RYDEX VARIABLE TRUST, 497, 1999-01-06

RYDEX VARIABLE TRUST
497, 1999-01-06

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[LOGO]

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
OF
CONSECO VARIABLE INSURANCE COMPANY
(FORMERLY GREAT AMERICAN RESERVE INSURANCE COMPANY)
Administrative Office: 11825 North Pennsylvania Street, Carmel, Indiana 46032
Phone: (800) 437-3506

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT - FLEXIBLE PURCHASE PAYMENTS

The individual deferred variable annuity contract (the "Contract") described in
this Prospectus is issued by Conseco Variable Insurance Company ("CVIC"). The
Contract provides seven investment options and provides for the payment of
annuity and other benefits at a future date. The Contract is sold ONLY to
individuals who wish to accumulate assets by engaging in strategic or tactical
asset allocation investing with the assistance of a professional money manager.

The investment options, which are provided through Rydex Advisor Variable
Annuity Account (a separate account of CVIC), are separate investment funds
("Funds") of Rydex Variable Trust ("Trust"). The names of the Funds are the
Nova, Ursa, OTC, Precious Metals, U.S. Government Bond, Juno, and U.S.
Government Money Market Funds. THE TRUST PROSPECTUS, WHICH ACCOMPANIES THIS
PROSPECTUS, PROVIDES AN INVESTMENT RISK/RETURN SUMMARY AND OTHER INFORMATION
ABOUT THE FUNDS AND THE TRUST.

The Contract also provides for investment in a Fixed Account of CVIC.
Allocations and transfers to the Fixed Account are held in the general account
of CVIC, accumulate on a fixed basis and are guaranteed by the general account
assets of CVIC.

The Contract is not intended as a short-term investment vehicle. Early
withdrawals of purchase payments from the Contract may be subject to a
contingent deferred sales charge of up to 7%, and withdrawals by an owner before
age 59 1/2 may be subject to a 10% additional income tax penalty. See "Fees and
Charges" and "Federal Income Tax Considerations" for additional information.

A Contract may be returned within ten days of receipt for a full refund of the
Contract Value (or purchase payments, if required under applicable law). Longer
"free look" periods apply in some states.

INVESTMENT IN A VARIABLE ANNUITY CONTRACT IS SUBJECT TO RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus contains information that a prospective Contract Owner should
know before investing. It should be read and retained for future reference.
Additional information is contained in a Statement of Additional Information,
dated November 2, 1998, which has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. The Securities and Exchange
Commission has a Web site (http://www.sec.gov) that contains the Statement of
Additional Information, material incorporated by reference and other information
regarding companies that file electronically with the Securities and Exchange
Commission.

INQUIRIES: If you would like the Statement of Additional Information at no
charge or would like more information about the Contract, please write to
Conseco Equity Sales, Inc., 11825 North Pennsylvania Street, Carmel, Indiana
46032, or call (800) 437-3506. The Table of Contents of the Statement of
Additional Information is included at the end of this Prospectus.

NOVEMBER 2, 1998

PROSPECTUS

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TABLE OF CONTENTS

DEFINITIONS................................................................................. 3

TABLE OF FEES AND EXPENSES.................................................................. 4

ACCUMULATION UNIT VALUES.................................................................... 6

CONSECO VARIABLE INSURANCE COMPANY.......................................................... 7

THE SEPARATE ACCOUNT........................................................................ 8
Rydex Variable Trust...................................................................... 9

THE CONTRACT................................................................................ 9
Purchase Payments......................................................................... 10
Accumulation Units........................................................................ 10
Transfers................................................................................. 11
Withdrawals............................................................................... 11
Suspension of Payment or Transfers........................................................ 12
Systematic Withdrawal Plan................................................................ 12
Payment on Death.......................................................................... 12
Annuity Provisions........................................................................ 13
Fees and Charges.......................................................................... 14
Premium Taxes............................................................................. 15
Income Taxes.............................................................................. 15
Fund Expenses............................................................................. 15
The Fixed Account......................................................................... 15
Beneficiary............................................................................... 16
Ownership................................................................................. 16

FEDERAL INCOME TAX CONSIDERATIONS........................................................... 16
Annuity Contracts in General.............................................................. 16
Qualified and Non-Qualified Contracts..................................................... 17
Withdrawals -- Non-Qualified Contracts.................................................... 17
Withdrawals -- Qualified Contracts........................................................ 17
Withdrawals -- Tax-Sheltered Annuities.................................................... 17
Diversification........................................................................... 17
Investor Control.......................................................................... 17

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION.................................... A-1
</TABLE>

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DEFINITIONS

ACCUMULATION UNIT: A unit of measure used to compute your interest in a
Subaccount of the Separate Account.

ANNUITY DATE: The date on which annuity payments begin.

CONTRACT: The individual deferred variable annuity offered by and described in
this Prospectus.

CONTRACT OWNER: The person specified in the Contract as the owner of the
Contract and entitled to exercise ownership rights under the Contract.

CONTRACT VALUE: The current value of all interests held under the Contract in
Subaccounts of the Separate Account and the Fixed Account.

FINANCIAL ADVISOR: A person who is registered as an Investment Adviser with the
U.S. Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended, or who qualifies for exclusion from such registration, and who
provides strategic or tactical asset allocation services to the Contract Owner
and who is not prevented from providing such services by any federal or state
regulatory action.

FIXED ACCOUNT: An account maintained by CVIC as part of its general asset
account where amounts allocated and transferred to the account are held and
accumulated on a fixed basis.

FUND: An investment portfolio of Rydex Variable Trust.

SEPARATE ACCOUNT: Rydex Advisor Variable Annuity Account, a separate account of
Conseco Variable Insurance Company.

SUBACCOUNT: A segment within the Separate Account which invests in a Fund of
Rydex Variable Trust.

TRUST: Rydex Variable Trust.

YOU: A reference to "you" denotes the Contract Owner or prospective Contract
Owner.

WE OR US: A reference to "we" or "us" denotes Conseco Variable Insurance
Company.

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TABLE OF FEES AND EXPENSES

CONTRACT OWNER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Sales Load Imposed on Purchase Payments.................................................. None
Withdrawal Charge (percent of purchase payments withdrawn)............................... 7%*
Exchange Fee............................................................................. None

ANNUAL CONTRACT FEE...................................................................... NONE

SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of Subaccount values)
Mortality and Expense Risk Charge...................................................... 1.25%
Contract Administration Fee............................................................ 0.15%
Total Separate Account Annual Expenses................................................. 1.40%
</TABLE>

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* A withdrawal charge may be applied if money is withdrawn from the Contract
or, if the Contract has been in effect for less than five years, and money
in the Contract is applied to provide annuity payments for less than five
years. The charge on a withdrawal of a purchase payment declines to zero
over a seven-year period commencing on the date we received the purchase
payment. See "Fees and Charges" in this Prospectus for additional
information, including information on free withdrawals.

RYDEX VARIABLE TRUST ANNUAL EXPENSES
(AS A PERCENT OF AVERAGE NET ASSETS, REFLECTING EXPENSE LIMITATIONS)

<TABLE>
<CAPTION>
Total
Management Other Fund
Fees Expenses+ Expenses+
---------- --------- ---------

<S> <C> <C> <C>
Nova Fund 0.75% 1.45% 2.20%

Ursa Fund 0.90% 1.40% 2.30%

OTC Fund 0.75% 1.45% 2.20%

Precious Metals Fund 0.75% 1.45% 2.20%

U.S. Government Bond Fund 0.50% 1.30% 1.80%

Juno Fund 0.90% 1.40% 2.30%

U.S. Government Money Market Fund 0.50% 1.10% 1.60%
</TABLE>

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+ PADCO Advisors II, Inc., investment adviser to the Funds, and PADCO Service
Company, Inc., servicer to the Funds, have voluntarily agreed to waive fees
and/or reimburse expenses to ensure that expenses do not exceed the expenses
shown. For the period ending June 30, 1998, absent these voluntary expense
limitations and adjusted to exclude insurance related charges, total fund
related expenses were as follows: Nova Fund -- 2.71%; Ursa Fund -- 2.87%;
OTC Fund -- 2.57%; Precious Metals Fund -- 2.82%; U.S. Government Bond Fund
-- 2.36%; Juno Fund -- 2.54%; U.S. Government Money Market Fund -- 2.46%.
For the period ending December 31, 1997, absent these voluntary expense
limitations and adjusted to exclude insurance related charges, total fund
related expenses were as follows: Nova Fund -- 7.69%; Ursa Fund -- 7.81%;
OTC Fund -- 7.67%; Precious Metals Fund -- 8.36%; U.S. Government Bond Fund
-- 7.07%; U.S. Government Money Market Fund -- 5.42%.

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EXAMPLES

The following examples illustrate the cumulative dollar amount of expenses that
would be incurred on each $1,000 invested.

If you surrender your Contract at the end of the applicable period, or if your
Contract has been in effect for less than five years and you elect to receive
annuity payments (or the annuity payments you have elected are not for life or
for a period of at least five years), you would pay the following expenses on a
$1,000 investment, assuming a 5% annual return on assets.

<TABLE>
<CAPTION>
ONE THREE
YEAR YEARS
--------- -----------
<S> <C> <C>
Nova Subaccount $ 106 $ 163
Ursa Subaccount $ 107 $ 166
OTC Subaccount $ 106 $ 163
Precious Metals Subaccount $ 106 $ 163
U.S. Government Bond Subaccount $ 102 $ 151
Juno Subaccount $ 107 $ 166
U.S. Government Money Market Subaccount $ 100 $ 145
</TABLE>

If you do not surrender your Contract at the end of the applicable period, or if
your Contract has been in effect for at least five years and you elect to
receive annuity payments for life or for a period of at least five years, you
would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets.

<TABLE>
<CAPTION>
ONE THREE
YEAR YEARS
--- -----------
<S> <C> <C>
Nova Subaccount $ 36 $ 110
Ursa Subaccount $ 37 $ 112
OTC Subaccount $ 36 $ 110
Precious Metals Subaccount $ 36 $ 110
U.S. Government Bond Subaccount $ 32 $ 98
Juno Subaccount $ 37 $ 112
U.S. Government Money Market Subaccount $ 30 $ 92
</TABLE>

The purpose of the above examples is to assist you in understanding the costs
and expenses that you will bear directly or indirectly. The table reflects
expenses of the Separate Account as well as the Trust. The examples should not
be considered a representation of future expenses and charges. Actual expenses
may be more or less than those shown. Similarly, the assumed 5% annual rate of
return is not an estimate or a guarantee of future investment performance of the
Subaccounts of the Separate Account. Neither the tables nor the examples reflect
any state premium taxes that may be applicable to variable annuity Contracts,
which currently range from 0% to 3.5%, or any fees that you pay your Financial
Advisor for assisting in strategic or tactical asset allocation services.
Additional information on fees and expenses may be found under "Fees and
Charges" in this Prospectus and under "Management of the Fund" in the Statement
of Additional Information of the Trust.

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ACCUMULATION UNIT VALUES

The following table shows Accumulation Unit values and the number of
Accumulation Units outstanding for the Nova, Ursa, OTC, Precious Metals, U.S.
Government Bond, Juno and U.S. Government Money Market Subaccounts of the
Separate Account for the periods indicated. The information is derived from the
financial statements of the Separate Account. The Accumulation Unit values and
numbers of Accumulation Units are the same as they would have been if the
Separate Account had operated as a unit investment trust and had invested in
shares of the Funds of the Trust for the periods shown, and the operations of
the Funds had been as currently reported in the Trust's Prospectus and Statement
of Additional Information. The Nova, Ursa, OTC, Juno and U.S. Government Money
Market Subaccounts commenced operations on May 7, 1997. The Precious Metals and
U.S. Government Bond Subaccounts commenced operations on May 29, 1997. For the
Ursa, U.S. Government Bond and Juno Subaccounts, there were periods during which
no Accumulations Units were outstanding.

<TABLE>
<CAPTION>
NUMBER OF ACCUMULATION
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE UNITS OUTSTANDING AT
AT BEGINNING OF PERIOD AT END OF PERIOD END OF PERIOD
------------------------- ------------------------- ---------------------------------
<S> <C> <C> <C>
Nova Subaccount
FOR THE PERIODS
5/7/97 TO 12/31/97 10.00 12.21 855,862
1/1/98 TO 6/30/98 12.21 14.57 1,518,888

Ursa Subaccount
FOR THE PERIODS
5/7/97 TO 5/21/97 10.00 9.63 0
5/24/97 TO 6/3/97 9.57 9.58 0
6/10/97 TO 12/31/97 9.36 8.07 356,784
1/1/98 TO 6/30/98 8.07 6.95 463,004

OTC Subaccount
FOR THE PERIODS
5/7/97 TO 12/31/97 10.00 10.65 222,217
1/1/98 TO 6/30/98 10.65 14.36 1,933,702

Precious Metals
Subaccount
FOR THE PERIODS
5/29/97 TO 12/31/97 10.00 7.02 73,827
1/1/98 TO 6/30/98 7.02 6.61 10,094

U.S. Gov't. Bond
Subaccount
FOR THE PERIODS
5/29/97 TO 6/5/97 10.00 10.15 0
6/24/97 TO 7/14/97 10.44 10.67 0
7/29/97 TO 8/12/97 10.92 10.56 0
8/18/97 TO 12/31/97 10.70 11.82 75,493
1/1/98 TO 6/30/98 11.82 12.51 116,899
</TABLE>

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<TABLE>
<CAPTION>
NUMBER OF ACCUMULATION
ACCUMULATION UNIT VALUE ACCUMULATION UNIT VALUE UNITS OUTSTANDING AT
AT BEGINNING OF PERIOD AT END OF PERIOD END OF PERIOD
------------------------- ------------------------- ---------------------------------
Juno Subaccount
<S> <C> <C> <C>
FOR THE PERIODS
5/7/97 TO 6/3/97 10.00 9.86 0
6/16/97 TO 7/2/97 9.71 9.68 0
7/7/97 9.59 9.54 0
7/24/97 TO 8/11/97 9.41 9.68 0
8/26/97 TO 10/19/97 9.72 9.52 0
10/22/97 TO 12/11/97 9.50 9.01 0
1/20/98 TO 1/25/98 8.88 8.99 0
2/2/98 8.98 8.98 0
2/23/98 TO 2/25/98 9.03 9.07 0
3/2/98 9.09 9.09 0
3/4/98 TO 6/30/98 9.20 8.60 6,440

U.S. Gov't. Money Market
Subaccount
FOR THE PERIODS
5/7/97 TO 12/31/97 10.00 10.32 1,734,974
1/1/98 TO 6/30/98 10.32 10.45 1,405,279
</TABLE>

In advertisements of the Contracts, information on total return performance and
on annual changes in Accumulation Unit values may be provided. Information on
total return performance will include average annual rates of total return for
one, five and ten year periods of continuous operation, or lesser periods
depending on the date of commencement of continuous operation of the underlying
Fund. Total return figures will show the average annual rates of increase or
decrease in investments in the Subaccounts, assuming a $1,000 investment at the
beginning of the period, withdrawal of the investment at the end of the period,
and the deduction of all applicable charges. We may also show total return
figures, assuming no withdrawals from the Contract. Total return figures which
assume no withdrawal at the end of the period will reflect all recurring
charges, but will not reflect the withdrawal charge (if applicable, the
withdrawal charge would reduce the amount that may be withdrawn under the
Contracts). In addition, we may show cumulative total return for selected
periods, assuming no withdrawal at the end of the period. We may also include
yield and effective yield on investments in the U.S. Government Money Market
Fund advertisements. Future performance will, of course, vary; the results shown
will not necessarily be representative of future results.

