0001021408-01-509207.txt : 20011106
0001021408-01-509207.hdr.sgml : 20011106
ACCESSION NUMBER: 0001021408-01-509207
CONFORMED SUBMISSION TYPE: 485BPOS
PUBLIC DOCUMENT COUNT: 4
FILED AS OF DATE: 20011101
EFFECTIVENESS DATE: 20011101
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: WRL SERIES LIFE ACCOUNT
CENTRAL INDEX KEY: 0000778209
STANDARD INDUSTRIAL CLASSIFICATION: []
STATE OF INCORPORATION: OH
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 485BPOS
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-58322
FILM NUMBER: 1773109
BUSINESS ADDRESS:
STREET 1: 570 CARILLON PARKWAY
CITY: ST PETERSBURG
STATE: FL
ZIP: 33716
BUSINESS PHONE: 2722991800
MAIL ADDRESS:
STREET 1: 201 HIGHLAND AVENUE
CITY: LARGO
STATE: FL
ZIP: 33770
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: WRL SERIES LIFE ACCOUNT
CENTRAL INDEX KEY: 0000778209
STANDARD INDUSTRIAL CLASSIFICATION: []
STATE OF INCORPORATION: OH
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 485BPOS
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-04420
FILM NUMBER: 1773110
BUSINESS ADDRESS:
STREET 1: 570 CARILLON PARKWAY
CITY: ST PETERSBURG
STATE: FL
ZIP: 33716
BUSINESS PHONE: 2722991800
MAIL ADDRESS:
STREET 1: 201 HIGHLAND AVENUE
CITY: LARGO
STATE: FL
ZIP: 33770
485BPOS
1
d485bpos.txt
WRL FREEDOM ELITE BUILDER PEA #2
As filed with the Securities and Exchange Commission on November 1, 2001
Registration File Nos. 333-58322/811-4420
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
POST-EFFECTIVE AMENDMENT NO. 2
FORM S-6
---------------------------------
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
---------------------------------
WRL SERIES LIFE ACCOUNT
(Exact Name of Trust)
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
(Name of Depositor)
570 Carillon Parkway
St. Petersburg, Florida 33716
(Complete Address of Depositor's Principal Executive Offices)
John K. Carter, Esq.
Vice President and Senior Counsel
Western Reserve Life Assurance Co. of Ohio
570 Carillon Parkway
St. Petersburg, Florida 33716
(Name and Complete Address of Agent for Service)
Copies to:
Stephen E. Roth, Esq.
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2415
---------------------------------
Title of Securities being registered: Units of interest in the separate account
under flexible payment deferred variable life policies.
It is proposed that this filing will become effective (check appropriate space):
X immediately upon filing pursuant to paragraph (b) of Rule 485
-----
on (date) , pursuant to paragraph (b) of Rule 485
----- ------------
60 days after filing pursuant to paragraph (a) of Rule 485
-----
on (date) , pursuant to paragraph (a) of Rule 485
----- -------------
WRL FREEDOM ELITE BUILDER/SM/
SUPPLEMENT DATED NOVEMBER 1, 2001 TO
PROSPECTUS DATED JULY 5, 2001 AS
SUPPLEMENTED AUGUST 24, 2001 AND OCTOBER 5, 2001
This Supplement discusses the Adjustable Term Insurance Rider and the
Death Benefit Extension Rider that are available under the WRL Freedom Elite
Builder/SM/ (the "Policy"). Terms used in this Supplement have the same meaning
as the terms in the prospectus.
The following is added as a new subsection under the section entitled
"Supplemental Benefits (Riders)" on page 66 of the prospectus:
Adjustable Term Insurance Rider ("ATIR")
The ATIR provides a death benefit upon the death of the insured that is in
addition to the death benefit under the Base Policy. This rider can only be
added at issue of your Policy and for issue ages 18 through 80. The amount of
the death benefit payable under the rider adjusts over time, subject to the
terms of the rider and the Policy. This rider is not available in all states
and currently may not be available through all distribution channels.
We require an initial minimum ATIR target death benefit of $4,000.
