-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SgfXUBTnTwJRp2u7dz56AktsRHpz/Wgsy/gUlQz/ulMu9VICrd9Tt6B8D+R042h5 ObcsPIIzeMBsxN94w4G2tw== 0001016843-97-000677.txt : 19971231 0001016843-97-000677.hdr.sgml : 19971231 ACCESSION NUMBER: 0001016843-97-000677 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19971230 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WRL SERIES LIFE ACCOUNT CENTRAL INDEX KEY: 0000778209 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 497 SEC ACT: SEC FILE NUMBER: 033-00506 FILM NUMBER: 97745907 BUSINESS ADDRESS: STREET 1: 201 HIGHLAND AVE CITY: LARGO STATE: FL ZIP: 34640 BUSINESS PHONE: 813-587-18 MAIL ADDRESS: STREET 1: 201 HIGHLAND AVENUE CITY: LARGO STATE: FL ZIP: 33770 497 1 SUPPLEMENT DATED JANUARY 1, 1998 TO PROSPECTUS DATED MAY 1, 1989 AS SUPPLEMENTED MAY 1, 1997 THE EQUITY PROTECTOR THE FOLLOWING INFORMATION MODIFIES AND SUPPLEMENTS INFORMATION PROVIDED ON PAGE 4 OF THE PROSPECTUS UNDER THE HEADING "7. HOW ARE NET PREMIUMS ALLOCATED?", AND ON PAGES 12-13 UNDER THE HEADING "INVESTMENTS OF THE SERIES ACCOUNT - WRL SERIES FUND": Effective January 2, 1998, the Fund will offer a new investment option. This new option is the Third Avenue Value Portfolio ("Portfolio"). The investment objective and policy of the Portfolio are summarized below. There is no assurance that the Portfolio will achieve its stated objective. Also, effective January 2, 1998, the Short-to-Intermediate Government Portfolio is no longer available as an investment option of the Fund; the Bond Portfolio will have a change of Sub-Adviser from Janus Capital Corporation to AEGON USA Investment Management, Inc.; and the Bond and C.A.S.E. Growth Portfolios will each have a change to their investment objective. See the information below for details. For more detailed information, including a description of risks, see the prospectus for the Fund, which should be read carefully. On or about December 16, 1997, after receiving an Order from the Securities and Exchange Commission ("Commission"), Western Reserve redeemed shares of the Short-to-Intermediate Government Portfolio held by the Short-to-Intermediate Government Sub-Account and purchased shares of the Bond Portfolio with the proceeds. Immediately following the substitution of shares, the assets of the Short-to-Intermediate Government Sub-Account were transferred to the Bond Sub-Account, thereby consolidating the Short-to-Intermediate Government Sub-Account into the Bond Sub-Account. The Portfolio substitution and Sub-Account consolidation took place at net asset value with no change in the amount of any Owner's benefits or Cash Value. Western Reserve and its affiliates did not receive any compensation or remuneration as a result of this transaction. THIRD AVENUE VALUE PORTFOLIO: This Portfolio seeks long-term capital appreciation by investing primarily in a portfolio of equity securities of well-financed companies believed to be priced below their private market values and debt securities providing strong protective covenants and high, effective yields. EQSF Advisers, Inc. ("EQSF"), is sub-adviser to the Third Avenue Value Portfolio of the Fund. EQSF is a New York corporation organized in 1988 and is controlled by Martin J. Whitman. WRL Investment Management, Inc. ("WRL Management") and EQSF will divide equally monthly compensation at the current annual rate of 0.80% of the aggregate average daily net assets of the Third Avenue Value Portfolio. EQSF's compensation will be reduced by 50% of the amount paid by WRL Management on behalf of the Third Avenue Value Portfolio pursuant to any expense limitation or other reimbursement. BOND PORTFOLIO: This Portfolio seeks the highest possible current income within the confines of the primary goal of insuring the protection of capital by investing at least 65% and usually a higher percentage of its assets in debt securities issued by the U.S. Government and its agencies and instrumentalities and in other medium to high-quality debt securities. AEGON USA Investment Management, Inc. ("AIMI") serves as sub-adviser to the Balanced and Bond Portfolios of the Fund. AIMI is a wholly-owned subsidiary of AEGON USA. WRL Management and AIMI will divide equally monthly compensation at the current rate of 0.80% of the aggregate average daily net assets of the Balanced Portfolio. WRL Management will receive monthly compensation at the current annual rate of 0.45% and AIMI will receive 0.20% of the aggregate average daily net assets of the Bond Portfolio. AIMI's compensation will be reduced by 50% of the amount paid by WRL Management on behalf of the Balanced and Bond Portfolios pursuant to any expense limitation or other reimbursement. C.A.S.E. GROWTH PORTFOLIO: This Portfolio seeks annual growth of capital through investment in companies whose management, financial resources and fundamentals appear attractive on a scale measured against each company's present value. THE FOLLOWING INFORMATION IS ADDED TO PAGE 7, BEFORE THE SECTION ENTITLED "WESTERN RESERVE AND THE SERIES ACCOUNT" OF THE PROSPECTUS: The information contained in both the explanation and "Hypothetical Illustrations" is out-of-date and should not be relied upon. In addition, current hypothetical illustrations for the new Portfolios are not included in Appendix A. FUND ANNUAL EXPENSES* (as a % of Fund average net assets) THIRD AVENUE VALUE PORTFOLIO BOND PORTFOLIO --------------- -------------- Management Fees 0.80% 0.50%*** Other Expenses 0.13% 0.14% (After Reimbursement) Total Fund Annual Expenses 0.93% 0.64% - -------------- *Effective January 1, 1997, the Fund adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act ("Distribution Plan") and pursuant to the Plan, has entered into a Distribution Agreement with InterSecurities, Inc. ("ISI"), principal underwriter for the Fund. Under the Distribution Plan, the Fund, on behalf of the Portfolios, is authorized to pay to various service providers, as direct payment for expenses incurred in connection with the distribution of a Portfolio's shares, amounts equal to actual expenses associated with distributing a Portfolio's shares, up to a maximum rate of 0.15% (fifteen one-hundredths of one percent) on an annualized basis of the average daily net assets. This fee is measured and accrued daily and paid monthly. ISI has determined that it will not seek payment by the Fund of distribution expenses with respect to any Portfolio during the fiscal year ending December 31, 1998. Prior to ISI seeking reimbursement, Policyowners will be notified in advance. **Because the Value Equity and Global Sector Portfolios commenced operations on May 1, 1996, the percentages set forth as "Other Expenses" and "Total Fund Annual Expenses" are annualized. Because the International Equity and U.S. Equity Portfolios commenced operations on January 2, 1997, and the Third Avenue Value Portfolio commenced operations on January 2, 1998, the percentages set forth as "Other Expenses" and "Total Fund Annual Expenses" are estimates. ***Effective January 1, 1998, the management fees for the Bond Portfolio will be reduced from 0.50% to 0.45% of the Portfolio's average daily net assets. On December 16, 1997, Western Reserve received an Order from the Commission approving the substitution of shares of the Bond Portfolio for shares of the Short-to-Intermediate Government Portfolio. On or about December 16, 1997, the substitution was effected in accordance with the Commission's Order. As a result of the substitution, investments in the former Short-to-Intermediate Government Sub-Account were automatically transferred to the Bond Sub-Account and the Short-to-Intermediate Government Sub-Account was liquidated. THE ATTACHED FINANCIALS SUPPLEMENT THE FINANCIAL STATEMENTS INCLUDED IN THE MAY 1,1989 PROSPECTUS BOOKLET. WRL00182-01/98 WRL SERIES LIFE ACCOUNT MONEY MARKET SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Money Market Portfolio (14,179,829.230 shares; cost $14,179,829) ............ $14,179,829 Accrued transfers from (to) depositor - net ............ 140,423 ----------- Total assets ............... 14,320,252 ----------- LIABILITIES: .................. 350 ----------- Total net assets ............ $14,319,902 =========== EQUITY ACCOUNTS: Policyowners' equity: Money Market sub-account (897,927.644465 units; $15.947724 unit value) ...... $14,319,902 ----------- Total equity ............... $14,319,902 ===========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $561,428 Capital gain distributions ......... 0 -------- 561,428 EXPENSES: Mortality and expense risk charges 97,772 -------- Net investment income (loss) ...... 463,656 -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 0 Change in unrealized appreciation (depreciation) ............... 0 -------- Net gain (loss) on investments ... 0 -------- Net increase (decrease) in equity accounts resulting from operations ..................... $463,656 ========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ 463,656 $ 491,185 Net gain (loss) on investments ....................................... 0 0 ----------- ----------- Net increase (decrease) in equity accounts resulting from operations 463,656 491,185 ----------- ----------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed) ................................. 4,799,129 5,217,298 ----------- ----------- Less cost of units redeemed: Administrative charges ............................................. 2,318,360 2,639,279 Policy loans ......................................................... 634,328 285,757 Surrender benefits ................................................... 721,584 776,305 Death benefits ...................................................... 8,640 25,737 ----------- ----------- 3,682,912 3,727,078 ----------- ----------- Increase (decrease) in equity accounts from capital unit transactions 1,116,217 1,490,220 ----------- ----------- Net increase (decrease) in equity accounts ........................... 1,579,873 1,981,405 EQUITY ACCOUNTS: Beginning of period ................................................... 12,740,029 10,758,624 ----------- ----------- End of period ......................................................... $14,319,902 $12,740,029 =========== ===========