CONSECO VARIABLE INSURANCE COMPANY
(FORMERLY GREAT AMERICAN RESERVE INSURANCE COMPANY)

Conseco Variable Insurance Company is incorporated as a life insurance company
under the laws of the State of Texas and is authorized to sell life insurance,
annuity and similar financial products in 49 states and the District of
Columbia. Texas regulatory authorities approved a change in our name from Great
American Reserve Insurance to Conseco Variable Insurance Company ("CVIC") on
October 7, 1998. We are currently engaged in obtaining approvals for the name
change from regulatory authorities of the other states in which we operate. We
anticipate that we will complete the filing and approval process by the end of
the first quarter of 1999.

Originally organized in 1937, we are an indirect wholly owned subsidiary of
Conseco, Inc. ("Conseco"). Conseco provides corporate and Contract
administration services to us. Conseco is a publicly-owned financial services
holding company, the principal operations of which are the development,
marketing and administration of supplemental health insurance, annuity, life
insurance, individual and group major medical insurance, other insurance
products and consumer and commercial finance products and services. Conseco is

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located at 11825 N. Pennsylvania Street, Carmel, Indiana, 46032.

All inquiries regarding the Separate Account, the Contracts, or any related
matter should be directed to our administrative office at 11825 North
Pennsylvania Street, Carmel, Indiana, 46032, (800) 437-3506.

We depend on the smooth functioning of computer systems in almost every aspect
of our business. Like other insurance companies, businesses and individuals
around the world, we could be adversely affected if the computer systems used by
our service providers do not properly process dates on and after January 1, 2000
and distinguish between the year 2000 and the year 1900. We have asked our
service providers whether they expect to have their computer systems adjusted
for the year 2000 transition, and received assurances from each that its system
is expected to accommodate the year 2000 without material adverse consequences
to us and the Separate Account. CVIC and our Contract Owners may experience
losses if these assurances prove to be incorrect or as a result of year 2000
computer difficulties experienced by the Trust, issuers of portfolio securities
or third parties, such as custodians, banks, broker-dealers or others with which
CVIC and the Trust do business.

THE SEPARATE ACCOUNT

We established the Separate Account under Texas insurance law on April 15, 1996
for the purpose of segregating separate portfolios of investments for the
Contracts. Income, gains and losses, realized or unrealized, of the Separate
Account are credited to or charged against the Separate Account without regard
to any of our other income, gains or losses. Assets equal to the reserves and
other Contract liabilities with respect to the Separate Account are not
chargeable with liabilities arising out of any of our other business activities.
We are obligated to pay all benefits and make all payments under the Contracts.

The Separate Account was registered with the U.S. Securities and Exchange
Commission (the "SEC") as a management investment company on May 2, 1996. It was
divided into seven different Subaccounts--the Nova Subaccount, Ursa Subaccount,
OTC Subaccount, Precious Metals Subaccount, U.S. Government Bond Subaccount,
Juno Subaccount and Money Market Subaccount, each with its own investment
objective and investment policies. As a registered management investment
company, the Separate Account and its Subaccounts invested directly in
securities in accordance with their investment objectives and policies.

On November 2, 1998, registration of the Separate Account was changed to a unit
investment trust and the investment portfolios of the Subaccounts were
transferred to newly established Funds of Rydex Variable Trust--the Nova Fund,
Ursa Fund, OTC Fund, Precious Metals Fund, U.S. Government Bond Fund, Juno Fund
and U.S. Government Money Market Fund. In exchange for the investment portfolio
of each Subaccount, the Trust issued a separate series of shares of common stock
to the Subaccount, representing shares of the Fund corresponding to the
Subaccount, and assumed the liabilities of the Subaccount other than liabilities
for Contract insurance charges.

As a Contract Owner participating in a Subaccount of the Separate Account, you
may instruct us as to the voting of the shares of the Fund held in the
Subaccount. The number of shares of a Fund for which voting instructions may be
given is determined by dividing the Contract Owner's interest in the applicable
Subaccount by the net asset value of the Fund share. Should the governing law,
or interpretations thereof, change so as to permit us to vote shares of the
Funds in our own right, we may elect to do so. Further, we reserve the right to
modify the manner in which we calculate the weight to be given to pass-through
voting instructions where such a change is necessary to comply with federal law
or interpretations thereof.

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RYDEX VARIABLE TRUST

The Trust is organized as a Delaware business trust and is registered with the
SEC as an open-end management investment company under the Investment Company
Act of 1940, as amended. PADCO Advisors II, Inc. serves as the investment
adviser and manager of the Funds. Purchase payments allocated or transferred to
a Subaccount of the Separate Account are invested in shares of the corresponding
Fund of the Trust. The Funds and their investment objectives are as follows:

<TABLE>
<S> <C> <C>
Nova Fund -- seeks to provide investment
returns that are 150% of the
S&P 500 Index

Ursa Fund -- seeks to provide investment
results that will inversely
correlate to the performance
of the S&P 500 Index

OTC Fund -- seeks to provide investment
results that correspond to a
bench mark for
over-the-counter securities.
The Fund's current benchmark
is the NASDAQ 100 Index.

Precious Metals -- seeks to provide investment
Fund results that correspond to a
benchmark primarily for
metals-related securities. The
Fund's current benchmark is
the XAU Index

U.S. Government -- seeks to provide investment
Bond Fund results that correspond to a
benchmark for U.S. Government
securities. The Fund's current
benchmark is 120% of the price
movement of the Long Treasury
Bond.

Juno Fund -- seeks to provide total returns
that will inversely correlate
to the price movement of a
benchmark for U.S. Treasury
debt instruments or futures
contract on a specified debt
instrument. The Fund's current
benchmark is the inverse of
the price movement of the Long
Treasury Bond.

U.S. Government -- seeks to provide security of
Money Market principal, high current income
Fund and liquidity
</TABLE>

THE TRUST PROSPECTUS ACCOMPANIES THIS PROSPECTUS. YOU SHOULD READ IT CAREFULLY
BEFORE INVESTING.

THE CONTRACT

The Contract is sold only to individuals who have retained a Financial Advisor
to provide strategic or tactical asset allocation services under their Contract.
You are responsible for selecting, supervising, and paying any compensation to
your Financial Advisor. You must execute a power of attorney authorizing your
Financial Advisor to give allocation and transfer directions to us and/or our
designee. You may make withdrawals from or surrender your Contract at any time,
BUT ONLY YOUR FINANCIAL ADVISOR MAY GIVE US DIRECTIONS TO ALLOCATE PURCHASE
PAYMENTS OR TRANSFER AMOUNTS TO THE SUBACCOUNTS OR TO THE FIXED ACCOUNT. We do
not recommend, select or supervise your Financial Advisor. We do not make
recommendations on strategic or tactical asset allocations or transfers. We are
not responsible for advice provided by your Financial Advisor. If you enter into
an advisory agreement with your Financial Advisor to have the Financial
Advisor's fee paid out of your Contract Value, you should consider the tax
consequences of withdrawing funds from the Contract to pay the fee. SEE "Federal
Income Tax Considerations" in this Prospectus.

To change your Financial Advisor without interrupting allocations and transfers
among Subaccounts, you must: (1) notify us in writing of the name of your new
Financial Advisor and (2) provide us with a power of attorney authorizing your
new Financial Advisor to give us asset allocation directions.

If we receive notification that your Financial Advisor is no longer authorized
by you to give strategic or tactical asset allocation directions on your behalf,
or that your Financial Advisor has resigned or has died, or that your Financial
Advisor is otherwise not able to act on your behalf, amounts credited under your
Contract to Subaccounts of the Separate Account will be transferred to the U.S.
Government Money Market Subaccount and you will be notified of the transfer and
the information we received. You may transfer amounts from the U.S. Government
Money Market

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Subaccount to the Fixed Account without a Financial Advisor (subject to time
restrictions on transferring amounts out of the Fixed Account). Until such time
as we receive written notification of the name of your new Financial Advisor and
we receive a power of attorney authorizing your new Financial Advisor to give us
investment instructions, your investment options are limited to the U.S.
Government Money Market Subaccount and the Fixed Account. When we receive
written notification of your new Financial Advisor and the power of attorney,
allocations and transfers among the investment options may resume. You may also
surrender your Contract. Withdrawals may be made from the Contract Value subject
to any applicable withdrawal fee.

THE STRATEGIC OR TACTICAL ASSET ALLOCATION CONTEMPLATED IN THE CONTRACT MAY BE
CHARACTERIZED AS AGGRESSIVE INVESTING. THERE CAN BE NO ASSURANCE THAT ANY
FINANCIAL ADVISOR WILL PREDICT MARKET MOVES SUCCESSFULLY. IN SELECTING YOUR
FINANCIAL ADVISOR, YOU SHOULD CAREFULLY CONSIDER HIS OR HER EDUCATION,
EXPERIENCE AND REPUTATION.

The Contract may be amended at any time to conform to applicable laws or
governmental regulations. If, in our judgment, investment in any of the Funds
becomes inappropriate to the purposes of the Contract, we may, with approval of
the Securities and Exchange Commission and any governing state insurance
department, substitute another fund for existing and future funds. In addition,
we may, in our discretion, no longer make available any of the Subaccounts and
may offer additional Subaccounts of the Separate Account.

PURCHASE PAYMENTS
To purchase a Contract, your completed application and all required
documentation, together with a check for the first purchase payment, must be
forwarded to our administrative office. Once we receive your purchase payment
and all necessary information, we will issue a Contract to you 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 obtain 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. The transaction cut-off time for receipt by us of purchase
payments for allocation to the Separate Account is 2:30 p.m., Eastern time. The
transaction cut-off time for receipt by us of purchase payments for allocation
to the Fixed Account is 4:00 p.m., Eastern time. We reserve the right to reject
any application or purchase payment. All subsequent purchase payments are sent
directly to our administrative office.

If you change your mind about owning the Contract, you may cancel the Contract
by returning it to us within 10 days of receiving it (or within a longer period
as provided under applicable state law). If you exercise this right, we will
refund either the Contract Value or all of your purchase payments, as required
under applicable state law.

Initial purchase payments to be allocated to the Separate Account are credited
to the U.S. Government Money Market Subaccount. Fourteen days after the Contract
Date, transfers will be made to other Subaccounts of the Separate Account or the
Fixed Account pursuant to instructions from your Financial Advisor.

The minimum initial purchase payment is $25,000 and the minimum for each
subsequent purchase payment is $1,000. We will accept total purchase payments
under your Contract of up to $500,000. Payments to us in excess of $500,000
require our prior approval.

The principal underwriter of the Contract (under federal securities laws) is
Conseco Equity Sales, Inc., 11825 North Pennsylvania Street, Carmel, Indiana
46032.

ACCUMULATION UNITS

Purchase payments and amounts allocated and transferred to a Subaccount are
credited to the Contract in the form of Accumulation Units. The number of
Accumulation Units is determined by dividing the purchase payment or transfer
amount by the value of the Accumulation Unit for the valuation period in which
the purchase payment or transfer amount is received at our administrative office
or, in the case of the initial purchase payment, is accepted by us. The number
of Accumulation Units will not change as a result of the investment experience
of the Subaccounts.

Accumulation Units are used to account for all amounts allocated or transferred
to or withdrawn from

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a Subaccount as a result of purchase payments, withdrawals, transfers and
charges.

For each Subaccount of the Separate Account the value of an Accumulation Unit
was set at $10 when it commenced operations. The value of an Accumulation Unit
may increase or decrease from one valuation period to the next. We calculate the
value of an Accumulation Unit for each Subaccount after the New York Stock
Exchange closes each day. A valuation period is the interval from one valuation
day of a Subaccount to the next valuation day, measured from the time each day
the Subaccount is valued.

The value of an Accumulation Unit for a valuation period, is determined by
dividing the current market value of the assets of the Subaccount less any
liabilities, by the total number of Accumulation Units of the Subaccount. The
investment experience of the shares of the Fund held in the Subaccount, expenses
of the Subaccount and the Fund and the deduction of fees and charges at the
Subaccount and Fund levels, all affect the Accumulation Unit value.

TRANSFERS

Transfers among the Subaccounts may only be made by your Financial Advisor at
any time prior to the Annuity Date. Transfer requests may be made by written
instruction or by telephonic or other electronic instruction satisfactory to us.
By authorizing your Financial Advisor to give transfer instructions by telephone
or other electronic medium, you agree that we will not be liable for any losses
you may suffer from any fraudulent or unauthorized transfer instruction. We or
our designee will employ reasonable procedures to confirm that transfer
instructions are genuine, such as requiring some form of personal
identification. We may discontinue or change the right to make telephonic and
other electronic transfers at any time.

The minimum amount which can be transferred is $500 from any Subaccount or your
entire interest in the Subaccount, if less. We do not charge you for transfers.

The transaction cut-off times for the receipt by us requests to make of
transfers among the Subaccounts are as follows. With respect to transfers for
the Nova, Ursa, and OTC Subaccounts, the time is 3:30 p.m., Eastern time; for
the Precious Metals Subaccount, the time is 3:15 p.m., Eastern time; for the
U.S. Government Bond and Juno Subaccounts, the time is 2:30 p.m., Eastern time;
and for the U.S. Government Money Market Subaccount and the Fixed Account, the
time is 4:00 p.m., Eastern time. For transfers involving different transaction
end times, the earlier of the times indicated above applies. Telephone and
electronic transfer orders will be accepted only prior to the transaction
cut-off times. If the primary exchange or market on which the underlying Fund
transacts business closes early, the above cut-off time will be approximately
thirty minutes (forty-five minutes, in the case of the Precious Metals Fund)
prior to the close of such exchange or market.

WITHDRAWALS

Prior to of the Annuity Date, you may withdraw all or part of your Contract
Value. Withdrawals will be based on values for the valuation period in which a
proper written request for withdrawal (and the Contract, if required) are
received at our administrative office. Withdrawals will be received by us only
between 8:30 a.m. Eastern time, and 2:30 p.m. Eastern time; withdrawal requests
received after 2:30 p.m., will be deemed received by us on the next business day
and the withdrawal will be based on the Accumulation Unit value next determined
after receipt on that date. Payment will normally be made within seven days of
receipt of the written request and the Contract, if required. A withdrawal may
result in a withdrawal charge and/or tax consequences (including an additional
10% tax penalty under certain circumstances). Certain withdrawal restrictions
may apply if your Contract is issued in connection with a Section 403(b) tax-
qualified plan (also known as a tax-sheltered annuity). SEE "Withdrawal Charge"
and "Federal Income Tax Considerations" in this Prospectus.

The minimum withdrawal is $500, and the remaining Contract Value must be at
least $10,000 ($3,500 for Contracts held under a tax-qualified retirement
arrangement.) If a partial withdrawal plus any withdrawal charge would reduce
the value of your Contract to less than $10,000 ($3,500 for tax-qualified
Contracts), CVIC reserves the right to treat the partial withdrawal as a total
withdrawal of your Contract Value. We reserve the right to increase or decrease
such minimums. If you request a partial withdrawal,

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<PAGE>
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you must specify in writing the Subaccount(s) and/or Fixed Account from which
funds are to be withdrawn.