We cap the ATIR death benefit at four (4) times the total of the Base
Policy's specified amount and the amount of Primary Insured Rider Plus
coverage. In other words, if the Base Policy's specified amount is $1,000,000
and your Primary Insured Rider Plus face amount is $500,000, the maximum ATIR
death benefit will be $6,000,000. Underwriting may place further limitations on
the maximum ATIR death benefit.
During any policy year, we will not accept premiums that exceed two (2)
times the ATIR Maximum Target Death Benefit at issue, reduced by interest in
advance. The ATIR Maximum Target Death Benefit is the maximum ATIR death
benefit at issue, as specified in your Policy. If your payment should exceed
this amount, we will refund the excess premium amount. For more information,
please contact your agent.
ATIR Death Upon our receipt of due proof that the insured's death occurred
Benefit while the ATIR was in force, the amount of the death benefit
payable under the ATIR will generally be the lesser of:
.the ATIR target death benefit you selected at the rider's
issue, as shown on the target death benefit page attached to
your Policy; or
.the return of premium(s) you paid on the Policy up to an
annual maximum, plus interest.
The death benefit on the ATIR will automatically decrease on a
dollar-for-dollar basis when the Base Policy death benefit is increased due to
the operation of the "limitation percentage" required by federal tax
requirements. It is possible that the amount of the ATIR death benefit may be
zero if your Base Policy death benefit increases enough.
1
Even when the ATIR death benefit is reduced to zero by virtue of the
operation of the "limitation percentage," your rider remains in effect until
you remove it from your Policy. If later the base death benefit drops, the ATIR
coverage could reappear.
At age 90, when the PIR Plus terminates, the face amount of coverage under
that rider may be added to coverage under the ATIR and the ATIR charge will
apply to the transferred coverage.
ATIR charge The ATIR charge is a cost of insurance charge that is calculated by
multiplying the monthly cost of insurance rate for the ATIR by the
ATIR death benefit in effect on each Monthiversary. The cost of
insurance rates for the ATIR are based on the insured's issue age,
gender, rate class, and length of time that the rider has been in
force. We deduct the charge from each subaccount and the fixed
account in accordance with your current premium allocation
instructions.
The total charges you pay may be less if you have greater coverage under
an ATIR rather than under the Base Policy and the PIR Plus rider. The monthly
guaranteed maximum costs of insurance rates for this rider are in your Policy.
This rider is not available if you have chosen:
. Death Benefit Option B;
. the Disability Waiver Rider; or
. the Disability Waiver and Income Rider.
The rider does not contribute to the Policy's cash value or cash surrender
value. It cannot be used for a Policy loan. We do not assess any additional
surrender charge for the ATIR.
The rider will terminate on the earliest of:
. the date the Policy terminates;
. the effective date of any change in the Death Benefit Option type
under the Policy;
. the Monthiversary when the rider terminates at the owner's written
request; or
. the anniversary nearest the maturity date if maturity is elected
under the Base Policy or if you elect to continue coverage after
maturity with the Base Policy death benefit equal to the cash value
(Option 1 under Benefits at Maturity on page 64 of the prospectus).
However, at attained age 95, if the Death Benefit Extension Rider has
been elected, coverage under the ATIR also continues. At attained age
100, if the Death Benefit Extension Rider is on the Policy, any death
benefit associated with the ATIR will become part of the Base
Policy's specified amount.
If you have the ATIR on your Policy, the following transactions will cause
any future scheduled increases in the maximum target death benefit to be
discontinued:
. a cash withdrawal;
. a decrease in the specified amount; or
. taking a loan.
2
The following is added to the section entitled "Risk Summary" on page 13
of the prospectus:
Leverage Risks Please be aware that the investment returns under the Policy are
not guaranteed. If you purchase any portion of this Policy using
loan proceeds, and investment returns are less than expected, or
your loan and withdrawal history under the Policy results in lower
than expected cash value, you may be required to pay additional
premiums in order to maintain the Policy in force. Such costs
would be in addition to the principal and interest accruing on loans
outside the Policy.
The following is added at the end of the section entitled "Death Benefit
-- Death Benefit Proceeds" on page 48 of the prospectus:
Effect of Adjustable Term Insurance Rider ("ATIR") on the Death Benefit
The ATIR provides a death benefit upon the death of the insured that
supplements the death benefit under the Base Policy. Upon our receipt of due
proof that the insured's death occurred while the ATIR was in force, the amount
of the death benefit payable under the ATIR will generally be the lesser of:
(a) the ATIR target death benefit you selected at the rider's issue and
is agreeable to us, as shown on the target death benefit page
attached to your Policy; or
(b) the return of premium(s) you paid on the Policy each year up to an
annual maximum, plus interest.