The notes to the financial statements are an integral part of this report. 1 WRL SERIES LIFE ACCOUNT MONEY MARKET SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 ---------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 ------------- ------------ ------------ ------------ ------------ ------------ Accumulation unit value, beginning of period $ 15.45 $ 14.83 $ 14.19 $ 13.84 $ 13.63 $ 13.33 Income from operations: Net investment income (loss) ............... .50 .62 .64 .35 .21 .30 Net realized and unrealized gain (loss) on investments ............... .00 .00 .00 .00 .00 .00 --------- --------- --------- --------- --------- --------- Total income (loss) from operations ...... .50 .62 .64 .35 .21 .30 --------- --------- --------- --------- --------- --------- Accumulation unit value, end of period ...... $ 15.95 $ 15.45 $ 14.83 $ 14.19 $ 13.84 $ 13.63 ========= ========= ========= ========= ========= ========= Total return(a) .............................. 3.22% 4.17% 4.49% 2.58% 1.52% 2.24% Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 14,320 $ 12,740 $ 10,759 $ 9,706 $ 4,985 $ 4,619 Ratio of net investment income (loss) to average net assets(b) ..................... 4.23% 4.07% 4.37% 2.66% 1.51% 2.12%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 2 WRL SERIES LIFE ACCOUNT BOND SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Bond Portfolio (1,237,737.879 shares; cost $13,361,933)............ $13,862,933 Accrued transfers from (to) depositor - net ......... (3,514) ----------- Total assets ............... 13,859,419 ----------- LIABILITIES: .................. 341 ----------- Total net assets ............ $13,859,078 =========== EQUITY ACCOUNTS: Policyowners' equity: Bond sub-account (675,824.385058 units; $20.506922 unit value) ...... $13,859,078 ----------- Total equity ............... $13,859,078 ===========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 135,261 Capital gain distributions ......... 0 ---------- 135,261 EXPENSES: Mortality and expense risk charges 82,919 ---------- Net investment income (loss) ...... 52,342 ---------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... (192,238) Unrealized appreciation (depreciation) ............... 779,508 ---------- Net gain (loss) on investments ... 587,270 ---------- Net increase (decrease) in net assets resulting from operations ..................... $ 639,612 ==========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ 52,342 $ 553,012 Net gain (loss) on investments ....................................... 587,270 (613,958) ----------- ----------- Net increase (decrease) in equity accounts resulting from operations 639,612 (60,946) ----------- ----------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed): ................................. 3,389,659 3,451,573 ----------- ----------- Less cost of units redeemed: Administrative charges ............................................. 1,206,516 1,314,254 Policy loans ......................................................... 268,423 191,268 Surrender benefits ................................................... 278,383 338,599 Death benefits ...................................................... 1,419 28,090 ----------- ----------- 1,754,741 1,872,211 ----------- ----------- Increase (decrease) in equity accounts from capital unit transactions 1,634,918 1,579,362 ----------- ----------- Net increase (decrease) in equity accounts ........................... 2,274,530 1,518,416 EQUITY ACCOUNTS: Beginning of period ................................................... 11,584,548 10,066,132 ----------- ----------- End of period ......................................................... $13,859,078 $11,584,548 =========== ===========
The notes to the financial statements are an integral part of this report. 3 WRL SERIES LIFE ACCOUNT BOND SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 ---------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 ------------- ------------- ------------ ------------- ----------- ----------- Accumulation unit value, beginning of period $ 19.53 $ 19.67 $ 16.14 $ 17.50 $ 15.57 $ 14.68 Income from operations: Net investment income (loss) ............... .09 .99 1.05 .89 2.11 1.00 Net realized and unrealized gain (loss) on investments ............... .89 ( 1.13) 2.48 ( 2.25) ( .18) ( .11) --------- -------- --------- -------- -------- -------- Total income (loss) from operations ...... .98 ( .14) 3.53 ( 1.36) .1.93 .89 --------- -------- --------- -------- -------- -------- Accumulation unit value, end of period ...... $ 20.51 $ 19.53 $ 19.67 $ 16.14 $ 17.50 $ 15.57 ========= ======== ========= ======== ======== ======== Total return(a) .............................. 5.02% ( .75%) 21.89% ( 7.77%) 12.40% 6.08% Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 13,859 $ 1,585 $ 10,066 $ 6,259 $ 6,985 $ 4,558 Ratio of net investment income (loss) to average net assets(b) ..................... .6 % 5.34% 5.80% 5.57% 12.92% 6.69%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 4 WRL SERIES LIFE ACCOUNT GROWTH SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Growth Portfolio (10,798,143.320 shares; cost $303,973,822)............ $457,846,222 Accrued transfers from (to) depositor - net ............ 79,810 ------------ Total assets ............... 457,926,032 ------------ LIABILITIES: .................. 11,322 ------------ Total net assets ............ $457,914,710 ============ EQUITY ACCOUNTS: Policyowners' equity: Growth sub-account (7,786,258.715292 units; $58.810621 unit value) ...... $457,914,710 ------------ Total equity ............... $457,914,710 ============
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 495,370 Capital gain distributions ......... 2,782,833 ----------- 3,278,203 EXPENSES: Mortality and expense risk charges 2,633,824 ----------- Net investment income (loss) ...... 644,379 ----------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 4,204,278 Unrealized appreciation (depreciation) ............... 72,843,027 ----------- Net gain (loss) on investments ... 77,047,305 ----------- Net increase (decrease) in net assets resulting from operations ..................... $77,691,684 ===========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ 644,379 $ 19,310,499 Net gain (loss) on investments ....................................... 77,047,305 26,918,660 ------------ ------------ Net increase (decrease) in equity accounts resulting from operations 77,691,684 46,229,159 ------------ ------------ EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 77,509,745 91,555,979 ------------ ------------ Less cost of units redeemed: Cost of insurance and administrative charges ........................ 27,178,840 29,331,415 Policy loans ......................................................... 7,668,860 8,442,970 Surrender benefits ................................................... 11,506,754 12,385,662 Death benefits ...................................................... 423,541 600,920 ------------ ------------ 46,777,995 50,760,967 ------------ ------------ Increase (decrease) in equity accounts from capital unit transactions 30,731,750 40,795,012 ------------ ------------ Net increase (decrease) in equity accounts ........................... 108,423,434 87,024,171 EQUITY ACCOUNTS: Beginning of period ................................................... 349,491,276 262,467,105 ------------ ------------ End of period ......................................................... $457,914,710 $349,491,276 ============ ============