CVIC will, pursuant to an agreement with you, make a partial withdrawal from
your Contract Value to pay for the services of your Financial Advisor. If your
Contract is non-qualified, the withdrawal will be treated like any other
distribution and may be included in gross income for federal tax purposes and,
if you are under age 59 1/2, may be subject to a tax penalty. If your Contract
is tax-qualified, the withdrawal for the payment of fees will not be treated as
a taxable distribution if certain conditions are met. You should consult a tax
adviser regarding the tax treatment of the payment of Financial Advisor fees
from your Contract.

SUSPENSION OF PAYMENT OR TRANSFERS

CVIC may be required to suspend or postpone payments for withdrawal or transfers
for any period when:

1. the New York Stock Exchange, the Chicago Board of Trade or the Chicago
Mercantile Exchange, as appropriate, is closed (other than customary
weekend and holiday closings);

2. trading on the New York Stock Exchange, the Chicago Board of Trade or
the Chicago Mercantile Exchange is restricted;

3. an emergency exists as a result of which disposal of shares of the Funds
is not reasonably practicable or it is not reasonably practicable for
the Trust fairly to determine the net asset value of the shares of the
Funds;

4. during any other period when the Securities and Exchange Commission, by
order, so permits for the protection of Contract Owners.

SYSTEMATIC WITHDRAWAL PLAN

We administer a systematic withdrawal plan which enables you to arrange for
pre-authorized systematic withdrawals. To take advantage of the plan, you enter
into an agreement with us to withdraw a level dollar amount from specified
Subaccounts on a periodic basis. The plan is available only with respect to
amounts which are free of any withdrawal charge. SEE "Fees and Charges" in this
Prospectus for information on amounts that may be withdrawn from the Contract
free of any withdrawal charge. If you make an additional withdrawal which is not
part of the systematic withdrawal plan, the plan will terminate automatically
and may be reinstated only on or after making a written request to us.
Withdrawals under the plan may result in tax consequences (including an
additional 10% tax penalty under certain circumstances). SEE "Federal Income Tax
Considerations" in this Prospectus.

PAYMENT ON DEATH

If you or your spouse, as joint Contract Owner, dies prior to the Annuity Date,
we will pay the death benefit to the beneficiary. Upon the death of a joint
Contract Owner, the surviving joint Contract Owner will become the beneficiary.
The death benefit is the greater of the Contract Value or purchase payments made
under the Contract less any applicable withdrawals and charges, on the date
proof of death is received at our administrative office (subject to state
regulations which vary from state to state). When we receive notification of a
Contract Owner's death, the amounts held in Subaccounts under your Contract will
be transferred to the U.S. Government Money Market Subaccount. Payment will be
in a lump sum unless an annuity option is chosen. A beneficiary, other than the
surviving spouse of the deceased Contract Owner, may choose only an annuity
option which provides for full payout within five years of death, or within the
life or life expectancy of the beneficiary. Payments must begin within one year
of the Contract Owner's death if a life expectancy option is selected. If the
surviving spouse of a deceased Contract Owner is the beneficiary, he or she may
choose to continue the Contract in force at the then current Contract Value.

If you or your spouse, as joint Contract Owner, who is not the Annuitant, dies
after the Annuity Date, any remaining payments under the Annuity Option that was
selected will continue at least as rapidly as under the pay-out plan in effect
upon death. If you die after the Annuity Date, the beneficiary becomes the
Contract Owner. Upon the death of a joint Contract Owner after the Annuity Date,
the surviving joint Contract Owner will be treated as the primary beneficiary.
Any other person designated on record as a beneficiary at the time of death will
be treated as a contingent beneficiary.

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If you are a natural person and not the Annuitant and the Annuitant dies prior
to the Annuity Date, the Contract will continue in force on the same terms and
you will become the Annuitant, unless another person is designated by you and we
are notified in writing within thirty days. If the Contract Owner is a non-
natural person (for example, a corporation) then the death of the Annuitant will
be treated as the death of the Contract Owner and a new Annuitant may not be
named.

If the Annuitant dies after the Annuity Date, any remaining payments will be
made as provided for in the annuity option selected. SEE "Annuity Provisions" in
this Prospectus.

Different rules apply to payments on death under tax-qualified Contracts.

ANNUITY PROVISIONS
You may select any one of the following fixed annuity options or any other
option satisfactory to you and CVIC. You can change the annuity option with 30
days written notice to us prior to the Annuity Date. The Contract Value, less
any applicable Withdrawal Charge, is applied to the Annuity Table in the
Contract to determine the amount of each fixed annuity payment to be made under
the annuity option selected. No withdrawal charge is applicable if the annuity
payments begin at least 5 years after the effective date of the Contract and are
paid under any life annuity option, or any annuity option with payments for a
minimum of 5 years. Annuity payments will be made to the Annuitant unless you
notify us otherwise in writing. The annuitant is the individual designated by
the Contract Owner on whose continuation of life annuity payments may depend.

FIRST OPTION--LIFE ANNUITY. An annuity payable monthly during the lifetime of
the Annuitant and ceasing with the last monthly payment due prior to the death
of the Annuitant. This option offers a greater level of monthly payments than
the second option, 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. This option is generally
not available for Contract Owners annuitizing over the age of 85.

SECOND OPTION--LIFE ANNUITY WITH GUARANTEED PERIODS. An annuity payable monthly
during the lifetime of the Annuitant with the guarantee that if, at the death of
the Annuitant, payments have been made for less than 5, 10, or 20 years (you
choose before payments begin), annuity payments will be continued during the
remainder of such period to the beneficiary. If no beneficiary is designated, we
will, pay in a lump sum to the Annuitant's estate the present value, as of the
date of death, of the number of guaranteed annuity payments remaining after that
date, computed on the basis of the assumed net investment rate used in
determining the first monthly payment. Because this Second 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. Payments are made for the
installment refund period, which is the time required for the sum of the
payments to equal the amount applied, and thereafter for the life of the payee.

FOURTH OPTION--PAYMENTS FOR A FIXED PERIOD. Payments are made for the number of
years selected, which may be from 3 through 20. Should the Annuitant die before
the specified number of monthly payments are made, the remaining payments will
be commuted and paid to the designated beneficiary in a lump sum payment.

FIFTH OPTION--JOINT AND SURVIVOR ANNUITY. We will make monthly payments during
the joint lifetime of the Annuitant and a joint Annuitant. Payments will
continue during the lifetime of the surviving Annuitant and will be computed on
the basis of 100%, 50%, or 66 2/3% of the annuity payment (or limits) in effect
during their joint lifetime.

Annuity payments will be made monthly. However, if any payment would be or
become less than $50, we may change the frequency so payments are at least $50
each. If the net Contract Value to be applied at the Annuity Date is less than
$10,000 ($3,500 for a Contract held under tax-qualified retirement
arrangements), we reserve the right to pay such amount in a lump sum.

We may require proof of age, sex, or survival of any person upon whose
continuation of life annuity payments depend.

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<PAGE>
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You select the Annuity Date in the application for the Contract, and you may
change the Annuity Date by notifying us in writing of a new Annuity Date at
least 30 days prior to the current Annuity Date. The Annuity Date may not be
later than the first Contract year after the Annuitant's 90th birthday or the
maximum date permitted under applicable state law. If the Contract Owner is 85
or older on the date of issue, the Annuity Date may not be later than the fifth
Contract year. If no Annuity Date is selected, we will assume the latest
possible Annuity Date. For a Contract held under a tax-qualified retirement
arrangement (other than an IRA), the Annuity Date generally may not be later
than (i) April 1 of the year after the year in which the Annuitant attains age
70 1/2 or (ii) the calendar year in which the Annuitant retires if later. For a
contract held as an IRA, the Annuity Date may not be later than April 1 of the
year after the year in which the Annuitant attains age 70 1/2.

FEES AND CHARGES
CONTRACT ADMINISTRATION FEE. We deduct a Contract administration fee from the
Separate Account for services rendered in administering the Contract. Contract
administration includes preparing and issuing Contracts, communicating with
Contract Owners, maintaining Contract records and preparing and distributing
Contract Owner reports and statements. The fee is equal to an effective annual
rate of 0.15% of the daily net assets of each Subaccount of the Separate
Account. We may not increase the fee over the duration of the Contract.

MORTALITY AND EXPENSE RISK CHARGE. We deduct a mortality and expense risk charge
from the Separate Account. Mortality risk refers to risks CVIC assumes in the
obligation to make annuity payments over the life time of Annuitants and the
obligation to pay minimum death benefits in the future in a declining securities
market and Contract Value. Expense risk refers to the risk CVIC assumes in the
obligation not to increase administration charges over the life of the Contract
even though future expenses may increase. The mortality and expense risk charge
is equal to an annual rate of 1.25% of the daily net assets of each Subaccount.

WITHDRAWAL CHARGE. The withdrawal charge, when applicable, permits us to recover
a portion of our expenses relating to the sale of the Contract. Sales expenses
which are not covered by the withdrawal charge are paid from surplus in our
general account, which may include revenues from our mortality and expense risk
charge. We may assess a withdrawal charge against the purchase payments when the
payments are withdrawn and, if the Contract has been in effect less than five
years, when payments are used to provide annuity payments for less then five
years. Subject to certain state variations, the withdrawal charge will be a
specified percentage of the sum of the purchase payments paid within seven years
prior to the date of withdrawal, adjusted for any prior withdrawals. There is no
charge on withdrawals of (a) purchase payments that have been in the Contract
more than seven complete Contract years or (b) free withdrawal amounts described
below. The length of time from receipt of a purchase payment to the time of
withdrawal determines the withdrawal charge. For the purpose of calculating the
withdrawal charge, withdrawals will be deemed made first from purchase payments
on a first-in, first-out basis and then from any gain. The withdrawal charge is
applicable to withdrawals from both the Separate Account and Fixed Account.

No withdrawal charge is applicable in the event of the death of the Contract
Owner (subject to certain state variations) or if payments are made under an
annuity option under the Contract that begins at least five years after the
effective date of the Contract and is paid under any life annuity option, or any
option with payments for a minimum of five years.

The withdrawal charge, if applicable, equals:

<TABLE>
<CAPTION>
Complete Years Since
Receipt of Payment Withdrawal Charge
- --------------------------- ------------------------
<S> <C>
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 and thereafter 0%
</TABLE>

In addition, in certain states the following circumstances further limit or
reduce withdrawal charges: for issue ages up to 56, there is no withdrawal
charge made after you attain age 67 and later; for issue ages 57 and later, any
otherwise applicable withdrawal

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charge will be multiplied by a factor ranging from 0.9 to 0 for Contract years
one through 10.

A Contract Owner may make one free withdrawal per Contract year from Contract
Value of an amount up to 10% of the Contract Value (as determined on the date of
receipt of the withdrawal request). Additional withdrawals in excess of that
amount in any Contract year during the period when any withdrawal charge is
applicable will be subject to the appropriate charge as set forth above.

Withdrawals authorized by you to pay compensation to your Financial Advisor are
treated as free withdrawals, and such free withdrawals are in addition to the
10% free withdrawal you may make each Contract year. There may, however, be
certain adverse tax consequences. See "Withdrawals" and "Federal Income Tax
Considerations" in this Prospectus.

With respect to any Contract which is owned by a "charitable remainder unitrust"
or a "charitable remainder annuity trust" (both a "Charitable Remainder Trust")
within the meaning of Section 664(d) of the Internal Revenue Code (the "Code"),
we may, in our discretion, permit an additional free withdrawal necessary to
fund required distributions by the Charitable Remainder Trust in any Contract
year. In order for a Charitable Remainder Trust to qualify for such an increase,
the trustee or trustees of the Charitable Remainder Trust will be required to
certify: (i) that such trust is a bona fide "charitable remainder unitrust" or a
"charitable remainder annuity trust" within the meaning of Section 664 of the
Code, and that all amounts proposed to be withdrawn will be used to make
distributions required under Section 664 of the Code for the year in which such
amounts are withdrawn or for a prior year; (ii) that the required distribution
exceeds the one free withdrawal of 10% of the Contract Value which is permitted
without a withdrawal charge; and (iii) that the funds necessary to make the
required distribution could not otherwise be made available without hardship to
the trust or its beneficiaries.

We also reserve the right to reduce the withdrawal charge under certain
circumstances when sales of Contracts are made to a trustee, employer, or
similar party pursuant to a retirement plan or similar arrangement for sales of
Contracts to a group of individuals if the program results in a savings of sales
expenses. The amount of reduction will depend on such factors as the size of the
group, the total amount of purchase payments, and other factors that might tend
to reduce expenses incurred in connection with such sales. This reduction will
not be unfairly discriminatory to any Contract Owner.

PREMIUM TAXES

Some states and other governmental entities (E.G., municipalities) charge
premium taxes or similar taxes. We are responsible for the payment of these
taxes and will make a deduction from the value of the Contract for them. These
taxes are due either when the Contract is issued or when annuity payments begin.
It is CVIC's current practice to deduct these taxes when either annuity payments
begin or upon partial or full surrender of the Contract. CVIC may in the future
discontinue this practice and assess the charge when the tax is due. Premium
taxes currently range from 0% to 3.5%, depending on the jurisdiction.

INCOME TAXES

We will deduct amounts from the Contract for any income taxes which it incurs
because of the Contract. At the present time, we incur no such taxes and make no
such deductions.

FUND EXPENSES

See the accompanying Trust Prospectus for more information about fees and
expenses incurred by the Funds.

THE FIXED ACCOUNT

In addition to the investment options in the Separate Account, the Contract
provides for a Fixed Account, where amounts held under the Contract may
accumulate at a guaranteed interest rate and become part of our general account.
We guarantee that we will credit daily interest of at least 3% on an annual
basis, compounded annually. We may credit interest at higher rates from time to
time in our discretion. Gains or losses on amounts allocated or transferred to
Subaccounts of the Separate Account and charges against assets held in the
Separate Account, have no effect on the Fixed Account. The Fixed Account is
subject to certain transfer restrictions (E.G., in any six-month period, a
maximum of 20% of the Fixed Account Value may be transferred; this restriction,
however, is not effective until one year after the Contract Date).

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BECAUSE OF EXEMPTIVE AND EXCLUSIONARY PROVISIONS, INTERESTS IN THE FIXED
ACCOUNT ARE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933 AND OUR GENERAL
ACCOUNT IS NOT REGISTERED AS AN INVESTMENT COMPANY UNDER THE 1940 ACT. OUR
GENERAL ACCOUNT AND ANY INTERESTS HELD IN THE GENERAL ACCOUNT ARE THEREFORE NOT
SUBJECT TO THE PROVISIONS OF THESE ACTS. HENCE THIS PROSPECTUS GENERALLY
DISCUSSES ONLY THE VARIABLE PORTION OF THE CONTRACT. WE UNDERSTAND THAT THE
STAFF OF THE SEC HAS NOT REVIEWED THE DISCLOSURE IN THIS PROSPECTUS RELATING TO
THE FIXED ACCOUNT. DISCLOSURE REGARDING THE FIXED ACCOUNT, HOWEVER, MAY BE
SUBJECT TO GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS
RELATING TO THE ACCURACY AND COMPLETENESS OF STATEMENTS MADE IN THIS PROSPECTUS.

BENEFICIARY

The beneficiary and any contingent beneficiary are named in the application for
the Contract. However, unless the beneficiary has been irrevocably designated,
you may change the beneficiary by written notification to our administrative
office. The change will be effective as of the date signed, unless we have acted
in reliance on your designation of the prior beneficiary. The estate or heirs of
a beneficiary who died before payment under the Contract becomes due have no
rights under the Contract. If no beneficiary survives when payment under the
Contract becomes due, payment will be made to the Contract Owner's estate.

