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WASHINGTON NATIONAL INSURANCE COMPANY
ANNUAL REPORT
TO CONTRACT OWNERS
DECEMBER 31, 1999
Washington National Variable Annuity Fund A
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ANNUAL REPORT TO CONTRACT OWNERS
TABLE OF CONTENTS
DECEMBER 31, 1999
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WASHINGTON NATIONAL VARIABLE ANNUITY FUND A PAGE
Statement of Assets and Liabilities
as of December 31, 1999 .................................................... 1
Statements of Operations for the Years Ended
December 31, 1999 and 1998 ................................................. 2
Statements of Changes in Net Assets for the Years
Ended December 31, 1999 and 1998 ........................................... 2
Notes to Financial Statements ................................................ 3
Report of Independent Accountants ............................................ 4
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WASHINGTON NATIONAL VARIABLE ANNUITY FUND A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
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NET ASSET
VALUE
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Assets:
Investments in portfolio shares at net asset value (Note 2):
Fundamental Investors, 200,663 shares (cost-- $2,036,427)... $6,539,607
Net amount due from Washington National Insurance Company..... 4,325
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Total assets.............................................. $6,543,932
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TOTAL VALUE
UNITS UNIT VALUE OF UNITS
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Net assets attributable to:
Contract owners' deferred annuity reserves:
Fundamental Investors..................... 233,682.5 $27.821290 $6,501,349
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Net assets attributable to contract
owners' deferred annuity reserves ........................... 6,501,349
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Contract owners' annuity payment reserves:
Fundamental Investors.......................................... 42,583
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Net assets attributable to contract
owners' annuity payment reserves.......................... 42,583
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Net assets................................................. $6,543,932
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The accompanying notes are an integral part of these financial statements.
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WASHINGTON NATIONAL VARIABLE ANNUITY FUND A
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
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1999 1998
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Investment income:
Dividends from investments in portfolio shares ....... $ 608,282 $ 583,538
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Expenses:
Mortality and expense risk fees ...................... 62,560 58,742
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Net investment income .............................. 545,722 524,796
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Net realized gains (losses) and unrealized appreciation
(depreciation) of investments in portfolio shares:
Net realized gains on sales of investments in
portfolio shares ................................... 70,356 8,618
Net change in unrealized appreciation of investments
in portfolio shares ................................ 681,954 301,890
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Net gain on investments in portfolio shares ........ 752,310 310,508
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Net increase in net assets from operations ....... $1,298,032 $ 835,304
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STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
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1999 1998
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Changes from operations:
Net investment income ................................ $ 545,722 $ 524,796
Net realized gains on sales of investments in
portfolio shares 70,356 8,618
Net change in unrealized appreciation of investments
in portfolio shares 681,954 301,890
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Net increase in net assets from operations ......... 1,298,032 835,304
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Changes from contract owners' transactions:
Net contract purchase payments ....................... 3,332 49,795
Contract redemptions ................................. (904,506) (162,307)
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Net decrease in net assets from contract owners'
transactions (901,174) (112,512)
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Net increase in net assets ....................... 396,858 722,792
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Net assets, beginning of year ........................... 6,147,074 5,424,282
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Net assets, end of year .......................... $6,543,932 $6,147,074
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The accompanying notes are an integral part of these financial statements.
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WASHINGTON NATIONAL VARIABLE ANNUITY FUND A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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(1) GENERAL
The Washington National Variable Annuity Fund A (the "Fund") is a segregated
investment account for individual variable annuity contracts which are
registered under the Securities Act of 1933. The Fund is registered as a unit
investment trust under the Investment Company Act of 1940, as amended. The Fund
invests solely in shares of Fundamental Investors, Inc., a diversified open-end
management investment company.
The operations of the Fund are included in the operations of Washington
National Insurance Company (the "Company") pursuant to the provisions of the
Illinois 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.
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 as of the date of the financial statements and
the reported amounts of 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
Fundamental Investors, Inc., 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 last-in first-out basis. The Fund 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
Fund 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 Fund 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 Fund 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.
Annuity payment reserves for contracts under which contract owners are
receiving periodic retirement payments are computed according to the Progressive
Annuity Mortality Table. The assumed net investment rate is equal to the assumed
rate of accumulation. The annuity unit values for periodic retirement payments
were $11.113946 and $8.984344 for the years ended December 31, 1999 and 1998,
respectively.
3) PURCHASES AND SALES OF INVESTMENTS IN PORTFOLIO SHARES
The aggregate cost of purchases of investments in portfolio shares for the
years ended December 31, 1999 and 1998, was $608,282 and $629,772, respectively.
The aggregate proceeds from sales of investments in portfolio shares for the
years ended December 31, 1999 and 1998, were $960,385 and $219,498,
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
expense or mortality experience because the Company assumes the mortality risk
and the expense risk 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
contract administrative charges may prove insufficient to cover the actual
expenses.
The Company deducts daily from the Fund a fee, which is equal on an annual
basis to 1.022 percent of the daily value of the total investments of the Fund,
for assuming the mortality and expense risks. These fees were $62,560 and
$58,742 for the years ended December 31, 1999 and 1998, respectively.
The Company deducts a sales and administrative charge from each purchase
payment in the amount of 6 percent of such purchase payment plus $0.50 for
administrative expenses, but the total combined deduction may not exceed 9
percent. These fees were $202 and $3,225 for the years ended December 31, 1999
and 1998, respectively.
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REPORT OF INDEPENDENT ACCOUNTANTS
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TO THE BOARD OF DIRECTORS OF WASHINGTON NATIONAL
INSURANCE COMPANY AND CONTRACT OWNERS OF
WASHINGTON NATIONAL VARIABLE ANNUITY FUND A
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 Washington National
Variable Annuity Fund A (the "Fund") at December 31, 1999, 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 accounting principles generally
accepted in the United States. These financial statements are the responsibility
of the Fund'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 fund, provide a reasonable basis for the opinion
expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
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PRICEWATERHOUSECOOPERS LLP
Indianapolis, Indiana
February 10, 2000
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WASHINGTON NATIONAL VARIABLE ANNUITY FUND A
SPONSOR
Washington National Insurance Company - Carmel, Indiana.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP - Indianapolis, Indiana.
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WASHINGTON NATIONAL INSURANCE COMPANY IS AN INDIRECT WHOLLY OWNED
SUBSIDIARY 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.
WASHINGTON NATIONAL INSURANCE COMPANY
11815 North Pennsylvania Street
Carmel, Indiana 46032
WNIC001 (2/00) 05990
(c) 1999 Washington National Insurance Company
WWW.CONSECO.COM
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