The notes to the financial statements are an integral part of this report. 5 WRL SERIES LIFE ACCOUNT GROWTH SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 ---------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 ------------- ------------ ------------ ------------- ------------ ----------- Accumulation unit value, beginning of period $ 48.48 $ 41.47 $ 28.44 $ 31.30 $ 30.37 $ 29.95 Income from operations: Net investment income (loss) ............... .09 2.88 3.89 .04 .46 1.09 Net realized and unrealized gain (loss) on investments ............... 10.24 4.13 9.14 ( 2.90) .47 ( .67) -------- -------- -------- -------- -------- -------- Total income (loss) from operations ...... 10.33 7.01 13.03 ( 2.86) .93 .42 -------- -------- -------- -------- -------- -------- Accumulation unit value, end of period ...... $ 58.81 $ 48.48 $ 41.47 $ 28.44 $ 31.30 $ 30.37 ======== ======== ======== ======== ======== ======== Total return(a) .............................. 21.30% 16.91% 45.81% ( 9.13%) 3.06% 1.41% Ratios and supplemental data: Net assets at end of period (in thousands) $457,915 $349,491 $262,467 $161,490 $169,757 $146,053 Ratio of net investment income (loss) to average net assets(b) ..................... 0.22% 6.41% 11.05% 0.16% 1.56% 3.84%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 6 WRL SERIES LIFE ACCOUNT SHORT-TO-INTERMEDIATE GOVERNMENT SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Short-to-Intermediate Government Portfolio (171,756.149 shares; cost $1,784,332) ............ $1,823,871 Accrued transfers from (to) depositor - net ............ (2,272) ---------- Total assets ............... 1,821,599 ---------- LIABILITIES: .................. 45 ---------- Total net assets ............ $1,821,554 ========== EQUITY ACCOUNTS: Policyowners' equity: Short-to-Intermediate Government sub-account (147,547.135527 units; $12.345576 unit value) ...... $1,821,554 ---------- Total equity ............... $1,821,554 ==========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $22,511 Capital gain distributions ......... 0 ------- 22,511 EXPENSES: Mortality and expense risk charges 12,064 ------- Net investment income (loss) ...... 10,447 ------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 6,128 Unrealized appreciation (depreciation) ............... 57,881 ------- Net gain (loss) on investments ... 64,009 ------- Net increase (decrease) in net assets resulting from operations ..................... $74,456 =======
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ 10,447 $ 67,973 Net gain (loss) on investments ....................................... 64,009 (29,048) ---------- ---------- Net increase (decrease) in equity accounts resulting from operations 74,456 38,925 ---------- ---------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 300,331 442,872 ---------- ---------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 144,502 178,533 Policy loans ......................................................... 70,410 33,708 Surrender benefits ................................................... 47,687 77,704 Death benefits ...................................................... 471 0 ---------- ---------- 263,070 289,945 ---------- ---------- Increase (decrease) in equity accounts from capital unit transactions 37,261 152,927 ---------- ---------- Net increase (decrease) in equity accounts ........................... 111,717 191,852 EQUITY ACCOUNTS: Beginning of period ................................................... 1,709,837 1,517,985 ---------- ---------- End of period ......................................................... $1,821,554 $1,709,837 ========== ==========
The notes to the financial statements are an integral part of this report. 7 WRL SERIES LIFE ACCOUNT SHORT-TO-INTERMEDIATE GOVERNMENT SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 ---------------------------------------------------------------- 1997 1996 1995 1994 1993 1992(c) ------------- ----------- ------------ ------------- ------------ ------------ Accumulation unit value, beginning of period $ 11.85 $ 11.55 $ 10.27 $ 10.40 $ 10.04 $ 10.00 Income from operations: Net investment income (loss) ............... .07 .51 .61 .40 .14 .01 Net realized and unrealized gain (loss) on investments ............... .43 ( .21) .67 ( .53) .22 .03 --------- -------- --------- -------- --------- --------- Total income (loss) from operations ...... .50 .30 1.28 ( .13) .36 .04 --------- -------- --------- -------- --------- --------- Accumulation unit value, end of period ...... $ 12.35 $ 11.85 $ 11.55 $ 10.27 $ 10.40 $ 10.04 ========= ======== ========= ======== ========= ========= Total return(a) .............................. 4.19% 2.56% 12.53% ( 1.32%) 3.64% .38% Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 1,822 $ 1,710 $ 1,517 $ 945 $ 1,408 $ 803 Ratio of net investment income (loss) to average net assets (b) ..................... 0.77% 4.53% 5.53% 4.06% 1.39% 1.92%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 8 WRL SERIES LIFE ACCOUNT GLOBAL SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Global Portfolio (6,361,753.879 shares; cost $110,370,618)............ $140,752,119 Accrued transfers from (to) depositor - net ............ 244,321 ------------ Total assets ............... 140,996,440 ------------ LIABILITIES: .................. 3,435 ------------ Total net assets ............ $140,993,005 ============ EQUITY ACCOUNTS: Policyowners' equity: Global sub-account (7,574,714.290770 units; $18.613640 unit value) ...... $140,993,005 ------------ Total equity ............... $140,993,005 ============
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 744,580 Capital gain distributions ......... 971,067 ----------- 1,715,647 EXPENSES: Mortality and expense risk charges 741,035 ----------- Net investment income (loss) ...... 974,612 ----------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 675,993 Unrealized appreciation (depreciation) ............... 21,291,865 ----------- Net gain (loss) on investments ... 21,967,858 ----------- Net increase (decrease) in net assets resulting from operations ..................... $22,942,470 ===========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ 974,612 $ 6,524,214 Net gain (loss) on investments ....................................... 21,967,858 6,374,264 ------------ ----------- Net increase (decrease) in equity accounts resulting from operations 22,942,470 12,898,478 ------------ ----------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 48,311,852 43,696,555 ------------ ----------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 8,732,359 6,463,101 Policy loans ......................................................... 2,114,496 1,465,510 Surrender benefits ................................................... 2,479,374 2,225,874 Death benefits ...................................................... 94,171 62,009 ------------ ----------- 13,420,400 10,216,494 ------------ ----------- Increase (decrease) in equity accounts from capital unit transactions 34,891,452 33,480,061 ------------ ----------- Net increase (decrease) in equity accounts ........................... 57,833,922 46,378,539 Depositors' equity contribution (redemption) ........................ 0 (268,153) EQUITY ACCOUNTS: Beginning of period ................................................... 83,159,083 37,048,697 ------------ ----------- End of period ......................................................... $140,993,005 $83,159,083 ============ ===========
The notes to the financial statements are an integral part of this report. 9 WRL SERIES LIFE ACCOUNT GLOBAL SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 --------------------------------------- 1997 1996 1995 1994(e) ------------- ------------ ------------ ------------- Accumulation unit value, beginning of period $ 15.13 $ 11.95 $ 9.80 $ 10.00 Income from operations: Net investment income (loss) ............... .14 1.50 .45 .71 Net realized and unrealized gain (loss) on investments ............... 3.34 1.68 1.70 ( .91) -------- --------- --------- -------- Total income (loss) from operations ...... 3.48 3.18 2.15 ( .20) -------- --------- --------- -------- Accumulation unit value, end of period ...... $ 18.61 $ 15.13 $ 11.95 $ 9.80 ======== ========= ========= ======== Total return(a) .............................. 23.04% 26.60% 21.96% ( 2.02%) Ratios and supplemental data: Net assets at end of period (in thousands) ... $140,993 $ 83,159 $ 37,049 $ 21,672 Ratio of net investment income (loss) to average net assets(b) ..................... 1.17% 11.09% 4.25% 8.86%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 10 WRL SERIES LIFE ACCOUNT STRATEGIC TOTAL RETURN SUB-ACCOUNT (A) (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Strategic Total Return Portfolio (4,576,916.538 shares; cost $57,360,147).................. $76,849,078 Accrued transfers from (to) depositor - net ............... 71,090 ----------- Total assets ..................... 76,920,168 ----------- LIABILITIES: ........................ 1,887 ----------- Total net assets .................. $76,918,281 =========== EQUITY ACCOUNTS: Policyowners' equity: Strategic Total Return sub-account (4,099,538.586476 units; $18.762668 unit value) ............ $76,918,281 ----------- Total equity ..................... $76,918,281 ===========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 103,034 Capital gain distributions ......... 158,508 ----------- 261,542 EXPENSES: Mortality and expense risk charges 437,700 ----------- Net investment income (loss) ...... (176,158) ----------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 395,148 Unrealized appreciation (depreciation) ............... 11,755,948 ----------- Net gain (loss) on investments ... 12,151,096 ----------- Net increase (decrease) in net assets resulting from operations ..................... $11,974,938 ===========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ (176,158) $ 2,645,668 Net gain (loss) on investments ....................................... 12,151,096 3,635,535 ----------- ----------- Net increase (decrease) in equity accounts resulting from operations 11,974,938 6,281,203 ----------- ----------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 16,083,143 16,832,424 ----------- ----------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 4,358,914 4,528,541 Policy loans ......................................................... 1,046,427 920,628 Surrender benefits ................................................... 1,534,861 1,300,527 Death benefits ...................................................... 99,325 112,479 ----------- ----------- 7,039,527 6,862,175 ----------- ----------- Increase (decrease) in equity accounts from capital unit transactions 9,043,616 9,970,249 ----------- ----------- Net increase (decrease) in equity accounts ........................... 21,018,554 16,251,452 EQUITY ACCOUNTS: Beginning of period ................................................... 55,899,727 39,648,275 ----------- ----------- End of period ......................................................... $76,918,281 $55,899,727 =========== ===========