OWNERSHIP

As Contract Owner, you are entitled to all rights under the Contract. Unless
otherwise designated in the application for the Contract or by endorsement to
the Contract, the Contract Owner is also the Annuitant. Spousal joint Contract
Owners are allowed except in the case of a qualified Contract. Upon the death of
a joint Contract Owner, the surviving Contract Owner will be the primary
beneficiary. Any other beneficiary will be treated as a contingent beneficiary
unless otherwise stated in writing. No contingent owner of the Contract may be
named.

You may transfer ownership of the Contract to another person, if permitted under
applicable law, subject to certain conditions. A transfer of ownership must be
in writing and the new Contract Owner must appoint a Financial Advisor and
execute a power of attorney authorizing the Financial Advisor to give us
allocation and transfer instructions. Documentation for the foregoing must be
received at our administrative office before the transfer of ownership becomes
effective. A transfer of ownership does not affect the legal validity of a
designation of beneficiary.

You may also pledge your Contract, if permitted by applicable law. A collateral
assignment does not change Contract ownership. The rights of a collateral
assignee have priority over the rights of a beneficiary.

An assignment or transfer may have adverse tax consequences, and therefore you
should consult a competent tax adviser before assigning or transferring your
Contract.

FEDERAL INCOME TAX CONSIDERATIONS

NOTE: WE HAVE 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. ADDITIONAL
DISCUSSION OF FEDERAL INCOME TAX CONSIDERATIONS IS INCLUDED 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 (the "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 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

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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 tax-qualified trusts), the
Contract will generally not be treated as an annuity for tax purposes.

QUALIFIED AND NON-QUALIFIED CONTRACTS

A Contract purchased by an individual under a tax-qualified pension plan or
employer sponsored program, or as an individual retirement annuity ("IRA"), is
referred to as a tax-qualified Contract. Examples of qualified Contracts are
IRAs and tax-sheltered annuities (sometimes referred to as 403(b) Contracts). A
Contract which is not purchased under such a plan or program, or is not
purchased as an IRA, is referred to as a non-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) under a lifetime
annuity; (5) paid under an immediate annuity; or (6) which come from purchase
payments made prior to August 14, 1982.

WITHDRAWALS -- QUALIFIED CONTRACTS

The above information describing the taxation of non-qualified Contracts does
not apply to qualified Contracts. There are special rules that govern with
respect to qualified Contracts. We have provided a more complete discussion in
the Statement of Additional Information.

WITHDRAWALS -- TAX-SHELTERED ANNUITIES

The Code limits the withdrawal of purchase payments made by owners from certain
Tax-Sheltered Annuities. Withdrawals can only be made when an owner: (1) reaches
age 59 1/2; (2) leaves his/her job; (3) dies; (4) becomes disabled (as that term
is defined in the Code); (5) in the case of hardship; or (6) made pursuant to a
qualified domestic relations order.

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. We believe that the Funds are being managed so as to comply
with such 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 CVIC would be
considered the owner of the shares of the Funds. If this occurs, 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 funds, to make
transfers among the funds or the number and type of funds owners may select
from. 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 Funds.

Due to the uncertainty in this area, CVIC reserves the right to modify the
Contract as reasonably deemed necessary to maintain favorable tax treatment.

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<PAGE>
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TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PERFORMANCE INFORMATION................................................... 2
Total Return Information.................................................. 2
Comparisons of Total Return............................................... 3

DISTRIBUTION OF CONTRACTS................................................. 5

FEDERAL INCOME TAX CONSIDERATIONS......................................... 5
General................................................................... 5
Diversification........................................................... 6
Multiple Contracts........................................................ 7
Contracts Owned by Other than Natural Persons............................. 8
Tax Treatment of Assignments.............................................. 8
Income Tax Withholding.................................................... 8
Tax Treatment of Withdrawals -- Non-Qualified Contracts................... 9
Qualified Plans........................................................... 9
Tax Treatment of Withdrawals -- Qualified Contracts....................... 11
Tax-Sheltered Annuities -- Withdrawal Limitations......................... 12

INDEPENDENT ACCOUNTANTS................................................... 13

FINANCIAL STATEMENTS...................................................... 13
</TABLE>

A-1

<PAGE>
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ORDER FORM

Please send me a copy of the most recent Statement of Additional Information for
the Rydex Advisor Variable Annuity Account.

<TABLE>
<C> <S>
- ------------------------------ ----------------------------------------
(Date) (Name)

----------------------------------------
(Street Address)

----------------------------------------
(City) (State) (Zip Code)
</TABLE>

Send to: Rydex Advisor Variable Annuity Account
11815 North Pennsylvania Street
Carmel, IN 46032

A-2
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<PAGE>
PROSPECTUS

<TABLE>
<C> <S>
2 INTRODUCTION
---

3 NOVA FUND
---

4 URSA FUND
---

5 OTC FUND
---

6 PRECIOUS METALS FUND
---

7 U.S. GOVERNMENT BOND FUND
---

8 JUNO FUND
---

9 U.S. GOVERNMENT MONEY MARKET FUND
---

10 MORE INFORMATION ABOUT RISK
---

13 PURCHASING AND REDEEMING SHARES
---

14 MANAGEMENT
---

16 DIVIDENDS, DISTRIBUTIONS AND TAXES
---

17 FINANCIAL HIGHLIGHTS
---

22 BENCHMARK INFORMATION
---

BC ADDITIONAL INFORMATION
---
</TABLE>

NOVEMBER 2, 1998

RYDEX VARIABLE TRUST

NOVA FUND
URSA FUND
OTC FUND
PRECIOUS METALS FUND
U.S. GOVERNMENT BOND FUND
JUNO FUND
U.S. GOVERNMENT MONEY MARKET FUND

6116 Executive Boulevard, Suite 400, Rockville, Maryland 20852
1-800-820-0888 301-468-8520

Rydex Variable Trust (the "Trust") is a mutual fund complex with twenty-two
separate investment portfolios (the "Rydex Variable Funds"), seven of which are
described in this Prospectus (the "Funds"). Shares of the Funds are available
exclusively for variable annuity and variable life insurance products. Variable
life and variable annuity account investors should also review the separate
account prospectus prepared by their insurance company.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
TRUST'S SHARES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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2 PROSPECTUS

INTRODUCTION

The Funds' objectives (except the U.S. Government Money Market Fund) are to
match, exceed or perform the opposite of the performance of a specific index or
market indicator. The benchmark used by each Fund is set forth below:

<TABLE>
<CAPTION>
FUND BENCHMARK
<S> <C>
NOVA FUND 150% OF THE PERFORMANCE OF THE S&P 500 COMPOSITE STOCK PRICE
INDEX-TM- (SPX)
URSA FUND INVERSE (OPPOSITE) OF THE S&P 500 COMPOSITE STOCK PRICE INDEX-TM-
(SPX)
OTC FUND NASDAQ 100 INDEX-TM- (NDX)
PRECIOUS METALS FUND PHILADELPHIA STOCK EXCHANGE GOLD/SILVER INDEX-TM- (XAU)
U.S. GOVERNMENT BOND FUND 120% OF THE PRICE MOVEMENT OF THE LONG TREASURY BOND
JUNO FUND INVERSE (OPPOSITE) OF THE PRICE MOVEMENT OF THE LONG TREASURY BOND
</TABLE>

A BRIEF GUIDE TO THE BENCHMARKS.

THE S&P 500 COMPOSITE STOCK PRICE INDEX-TM- (S&P 500 INDEX). The S&P 500 Index
is a capitalization-weighted index composed of 500 common stocks, which are
chosen by the Standard & Poor's Corporation ("S&P"), on a statistical basis to
be included in the S&P 500 Index.

THE NASDAQ 100 INDEX-TM-. The NASDAQ 100 Index-TM- is a capitalization-weighted
index composed of 100 of the largest non-financial companies listed on the
National Association of Securities Dealers Automated Quotations System.

THE PHILADELPHIA STOCK EXCHANGE GOLD/SILVER INDEX-TM- (XAU INDEX). The XAU Index
is a capitalization-weighted index featuring securities of ten widely-held
companies in the gold and silver mining and production industry, or companies
that invest in such mining and production companies.

THE LONG TREASURY BOND. The Long Treasury Bond is the current U.S. Treasury bond
with the longest maturity. Currently, the longest maturity of a U.S. Treasury
bond is 30 years.
ALL FUNDS:

- are not federally insured

- are not guaranteed by any government agency

- are not bank deposits

- are not guaranteed to achieve their objectives

INVESTING IN ANY OF THE FUNDS INVOLVES RISKS THAT MAY ADVERSELY AFFECT THE
FUNDS' NET ASSET VALUE, YIELD, AND TOTAL RETURN. YOU MAY LOSE MONEY. Each Fund
(except the U.S. Government Money Market Fund) is non-diversified. Non-
diversified funds may invest in the securities of a relatively few number of
issuers. If the assets of a Fund are invested in a limited number of issuers,
the Fund may be more susceptible to a single adverse economic or regulatory
occurrence.
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PROSPECTUS 3
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FUND INFORMATION -- NOVA FUND

FUND OBJECTIVE

The Nova Fund seeks to provide investment returns that are 150% of the S&P
500 Index.

PORTFOLIO INVESTMENTS

Unlike a traditional index fund, as its primary investment strategy, the
Fund invests to a significant extent in futures contracts and options on:
securities, futures contracts, and stock indexes. On a day-to-day basis, the
Fund holds U.S. Government securities to collateralize these futures and options
contracts. Futures and options contracts, if used properly, may enable the Fund
to meet its objective without investing directly in the securities included in
the Index. The Fund also may purchase equity securities and enter into
repurchase agreements.

RISK CONSIDERATIONS

The Nova Fund is subject to a number of risks that will affect the value of
its shares, including:

- EQUITY RISK -- The equity markets are volatile, and the value of the
Fund's futures and options contracts and other securities may fluctuate
drastically from day-to-day.

- LEVERAGING RISK -- The Fund invests a percentage of its assets in
leveraged instruments, such as certain futures and options contracts. The
more the Fund invests in these leveraged instruments, the more this
leverage will magnify the Fund's gains or losses on those investments.

- TRACKING ERROR RISK -- The Advisor may not be able to match the
performance of the Fund's benchmark.

If the Fund meets its objective, the value of the Fund's shares will tend to
increase by 150% of the value of any increase in the S&P 500 Index. However,
when the value of the S&P 500 Index declines, the value of the Fund's shares
should also decrease by 150% of the value of any decrease in the Index.
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4 PROSPECTUS

FUND INFORMATION -- URSA FUND

FUND OBJECTIVE

The Ursa Fund seeks to provide investment results that will inversely
correlate to the performance of the S&P 500 Index.

PORTFOLIO INVESTMENTS

Unlike a traditional index fund, the Fund's benchmark is to perform exactly
opposite the S&P 500 Index, and the Fund will generally not own the securities
included in the Index. Instead, as its primary investment strategy, the Fund
invests to a significant extent in futures contracts and options on: securities,
futures contracts, and stock indexes. On a day-to-day basis, the Fund holds U.S.
Government securities to collateralize these futures and options contracts. The
Fund also may enter into repurchase agreements and sell securities short.

RISK CONSIDERATIONS

The Ursa Fund is subject to a number of risks that will affect the value of
its shares, including:

- EQUITY RISK -- The equity markets are volatile, and the value of the
Fund's futures and options contracts and other securities may fluctuate
drastically from day-to-day.

- TRACKING ERROR RISK -- The Advisor may not be able to match the
performance of the Fund's benchmark.

If the Fund meets its objective, the value of the Fund's shares will tend to
increase during times when the value of the S&P 500 Index is decreasing. When
the value of the S&P 500 Index is increasing, however, the value of the Fund's
shares should decrease by an inversely proportionate amount (e.g., if the S&P
500 Index goes up by 10%, the value of the Fund's shares should go down by 10%).
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PROSPECTUS 5
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FUND INFORMATION -- OTC FUND

FUND OBJECTIVE

The OTC Fund seeks to provide investment results that correspond to a
benchmark for over-the-counter securities. The Fund's current benchmark is the
NASDAQ 100 Index-TM-.

PORTFOLIO INVESTMENTS

The Fund invests principally in securities of companies included in the
NASDAQ 100 Index-TM-. It also may invest in other instruments whose performance
is expected to correspond to that of the Index, and may engage in futures and
options transactions. The Fund may also purchase U.S. Government securities and
enter into repurchase agreements.

RISK CONSIDERATIONS

The OTC Fund is subject to a number of risks that will affect the value of
its shares, including:

- EQUITY RISK -- The equity markets are volatile, and the value of the
Fund's securities and futures and options contracts may fluctuate
drastically from day-to-day.

- TRACKING ERROR RISK -- The Advisor may not be able to match the
performance of the Fund's benchmark.

If the Fund meets its objective, the value of the Fund's shares will tend to
increase by the amount of the increase in value of the NASDAQ 100 Index-TM-.
However, when the value of the NASDAQ 100 Index-TM- declines, the value of the
Fund's shares should also decrease by the amount of the decrease in value of the
Index-TM-.
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6 PROSPECTUS

FUND INFORMATION -- PRECIOUS METALS FUND

FUND OBJECTIVE

The Precious Metals Fund seeks to provide investment results that correspond
to a benchmark primarily for metals-related securities. The Fund's current
benchmark is the XAU Index.

PORTFOLIO INVESTMENTS

The Fund invests in securities of companies included in the XAU Index, as
well as securities whose performance is expected to track the performance of the
XAU Index. The Fund also may engage in futures and options transactions,
purchase ADRs and U.S. government securities, and enter into repurchase
agreements. The Fund may also invest a portion of its assets in securities of
foreign issuers.

RISK CONSIDERATIONS

The Precious Metals Fund is subject to a number of risks that will affect
the value of the Fund's shares, including:

- CONCENTRATION RISK -- The risk that the relatively few securities of
issuers in the same industry (e.g., mining) that the Fund purchases will
underperform the market as a whole. To the extent that the Fund's
investments are concentrated in issuers conducting business in the same
industry, the Fund is subject to legislative or regulatory changes,
adverse market conditions and/or increased competition affecting that
industry, as well as to the volatility of global prices for precious
metals. The prices of precious metals may fluctuate widely due to changes
in inflation or inflation expectations, currency fluctuations,
speculation, worldwide demand and political developments in precious
metals producing countries.

- EQUITY RISK -- The equity markets are volatile, and the value of the
Fund's securities and futures and options contracts may fluctuate
drastically from day-to-day.

- TRACKING ERROR RISK -- The Advisor may not be able to match the
performance of the Fund's benchmark.

If the Fund meets its objective, the value of the Fund's shares will tend to
increase by the amount of the increase in value of the XAU Index. However, when
the value of the XAU Index declines, the value of the Fund's shares should also
decrease by the amount of the decrease in value of the Index.
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PROSPECTUS 7
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FUND INFORMATION -- U.S. GOVERNMENT BOND FUND

FUND OBJECTIVE

The U.S. Government Bond Fund seeks to provide investment results that
correspond to a benchmark for U.S. Government securities. The Fund's current
benchmark is 120% of the price movement of the Long Treasury Bond.