The death benefit on the ATIR will automatically decrease on a
dollar-for-dollar basis when the Base Policy death benefit is increased due to
the operation of the "limitation percentage" required by federal tax
requirements. It is possible that the amount of the ATIR death benefit may be
zero if your Base Policy death benefit increases enough. When determining the
ATIR death benefit, no interest is credited on or after the Policy anniversary
on which the insured turns 100.
The ATIR is not available with Death Benefit Option B. A change from
Option A to Option B will cause an ATIR to terminate.
The following is added as a new subsection under the section entitled
"Other Policy Information" on page 63 of the prospectus:
Split Dollar Arrangements
You may enter into a split dollar arrangement with another owner or
another person(s) whereby the payment of premiums and the right to receive the
benefits under the Policy (i.e., cash surrender value or insurance proceeds)
are split between the parties. There are different ways of allocating these
rights.
For example, an employer and employee might agree that under a Policy on
the life of the employee, the employer will pay the premiums and will have the
right to receive the cash surrender value. The employee may designate the
beneficiary to receive any insurance proceeds in excess of
3
the cash surrender value. If the employee dies while such an arrangement is in
effect, the employer would receive from the insurance proceeds the amount that
he would have been entitled to receive upon surrender of the Policy and the
employee's beneficiary would receive the balance of the proceeds.
No transfer of Policy rights pursuant to a split dollar arrangement will
be binding on us unless in writing and received by us at our administrative
office. Split dollar arrangements may have tax consequences. You should consult
a tax advisor before entering into a split dollar arrangement.
The following is added as a new subsection under the section entitled
"Supplemental Benefits (Riders)" on page 66 of the prospectus:
Death Benefit Extension Rider
This rider will extend the life insurance coverage past attained age 100
with no administrative or cost of insurance charges at or after attained age
100. The then current mortality and risk charge associated with the base Policy
will apply. This rider can be elected at issue or, if then available, at any
time prior to attained age 81. This rider is not available in all states and
currently may not be available through all distribution channels.
With this rider on your Policy, life insurance coverage automatically
extends on the maturity date (attained age 95) to attained age 100 with all
benefits and all charges as set forth in your Policy. At attained age 100, we
will discontinue taking monthly deductions for cost of insurance and
administrative charges.
Death Benefit Extension .The rider is pre-funded. The charge is deducted from your
Rider charge Policy's cash value each month from the date the rider is
issued until attained age 100;
.The charge is added to the cost of insurance charges
deducted each month for the Base Policy, any ATIR and any
PIR Plus; and
.The charge is based on the insured's age when the rider is
issued.
.These charges may extend over a long period of time and
may be significant. You should examine these charges
carefully before you purchase this rider.
Conditions on and after .All riders will terminate and the death benefit under the
age 100 ATIR will be added to the Base Policy's specified amount.
.No future premium payments will be accepted without our
consent unless required to prevent lapse of the Policy.
Additional loan payments may be necessary to keep the
Policy in force.
.Loan interest will continue to accumulate on any outstanding
Policy loans.
.The death benefit may not be increased or decreased.
4
If you elect the Death Benefit Extension Rider, the limitation percentage
would be 101% at your attained age 100%.
The following paragraph is added after the second paragraph under the
section entitled "Federal Income Tax Considerations -- Tax Treatment of Policy
Benefits" on page 59 of the prospectus:
Death Benefit Extension Rider. Under the Death Benefit Extension Rider,
you may continue your Policy after the insured attains age 100. The tax
consequences associated with continuing your Policy after attained age 100 are
uncertain and a tax advisor should be consulted about these consequences.