(a) Prior to May 1, 1997, this sub-account was known as Equity-Income. The notes to the financial statements are an integral part of this report. 11 WRL SERIES LIFE ACCOUNT STRATEGIC TOTAL RETURN SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 ---------------------------------------------------- 1997 1996 1995 1994 1993(d) ------------- ------------ ------------ ------------- ------------ Accumulation unit value, beginning of period $ 15.66 $ 13.74 $ 11.12 $ 11.28 $ 10.00 Income from operations: Net investment income (loss) ............... ( .04) .82 .68 .18 .19 Net realized and unrealized gain (loss) on investments ............... 3.14 1.10 1.94 ( .34) 1.09 -------- --------- --------- -------- --------- Total income (loss) from operations ...... 3.10 1.92 2.62 ( .16) 1.28 -------- --------- --------- -------- --------- Accumulation unit value, end of period ...... $ 18.76 $ 15.66 $ 13.74 $ 11.12 $ 11.28 ======== ========= ========= ======== ========= Total return(a) .............................. 19.82% 13.97% 23.55% ( 1.42%) 12.81% Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 76,918 $ 55,900 $ 39,648 $ 23,649 $ 13,343 Ratio of net investment income (loss) to average net assets(b) ..................... ( 0.36)% 5.76% 5.47% 1.93% 2.27%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 12 WRL SERIES LIFE ACCOUNT EMERGING GROWTH SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Emerging Growth Portfolio 7,057,187.517 shares; cost $110,794,080)............ $166,181,036 Accrued transfers from (to) depositor - net ............ 66,132 ------------ Total assets ............... 166,247,168 ------------ LIABILITIES: .................. 4,081 ------------ Total net assets ............ $166,243,087 ============ EQUITY ACCOUNTS: Policyowners' equity: Emerging Growth sub-account (6,686,647.961311 units; $24.861947 unit value) ...... $166,243,087 ------------ Total equity ............... $166,243,087 ============
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 0 Capital gain distributions ......... 749,646 ----------- 749,646 EXPENSES: Mortality and expense risk charges 849,777 ----------- Net investment income (loss) ...... (100,131) ----------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 1,318,955 Unrealized appreciation (depreciation) ............... 32,864,088 ----------- Net gain (loss) on investments ... 34,183,043 ----------- Net increase (decrease) in net assets resulting from operations ..................... $34,082,912 ===========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Period Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ (100,131) $ 3,934,952 Net gain (loss) on investments ....................................... 34,183,043 9,284,053 ------------ ------------ Net increase (decrease) in equity accounts resulting from operations 34,082,912 13,219,005 ------------ ------------ EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 40,143,911 40,944,477 ------------ ------------ Less cost of units redeemed: Cost of insurance and administrative charges ........................ 10,374,194 9,201,102 Policy loans ......................................................... 2,574,981 2,095,860 Surrender benefits ................................................... 2,840,916 2,754,328 Death benefits ...................................................... 118,818 91,972 ------------ ------------ 15,908,909 14,143,262 ------------ ------------ Increase (decrease) in equity accounts from capital unit transactions 24,235,002 26,801,215 ------------ ------------ Net increase (decrease) in equity accounts ........................... 58,317,914 40,020,220 EQUITY ACCOUNTS: Beginning of period ................................................... 107,925,173 67,904,953 ------------ ------------ End of period ......................................................... $166,243,087 $107,925,173 ============ ============
The notes to the financial statements are an integral part of this report. 13 WRL SERIES LIFE ACCOUNT EMERGING GROWTH SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 ----------------------------------------------------- 1997 1996 1995 1994 1993(d) ------------- ------------ ------------ ------------- ------------- Accumulation unit value, beginning of period $ 19.51 $ 16.56 $ 11.38 $ 12.40 $ 10.00 Income from operations: Net investment income (loss) ............... ( .02) .82 .65 ( .09) ( .09) Net realized and unrealized gain (loss) on investments ............... 5.37 2.13 4.53 ( .93) 2.49 -------- -------- --------- -------- -------- Total income (loss) from operations ...... 5.35 2.95 5.18 ( 1.02) 2.40 -------- -------- --------- -------- -------- Accumulation unit value, end of period ...... $ 24.86 $ 19.51 $ 16.56 $ 11.38 $ 12.40 ======== ======== ========= ======== ======== Total return(a) .............................. 27.43% 17.82% 45.49% ( 8.18%) 23.96% Ratios and supplemental data: Net assets at end of period (in thousands) ... $166,243 $107,925 $ 67,905 $ 36,687 $ 18,620 Ratio of net investment income (loss) to average net assets(b) ..................... ( 0.11%) 4.51% 4.66% ( 0.86%) ( 0.92%)
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 14 WRL SERIES LIFE ACCOUNT AGGRESSIVE GROWTH SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Aggressive Growth Portfolio (4,989,396.934 shares; cost $69,928,239) ............ $90,571,430 Accrued transfers from (to) depositor - net ............ 15,959 ----------- Total assets ............... 90,587,389 ----------- LIABILITIES: .................. 2,238 ----------- Total net assets ............ $90,585,151 =========== EQUITY ACCOUNTS: Policyowners' equity: Aggressive Growth sub-account (4,816,335.711588 units; $18.807898 unit value) ...... $90,585,151 ----------- Total equity ............... $90,585,151 ===========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 0 Capital gain distributions ......... 464,060 ----------- 464,060 EXPENSES: Mortality and expense risk charges 471,484 ----------- Net investment income (loss) ...... (7,424) ----------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 796,354 Unrealized appreciation (depreciation) ............... 17,082,476 ----------- Net gain (loss) on investments ... 17,878,830 ----------- Net increase (decrease) in net assets resulting from operations ..................... $17,871,406 ===========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Period Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ (7,424) $ 1,138,792 Net gain (loss) on investments ....................................... 17,878,830 2,797,147 ----------- ----------- Net increase (decrease) in equity accounts resulting from operations 17,871,406 3,935,939 ----------- ----------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 28,302,321 26,224,213 ----------- ----------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 7,032,417 6,412,799 Policy loans ......................................................... 1,290,409 863,340 Surrender benefits ................................................... 1,646,992 1,349,932 Death benefits ...................................................... 26,998 29,810 ----------- ----------- 9,996,816 8,655,881 ----------- ----------- Increase (decrease) in equity accounts from capital unit transactions 18,305,505 17,568,332 ----------- ----------- Net increase (decrease) in equity accounts ........................... 36,176,911 21,504,271 EQUITY ACCOUNTS: Beginning of period ................................................... 54,408,240 32,903,969 ----------- ----------- End of period ......................................................... $90,585,151 $54,408,240 =========== ===========
The notes to the financial statements are an integral part of this report. 15 WRL SERIES LIFE ACCOUNT AGGRESSIVE GROWTH SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 --------------------------------------- 1997 1996 1995 1994(e) ------------- ------------ ------------ ------------- Accumulation unit value, beginning of period $ 14.70 $ 13.43 $ 9.82 $ 10.00 Income from operations: Net investment income (loss) ............... .00 .36 .37 ( .06) Net realized and unrealized gain (loss) on investments ............... 4.11 .91 3.24 ( .12) -------- --------- --------- -------- Total income (loss) from operations ...... 4.11 1.27 3.61 ( .18) -------- --------- --------- -------- Accumulation unit value, end of period ...... $ 18.81 $ 14.70 $ 13.43 $ 9.82 ======== ========= ========= ======== Total return(a) .............................. 27.98% 9.46% 36.79% ( 1.85%) Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 90,585 $ 54,408 $ 32,904 $ 8,909 Ratio of net investment income (loss) to average net assets(b) ..................... ( 0.01%) 2.65% 2.93% ( 0.72%)