PORTFOLIO INVESTMENTS

The Fund invests principally in U.S. Government securities, futures
contracts, and options. Some of the Fund's U.S. Government securities will be
used to collateralize these futures and options. Futures and options contracts,
if used properly, may enable the Fund to meet its objective by increasing the
Fund's exposure to the securities included in its benchmark. In addition, the
Fund may enter into transactions involving zero coupon U.S. Treasury bonds and
repurchase agreements.

RISK CONSIDERATIONS

The U.S. Government Bond Fund is subject to a number of risks that will
affect the value of its shares, including:

- FIXED INCOME RISK -- The Fund's fixed income investments will change in
value in response to interest rate changes and other factors. In addition,
the value of securities with longer maturities will fluctuate more in
response to interest rate changes.

- TRACKING ERROR RISK -- The Advisor may not be able to match the
performance of the Fund's benchmark.

If the Fund meets its objective, the value of the Fund's shares should
increase by 120% of any price increase by the Long Treasury Bond. In contrast,
when the price of the Long Treasury Bond declines, the value of the Fund's
shares should decline by 120% of any price decline of the Long Treasury Bond.
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8 PROSPECTUS

FUND INFORMATION -- JUNO FUND

FUND OBJECTIVE

The Juno Fund seeks to provide total returns that will inversely correlate
to the price movements of a benchmark for U.S. Treasury debt instruments or
futures contract on a specified debt instrument. The Fund's current benchmark is
the inverse of the price movement of the Long Treasury Bond.

PORTFOLIO INVESTMENTS

Unlike a traditional fund, the Fund's benchmark is to perform exactly
opposite the Long Treasury Bond. As its primary investment strategy, the Fund
enters into short sales and engages in futures and options transactions. On a
day-to-day basis, the Fund holds U.S. Government securities to collateralize
these obligations. The Fund also may enter into repurchase agreements.

RISK CONSIDERATIONS

The Juno Fund is subject to a number of risks that will affect the value of
its shares, including:

- TRACKING ERROR RISK -- The Advisor may not be able to match the
performance of the Fund's benchmark.

If the Fund meets its objective, the value of the Fund's shares will tend to
increase during periods when the price of the Long Treasury Bond decreases. When
the price of the Long Treasury Bond increases, however, the value of the Fund's
shares should decrease by an inversely proportionate amount (e.g., if the price
of the Long Treasury Bond increases by 2%, the value of the Fund's shares should
go down by 2%).
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PROSPECTUS 9
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FUND INFORMATION -- U.S. GOVERNMENT MONEY MARKET FUND

FUND OBJECTIVE

The U.S. Government Money Market Fund seeks to provide security of
principal, high current income, and liquidity.

PORTFOLIO INVESTMENTS

The U.S. Government Money Market Fund invests primarily in money market
instruments issued or guaranteed as to principal and interest by the U.S.
Government, its agencies or instrumentalities, and enters into repurchase
agreements fully collateralized by U.S. Government securities.

RISK CONSIDERATIONS

The U.S. Government Money Market Fund is subject to the following risk that
will potentially affect the value of its shares:

- INTEREST RATE RISK -- The Fund's securities are subject to Interest Rate
Risk, which is the potential for decline in the price of the Fund's
securities due to rising interest rates.

In addition, the U.S. Government Money Market Fund is governed by SEC rules
which impose certain liquidity, maturity and diversification requirements. All
securities purchased by the Fund must have remaining maturities of 397 days or
less. The Fund's assets are valued using the amortized cost method, which
enables the Fund to maintain a stable price of $1.00 per share. ALTHOUGH THE
FUND IS MANAGED TO MAINTAIN A STABLE PRICE PER SHARE OF $1.00, THERE IS NO
GUARANTEE THAT THE PRICE WILL BE CONSTANTLY MAINTAINED.

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10 PROSPECTUS

MORE INFORMATION ABOUT RISK

As indicated below, the Funds are subject to a number of risks that may
affect the value of Fund shares.

EQUITY RISK (NOVA, URSA, OTC, AND PRECIOUS METALS FUNDS) -- The Funds may invest
in public and privately issued equity securities, including common and preferred
stocks, warrants, and rights, as well as instruments that attempt to track the
price movement of equity indices. Investments in equity securities and equity
derivatives in general are subject to market risks that may cause their prices
to fluctuate over time. The value of securities convertible into equity
securities, such as warrants or convertible debt, is also affected by prevailing
interest rates, the credit quality of the issuer and any call provision.
Fluctuations in the value of equity securities in which the Funds invest will
cause the net asset value of the Funds to fluctuate. An investment in the Funds
may be more suitable for long-term investors who can bear the risk of short-term
principal fluctuations.

FIXED INCOME RISK (U.S. GOVERNMENT BOND AND JUNO FUNDS) -- The market value of
fixed income investments will change in response to interest rate changes and
other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Moreover, while securities with longer maturities tend to produce higher yields,
the prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates.

TRACKING ERROR RISK (ALL FUNDS EXCEPT U.S. GOVERNMENT MONEY MARKET FUND) --
While the Funds do not expect returns to deviate from their respective
benchmarks by more than ten percent, factors such as Fund expenses, imperfect
correlation between the Funds' investments and those of their benchmarks,
rounding of share prices, changes to the benchmark, regulatory policies, and
leverage, may affect their ability to achieve perfect correlation. The magnitude
of any tracking error may be affected by a higher portfolio turnover rate.

TRADING HALT RISK (NOVA, URSA, U.S. GOVERNMENT BOND AND JUNO FUNDS) -- The Funds
typically will hold short-term options and futures contracts. The major
exchanges on which these contracts are traded, such as the Chicago Mercantile
Exchange ("CME"), have established limits on how much an option or futures
contract may decline over various time periods within a day. If an option or
futures contract's price declines more than the established limits, trading on
the exchange is halted on that instrument. If a trading halt occurs at the close
of a trading day, a Fund may not be able to purchase or sell options or futures
contracts. In such an event, a Fund also may be required to use a "fair-value"
method to price its outstanding contracts.
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PROSPECTUS 11
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LEVERAGING RISK (NOVA AND U.S. GOVERNMENT BOND FUNDS) -- Leveraging activities
include, among other things, borrowing and the use of certain types of short
sales, options and futures. There are risks associated with leveraging
activities, including:

- A Fund experiencing losses over certain ranges in the market that exceed
losses experienced by a non-leveraged Fund.

- There may be an imperfect or no correlation between the changes in market
value of the securities held by a Fund and the prices of futures and
options on futures.

- Although the Funds will only purchase exchange-traded futures and options,
due to market conditions there may not be a liquid secondary market for a
futures contract or option. As a result, the Funds may be unable to close
out their futures or options contracts at a time which is advantageous.

- Trading restrictions or limitations may be imposed by an exchange, and
government regulations may restrict trading in futures contracts and
options.

In addition, the following instruments may involve leverage and are subject to
certain specific risks:

FUTURES RISK -- Futures contracts and options on futures contracts provide
for the future sale by one party and purchase by another party of a
specified amount of a specific security at a specified future time and at a
specified price. An option on a futures contract gives the purchaser the
right, in exchange for a premium, to assume a position in a futures contract
at a specified exercise price during the term of the option. Index futures
are futures contracts for various indices that are traded on registered
securities exchanges.

The Funds may use futures contracts and related options for bona fide
hedging purposes to offset changes in the value of securities held or
expected to be acquired. They may also be used to gain exposure to a
particular market or instrument, to create a synthetic money market
position, and for certain other tax-related purposes. The Fund will only
enter into futures contracts traded on a national futures exchange or board
of trade.

OPTIONS RISK -- The buyer of an option acquires the right to buy (a call
option) or sell (a put option) a certain quantity of a security (the
underlying security) or instrument at a certain price up to a specified
point in time. The seller or writer of an option is obligated to sell (a
call option) or buy (a put option) the underlying security. When writing
(selling) call options on securities, the Funds may cover its position by
owning the underlying security on which the option is written or by owning a
call option on the underlying security. Alternatively, the Funds may cover
its position by maintaining in a segregated account cash or liquid
securities equal in value to the exercise price of the call option written
by the Funds.
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12 PROSPECTUS

Because option premiums paid or received by the Funds are small in relation
to the market value of the investments underlying the options, buying and
selling put and call options can be more speculative than investing directly
in securities.

SHORT SALES RISK -- In certain short sales transactions, a Fund sells a
security it does not own. To complete the transaction, the Fund must borrow
the security to make delivery to the buyer. The Fund is then obligated to
replace the security borrowed by purchasing the security at the market price
at the time of replacement. The price at such time may be more or less than
the price at which the security was sold by the Fund. In another type of
short sale, a short sale "against the box," a Fund sells a security it owns
or has the right to acquire.

PORTFOLIO TURNOVER RATE RISK (PRECIOUS METALS, OTC AND U.S. GOVERNMENT BOND
FUNDS) -- The Trust anticipates that investors that are part of a tactical or
strategic asset-allocation strategy will frequently redeem or exchange shares of
a Fund, which will cause that Fund to experience high portfolio turnover. A
higher portfolio turnover rate may result in a Fund paying higher levels of
transaction costs and generating greater tax liabilities for shareholders.

CONCENTRATION RISK (PRECIOUS METALS FUND) -- Since the Fund invests in the
securities of a limited number of issuers conducting business in the precious
metals industry, it is subject to the risk that those issuers (or that industry)
will perform poorly, and the Fund will be negatively impacted by that poor
performance. The prices of precious metals may fluctuate widely due to changes
in inflation or inflation expectations, currency fluctuations, speculation,
worldwide demand and political developments in precious metals-producing
countries. None of the Funds will invest 25% or more of the value of the Fund's
total assets in the securities of one or more issuers conducting their principal
business activities in the same industry; EXCEPT THAT, to the extent the
benchmark selected for a particular Fund is concentrated in a particular
industry, the Fund will necessarily be concentrated in that industry. This
limitation does not apply to investments or obligations of the U.S. Government
or any of its agencies or instrumentalities.

EARLY CLOSING RISK (OTC FUND) -- The normal close of trading of securities
listed on the National Association of Securities Dealers Automated Quotations
system ("NASDAQ") and the New York Stock Exchange ("NYSE") is 4:00 P.M., Eastern
Time. Unanticipated early closings may result in a Fund being unable to sell or
buy securities on that day. If an exchange closes early on a day when one or
more of the Funds needs to execute a high volume of securities trades late in a
trading day, a Fund might incur substantial trading losses.

YEAR 2000 RISK (ALL FUNDS) -- The Funds depend on the smooth functioning of
computer systems in almost every aspect of their business. Like other mutual
funds, businesses and individuals around the world, the Funds could be adversely
affected if the computer systems used by its service providers do not properly
process dates on and after January 1, 2000 and distinguish between the
<PAGE>
PROSPECTUS 13
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year 2000 and the year 1900. The Trust has asked their service providers whether
they expect to have their computer systems adjusted for the year 2000
transition, and received assurances from all that they are devoting significant
resources to prevent material adverse consequences to the Funds. The Funds and
their respective shareholders may experience losses if these assurances prove to
be incorrect or as a result of year 2000 computer difficulties experienced by
issuers of portfolio securities or third parties, such as custodians, banks,
broker-dealers or others with which the Funds do business.

FOREIGN COMPANY RISKS (PRECIOUS METALS FUND) -- Investments in securities of
foreign companies can be more volatile than investments in U.S. companies.
Diplomatic, political, or economic developments could affect investments in
foreign countries. Foreign companies generally are not subject to uniform
accounting, auditing, and financial reporting standards comparable to those
applicable to U.S. domestic companies.

PURCHASING AND REDEEMING SHARES

Shares are offered continuously, and may be purchased on any day that the
NYSE is open for business (a "Business Day"). On any day that the New York Fed
or the NYSE closes early, the principal government securities and corporate bond
markets close early (such as on days in advance of holidays generally observed
by participants in these markets), or as permitted by the Securities and
Exchange Commission ("SEC"), the right is reserved to advance the time on that
day by which purchase and redemption orders must be received.

Shares of each Fund can be purchased only by insurance companies for their
separate accounts to fund variable life insurance and variable annuity
contracts. An insurance company purchases and redeems Shares of each Fund based
on, among other things, the amount of net Contract premiums or purchase payments
allocated to a separate account investment division, transfers to or from a
separate account investment division, contract loans and repayments, contract
withdrawals and surrenders, and benefit payments, at the Fund's net asset value
per share calculated as of that same day.

All redemption requests will be processed and payment with respect thereto
will be made within seven days after tender. The Trust may suspend redemption,
if permitted by the Investment Company Act of 1940 (the "1940 Act"), for any
period during which the NYSE, NASDAQ, CME, the Chicago Board Options Exchange
("CBOE") or the Chicago Board of Trade ("CBOT"), as appropriate, is closed or
during which trading is restricted by the SEC, or the SEC declares that an
emergency exists. Redemptions may also be suspended during other periods
permitted by the SEC for the protection of the Trust's investors.

NET ASSET VALUE

The price per share (the offering price) will be the net asset value per
share ("NAV") next determined after your purchase order is received by the
Trust. NAV is calculated by (1) taking the current market value of a Fund's
total assets, (2) subtracting the liabilities, and (3) dividing that
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14 PROSPECTUS

amount by the total number of shares owned by shareholders. For most Funds, the
NAV is calculated once each Business Day after the close of the NYSE (currently,
4:00 p.m., Eastern Time) and the settlement time for the Funds' futures and
options contracts, if any (typically, 4:15 p.m., Eastern Time). The NAV of the
U.S. Government Bond Fund and the Juno Fund is determined each day on which the
CBOT is open for trading futures contracts on U.S. Treasury bonds as of the
close of normal trading on the CBOT (normally 3:00 P.M., Eastern Time). If the
exchange or market where a Fund's securities or other investments are primarily
traded closes early, the NAV may be calculated earlier in accordance with the
policies set forth in the Funds' SAI.

TO RECEIVE THE CURRENT BUSINESS DAY'S NAV, THE TRUST MUST RECEIVE PURCHASE
OR REDEMPTION ORDERS BEFORE 3:45 P.M., EASTERN TIME, FOR THE NOVA, URSA, AND OTC
FUNDS, 3:30 P.M., EASTERN TIME, FOR THE PRECIOUS METALS FUND, 2:45 P.M., EASTERN
TIME, FOR THE U.S. GOVERNMENT BOND AND JUNO FUNDS, AND 1:00 P.M., EASTERN TIME,
FOR THE MONEY MARKET FUND. HOWEVER, YOUR INSURANCE COMPANY MAY HAVE EARLIER
CUTOFF TIMES. VARIABLE LIFE AND VARIABLE ANNUITY ACCOUNT INVESTORS SHOULD
CONSULT THEIR SEPARATE ACCOUNT PROSPECTUS.

MANAGEMENT

THE ADVISOR'S INVESTMENT METHODOLOGY

In managing the Funds, the Advisor's primary objective is to match the
performance of each Fund's benchmark as closely as possible. Through the use of
quantitative analysis techniques, each Fund is structured to match the risk and
return characteristics of the appropriate benchmark, while remaining fully
invested in all market environments. The Advisor monitors each Fund on an
ongoing basis, and makes adjustments, as necessary, to minimize tracking error
and to maximize liquidity. The Advisor may utilize options contracts to leverage
a Fund's investment exposure. In addition, some Funds may require short selling
techniques designed to inversely correlate to the performance of an index or
benchmark.

