OTC, Precious Metals, Ursa and the U.S. Government Bond subaccounts immediately
before the Reorganization.
The operations of the Account 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.
Since November 2, 1998, the Account invests solely in the Rydex Variable
Trust (the "Trust"). The Trust consists of seven funds: Juno, Money Market,
Nova, OTC, Precious Metals, Ursa and U.S. Government Bond. The Trust is managed
by PADCO Advisors II, Inc. ("PADCO").
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 amounts of increases and decreases in net assets
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 funds of the Trust 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. Prior to November 2, 1998, interest
income was accrued on a daily basis. The cost of investments in portfolio shares
sold is determined on a first-in first-out basis. The Account 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
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 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 Account and are not
taxable until received by the contract owner or beneficiary in the form of
annuity payments or other distributions.
ANNUITY RESERVES
Deferred annuity contract reserves are comprised of net contract purchase
payments less redemptions and benefits. These reserves are adjusted daily for
the net investment income and net realized gains (losses) and unrealized
appreciation (depreciation) on investments.
(3) PURCHASES AND SALES OF INVESTMENTS IN SECURITIES AND INVESTMENTS IN
PORTFOLIO SHARES
The aggregate cost of purchases of investments in portfolio shares was
$1,908,414,033 for the year ended December 31, 1999. The aggregate proceeds from
sales of investments in portfolio shares were $1,839,092,968 for the year ended
December 31, 1999.
For the period November 2, 1998 through December 31, 1998, the aggregate
cost of purchases of investments in portfolio shares was $297,900,921 (including
transfers related to the Reorganization of $80,508,735). For the period November
2, 1998 through December 31, 1998, the aggregate proceeds from sales of
investments in portfolio shares was $204,085,011.
The aggregate cost of purchases of investments in securities was
$116,032,035 for the period January 1, 1998 through November 1, 1998. The
aggregate proceeds from sales of investments in securities were $120,715,273 for
the period January 1, 1998 through November 1, 1998.
(4) DEDUCTIONS AND EXPENSES
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
contract administrative charges and transfer processing fees may prove
insufficient to cover the actual administrative and transfer processing
expenses. The Company deducts daily from the Account a fee, which is equivalent
on an annual basis to 1.25 percent of the daily value of the total investments
of the Account, for assuming the mortality and expense risks. These fees were
$1,836,653 and $818,695 for the years ended December 31, 1999, and 1998,
respectively.
The Company provides sales and administrative services to the Account. The
Company may deduct a percentage of amounts surrendered to cover sales expenses.
The percentage varies up to 7.00 percent based upon the number of years the
contract has been held. The total fees for the Account were $690,992 and
$344,498 for the years ended December 31, 1999 and 1998, respectively. The
Company also deducts daily from the Account a fee, which is equivalent on an
annual basis to 0.15 percent of the daily value of the total investments of the
Account for administrative expenses. These
6
<PAGE>
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1999 AND 1998
================================================================================
fees were $220,399 and $98,241 for the years ended December 31, 1999 and 1998,
respectively.
Under the terms of an investment advisory contract, the Account paid PADCO
investment advisory fees calculated at an annual percentage rate of 0.50 percent
of the average net assets of the Money Market and the U.S. Government Bond
subaccounts, 0.75 percent of the average net assets of the Nova, Precious Metals
and OTC subaccounts, and 0.90 percent of the average net assets of the Ursa and
the Juno subaccounts.
PADCO Services, Inc. (the "Servicer") provided tactical allocation
administrative services to the Account calculated at an annual percentage rate
of 0.20 percent of the average net assets of the Money Market, U.S. Government,
Precious Metals and the OTC subaccounts; and at an annual rate of 0.25 percent
of the average net assets of the Nova, Ursa and the Juno subaccounts. The
Servicer also provided other necessary services to the Account, such as
accounting and auditing services, custody, printing and mailing, etc. during
these periods.
PADCO and the Servicer voluntarily agreed to waive their investment advisory
and tactical allocation administrative service fees and, if necessary, to
reimburse any subaccount expenses which would cause the ratios of expenses to
average net assets to exceed 3.60 percent in the Nova, OTC and Precious Metals
subaccounts, 3.70 percent in the Juno and Ursa subaccounts, 3.00 percent in the
Money Market subaccount, and 3.20 percent in the U.S. Government subaccount
effective January 1, 1998.
The investment advisory fees were $331,465 during the period January 1, 1998
through November 1, 1998 and the Account was reimbursed $85,124 from PADCO for
this period. Expenses paid to the Servicer during the January 1, 1998 through
November 1, 1998 period were $200,318 and the Account was reimbursed $20,511 for
this period. Both expenses are reported as other expenses in the Statement of
Operations.
(5) OTHER TRANSACTIONS WITH AFFILIATES
Conseco Equity Sales, Inc., a wholly owned subsidiary of Conseco, Inc., acts
as principal underwriter for the Account.
(6) NET ASSETS
Net assets consisted of the following at December 31, 1999:
================================================================================
Proceeds from the sales of units since organization,
less cost of units redeemed ...................................
$161,866,440
Undistributed net investment income ........................... 3,451,188
Undistributed net realized gain on sales of investments ....... 24,062,846
Net unrealized appreciation of investments .................... 6,865,132
- --------------------------------------------------------------------------------
Net assets ............................................... $196,245,606
================================================================================
7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
TO THE BOARD OF DIRECTORS OF CONSECO VARIABLE
INSURANCE COMPANY AND CONTRACT OWNERS OF
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
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 Rydex Advisor Variable
Annuity Account (the "Account") at December 31, 1999, and the results of its
operations for the year ended December 31, 1999 and the changes in its net
assets for each of the two years in the period then ended, in conformity with
accounting principles generally accepted in the United States. 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 auditing standards generally accepted in the United States, 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, 1999 by correspondence with the funds,
provides a reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
Indianapolis, Indiana
February 10, 2000
8
<PAGE>
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9
<PAGE>
[BLANK]
10
<PAGE>
================================================================================
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
SPONSOR
Conseco Variable Insurance Company - Carmel, Indiana.
DISTRIBUTOR
Conseco Equity Sales, Inc.- Carmel, Indiana.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP - Indianapolis, Indiana.
11
<PAGE>
RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT 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
CV-211 (2/00) 05961
(C) 1999 Conseco Variable Insurance Company
www.conseco.com
INSURANCE INVESTMENTS LENDING [CONSECO LOGO(SM)]
- ------------------------------------------------------------- CONSECO(R)
Step Up.(SM)