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 16 WRL SERIES LIFE ACCOUNT BALANCED SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Balanced Portfolio (739,683.639 shares; cost $8,062,184) ............ $9,757,771 Accrued transfers from (to) depositor - net ............ 8,936 ---------- Total assets ............... 9,766,707 ---------- LIABILITIES: .................. 239 ---------- Total net assets ............ $9,766,468 ========== EQUITY ACCOUNTS: Policyowners' equity: Balanced sub-account (687,514.514365 units; $14.205471 unit value) ...... $9,766,468 ---------- Total equity ............... $9,766,468 ==========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 37,522 Capital gain distributions ......... 59,592 ---------- 97,114 ---------- EXPENSES: Mortality and expense risk charges 53,300 ---------- Net investment income (loss) ...... 43,814 ---------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 68,447 Unrealized appreciation (depreciation) ............... 1,131,384 ---------- Net gain (loss) on investments ... 1,199,831 ---------- Net increase (decrease) in net assets resulting from operations ............ $1,243,645 ==========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Period Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ 43,814 $ 153,790 Net gain (loss) on investments ....................................... 1,199,831 341,121 ---------- ---------- Net increase (decrease) in equity accounts resulting from operations 1,243,645 494,911 ---------- ---------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 3,017,187 3,089,782 ---------- ---------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 674,954 575,594 Policy loans ......................................................... 136,005 77,586 Surrender benefits ................................................... 99,888 84,857 Death benefits ...................................................... 1,431 3,961 ---------- ---------- 912,278 741,998 ---------- ---------- Increase (decrease) in equity accounts from capital unit transactions 2,104,909 2,347,784 ---------- ---------- Net increase (decrease) in equity accounts ........................... 3,348,554 2,842,695 Depositor's equity contribution (redemption) ........................ 0 (220,175) EQUITY ACCOUNTS: Beginning of period ................................................... 6,417,914 3,795,394 ---------- ---------- End of period ......................................................... $9,766,468 $6,417,914 ========== ==========
The notes to the financial statements are an integral part of this report. 17 WRL SERIES LIFE ACCOUNT BALANCED SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 --------------------------------------- 1997 1996 1995 1994(e) ------------- ------------ ------------ ------------- Accumulation unit value, beginning of period $ 12.21 $ 11.13 $ 9.37 $ 10.00 Income from operations: Net investment income (loss) ............... .07 .36 .37 .22 Net realized and unrealized gain (loss) on investments ............... 1.93 .72 1.39 ( .85) --------- --------- --------- -------- Total income (loss) from operations ...... 2.00 1.08 1.76 ( .63) --------- --------- --------- -------- Accumulation unit value, end of period ...... $ 14.21 $ 12.21 $ 11.13 $ 9.37 ========= ========= ========= ======== Total return(a) .............................. 16.36% 9.73% 18.73% ( 6.29%) Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 9,766 $ 6,418 $ 3,795 $ 2,145 Ratio of net investment income (loss) to average net assets(b) ..................... 0.73% 3.18% 3.59% 3.06%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 18 WRL SERIES LIFE ACCOUNT GROWTH & INCOME SUB-ACCOUNT (A) (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Growth & Income Portfolio (546,958.391 shares; cost $6,281,297) ............ $7,222,213 Accrued transfers from (to) depositor - net ............ 10,061 ---------- Total assets ............... 7,232,274 ---------- LIABILITIES: .................. 177 ---------- Total net assets ............ $7,232,097 ========== EQUITY ACCOUNTS: Policyowners' equity: Growth & Income sub-account (490,659.777004 units; $14.739536 unit value) ...... $7,232,097 ---------- Total equity ............... $7,232,097 ==========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 14,590 Capital gain distributions ......... 79,136 -------- 93,726 EXPENSES: Mortality and expense risk charges 40,984 -------- Net investment income (loss) ...... 52,742 -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 117,474 Unrealized appreciation (depreciation) ............... 604,963 -------- Net gain (loss) on investments ... 722,437 -------- Net increase (decrease) in net assets resulting from operations ..................... $775,179 ========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Period Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ 52,742 $ 245,624 Net gain (loss) on investments ....................................... 722,437 210,007 ---------- ---------- Net increase (decrease) in equity accounts resulting from operations 775,179 455,631 ---------- ---------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): .............................. Net payments (redemptions) .......................................... 1,781,142 3,245,136 ---------- ---------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 513,495 439,973 Policy loans ......................................................... 115,491 72,641 Surrender benefits ................................................... 187,862 82,531 Death benefits ...................................................... 8,086 3,350 ---------- ---------- 824,934 598,495 ---------- ---------- Increase (decrease) in equity accounts from capital unit transactions 956,208 2,646,641 ---------- ---------- Net increase (decrease) in equity accounts ........................... 1,731,387 3,102,272 Depositor's equity contribution (redemption) ........................ 0 (232,644) EQUITY ACCOUNTS: Beginning of period ................................................... 5,500,710 2,631,082 ---------- ---------- End of period ......................................................... 7,232,097 $5,500,710 ========== ==========
(a) Prior to May 1, 1997, this sub-account was known as Utility. The notes to the financial statements are an integral part of this report. 19 WRL SERIES LIFE ACCOUNT GROWTH & INCOME SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 --------------------------------------- 1997 1996 1995 1994(e) ------------- ------------ ------------ ------------- Accumulation unit value, beginning of period $ 13.03 $ 11.77 $ 9.49 $ 10.00 Income from operations: Net investment income (loss) ............... .12 .76 .49 .29 Net realized and unrealized gain (loss) on investments ............... 1.59 .50 1.79 ( .80) --------- --------- --------- -------- Total income (loss) from operations ...... 1.71 1.26 2.28 ( .51) --------- --------- --------- -------- Accumulation unit value, end of period ...... $ 14.74 $ 13.03 $ 11.77 $ 9.49 ========= ========= ========= ======== Total return(a) .............................. 13.14% 10.64% 24.14% ( 5.15%) Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 7,232 $ 5,501 $ 2,361 $ 1,215 Ratio of net investment income (loss) to average net assets(b) ..................... 1.15% 6.38% 4.57% 3.71%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 20 WRL SERIES LIFE ACCOUNT TACTICAL ASSET ALLOCATION SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Tactical Asset Allocation Portfolio (1,844,591.450 shares; cost $22,442,581) .................. $26,845,304 Accrued transfers from (to) depositor - net .................. 56,095 ----------- Total assets ..................... 26,901,399 ----------- LIABILITIES: ........................ 659 ----------- Total net assets .................. $26,900,740 =========== EQUITY ACCOUNTS: Policyowners' equity: Tactical Asset Allocation sub-account (1,723,712.692606 units; $15.606278unit value) ...... $26,900,740 ----------- Total equity ..................... $26,900,740 ===========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 52,773 Capital gain distributions ......... 143,908 ---------- 196,681 EXPENSES: Mortality and expense risk charges 147,533 ---------- Net investment income (loss) ...... 49,148 ---------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 283,787 Change in unrealized appreciation (depreciation) ............... 2,936,912 ---------- Net gain (loss) on investments ... 3,220,699 ---------- Net increase (decrease) in equity accounts resulting from operations ..................... $3,269,847 ==========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Year Ended September 30, 1997 December 31, 1996 -------------------- ------------------ OPERATIONS: Net investment income (loss) .......................................... $ 49,148 $ 584,042 Net gain (loss) on investments ....................................... 3,220,699 1,178,927 ----------- ----------- Net increase (decrease) in equity accounts resulting from operations 3,269,847 1,762,969 ----------- ----------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed) ................................. 8,116,988 9,061,824 ----------- ----------- Less cost of units redeemed: Administrative charges ............................................. 1,543,003 1,134,737 Policy loans ......................................................... 332,772 306,304 Surrender benefits ................................................... 516,512 865,689 Death benefits ...................................................... 39,642 18,086 ----------- ----------- 2,431,929 2,324,816 ----------- ----------- Increase (decrease) in equity accounts from capital unit transactions 5,685,059 6,737,008 ----------- ----------- Net increase (decrease) in equity accounts ........................... 8,954,906 8,499,977 EQUITY ACCOUNTS: Beginning of period ................................................... 17,945,834 9,445,857 ----------- ----------- End of period ......................................................... $26,900,740 $17,945,834 =========== ===========