MANAGEMENT OF THE FUNDS

THE INVESTMENT ADVISOR -- PADCO Advisors II, Inc., a Maryland corporation with
offices at 6116 Executive Boulevard, Suite 400, Rockville, Maryland 20852,
serves as investment advisor and manager of the Funds. Albert P. Viragh, Jr.,
the Chairman of the Board and the President of the Advisor, owns a controlling
interest in the Advisor. From 1985 until the incorporation of the Advisor, Mr.
Viragh was a Vice President of Money Management Associates ("MMA"), a
Maryland-based registered investment advisor. From 1992 to June 1993, Mr. Viragh
was the portfolio manager of The Rushmore Nova Portfolio, a series of The
Rushmore Fund, Inc., an investment company managed by MMA.

The Advisor makes investment decisions for the assets of the Funds and
continuously reviews, supervises, and administers each Fund's investment
program. The Trustees of the Trust supervise the
<PAGE>
PROSPECTUS 15
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Advisor and establish policies that the Advisor must follow in its day-to-day
management activities. Under an investment advisory agreement between the Trust
and the Advisor, the Funds pay the Advisor a fee at an annualized rate, based on
the average daily net assets for each Fund, as set forth below:

<TABLE>
<CAPTION>
FUND ADVISORY FEE
- ----------------------------------------------------------------------------------------------
<S> <C>
Nova .75%
Ursa .90%
OTC .75%
Precious Metals .75%
U.S. Government Bond .50%
Juno .90%
U.S. Government Money Market .50%
</TABLE>

The Advisor bears all of its own costs associated with providing these
advisory services and the expenses of the Trustees who are affiliated with the
Advisor. The Advisor may make payments from its own resources to broker-dealers
and other financial institutions in connection with the sale of Fund shares.

PORTFOLIO MANAGEMENT

The portfolio manager of the Ursa Fund and the OTC Fund is Michael P. Byrum,
who is a Vice President and the Advisor's senior portfolio manager. Prior to
joining the Advisor as a portfolio manager in July 1993, Mr. Byrum worked as an
investor representative with MMA.

The portfolio manager of the Nova Fund and the Juno Fund is Thomas Michael,
who joined the Advisor as a portfolio manager in March 1994. From 1992 to
February 1994, Mr. Michael was a financial markets analyst at Cedar Street
Investment Management Co., of Chicago, Illinois, an institutional consulting
firm specializing in developing hedging and speculative strategies in stock
index futures contracts and U.S. Treasury bond futures contracts.

The portfolio manager of the Precious Metals Fund is T. Daniel Gillespie,
who joined the Advisor as a portfolio manager in January 1997. From July 1994 to
January 1997, Mr. Gillespie was a portfolio manager for GIT Investment Funds, a
registered investment company in Arlington, Virginia, where he managed over $160
million in equity, bond, and money market mutual fund assets. From 1991 to 1994,
Mr. Gillespie worked as a portfolio manager to The Rushmore Fund, Inc., where he
managed over $900 million in mutual fund assets.

The portfolio manager of the U.S. Government Bond Fund is Anne H. Ruff, who
joined the Advisor as a portfolio manager in August 1996. From 1989 to 1995, Ms.
Ruff worked as a portfolio
<PAGE>
- ------
16 PROSPECTUS

manager for United Services Life Insurance Company in Arlington, Virginia, where
she managed $2.5 billion in fixed-income portfolios.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

Income dividends and capital gain distributions are paid at least annually
by each of the Funds, except the U.S. Government Money Market and the U.S.
Government Bond Funds, which declare and pay dividends daily to the insurance
company. The Trust may declare a special capital gains distribution if the
Trustees believe that such a distribution would be in the best interest of the
shareholders of a Fund.

TAXES

Each Fund is treated as a separate entity for federal tax purposes, and
intends to qualify for the special tax treatment afforded regulated investment
companies. As long as a Fund qualifies as a regulated investment company, it
pays no federal income tax on the earnings it distributes to Shareholders. A
Fund is not liable for any income or franchise tax in Delaware as long as it
qualifies as a regulated investment company for federal income tax purposes.

In addition to qualifying for special tax treatment as a regulated
investment company, the Funds intend to meet special diversification
requirements of the Internal Revenue Code (the "Code") in order to assure
insurance companies that their variable annuity and variable life contracts
qualify as insurance under the Code.

<PAGE>
PROSPECTUS 17
--------

FINANCIAL HIGHLIGHTS

On November 2, 1998, the Trust acquired all of the assets and liabilities
(other than liabilities relating to insurance charges) of Rydex Advisor Variable
Annuity Account (the "Separate Account") and the subaccounts of the Separate
Account (the "Subaccounts"). The information prior to that date relates to the
Subaccounts. The financial statements of the Subaccounts were audited by
PricewaterhouseCoopers as indicated in their report dated March 6, 1998 on the
Subaccounts' financial statements as of December 31, 1997. This table should be
read in conjunction with the Subaccounts' financial statements and notes thereto
which are incorporated by reference to the Trust's Statement of Additional
Information under "Financial Information." Additional performance is contained
in the Separate Account's 1998 Semi-Annual Report and is available upon request
and without charge by calling 1-888-667-4936.

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
NOVA URSA
SUBACCOUNT NOVA SUBACCOUNT URSA URSA URSA
SIX MONTHS SUBACCOUNT* SIX MONTHS SUBACCOUNT* SUBACCOUNT* SUBACCOUNT*
ENDED PERIOD ENDED ENDED JUNE 10, 1997 MAY 24, 1997 MAY 7, 1997
JUNE 30, DECEMBER 31, JUNE 30, TO TO TO
1998 1997 1998 DECEMBER 31, 1997 JUNE 3, 1997 MAY 21, 1997
---------- ------------ ---------- ----------------- ------------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Per Accumulation Unit Income
Performance:
Accumulation Unit Value --
Beginning of Period.......... $ 12.21 $ 10.00 $ 8.07 $ 9.36 $ 9.57 $ 10.00
---------- ------------ ---------- -------- ------ ------------
Investment Income........... .25 .29 .17 .12 .01 .01
Expenses.................... .24 .22 .14 .13 .01 .05
---------- ------------ ---------- -------- ------ ------------
Net Investment Income
(Loss)..................... .01 .07 .03 (.01) .00 (.04)
Net Realized and Unrealized
Gains (Losses) on
Securities................. 2.35 2.14 (1.15) (1.28) .01 (.33)
---------- ------------ ---------- -------- ------ ------------
Net Increase (Decrease) in
Accumulation Unit Value.... 2.36 2.21 (1.12) (1.29) .01 (.37)
---------- ------------ ---------- -------- ------ ------------
Accumulation Unit Value -- End
of Period.................... $ 14.57 $ 12.21 $ 6.95 $ 8.07 $ 9.58 $ 9.63
---------- ------------ ---------- -------- ------ ------------
---------- ------------ ---------- -------- ------ ------------
Ratios to Average Net Assets**
Gross Expenses.............. 4.11% 9.09% 4.27% 9.21% 85.10% 13.62%
Net Expenses................ 3.59% 2.80% 3.70% 2.90% 2.90% 2.90%
Net Investment Income
(Loss)..................... 0.14% 0.91% 0.85% (0.27)% 2.76% (10.05)%
Supplementary Data:
Portfolio Turnover
Rate***.................... 0% 178.34% 0% 0% 0% 0%
Net Assets, End of Period
(000's omitted)............ $ 22,135 $ 10,448 $ 3,218 $ 2,879 $ -- $ --
Number of Accumulation Units
Outstanding at End of
Period....................... 1,518,888 855,862 463,004 356,784 -- --
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: NOVA SUBACCOUNT AND URSA SUBACCOUNT -- MAY 7,
1997. DUE TO THE NATURE OF THE INVESTMENT ACTIVITY, CERTAIN SUBACCOUNTS MAY
EXPERIENCE PERIODS WITH ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED
FOR PERIODS WITH NET ASSETS GREATER THAN ZERO ONLY. PER ACCUMULATION UNIT
AMOUNTS ARE CALCULATED USING AVERAGE OUTSTANDING UNITS.

** ANNUALIZED

*** PORTFOLIO TURNOVER RATE IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
<PAGE>
- ------
18 PROSPECTUS

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
PRECIOUS
MONEY MARKET OTC METALS
SUBACCOUNT MONEY MARKET SUBACCOUNT OTC SUBACCOUNT PRECIOUS METALS
SIX MONTHS SUBACCOUNT* SIX MONTHS SUBACCOUNT* SIX MONTHS SUBACCOUNT*
ENDED PERIOD ENDED ENDED PERIOD ENDED ENDED PERIOD ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1998 1997 1998 1997 1998 1997
------------ ------------ ---------- ------------ ---------- ---------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Per Accumulation Unit Income
Performance:
Accumulation Unit Value -- Be-
ginning of Period........... $ 10.32 $ 10.00 $ 10.65 $ 10.00 $ 7.02 $ 10.00
------------ ------------ ---------- ------------ ---------- -------
Investment Income............. .29 .52 .03 .12 .04 .03
Expenses...................... .16 .21 .22 .21 .14 .14
------------ ------------ ---------- ------------ ---------- -------
Net Investment Income
(Loss)...................... .13 .31 (.19) (.09) (.10) (.11)
Net Realized and Unrealized
Gains (Losses) on
Securities.................. (.00) .01 3.90 .74 (.31) (2.87)
------------ ------------ ---------- ------------ ---------- -------
Net Increase (Decrease) in Ac-
cumulation Unit Value....... .13 .32 3.71 .65 (.41) (2.98)
------------ ------------ ---------- ------------ ---------- -------
Accumulation Unit Value -- End
of Period................... $ 10.45 $ 10.32 $ 14.36 $ 10.65 $ 6.61 $ 7.02
------------ ------------ ---------- ------------ ---------- -------
------------ ------------ ---------- ------------ ---------- -------
Ratios to Average Net Assets**
Gross Expenses.............. 3.86% 6.82% 3.97% 9.07% 4.22% 9.76%
Net Expenses.................. 3.00% 2.20% 3.60% 2.80% 3.60% 2.80%
Net Investment Income
(Loss)...................... 2.56% 3.34% (3.02)% (1.22)% (2.70)% (2.19)%
Supplementary Data:
Portfolio Turnover
Rate***.................... 0% 0% 351.34% 449.91% 729.13% 913.83%
Net Assets, End of Period
(000's omitted)............. $ 14,688 $ 17,903 $ 27,762 $ 2,367 $ 67 $ 518
Number of Accumulation Units
Outstanding at End of
Period...................... 1,405,279 1,734,974 1,933,702 222,217 10,094 73,827
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: MONEY MARKET SUBACCOUNT AND OTC SUBACCOUNT --
MAY 7, 1997; PRECIOUS METALS SUBACCOUNT -- MAY 29, 1997. DUE TO THE NATURE
OF THE INVESTMENT ACTIVITY, CERTAIN SUBACCOUNTS MAY EXPERIENCE PERIODS WITH
ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED FOR PERIODS WITH NET
ASSETS GREATER THAN ZERO ONLY. PER ACCUMULATION UNIT AMOUNTS ARE CALCULATED
USING AVERAGE OUTSTANDING UNITS.

** ANNUALIZED

*** PORTFOLIO TURNOVER RATE IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
<PAGE>
PROSPECTUS 19
--------

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
U.S. GOVERNMENT
U.S. GOVERNMENT BOND U.S. GOVERNMENT U.S. GOVERNMENT
BOND SUBACCOUNT* BOND BOND U.S. GOVERNMENT
SUBACCOUNT AUGUST 18, 1997 SUBACCOUNT* SUBACCOUNT* BOND
SIX MONTHS TO JULY 29, 1997 JUNE 24, 1997 SUBACCOUNT*
ENDED DECEMBER 31, TO TO MAY 29, 1997 TO
JUNE 30, 1998 1997 AUGUST 12, 1997 JULY 14, 1997 JUNE 5, 1997
--------------- --------------- --------------- --------------- ---------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Per Accumulation Unit Income
Performance:
Accumulation Unit Value -- Beginning of
Period................................. $ 11.82 $ 10.70 $10.92 $10.44 $10.00
--------------- --------------- ------ ------ ------
Investment Income....................... .31 .24 .03 .13 .01
Expenses................................ .19 .09 .01 .03 .01
--------------- --------------- ------ ------ ------
Net Investment Income (Loss)............ .12 .15 .02 .10 .00
Net Realized and Unrealized Gains
(Losses) on Securities................. .57 .97 (.38) .13 .15
--------------- --------------- ------ ------ ------
Net Increase (Decrease) in Accumulation
Unit Value............................. .69 1.12 (.36) .23 .15
--------------- --------------- ------ ------ ------
Accumulation Unit Value -- End of
Period................................. $ 12.51 $ 11.82 $10.56 $10.67 $10.15
--------------- --------------- ------ ------ ------
--------------- --------------- ------ ------ ------
Ratios to Average Net Assets**
Gross Expenses........................ 3.76% 8.47% 49.63% 12.68% 5.43%
Net Expenses.......................... 3.20% 2.40% 2.40% 2.40% 2.40%
Net Investment Income (Loss).......... 2.01% 3.49% 3.80% 7.94% 1.86%
Supplementary Data:
Portfolio Turnover Rate***............ 1077.28% 760.78% 0% 0% 0%
Net Assets, End of Period (000's
omitted)............................. $ 1,462 $ 892 $ -- $ -- $ --
Number of Accumulation Units
Outstanding at End of Period......... 116,899 75,493 -- -- --
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: U.S. GOVERNMENT BOND SUBACCOUNT -- MAY 29,
1997. DUE TO THE NATURE OF THE INVESTMENT ACTIVITY, CERTAIN SUBACCOUNTS MAY
EXPERIENCE PERIODS WITH ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED
FOR PERIODS WITH NET ASSETS GREATER THAN ZERO ONLY. PER ACCUMULATION UNIT
AMOUNTS ARE CALCULATED USING AVERAGE OUTSTANDING UNITS.

** ANNUALIZED

*** PORTFOLIO TURNOVER RATE IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
<PAGE>
- ------
20 PROSPECTUS

FINANCIAL HIGHLIGHTS (UNAUDITED)

<TABLE>
<CAPTION>
JUNO JUNO
JUNO SUBACCOUNT* SUBACCOUNT*
SUBACCOUNT* FEBRUARY 23, JUNO JANUARY 20,
MARCH 4, 1998 JUNO 1998 SUBACCOUNT* 1998 TO
TO SUBACCOUNT* TO FEBRUARY FEBRUARY 2, JANUARY 25,
JUNE 30, 1998 MARCH 2, 1998 25, 1998 1998 1998
------------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Per Accumulation Unit Income Performance:
Accumulation Unit Value -- Beginning of Period.... $ 9.20 $9.09 $9.03 $8.98 $8.88
------ ----- ----- ----- -----
Investment Income................................. .16 .00 .00 .00 .01
Expenses.......................................... .11 .00 .00 .00 .01
------ ----- ----- ----- -----
Net Investment Income (Loss)...................... .05 .00 .00 .00 .00
Net Realized and Unrealized Gains (Losses) on
Securities....................................... (.65) .00 .04 .00 .11
------ ----- ----- ----- -----
Net Increase (Decrease) in Accumulation Unit
Value............................................ (.60) .00 .04 .00 .11
------ ----- ----- ----- -----
Accumulation Unit Value -- End of Period.......... $ 8.60 $9.09 $9.07 $8.98 $8.99
------ ----- ----- ----- -----
------ ----- ----- ----- -----
Ratios to Average Net Assets*
Gross Expenses.................................. 3.94% 5.79% 4.22% 3.93% 4.39%
Net Expenses.................................... 3.70% 3.70% 3.70% 3.70% 3.70%
Net Investment Income (Loss).................... 1.67% 1.93% 1.79% 2.45% 1.75%
Supplementary Data:
Portfolio Turnover Rate**....................... 0% 0% 0% 0% 0%
Net Assets, End of Period (000's omitted)....... $ 55 $ -- $ -- $ -- $ --
Number of Accumulation Units Outstanding at End
of Period...................................... 6,440 -- -- -- --
</TABLE>

- ------------

* DUE TO THE NATURE OF THE INVESTMENT ACTIVITY, CERTAIN SUBACCOUNTS MAY
EXPERIENCE PERIODS WITH ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED
FOR PERIODS WITH NET ASSETS GREATER THAN ZERO ONLY. PER ACCUMULATION UNIT
AMOUNTS ARE CALCULATED USING AVERAGE OUTSTANDING UNITS.