5
WRL Series Life Account
Statements of Assets and Liabilities
At June 30, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL
WRL WRL WRL WRL LKCM
J.P. Morgan AEGON Janus Janus Strategic
Money Market Bond Growth Global Total Return
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares............................. 47,279 2,889 20,648 17,135 6,611
=========== =========== =========== =========== ===========
Cost......................................... $ 47,279 $ 33,023 $ 1,000,258 $ 421,248 $ 98,006
=========== =========== =========== =========== ===========
Investment, at net asset value................. $ 47,279 $ 33,196 $ 821,186 $ 355,551 $ 96,583
Dividend receivable............................ 177 0 0 0 0
Transfers receivable from depositor............ 0 4 31 0 0
----------- ----------- ----------- ----------- -----------
Total assets................................. 47,456 33,200 821,217 355,551 96,583
----------- ----------- ----------- ----------- -----------
Liabilities:
Accrued expenses............................... 1 1 20 9 2
Transfers payable to depositor................. 521 0 0 26 11
----------- ----------- ----------- ----------- -----------
Total liabilities............................ 522 1 20 35 13
----------- ----------- ----------- ----------- -----------
Net assets................................... $ 46,934 $ 33,199 $ 821,197 $ 355,516 $ 96,570
=========== =========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.......................... $ 46,934 $ 33,199 $ 821,197 $ 355,516 $ 96,570
Depositor's equity............................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net assets applicable to units outstanding... $ 46,934 $ 33,199 $ 821,197 $ 355,516 $ 96,570
=========== =========== =========== =========== ===========
Policy owners' units........................... 2,501 1,336 9,569 12,975 4,544
Depositor's units.............................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Units outstanding............................ 2,501 1,336 9,569 12,975 4,544
=========== =========== =========== =========== ===========
Accumulation unit value...................... $ 18.77 $ 24.84 $ 85.82 $ 27.40 $ 21.25
=========== =========== =========== =========== ===========
See accompanying notes which are an integral part of the financial statements.
1
WRL Series Life Account
Statements of Assets and Liabilities
At June 30, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL
Van WRL WRL WRL
Kampen Alger WRL Federated Transamerica
Emerging Aggressive AEGON Growth & Value
Growth Growth Balanced Income Balanced
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares............................. 19,905 14,935 1,686 2,803 2,946
=========== =========== =========== =========== ===========
Cost......................................... $ 734,893 $ 320,469 $ 21,039 $ 35,863 $ 40,004
=========== =========== =========== =========== ===========
Investment, at net asset value................. $ 455,229 $ 258,968 $ 21,763 $ 41,929 $ 41,015
Dividend receivable............................ 0 0 0 0 0
Transfers receivable from depositor............ 0 47 9 78 2
----------- ----------- ----------- ----------- -----------
Total assets................................. 455,229 259,015 21,772 42,007 41,017
----------- ----------- ----------- ----------- -----------
Liabilities:
Accrued expenses............................... 11 6 1 1 1
Transfers payable to depositor................. 16 0 0 0 0
----------- ----------- ----------- ----------- -----------
Total liabilities............................ 27 6 1 1 1
----------- ----------- ----------- ----------- -----------
Net assets................................... $ 455,202 $ 259,009 $ 21,771 $ 42,006 $ 41,016
=========== =========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.......................... $ 455,202 $ 259,009 $ 21,771 $ 42,006 $ 41,016
Depositor's equity............................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net assets applicable to units outstanding... $ 455,202 $ 259,009 $ 21,771 $ 42,006 $ 41,016
=========== =========== =========== =========== ===========
Policy owners' units........................... 10,451 9,652 1,385 1,901 2,140
Depositor's units.............................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Units outstanding............................ 10,451 9,652 1,385 1,901 2,140
=========== =========== =========== =========== ===========
Accumulation unit value...................... $ 43.55 $ 26.83 $ 15.72 $ 22.10 $ 19.17
=========== =========== =========== =========== ===========
See accompanying notes which are an integral part of the financial statements.