The notes to the financial statements are an integral part of this report. 21 WRL SERIES LIFE ACCOUNT TACTICAL ASSET ALLOCATION SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
December 31 September 30 ------------------------- 1997 1996 1995(f) ------------- ------------ ------------ Accumulation unit value, beginning of period $ 13.50 $ 11.90 $ 10.00 Income from operations: Net investment income (loss) ............... .04 .53 .61 Net realized and unrealized gain (loss) on investments ............... 2.07 1.07 1.29 --------- --------- --------- Total income (loss) from operations ...... 2.11 1.60 1.90 --------- --------- --------- Accumulation unit value, end of period ...... $ 15.61 $ 13.50 $ 11.90 ========= ========= ========= Total return(a) .............................. 15.62% 13.40% 19.03% Ratios and supplemental data: Net assets at end of period (in thousands) $ 26,901 $ 17,946 $ 9,446 Ratio of net investment income (loss) to average net assets(b) ..................... 0.30% 4.35% 5.47%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 22 WRL SERIES LIFE ACCOUNT C.A.S.E. GROWTH SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: C.A.S.E. Growth Portfolio (630,714.519 shares; cost $8,639,769) ............ $10,428,435 Accrued transfers from (to) depositor - net ............ 46,584 ----------- Total assets ............... 10,475,019 ----------- LIABILITIES: .................. 259 ----------- Total net assets ............ $10,474,760 =========== EQUITY ACCOUNTS: Policyowners' equity: C.A.S.E. Growth sub-account (787,147.241092 units; $13.307244 unit value) ...... $10,474,760 ----------- Total equity ............... $10,474,760 ===========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 2,199 Capital gain distributions ......... 36,019 ---------- 38,218 EXPENSES: Mortality and expense risk charges 44,833 ---------- Net investment income (loss) ...... (6,615) ---------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 53,462 Unrealized appreciation (depreciation) ............... 1,566,921 ---------- Net gain (loss) on investments ... 1,620,383 ---------- Net increase (decrease) in net assets resulting from operations ..................... $1,613,768 ==========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Period Ended September 30, 1997 December 31, 1996* -------------------- ------------------- OPERATIONS: Net investment income (loss) .......................................... $ (6,615) $ 70,246 Net gain (loss) on investments ....................................... 1,620,383 227,803 ----------- ---------- Net increase (decrease) in equity accounts resulting from operations 1,613,768 298,049 ----------- ---------- EQUITY TRANSACTIONS: Proceeds from units sold (redeemed): ................................. 5,241,571 4,302,715 ----------- ---------- Less cost of units redeemed: Administrative charges ............................................. 606,696 140,145 Policy loans ......................................................... 105,418 7,028 Surrender benefits ................................................... 109,755 12,276 Death benefits ...................................................... 79 0 ----------- ---------- 821,948 159,449 ----------- ---------- Increase (decrease) in equity accounts from capital unit transactions 4,419,623 4,143,266 ----------- ---------- Net increase (decrease) in equity accounts ........................... 6,033,391 4,441,315 Depositors' equity contribution (redemption) ........................ (24,946) 25,000 EQUITY ACCOUNTS: Beginning of period ................................................... 4,466,315 0 ----------- ---------- End of period ......................................................... $10,474,760 $4,466,315 =========== ==========
* The inception date of this sub-account was May 1, 1996. The notes to the financial statements are an integral part of this report. 23 WRL SERIES LIFE ACCOUNT C.A.S.E. GROWTH SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
September 30 December 31 1997 1996(g) -------------- ------------ Accumulation unit value, beginning of period $ 10.81 $ 10.00 Income from operations: Net investment income (loss) ............... ( .01) .37 Net realized and unrealized gain (loss) on investments ............... 2.51 .44 -------- --------- Total income (loss) from operations ...... 2.50 .81 -------- --------- Accumulation unit value, end of period ...... $ 13.31 $ 10.81 ======== ========= Total return(a) .............................. 23.11% 8.09% Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 10,475 $ 4,466 Ratio of net investment income (loss) to average net assets(b) ..................... ( 0.13%) 6.11%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 24 WRL SERIES LIFE ACCOUNT VALUE EQUITY SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: Value Equity Portfolio (1,578,236.709 shares; cost $18,570,376) ............ $22,268,655 Accrued transfers from (to) depositor - net ............ 69,917 ----------- Total assets ............... 22,338,572 ----------- LIABILITIES: .................. 548 ----------- Total net assets ............ $22,338,024 =========== EQUITY ACCOUNTS: Policyowners' equity: Value Equity sub-account (1,595,234.009808 units; $14.002976 unit value) ...... $22,338,024 ----------- Total equity ............... $22,338,024 ===========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 7,477 Capital gain distributions ......... 0 ---------- 7,477 ---------- EXPENSES: Mortality and expense risk charges 99,998 ---------- Net investment income (loss) ...... (92,521) ---------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 235,523 Unrealized appreciation (depreciation) ............... 3,164,935 ---------- Net gain (loss) on investments ... 3,400,458 ---------- Net increase (decrease) in net assets resulting from operations ..................... $3,307,937 ==========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended Period Ended September 30, 1997 December 31, 1996* -------------------- ------------------- OPERATIONS: Net investment income (loss) .......................................... $ (92,521) $ 18,724 Net gain (loss) on investments ....................................... 3,400,458 603,734 ----------- ---------- Net increase (decrease) in equity accounts resulting from operations 3,307,937 622,458 ----------- ---------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 11,819,354 8,292,350 ----------- ---------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 767,914 152,948 Policy loans ......................................................... 375,925 36,190 Surrender benefits ................................................... 302,774 38,448 Death benefits ...................................................... 254 0 ----------- ---------- 1,446,867 227,586 ----------- ---------- Increase (decrease) in equity accounts from capital unit transactions 10,372,487 8,064,764 ----------- ---------- Net increase (decrease) in equity accounts ........................... 13,680,424 8,687,222 Depositors' equity contribution (redemption) ........................ (229,622) 200,000 EQUITY ACCOUNTS: Beginning of period ................................................... 8,887,222 0 ----------- ---------- End of period ......................................................... $22,338,024 $8,887,222 =========== ==========
* The inception date of this sub-account was May 1, 1996. The notes to the financial statements are an integral part of this report. 25 WRL SERIES LIFE ACCOUNT VALUE EQUITY SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
September 30 December 31 1997 1996(g) -------------- ------------ Accumulation unit value, beginning of period $ 11.25 $ 10.00 Income from operations: Net investment income (loss) ............... ( .07) .05 Net realized and unrealized gain (loss) on investments ............... 2.82 1.20 -------- --------- Total income (loss) from operations ...... 2.75 1.25 -------- --------- Accumulation unit value, end of period ...... $ 14.00 $ 11.25 ======== ========= Total return (a) .............................. 24.46% 12.51% Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 22,338 $ 8,887 Ratio of net investment income to average net assets (b) ..................... ( 0.82%) 0.77%