** ANNUALIZED

*** PORTFOLIO TURNOVER RATE IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.
<PAGE>
PROSPECTUS 21
--------

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
JUNO
JUNO JUNO SUBACCOUNT*
SUBACCOUNT* SUBACCOUNT* JULY 24, JUNO JUNO
OCTOBER 22, AUGUST 26, 1997 JUNO SUBACCOUNT* SUBACCOUNT*
1997 TO 1997 TO TO SUBACCOUNT* JUNE 16, 1997 MAY 7, 1997
DECEMBER OCTOBER 19, AUGUST 11, JULY 7, TO JULY 2, TO JUNE 3,
11, 1997 1997 1997 1997 1997 1997
----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Per Accumulation Unit Income
Performance:
Accumulation Unit Value -- Beginning of
Period................................. $ 9.50 $ 9.72 $ 9.41 $ 9.59 $ 9.71 $10.00
----------- ----------- ----------- ----------- ------ -----------
Investment Income..................... .07 .07 .03 .00 .02 .04
Expenses.............................. (.04) .06 .02 .00 .02 .04
----------- ----------- ----------- ----------- ------ -----------
Net Investment Income (Loss).......... .11 .01 .01 .00 .00 .00
Net Realized and Unrealized Gains
(Losses) on Securities............... (.60) (.21) .26 (.05) (.03) (.14)
----------- ----------- ----------- ----------- ------ -----------
Net Increase (Decrease) in
Accumulation Unit Value.............. (.49) (.20) .27 (.05) (.03) (.14)
----------- ----------- ----------- ----------- ------ -----------
Accumulation Unit Value -- End of
Period................................. $ 9.01 $ 9.52 $ 9.68 $ 9.54 $ 9.68 $ 9.86
----------- ----------- ----------- ----------- ------ -----------
----------- ----------- ----------- ----------- ------ -----------
Ratios to Average Net Assets**
Gross Expenses........................ 19.73% 7.88% 3.23% 111.10% 5.71% 6.13%
Net Expenses.......................... 2.90% 2.90% 2.90% 2.90% 2.90% 2.90%
Net Investment Income (Loss).......... 8.68% 0.80% 1.50% 0.74% 1.29% (0.37)%
Supplementary Data:
Portfolio Turnover Rate***............ 0% 0% 0% 0% 0% 0%
Net Assets, End of Period (000's
omitted)............................. $ -- $ -- $ -- $ -- $ -- $ --
Number of Accumulation Units
Outstanding at End of Period......... -- -- -- -- -- --
</TABLE>

- ------------

* COMMENCEMENT OF OPERATIONS: JUNO SUBACCOUNT -- MAY 7, 1997. DUE TO THE
NATURE OF THE INVESTMENT ACTIVITY, CERTAIN SUBACCOUNTS MAY EXPERIENCE
PERIODS WITH ZERO NET ASSETS. FINANCIAL HIGHLIGHTS ARE PRESENTED FOR
PERIODS WITH NET ASSETS GREATER THAN ZERO ONLY. PER ACCUMULATION UNIT
AMOUNTS ARE CALCULATED USING AVERAGE OUTSTANDING UNITS.

** ANNUALIZED

*** PORTFOLIO TURNOVER RATE IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR.

<PAGE>
- -------
22 PROSPECTUS

BENCHMARK INFORMATION

NEITHER THE NOVA FUND NOR THE URSA FUND IS SPONSORED, ENDORSED, SOLD, OR
PROMOTED BY STANDARD & POOR'S CORP. (S&P); THE OTC FUND IS NOT SPONSORED,
ENDORSED, SOLD, OR PROMOTED BY NASDAQ OR ANY OF NASDAQ'S AFFILIATES (NASDAQ AND
ITS AFFILIATES HEREINAFTER COLLECTIVELY REFERRED TO AS "NASDAQ"); AND THE
PRECIOUS METALS FUND IS NOT SPONSORED, ENDORSED, SOLD, OR PROMOTED BY THE
PHILADELPHIA STOCK EXCHANGE (PHLX), SPONSOR OF THE XAU INDEX.

NONE OF S&P, NASDAQ, AND PHLX MAKE ANY REPRESENTATION OR WARRANTY, IMPLIED OR
EXPRESS, TO THE INVESTORS IN THE FUNDS, OR ANY MEMBER OF THE PUBLIC, REGARDING
THE ADVISABILITY OF INVESTING IN INDEX FUNDS OR THE ABILITY OF THE S&P 500
INDEX, NASDAQ 100 INDEX-TM-, AND THE XAU INDEX, RESPECTIVELY, TO TRACK GENERAL
STOCK MARKET PERFORMANCE.

NONE OF S&P, NASDAQ, AND PHLX GUARANTEES THE ACCURACY AND/OR THE COMPLETENESS OF
THE S&P 500 INDEX, NASDAQ 100 INDEX-TM-, AND THE XAU INDEX, RESPECTIVELY, OR ANY
DATA INCLUDED THEREIN.

NONE OF S&P, NASDAQ, AND PHLX MAKE ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY ANY OF THE FUNDS, THE INVESTORS IN THE FUNDS, OR ANY
PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX, THE NASDAQ 100 INDEX-TM-,
THE XAU INDEX, RESPECTIVELY, OR ANY DATA INCLUDED THEREIN.

NONE OF S&P, NASDAQ, AND PHLX MAKE ANY EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE FOR USE WITH RESPECT TO THE
S&P 500 INDEX, THE NASDAQ 100 INDEX-TM-, THE XAU INDEX, RESPECTIVELY, OR ANY
DATA INCLUDED THEREIN.
<PAGE>
Additional information about the Funds is included in a Statement of Additional
Information dated November 2, 1998 (the "SAI"), which contains more detailed
information about the Funds. The SAI has been filed with the Securities and
Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus and, therefore, legally forms a part of this Prospectus. The SEC
maintains a Web site ("http://www.sec.gov") that contains the SAI, material
incorporated by reference, and other information regarding registrants that file
electronically with the SEC. You may also review and copy documents at the SEC
Public Reference Room in Washington, D.C. (for information call 1-800-SEC-0330).
You may request documents by mail from the SEC, upon payment of a duplication
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, D.C. 20549-6009. To help you to obtain additional
information, the Funds' SEC registration number is 811-08821.

You may obtain a copy of the SAI or the annual or semi-annual reports of Rydex
Advisor Variable Annuity Account, without charge by calling 1-800-820-0888 or by
writing to PADCO Service Company, Inc., at 6116 Executive Boulevard, Suite 400,
Rockville, Maryland 20852. Additional information about the investments of the
Funds' predecessor is available in the annual and semi-annual reports. Also, in
the annual report of the Funds' predecessor, you will find a discussion of the
market conditions and investment strategies that significantly affected
performance during its last fiscal year.

- --------------------------------------------------------------------------------

NO ONE HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE TRUST'S SAI IN
CONNECTION WITH THE OFFERING OF FUND SHARES. DO NOT RELY ON ANY SUCH INFORMATION
OR REPRESENTATIONS AS HAVING BEEN AUTHORIZED BY THE TRUST OR PADCO ADVISORS II,
INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE TRUST IN ANY
JURISDICTION WHERE SUCH AN OFFERING IS NOT LAWFUL.
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

NOVEMBER 2, 1998

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT

CONSECO VARIABLE INSURANCE COMPANY
(FORMERLY GREAT AMERICAN RESERVE INSURANCE COMPANY)
ADMINISTRATIVE OFFICE: 11825 NORTH PENNSYLVANIA STREET, CARMEL, INDIANA 46032
PHONE: (800) 437-3506

INDIVIDUAL DEFERRED VARIABLE ANNUITY CONTRACT
FLEXIBLE PURCHASE PAYMENTS

THIS STATEMENT OF ADDITIONAL INFORMATION (WHICH IS NOT A PROSPECTUS)
SHOULD BE READ IN CONJUNCTION WITH THE CURRENT PROSPECTUS FOR RYDEX ADVISOR
VARIABLE ANNUITY ACCOUNT (THE "SEPARATE ACCOUNT"), DATED NOVEMBER 2, 1998. YOU
MAY OBTAIN A COPY OF THE CURRENT PROSPECTUS BY WRITING TO OR CALLING CONSECO
EQUITY SALES, INC., 11825 NORTH PENNSYLVANIA STREET, CARMEL, INDIANA 46032,
TELEPHONE: (800) 437-3506

TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Total Return Information. . . . . . . . . . . . . . . . . . . . . . . . .2
Comparisons of Total Return . . . . . . . . . . . . . . . . . . . . . . .3

DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . .5

FEDERAL INCOME TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Diversification . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Multiple Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Contracts Owned by Other than Natural Persons . . . . . . . . . . . . . .8
Tax Treatment of Assignments. . . . . . . . . . . . . . . . . . . . . . .8
Income Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . . .8
Tax Treatment of Withdrawals - Non-Qualified Contracts. . . . . . . . . .9
Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Tax Treatment of Withdrawals - Qualified Contracts. . . . . . . . . . . 11
Tax-Sheltered Annuities - Withdrawal Limitations. . . . . . . . . . . . 12

INDEPENDENT ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 13

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

</TABLE>

<PAGE>

PERFORMANCE INFORMATION

TOTAL RETURN INFORMATION

The following tables show investment returns of the subaccounts of the
Separate Account (other than the U.S. Government Money Market Fund), assuming
different amounts invested, different periods of time amounts are invested, and
withdrawal and non-withdrawal of amounts at the end of the periods. Past
performance of a subaccount does not necessarily indicate how a subaccount will
perform in the future.

The average annual rates of total return are computed by finding the
average annual compounded rates of return over the periods shown that would
equate the initial amount invested to the withdrawal value, in accordance
n
with the following formula: P(1 + T) = ERV. In the formula, P is a
hypothetical purchase payment of $1,000; T is the average annual total
return; n is the number of years; and ERV is the withdrawal value at the end
of the period shown.

Table 1: Amount Invested in Subaccount: $1,000 - Withdrawn at End of Period

DATE OF
COMMENCEMENT OF AVERAGE ANNUAL TOTAL RETURN
CONTINUOUS FOR THE PERIODS ENDING
OPERATIONS NOVEMBER 2, 1998
--------------- ---------------------------
SINCE COMMENCEMENT OF
ONE YEAR CONTINUOUS OPERATIONS
-------- ---------------------
<S> <C> <C> <C>
Nova Subaccount 5/7/97 12.19% 18.64%

Ursa Subaccount 6/10/97 -24.55% -23.38%

OTC Subaccount 5/7/97 29.13% 26.54%

Precious Metals Subaccount 5/29/97 -20.94% -28.62%

U.S. Government Bond Subaccount 8/18/97 7.71% 11.84%

Juno Subaccount 3/4/98 N/A -12.99%

</TABLE>

-2-
<PAGE>

Table 2: Amount Invested in Subaccount: $1,000 -- Not Withdrawn at the End of
Period

Nova Subaccount 5/7/97 19.73% 23.90%

Ursa Subaccount* 6/10/97 -19.48% -19.73%

OTC Subaccount 5/7/97 37.81% 32.23%

Precious Metals Subaccount 5/29/97 -15.83% -25.30%

U.S. Government Bond Subaccount* 8/18/97 14.95% 18.03%

Juno Subaccount* 3/4/98 N/A -7.14%

</TABLE>
- ------------------------

* Due to the nature of the investment activity of the Funds underlying the
Subaccounts, there were discrete periods when certain Subaccounts had zero
net assets. The discrete periods for the Ursa Subaccount, and the
investment return for those periods, were as follows: 5/7/97 to 5/21/97
(-3.65%) and 5/24/97 to 6/3/97 (0.69%). The discrete periods for the U.S.
Government Bond Subaccount, and the investment return for those periods,
were as follows: 5/29/97 to 6/5/97 (1.45%), 6/24/97 to 7/14/97 (2.32%) and
7/29/97 to 8/12/97 (-3.70%). The discrete periods for the Juno Subaccount,
and the investment return for those periods, were as follows: 5/7/97 to
6/3/97 (-1.41%), 6/16/97 to 7/2/97 (-0.09%), 7/7/97 (-0.46%), 7/24/97 to
8/11/97 (2.82%), 8/26/97 to 10/19/97 (-2.01%), 10/22/97 to 12/11/97
(-4.4%), 1/20/98 to 1/25/98 (1.89%), 2/2/98 (0.49%), 2/23/98 to 2/25/98
(0.24%) and 3/2/98 (0.85%).

THE PERFORMANCE INFORMATION SET FORTH ABOVE IS FOR PAST PERFORMANCE AND IS
NOT AN INDICATION OR REPRESENTATION OF FUTURE PERFORMANCE.

COMPARISONS OF TOTAL RETURN

Performance information for each of the Separate Account subaccounts
contained in reports to Contract Owners or prospective Contract Owners,
advertisements, and other promotional literature may be compared to the record
of various unmanaged indexes for the same period. In conjunction with
performance reports, promotional literature, and/or analyses of Contract Owner
service for a subaccount, comparisons of the performance information of the
subaccount for a given period to the performance of recognized, unmanaged
indexes for the same period may be made. Such indexes include, but are not
limited to, ones provided by Dow Jones & Company, Standard & Poor's Corporation,
Lipper Analytical Services, Inc., Shearson Lehman Brothers, National Association
of Securities Dealers, Inc., The Frank Russell Company, Value Line Investment
Survey, the American Stock Exchange, the Philadelphia Stock Exchange, Morgan
Stanley Capital International, Wilshire Associates, the Financial Times-Stock
Exchange, and the Nikkei Stock Average and Deutcher Aktienindex, all of which
are unmanaged market

-3-
<PAGE>

indicators. Such comparisons can be a useful measure of the quality of a
subaccount's investment performance.