2
WRL Series Life Account
Statements of Assets and Liabilities
At June 30, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL WRL WRL WRL WRL
C.A.S.E. NWQ International GE Third
Growth Value Equity Equity U.S. Equity Avenue
Assets:
Investment in securities:
Number of shares............................. 2,357 2,221 940 2,205 1,851
=========== =========== =========== =========== ===========
Cost......................................... $ 31,971 $ 30,455 $ 11,098 $ 33,126 $ 24,879
=========== =========== =========== =========== ===========
Investment, at net asset value................. $ 23,194 $ 32,869 $ 8,550 $ 31,222 $ 27,297
Dividend receivable............................ 0 0 0 0 0
Transfers receivable from depositor............ 0 10 7 10 42
----------- ----------- ----------- ----------- -----------
Total assets................................. 23,194 32,879 8,557 31,232 27,339
----------- ----------- ----------- ----------- -----------
Liabilities:
Accrued expenses............................... 1 1 0 1 1
Transfers payable to depositor................. 4 0 0 0 0
----------- ----------- ----------- ----------- -----------
Total liabilities............................ 5 1 0 1 1
----------- ----------- ----------- ----------- -----------
Net assets................................... $ 23,189 $ 32,878 $ 8,557 $ 31,231 $ 27,338
=========== =========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.......................... $ 23,189 $ 32,878 $ 8,557 $ 31,231 $ 27,338
Depositor's equity............................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net assets applicable to units outstanding... $ 23,189 $ 32,878 $ 8,557 $ 31,231 $ 27,338
=========== =========== =========== =========== ===========
Policy owners' units........................... 1,869 1,995 786 1,876 1,795
Depositor's units.............................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Units outstanding............................ 1,869 1,995 786 1,876 1,795
=========== =========== =========== =========== ===========
Accumulation unit value...................... $ 12.41 $ 16.48 $ 10.89 $ 16.65 $ 15.23
=========== =========== =========== =========== ===========
See accompanying notes which are an integral part of the financial statements.
3
WRL Series Life Account
Statements of Assets and Liabilities
At June 30, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL WRL WRL WRL
J.P. Morgan Goldman WRL T. Rowe T. Rowe
Real Estate Sachs Munder Price Price
Securities Growth Net50 Dividend Growth Small Cap
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares............................. 375 216 285 191 380
=========== =========== =========== =========== ===========
Cost......................................... $ 3,806 $ 2,369 $ 3,143 $ 1,880 $ 4,584
=========== =========== =========== =========== ===========
Investment, at net asset value................. $ 4,220 $ 2,145 $ 3,152 $ 1,880 $ 4,425
Dividend receivable............................ 0 0 0 0 0
Transfers receivable from depositor............ 33 5 2 0 348
----------- ----------- ----------- ----------- -----------
Total assets................................. 4,253 2,150 3,154 1,880 4,773
----------- ----------- ----------- ----------- -----------
Liabilities:
Accrued expenses............................... 0 0 0 0 0
Transfers payable to depositor................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Total liabilities............................ 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net assets................................... $ 4,253 $ 2,150 $ 3,154 $ 1,880 $ 4,773
=========== =========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.......................... $ 4,253 $ 2,150 $ 3,154 $ 1,880 $ 4,773
Depositor's equity............................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Net assets applicable to units outstanding... $ 4,253 $ 2,150 $ 3,154 $ 1,880 $ 4,773
=========== =========== =========== =========== ===========
Policy owners' units........................... 379 225 289 195 448
Depositor's units.............................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Units outstanding............................ 379 225 289 195 448
=========== =========== =========== =========== ===========
Accumulation unit value...................... $ 11.23 $ 9.54 $ 10.91 $ 9.66 $ 10.66
=========== =========== =========== =========== ===========
See accompanying notes which are an integral part of the financial statements.