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 26 WRL SERIES LIFE ACCOUNT INTERNATIONAL EQUITY SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: International Equity Portfolio (shares 165,252.213; cost $1,840,097) ............... $1,900,165 Accrued transfers from (to) depositor - net ............... 5,194 ---------- Total assets .................. 1,905,359 ---------- LIABILITIES: ..................... 46 ---------- Total net assets ............... $1,905,313 ========== EQUITY ACCOUNTS: Policyowners' equity: International Equity sub-account (166,809.516700 units; $11.422091 unit value) ......... $1,905,313 ---------- Total equity .................. $1,905,313 ==========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 0 Capital gain distributions ......... 0 -------- 0 EXPENSES: Mortality and expense risk charges 8,940 -------- Net investment income (loss) ...... (8,940) -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 119,248 Unrealized appreciation (depreciation) ............... 60,068 -------- Net gain (loss) on investments ... 179,316 -------- Net increase (decrease) in net assets resulting from operations ..................... $170,376 ========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended September 30, 1997* -------------------- OPERATIONS: Net investment income (loss) .......................................... $ (8,940) Net gain (loss) on investments ....................................... 179,316 ---------- Net increase (decrease) in equity accounts resulting from operations 170,376 ---------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 1,864,196 ---------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 61,373 Policy loans ......................................................... 48,746 Surrender benefits ................................................... 12,841 Death benefits ...................................................... 0 ---------- 122,960 ---------- Increase (decrease) in equity accounts from capital unit transactions 1,741,236 ---------- Net increase (decrease) in equity accounts ........................... 1,911,612 Depositor's equity contribution (redemption) ........................ (6,299) EQUITY ACCOUNTS: Beginning of period ................................................... 0 ---------- End of period ......................................................... $1,905,313 ==========
* The inception date of this sub-account was January 2, 1997. The notes to the financial statements are an integral part of this report. 27 WRL SERIES LIFE ACCOUNT INTERNATIONAL EQUITY SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
September 30 1997(h) ------------- Accumulation unit value, beginning of period $ 10.00 Income from operations: Net investment income (loss) ............... ( .07) Net realized and unrealized gain (loss) on investments ............... 1.49 -------- Total income (loss) from operations ...... 1.42 -------- Accumulation unit value, end of period ...... $ 11.42 ======== Total return (a) .............................. 14.22% Ratios and supplemental data: Net assets at end of period (in thousands) ... $ 1,905 Ratio of net investment income to average net assets (b) ..................... ( 0.89%)
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. See Notes to Selected Per Unit Data and Ratios on page 30. The notes to the financial statements are an integral part of this report. 28 WRL SERIES LIFE ACCOUNT U.S. EQUITY SUB-ACCOUNT (UNAUDITED) STATEMENT OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
September 30, 1997 ------------------- ASSETS: Investments at net asset value: WRL Series Fund, Inc.: U.S. Equity Portfolio (shares 160,804.390; cost $1,837,148) ............ $1,996,870 Accrued transfers from (to) depositor - net ............ 27,434 ---------- Total assets ............... 2,024,304 ---------- LIABILITIES: .................. 49 ---------- Total net assets ............ $2,024,255 ========== EQUITY ACCOUNTS: Policyowners' equity: U.S. Equity sub-account (164,100.336032 units; $12.335473 unit value) ...... $2,024,255 ---------- Total equity ............... $2,024,255 ==========
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1997 ------------------- INVESTMENT INCOME: Dividend income ..................... $ 0 Capital gain distributions ......... 0 -------- 0 EXPENSES: Mortality and expense risk charges 5,637 -------- Net investment income (loss) ...... (5,637) -------- Net realized and unrealized gain (loss) on investments: Net realized gain (loss) from securities transactions ...... 8,890 Unrealized appreciation (depreciation) ............... 159,722 -------- Net gain (loss) on investments ... 168,612 -------- Net increase (decrease) in net assets resulting from operations ..................... $162,975 ========
STATEMENT OF CHANGES IN EQUITY ACCOUNTS
Nine Months Ended September 30, 1997* -------------------- OPERATIONS: Net investment income (loss) .......................................... $ (5,637) Net gain (loss) on investments ....................................... 168,612 ---------- Net increase (decrease) in equity accounts resulting from operations 162,975 ---------- EQUITY TRANSACTIONS: Proceeds from units sold (repurchased): Net payments (redemptions) .......................................... 1,954,362 ---------- Less cost of units redeemed: Cost of insurance and administrative charges ........................ 40,925 Policy loans ......................................................... 49,335 Surrender benefits ................................................... 5,296 Death benefits ...................................................... 36 ---------- 95,592 ---------- Increase (decrease) in equity accounts from capital unit transactions 1,858,770 ---------- Net increase (decrease) in equity accounts ........................... 2,021,745 Depositor's equity contribution (redemption) ........................ 2,510 EQUITY ACCOUNTS: Beginning of period ................................................... 0 ---------- End of period ......................................................... $2,024,255 ==========
* The inception date of this sub-account was January 2, 1997. The notes to the financial statements are an integral part of this report. 29 WRL SERIES LIFE ACCOUNT U.S. EQUITY SUB-ACCOUNT (UNAUDITED) SELECTED PER UNIT DATA AND RATIOS* FOR THE PERIOD ENDED
September 30 1997(h) ------------- Accumulation unit value, beginning of period $ 10.00 Income from operations: Net investment income (loss) ............ ( .08) Net realized and unrealized gain (loss) on investments ............ 2.42 -------- Total income (loss) from operations ...... 2.34 -------- Accumulation unit value, end of period ...... $ 12.34 ======== Total return .............................. 23.35% Ratios and supplemental data: Net assets at end of period (in thousands) $ 2,024 Ratio of net investment income to average net assets ..................... ( 0.89%)
* The above table illustrates the change for a unit outstanding computed using average units outstanding through each period. NOTES TO SELECTED PER UNIT DATA AND RATIOS (a) For periods less than one year, the total return is not annualized. (b) For periods less than one year, the ratio of net investment income to average net assets is annualized. (c) The inception date of this Sub-Account was December 3, 1992. (d) The inception date of this Sub-Account was March 1, 1993. (e) The inception date of this Sub-Account was March 1, 1994. (f) The inception date of this Sub-Account was January 3, 1995. (g) The inception date of this Sub-Account was May 1, 1996. (h) The inception date of this Sub-Account was January 2, 1997. The notes to the financial statements are an integral part of this report. 30 WRL SERIES LIFE ACCOUNT NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1997 NOTE 1 -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES WRL Series Life Account (the "Life Account") was established as a variable life insurance separate account of Western Reserve Life Assurance Co. of Ohio ("WRL") and is registered as a unit investment trust ("Trust") under the Investment Company Act of 1940, as amended. The Life Account contains fifteen investment options referred to as sub-accounts. Each sub-account invests in the corresponding portfolio of the WRL Series Fund, Inc. (the "Fund"), a registered management investment company under the Investment Company Act of 1940, as amended. These portfolios and their respective investment management organizations are as follows:
Portfolio Investment Manager - ------------------------ ------------------------------ Money Market J.P. Morgan Investment Management Inc. Bond Janus Capital Corporation ("JCC") Growth JCC Short-to-Intermediate AEGON USA Investment Government Management, Inc. ("AIMI") Global JCC Strategic Total Return Luther King Capital Management Corporation Emerging Growth Van Kampen American Capital Asset Management, Inc. Aggressive Growth Fred Alger Management, Inc. Balanced AIMI Growth & Income Federated Investment Counseling Tactical Asset Dean Investment Allocation Associates C.A.S.E. Growth C.A.S.E. Management, Inc. Value Equity NWQ Investment Management Company, Inc. International Equity Scottish Equitable Investment Management, Ltd. and GE Investment Management, Inc. U.S. Equity GE Investment Management, Inc.