In particular, performance information for the Nova subaccount, the Ursa
subaccount, and the Precious Metals subaccount may be compared to various
unmanaged indexes, including, but not limited to, the Standard & Poor's 500
Composite Stock Price Index-TM- (the "S&P 500 Index") or the Dow Jones
Industrial Average. Performance information for the Precious Metals subaccount
also may be compared to the current benchmark for the Precious Metals
subaccount, Philadelphia Stock Exchange Gold/Silver Index-TM- (the "XAU Index").
Performance information for the OTC subaccount may be compared to various
unmanaged indexes, including, but not limited to the current benchmark for the
OTC Fund, NASDAQ 100 Index-TM-, and the NASDAQ Composite Index-TM-. The NASDAQ
Composite Index-TM- comparison may be provided to show how the OTC subaccount's
total return compares to the record of a broad average of over-the-counter stock
prices over the same period. The OTC Fund has the ability to invest in
securities not included in the NASDAQ 100 Index-TM- or the NASDAQ Composite
Index-TM-, and the OTC Fund's investment portfolio may or may not be similar in
composition to NASDAQ 100 Index-TM- or the NASDAQ Composite Index-TM-. The
NASDAQ Composite Index-TM- is based on the prices of an unmanaged group of
stocks and, unlike the OTC Fund's returns, the returns of the NASDAQ Composite
Index-TM-, and such other unmanaged indexes, may assume the reinvestment of
dividends, but generally do not reflect payments of brokerage commissions or
deductions for operating costs and other expenses of investing. Performance
information for the U.S. Government Bond subaccount and the Juno subaccount may
be compared to the price movement of the current long treasury bond (the "Long
Bond") and to various unmanaged indexes, including, but not limited to, the
Shearson Lehman Government (LT) Index-TM-. Such unmanaged indexes may assume
the reinvestment of dividends, but generally do not reflect deductions for
operating costs and expenses.

In addition, rankings, ratings, and comparisons of investment performance
and/or assessments of the quality of Contract Owner service appearing in
publications such as MONEY, FORBES, KIPLINGER'S MAGAZINE, PERSONAL INVESTOR,
MORNINGSTAR, INC., THE MORNINGSTAR VARIABLE ANNUITY/LIFE REPORTER, VARDS, and
similar sources which utilize information compiled internally or by Lipper
Analytical Services, Inc., may be provided.

From time to time, each subaccount, other than the U.S. Government Money
Market subaccount, also may include in such advertising a total return figure
that is not calculated according to the formula set forth above in order to
compare more accurately the performance of the subaccount with other measures of
investment return. For example, in comparing the total return of a subaccount
with data published by Lipper Analytical Services, Inc., or with the performance
of the S&P 500 Index or the Dow Jones Industrial Average for each of the Nova
subaccount and the Ursa subaccount, the NASDAQ 100 Index-TM- for the OTC
subaccount, the XAU Index for the Precious Metals subaccount, and the Lehman
Government (LT) Index for the U.S. Government Bond subaccount and the Juno
subaccount, Conseco Variable Insurance Company ("CVIC") (formerly Great American
Reserve Insurance Company) may calculate for

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<PAGE>

each subaccount the aggregate total return for the specified periods of time by
assuming the allocation of $10,000 to the subaccount and assuming the
reinvestment of each dividend or other distribution at Accumulation Unit value
on the reinvestment date. Percentage increases are determined by subtracting
the initial value of the investment from the ending value and by dividing the
remainder by the beginning value. Each subaccount may show non-standardized
total returns and average annual total returns that do not include the
withdrawal charge (ranging from 7% to 0%) which, if included, would reduce total
return. Such alternative total return information will be given no greater
prominence in such advertising than the information prescribed under SEC Rules.

DISTRIBUTION OF CONTRACTS

Conseco Equity Sales, Inc., 11825 North Pennsylvania Street, Carmel,
Indiana 46032, is the principal underwriter of the Contracts. Prior to
November 2, 1998, PADCO Financial Services, Inc., was the principal underwriter
of the Contracts. The offering of the Contracts is continuous, although CVIC
reserves the right to suspend the offer and sale of the Contracts whenever, in
its opinion, market or other conditions make a suspension appropriate. CES is a
broker-dealer registered under the Securities Exchange Act of 1934, as amended,
and is a member of the National Association of Securities Dealers, Inc. The
Contracts are sold by authorized broker-dealers, and their registered
representatives, including registered representatives of CES. The
broker-dealers and their registered representatives are also licensed insurance
agents of CVIC. CVIC and its principal underwriter pay commissions to
authorized broker-dealers not exceeding 6.0% of purchase payments.

FEDERAL INCOME TAX CONSIDERATIONS

GENERAL

NOTE: THE FOLLOWING DESCRIPTION IS BASED UPON CVIC'S UNDERSTANDING OF CURRENT
FEDERAL INCOME TAX LAW APPLICABLE TO ANNUITIES IN GENERAL. CVIC 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. CVIC 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.

-5-
<PAGE>

Section 72 of the Code governs taxation of annuities in general. A
Contract 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. 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. Contract Owners, annuitants and beneficiaries under
the Contracts should seek competent financial advice about the tax consequences
of any distributions.

CVIC is taxed as a life insurance company under the Code. For federal
income tax purposes, the Separate Account is not a separate entity from CVIC,
and its operations form a part of CVIC.

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 Contract Owner with respect to earnings allocable to the Contract
prior to the receipt of payments under the Contract. The Code contains a safe
harbor provision which provides that annuity contracts such as the Contract meet
the diversification requirements if, as of the end of each quarter, the
underlying assets meet the diversification standards for a regulated investment
company and no more than fifty-five percent (55%) of the total assets consist of
cash, cash items, U.S. Government securities and securities of other regulated
investment companies.

On March 2, 1989, the Treasury Department issued Regulations (Treas.
Reg.1.817-5), which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contract. The Regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the Regulations, an investment portfolio will be deemed adequately

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<PAGE>

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."

CVIC intends that all Funds 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 Contract Owner
control of the investments of the Separate Account will cause the Contract Owner
to be treated as the owner of the assets of the Separate 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 Contract 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 Contract Owner's ability to
transfer among investment choices or the number and type of investment choices
available, would cause the Contract Owner to be considered as the owner of the
assets of the Separate Account resulting in the imposition of federal income tax
to the Contract 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 Contract
Owners being retroactively determined to be the owners of the assets of the
Separate Account.

Due to the uncertainty in this area, CVIC reserves 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

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<PAGE>

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. Contract 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 Contract Owner if the Contract
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. Contract
Owners should therefore consult competent tax advisers should they wish to
assign or pledge their Contracts.

INCOME TAX WITHHOLDING

All distributions or the portion thereof which is includible in the gross
income of the Contract 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 Contract
Owner, in most cases, may elect not to have taxes withheld or to have
withholding done at a different rate.

Effective January 1, 1993, certain distributions from retirement plans
qualified under Section 401 or Section 403(b) of the Code, which are not
directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity, are subject to a mandatory
20% withholding for federal income tax. The 20% withholding requirement
generally does not apply to: a) a series of substantially equal payments made
at least annually for the life or life expectancy of the participant or joint
and last survivor expectancy of the participant and a designated beneficiary or
for a specified period of 10 years or more; or b) distributions which are
required minimum distributions; or c) the portion of the distributions not
includible in gross income (i.e. returns of after-tax contributions).
Participants should consult their own tax counsel or other tax adviser regarding
withholding requirements.

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<PAGE>

TAX TREATMENT OF WITHDRAWALS - NON-QUALIFIED CONTRACTS

Section 72 governs treatment of distributions from annuity contracts.
Section 72 generally 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.
Section 72 further provides that a ten percent (10%) penalty will apply to the
income portion of any premature distribution. However, the penalty is not
imposed on amounts received: (a) after you reach age 59 1/2; (b) after your
death; (c) if you become totally disabled (for this purpose disability is as
defined in Section 72(m)(7) of the Code); (d) in a series of substantially
equal periodic payments made not less frequently than annually for your life (or
life expectancy) or for the joint lives (or joint life expectancies) of you and
your beneficiary; (e) under an immediate annuity; or (f) which are allocable to
purchase payments made prior to August 14, 1982.

The above information does not apply to qualified Contracts. However,
separate tax withdrawal penalties and restrictions may apply to such qualified
Contracts. (See "Tax Treatment of Withdrawals - Qualified Contracts" below.)

QUALIFIED PLANS

The Contracts offered herein are 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. Contract 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 CVIC's administrative procedures. Contract
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.)

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<PAGE>

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 CVIC in connection with
certain 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.) Employee loans are not
permitted under these Contracts. Any employee should obtain competent tax
advice as to the tax treatment and suitability of such an investment.

b. Individual Retirement Annuities

Section 408(b) of the Code permits eligible individuals to contribute up to
$2,000 per year to an individual retirement program known as an
"Individual Retirement Annuity" ("IRA"). Under applicable limitations,
certain amounts may be contributed to an IRA which will be deductible from
the individual's gross income. These IRAs are subject to limitations on
eligibility, contributions, transferability and distributions. (See "Tax
Treatment of Withdrawals - 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.

Roth IRAs

Beginning in 1998, individuals may purchase a new type of non-deductible
IRA, known as a Roth IRA. Purchase payments for a Roth IRA are limited to
a maximum of $2,000 per year. Lower maximum limitations apply to
individuals with adjusted gross incomes between $95,000 and $110,000 in the
case of single taxpayers, between $150,000 and

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<PAGE>

$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 to 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 hold a Roth IRA for at
least five years and, in addition, that the distribution be held either
after the individual reaches age 59 1/2, on the individual's death or
disability, or as a qualified first-time home purchase, subject to a
$10,000 lifetime maximum, for the individual, a spouse, child, grandchild,
or ancestor. Any distribution which is not a qualified distribution is
taxable to the extent of earnings in the distribution. Distributions are
treated as made from contributions first and therefore no distributions are
taxable until distributions exceed the amount of contributions 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. In addition, distributions of amounts attributable to conversion
deposits (I.E. rollover contributions from a Non-Roth IRA to a Roth IRA)
held for less than five years will also be subject to the penalty tax.

Amounts may be rolled over from one Roth IRA to another Roth IRA.
Furthermore, an individual may make a rollover contribution from a non-Roth
IRA to a Roth IRA, unless the individual has adjusted gross income over
$100,000 or the individual is a married taxpayer filing a separate return.
The individual must pay tax on any portion of the IRA being rolled over
that represents income or a previously deductible IRA contribution.
However, for rollovers in 1998, the individual may pay that tax ratably
over the four taxable year period beginning with tax year 1998.

Purchasers of Contracts to be qualified as a Roth IRA should obtain
competent tax advice as to the tax treatment and suitability of such an
investment.

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 403(b)
(Tax-Sheltered Annuities) and 408 and 408A (Individual Retirement Annuities).
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)
if distribution is made on or after the date on which the Contract Owner reaches
age 59 1/2; (b) distributions following the death or disability of the Contract
Owner (for this purpose disability is as defined

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<PAGE>

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 Contract
Owner or the joint lives (or joint life expectancies) of such Contract Owner and
his or her designated Beneficiary; (d) distributions to a Contract Owner who has
separated from service after he has attained age 55; (e) distributions made to
the Contract Owner to the extent such distributions do not exceed the amount
allowable as a deduction under Code Section 213 to the Contract Owner or
Annuitant (as applicable) for amounts paid during the taxable year for medical
care; (f) distributions made to an alternate payee pursuant to a qualified
domestic relations order; (g) distributions from an Individual Retirement
Annuity for the purchase of medical insurance (as described in Section
213(d)(1)(D) of the Code) for the Contract Owner and his or her spouse and
dependents if the Contract Owner has received unemployment compensation for at
least 12 weeks (this exception will no longer apply after the Contract Owner has
been re-employed for at least 60 days); (h) distributions from an Individual
Retirement Annuity made to the Contract Owner 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 Contract Owner for the taxable year; and (i)
distributions from an Individual Retirement Annuity made to the Contract Owner
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.

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.

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: (1) when the Contract Owner
attains age 59 1/2; (2) when the Contract Owner separates from service; (3)
when the Contract Owner dies; (4) when the Contract Owner becomes disabled
(within the meaning of Section 72(m)(7) of the Code); (5) in the case of
hardship; or (6) pursuant to the terms of a Qualified Domestic Relations
Order. However, withdrawals for hardship are restricted to the portion of
the Contract Owner's Contract Value which represents contributions made by
the Contract 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

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<PAGE>

do not affect transfers between Tax-Sheltered Annuity Plans. Contract Owners
should consult their own tax counsel or other tax adviser regarding any
distributions.

INDEPENDENT ACCOUNTANTS

The financial statements of CVIC as of December 31, 1997 and for the two
years then ended, included in this Statement of Additional Information, have
been audited by PricewaterhouseCoopers LLP, 2900 One American Square, Box 82002,
Indianapolis, Indiana, 46282-0002, as stated in their report herein.

FINANCIAL STATEMENTS

The financial statements of CVIC are included on the following pages. They
should only be considered as bearing on the ability of the Company to meet its
obligations under the Contracts.

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<PAGE>

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
STATEMENT OF NET ASSETS
NOVEMBER 2, 1998
(Unaudited)
<TABLE>
<CAPTION>
Reported
Shares Cost Value
ASSETS:
Investments in Rydex Variable Trust portfolio shares, at net asset value (Note 2):
<S> <C> <C> <C>
Juno Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,304.3 $ 93,453 $ 95,272
Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . 32,127,585.5 32,127,585 32,127,585
Nova Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,807,614.6 23,215,358 24,358,893
OTC Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,079,187.1 13,047,031 16,164,832
Precious Metals Fund. . . . . . . . . . . . . . . . . . . . . . . 172,864.4 1,108,752 1,167,680
Ursa Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 811,892.6 5,857,203 5,671,499
U.S. Government Bond Fund . . . . . . . . . . . . . . . . . . . . 391,472.3 5,259,353 5,229,895

TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $84,815,656

Reported
Units Unit Value Value

NET ASSETS OF RYDEX VARIABLE TRUST ATTRIBUTABLE TO CONTRACT OWNERS' DEFERRED ANNUITY RESERVES:
<S> <C> <C> <C>
Juno Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,304.3 $ 8.427921 $ 95,272
Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . 3,049,537.7 10.535231 32,127,585
Nova Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,807,614.6 13.475711 24,358,893
OTC Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,079,187.1 14.978711 16,164,832
Precious Metals Fund. . . . . . . . . . . . . . . . . . . . . . . 172,864.4 6.754890 1,167,680
Ursa Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 811,892.6 6.985529 5,671,499
U.S. Government Bond Fund . . . . . . . . . . . . . . . . . . . . 391,472.3 13.359552 5,229,895

NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS' DEFERRED ANNUITY RESERVES. . . . . . . . . $84,815,656

</TABLE>

The accompanying notes are an integral part of this financial statement.

<PAGE>

RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
NOTES TO STATEMENT OF NET ASSETS
(UNAUDITED)

(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") (formerly Great American Reserve Insurance Company prior
to its name change in October 1998). 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 a Plan
of Reorganization approved by the contract owners of the Account on October 26,
1998.

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.

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. Conseco Equity Sales, Inc., a wholly owned subsidiary of Conseco, Inc.,
acts as principal underwriter for the Account.

The Statement of Net Assets has been prepared in accordance with generally
accepted accounting principles and, as such, includes amounts based on informed
estimates and judgments of management with consideration given to materiality.
Actual results could differ from those estimates.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATION, TRANSACTIONS, AND INCOME

Investments in portfolio shares are valued using the net asset value of the
respective 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. 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
Statement of Net Assets 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) 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

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RYDEX ADVISOR VARIABLE ANNUITY ACCOUNT
NOTES TO STATEMENT OF NET ASSETS
(UNAUDITED)

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.

(3) DEDUCTIONS AND EXPENSES (CONTINUED)

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.

Pursuant to an agreement between the Account and the Company, the
Company provides sales and administrative services to the Account. The
Company may deduct a percentage of the sum of purchase payments less prior
withdrawals from the contract to cover sales expenses. The percentage
declines from 7% to 0% over a seven-year period commencing on the date of
receipt of the purchase payment. The Company also deducts daily from the
Account a fee, which is equivalent on an annual basis of .15 percent of the
daily value of the total investments of the Accounts for Administrative
expenses.