4
WRL Series Life Account
Statements of Assets and Liabilities
At June 30, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL
WRL WRL WRL WRL Great
Salomon Pilgrim Baxter Dreyfus Value Line Companies-
All Cap Mid Cap Growth Mid Cap Aggressive Growth America/SM/
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares............................. 1,717 3,082 368 130 1,239
=========== =========== =========== =========== ===========
Cost......................................... $ 22,883 $ 59,653 $ 4,284 $ 1,310 $ 12,883
=========== =========== =========== =========== ===========
Investment, at net asset value................. $ 23,509 $ 35,257 $ 4,289 $ 1,117 $ 12,325
Dividend receivable............................ 0 0 0 0 0
Transfers receivable from depositor............ 26 380 0 0 23
----------- ----------- ----------- ----------- -----------
Total assets................................. 23,535 35,637 4,289 1,117 12,348
----------- ----------- ----------- ----------- -----------
Liabilities:
Accrued expenses............................... 1 1 0 0 0
Transfers payable to depositor................. 0 0 0 0 0
----------- ----------- ----------- ----------- -----------
Total liabilities............................ 1 1 0 0 0
----------- ----------- ----------- ----------- -----------
Net assets................................... $ 23,534 $ 35,636 $ 4,289 $ 1,117 $ 12,348
=========== =========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.......................... $ 23,534 $ 35,636 $ 4,289 $ 947 $ 12,151
Depositor's equity............................. 0 0 0 170 197
----------- ----------- ----------- ----------- -----------
Net assets applicable to units outstanding... $ 23,534 $ 35,636 $ 4,289 $ 1,117 $ 12,348
=========== =========== =========== =========== ===========
Policy owners' units........................... 1,788 3,476 388 112 1,234
Depositor's units.............................. 0 0 0 20 20
----------- ----------- ----------- ----------- -----------
Units outstanding............................ 1,788 3,476 388 132 1,254
=========== =========== =========== =========== ===========
Accumulation unit value...................... $ 13.17 $ 10.25 $ 11.06 $ 8.48 $ 9.85
=========== =========== =========== =========== ===========
See accompanying notes which are an integral part of the financial statements.
5
WRL Series Life Account
Statements of Assets and Liabilities
At June 30, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL WRL WRL WRL
Great Great Gabelli LKCM
Companies- Companies- Global Capital
Technology/SM/ Global/2/ Growth Growth
Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares............................. 746 168 573 15
=========== =========== =========== ===========
Cost......................................... $ 5,359 $ 1,311 $ 5,177 $ 139
=========== =========== =========== ===========
Investment, at net asset value................. $ 3,596 $ 1,219 $ 4,951 $ 124
Dividend receivable............................ 0 0 0 0
Transfers receivable from depositor............ 17 1 3 8
----------- ----------- ----------- -----------
Total assets................................. 3,613 1,220 4,954 132
----------- ----------- ----------- -----------
Liabilities:
Accrued expenses............................... 0 0 0 0
Transfers payable to depositor................. 0 0 0 0
----------- ----------- ----------- -----------
Total liabilities............................ 0 0 0 0
----------- ----------- ----------- -----------
Net assets................................... $ 3,613 $ 1,220 $ 4,954 $ 132
=========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.......................... $ 3,518 $ 1,202 $ 4,933 $ 113
Depositor's equity............................. 95 18 21 19
----------- ----------- ----------- -----------
Net assets applicable to units outstanding... $ 3,613 $ 1,220 $ 4,954 $ 132
=========== =========== =========== ===========
Policy owners' units........................... 738 167 575 15
Depositor's units.............................. 20 3 3 3
----------- ----------- ----------- -----------
Units outstanding............................ 758 170 578 18
=========== =========== =========== ===========
Accumulation unit value...................... $ 4.77 $ 7.19 $ 8.58 $ 7.61
=========== =========== =========== ===========
See accompanying notes which are an integral part of the financial statements.
6
WRL Series Life Account
Statements of Assets and Liabilities
At June 30, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
Fidelity VIP III
Growth Fidelity VIP II Fidelity VIP
Opportunities Contrafund(R) Equity-Income
Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares............................. 68 90 103
=========== =========== ===========
Cost......................................... $ 1,178 $ 2,038 $ 2,440
=========== =========== ===========
Investment, at net asset value................. $ 1,085 $ 1,854 $ 2,441
Dividend receivable............................ 0 0 0
Transfers receivable from depositor............ 2 7 3
----------- ----------- -----------
Total assets................................. 1,087 1,861 2,444
----------- ----------- -----------
Liabilities:
Accrued expenses............................... 0 0 0
Transfers payable to depositor................. 0 0 0
----------- ----------- -----------
Total liabilities............................ 0 0 0
----------- ----------- -----------
Net assets................................... $ 1,087 $ 1,861 $ 2,444
=========== =========== ===========
Net Assets Consists of:
Policy owners' equity.......................... $ 1,068 $ 1,840 $ 2,444
Depositor's equity............................. 19 21 0
----------- ----------- -----------
Net assets applicable to units outstanding... $ 1,087 $ 1,861 $ 2,444
=========== =========== ===========
Policy owners' units........................... 138 219 226
Depositor's units.............................. 3 3 0
----------- ----------- -----------
Units outstanding............................ 141 222 226
=========== =========== ===========
Accumulation unit value...................... $ 7.77 $ 8.40 $ 10.83
=========== =========== ===========
See accompanying notes which are an integral part of the financial statements.