WRL and AIMI are indirectly wholly-owned subsidiaries of AEGON USA, Inc., which is an indirect wholly-owned subsidiary of AEGON nv, a Netherlands corporation. On January 2, 1997, WRL made an initial contribution of $400,000 to the Life Account, International Equity Sub-Account, for which WRL received 40,000.000000 units. On April 28, 1997, WRL redeemed the initial contribution in the Life Account, International Equity Sub-Account, for $406,299. On January 2, 1997, WRL made an initial contribution of $200,000 to the Life Account, U.S. Equity Sub-Account, for which WRL received 20,000.000000 units. On April 28, 1997, WRL redeemed the initial contribution in the Life Account, U.S. Equity Sub-Account, for $197,490. The Life Account holds assets to support the benefits under flexible premium variable universal life insurance policies (the "Policies") issued by WRL, which issued the first of such Policies on October 3, 1986. The Life Account's equity transactions are accounted for using the appropriate effective date at the corresponding accumulation unit value. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following significant accounting policies, which are in conformity with generally accepted accounting principles for unit investment trusts, have been consistently used in preparation of the Trust's financial statements. A. VALUATION OF INVESTMENTS The investments in the Fund's shares are stated at the closing net asset value ("NAV") per share as determined by the Fund on September 30, 1997. Investment transactions are accounted for on the trade date, using the Fund NAV next determined after receipt of sale or redemption order without sales charges. Dividend income and capital gain distributions are recorded on the ex-dividend date. The cost of investments sold is determined on a first-in first-out basis. B. FEDERAL INCOME TAXES The operations of the Life Account are a part of and are taxed with the total operations of WRL, which is taxed as a life insurance company under the Internal Revenue Code. Under current law, the investment income of the Code. Under current law, the investment income of the Life Account, including realized and unrealized capital 31 WRL SERIES LIFE ACCOUNT NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1997--(CONTINUED) NOTE 1 -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED) gains, is not taxable to WRL. Accordingly, no provision for Federal income taxes has been made. NOTE 2 -- CHARGES AND DEDUCTIONS Charges are assessed by WRL in connection with issuance and administration of the Policies. A. POLICY CHARGES Under some forms of the Policies, sales and other administrative charges are deducted by WRL prior to allocation of policyowner payments to the sub-accounts. Thereafter, monthly administrative charges are deducted from the Sub-Accounts, some of which continue only during the first policy year. Contingent surrender charges may also apply. Under the other forms of the Policies, such "front-end" and other administrative charges are deducted prior to allocation of the initial premium payment but may reside as contingent surrender charges. Under all forms of the Policy, monthly charges against policy cash values are made to compensate WRL for costs of insurance provided. B. LIFE-ACCOUNT CHARGES A daily charge equal to an annual rate of 0.90% of average daily net assets of the Life Account is assessed to compensate WRL for assumption of mortality and expense risks in connection with issuance and administration of the Policies. This charge (not assessed at the individual policy level) effectively reduces the value of a unit outstanding during the year. NOTE 3 -- DIVIDENDS AND DISTRIBUTIONS Dividends of the Fund's Money Market Portfolio are declared daily and reinvested monthly. Dividends of the remaining Portfolios are typically declared and reinvested semi-annually, while capital gain distributions are typically declared and reinvested annually. Dividends and distributions of the Fund are generally paid to and reinvested by the Life Account the next business day after declaration. NOTE 4 -- OTHER MATTERS As of September 30, 1997, the equity accounts include net unrealized appreciation (depreciation) on investments as follows:
Sub-Account - ---------------------------------- Money Market $N/A Bond 501,000 Growth 153,872,400 Short-to-Intermediate Government 39,539 Global 30,381,501 Strategic Total Return 19,488,931 Emerging Growth 55,386,956 Aggressive Growth 20,643,191 Balanced 1,695,587 Growth & Income 940,916 Tactical Asset Allocation 4,402,723 C.A.S.E. Growth 1,788,666 Value Equity 3,698,279 International Equity 60,068 U.S. Equity 159,722
32 WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO BALANCE SHEET - STATUTORY BASIS AS OF SEPTEMBER 30, 1997 (IN THOUSANDS)(UNAUDITED) ADMITTED ASSETS Cash and invested assets: Cash (deficit) and short-term investments .................................... $ (6,237) Bonds ........................................................................ 273,073 Common stock, at market ...................................................... 516 Mortgage loans on real estate ................................................ 4,853 Home office properties, at cost less accumulated depreciation ............... 14,365 Policy loans .................................................................. 69,712 ----------- Total cash and invested assets ................................................ 356,282 Premiums deferred and uncollected ............................................. 1,811 Accrued investment income ...................................................... 5,024 Receivable from affiliates ................................................... 7,676 Transfers from separate accounts ............................................. 268,684 Other assets .................................................................. 3,691 Separate account assets ...................................................... 4,815,635 ----------- Total admitted assets ......................................................... $5,458,803 =========== LIABILITIES AND CAPITAL AND SURPLUS Liabilities: Aggregate reserves for policies and contracts: Life ........................................................................ $ 194,165 Annuity ..................................................................... 290,163 Policy and contract claim reserves .......................................... 8,680 Other policyholders' funds ................................................... 3,584 Remittances and items not allocated .......................................... 13,658 Federal income taxes payable ................................................ 611 Asset valuation reserve ...................................................... 4,552 Interest maintenance reserve ................................................ 8,544 Other liabilities ............................................................ 25,730 Separate account liabilities ................................................ 4,810,546 ----------- Total liabilities ............................................................ 5,360,233 Capital and surplus: Common stock, $1.00 par value, 1,500 shares authorized, issued and outstanding 1,500 Paid-in surplus ............................................................... 68,015 Unassigned surplus ............................................................ 29,055 ----------- Total capital and surplus ...................................................... 98,570 ----------- Total liabilities and capital and surplus .................................... $5,458,803 ===========
See note to financial statements 33 WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENT OF OPERATIONS - STATUTORY BASIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (IN THOUSANDS)(UNAUDITED) Revenues: Premiums and other considerations, net of reinsurance Life ........................................................................... $ 282,589 Annuity ........................................................................ 641,923 Net investment income ............................................................ 30,914 Amortization of interest maintenance reserve .................................... 1,176 Commissions and expense allowances on reinsurance ceded ........................... 8 Other income ..................................................................... 315 --------- 956,925 Benefits and expenses: Benefits paid or provided for: Life ........................................................................... 18,591 Surrender benefits ............................................................... 327,116 Other benefits .................................................................. 21,980 Increase (decrease) in aggregate reserves for policies and contracts: Life ........................................................................... 39,055 Annuity ........................................................................ (42,123) Other ........................................................................... 493 --------- 365,112 Insurance expenses: Commissions ..................................................................... 131,631 General insurance expenses ...................................................... 50,000 Taxes, licenses and fees ...................................................... 9,543 Transfer to separate accounts ................................................... 402,754 Other expenses .................................................................. 14 --------- 593,942 --------- 959,054 --------- Loss from operations before federal income taxes and realized capital gains on (2,129) investments Federal income tax expense ...................................................... 1,407 --------- Loss from operations before realized capital gains on investments ............... (3,536) Net realized capital gains on investments (net of related federal income taxes and amounts transferred to interest maintenance reserve) ................................................... 1,206 --------- Net loss ........................................................................ $ (2,330) =========
See note to financial statements 34 WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENT OF CHANGES IN CAPITAL AND SURPLUS - STATUTORY BASIS (IN THOUSANDS)(UNAUDITED)
Total Capital Common Paid-in Unassigned and Stock Surplus Surplus Surplus -------- --------- ------------ ----------- Balance at January 1, 1997 ..................... $1,500 $68,015 $ 26,041 $ 95,556 Net (loss) .................................... 0 0 (2,330) (2,330) Net unrealized gains (losses) .................. 0 0 (232) (232) Decrease in non-admitted assets ............... 0 0 213 213 Increase in asset valuation reserve ............ 0 0 1,158 1,158 Increase in surplus in separate accounts ...... 0 0 457 457 Other adjustments .............................. 0 0 3,748 3,748 ------ ------- -------- -------- Balance at September 30, 1997 .................. $1,500 $68,015 $ 29,055 $ 98,570 ====== ======= ======== ========
See note to financial statements 35 WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO STATEMENT OF CASH FLOWS - STATUTORY BASIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (IN THOUSANDS)(UNAUDITED) SOURCES OF CASH Premiums and other considerations, net of reinsurance ............ $ 924,612 Net investment income .......................................... 32,836 Other income ................................................... 4,415 --------- 961,863 Life claims ...................................................... (18,630) Surrender benefits and other fund withdrawals .................. (327,116) Other benefits to policyholders ................................. (21,847) Commissions, other expenses and taxes ........................... (190,959) Net transfers to separate accounts .............................. (466,844) Dividends to policyholders ....................................... (25) --------- Net cash used by operations .................................... (63,558) Proceeds from investments sold, matured or repaid: Bonds and redeemable preferred stock ........................... 108,115 Mortgage loans on real estate ................................. 2,088 --------- Total cash from investments .................................... 110,203 Other sources ................................................... 19,309 --------- Total sources of cash .......................................... 65,954 APPLICATIONS OF CASH Cost of investments acquired: Bonds and redeemable preferred stock ........................... 19,663 Common stocks ................................................... 150 Mortgage loans on real estate ................................. 892 Real estate ................................................... 6,403 Net increase in policy loans .................................... 17,108 --------- Total investments acquired ....................................... 44,216 Other applications, net .......................................... 30,455 --------- Total applications of cash ....................................... 74,671 --------- Net change in cash and short-term investments .................. (8,717) Cash and short-term investments at beginning of year ............ 2,480 --------- Cash (deficit) and short-term investments at end of period ...... $ (6,237) =========
See note to financial statements 36 WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO NOTE TO FINANCIAL STATMENTS - STATUTURY BASIS AS OF SEPTEMBER 30, 1997 (UNAUDITED) NOTE 1 -- BASIS OF PRESENTATION The accompanying unaudited statutory basis financial statements have been prepared in accordance with statutory accounting principles for interim financial information and the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjust ments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the accompanying statutory basis financial statements and notes thereto for the year ended December 31, 1996. 37 -----END PRIVACY-ENHANCED MESSAGE-----