7
WRL Series Life Account
Statements of Operations
For the Period Ended June 30, 2001
All Amounts in Thousands
(unaudited)
WRL
WRL WRL WRL WRL LKCM
J.P. Morgan AEGON Janus Janus Strategic
Money Market Bond Growth Global Total Return
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................... $ 1,460 $ 0 $ 0 $ 0 $ 0
Capital gain distributions........................ 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Total investment income......................... 1,460 0 0 0 0
Expenses:
Mortality and expense risk........................ 264 135 3,824 1,662 426
---------- ---------- ---------- ---------- ----------
Net investment income (loss).................... 1,196 (135) (3,824) (1,662) (426)
---------- ---------- ---------- ---------- ----------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities. 0 (23) 20,847 4,325 747
Change in unrealized appreciation
(depreciation)................................... 0 877 (176,008) (59,747) (2,676)
---------- ---------- ---------- ---------- ----------
Net gain (loss) on investment securities........ 0 854 (155,161) (55,422) (1,929)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations..................... $ 1,196 $ 719 $ (158,985) $ (57,084) $ (2,355)
========== ========== ========== ========== ==========
WRL WRL WRL WRL
Van Kampen Alger WRL Federated Transamerica
Emerging Aggressive AEGON Growth & Value
Growth Growth Balanced Income Balanced
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................... $ 0 $ 0 $ 0 $ 0 $ 0
Capital gain distributions........................ 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Total investment income......................... 0 0 0 0 0
Expenses:
Mortality and expense risk........................ 2,168 1,150 95 151 169
---------- ---------- ---------- ---------- ----------
Net investment income (loss).................... (2,168) (1,150) (95) (151) (169)
---------- ---------- ---------- ---------- ----------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities. (147,797) 1,232 157 77 98
Change in unrealized appreciation
(depreciation)................................... 13,413 (33,685) (537) 3,661 1,935
---------- ---------- ---------- ---------- ----------
Net gain (loss) on investment securities........ (134,384) (32,453) (380) 3,738 2,033
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations..................... $ (136,552) $ (33,603) $ (475) $ 3,587 $ 1,864
========== ========== ========== ========== ==========
See accompanying notes which are an integral part of the financial statements.
8
WRL Series Life Account
Statements of Operations
For the Period Ended June 30, 2001
All Amounts in Thousands
(unaudited)
WRL
WRL WRL WRL WRL Third
C.A.S.E. NWQ International GE Avenue
Growth Value Equity Equity U.S. Equity Value
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................... $ 0 $ 0 $ 0 $ 0 $ 0
Capital gain distributions........................ 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Total investment income......................... 0 0 0 0 0
Expenses:
Mortality and expense risk........................ 109 136 36 135 97
---------- ---------- ---------- ---------- ----------
Net investment income (loss).................... (109) (136) (36) (135) (97)
---------- ---------- ---------- ---------- ----------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities. (965) 55 (255) 42 388
Change in unrealized appreciation
(depreciation)................................... (389) 839 (807) (1,775) 1,351
---------- ---------- ---------- ---------- ----------
Net gain (loss) on investment securities........ (1,354) 894 (1,062) (1,733) 1,739
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations..................... $ (1,463) $ 758 $ (1,098) $ (1,868) $ 1,642
========== ========== ========== ========== ==========
WRL WRL WRL WRL
J.P. Morgan Goldman WRL T. Rowe T. Rowe
Real Estate Sachs Munder Price Price
Securities Growth Net50 Dividend Growth Small Cap
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................... $ 0 $ 0 $ 0 $ 0 $ 0
Capital gain distributions........................ 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Total investment income......................... 0 0 0 0 0
Expenses:
Mortality and expense risk........................ 14 8 9 7 14
---------- ---------- ---------- ---------- ----------
Net investment income (loss).................... (14) (8) (9) (7) (14)
---------- ---------- ---------- ---------- ----------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities. 7 (12) (23) 53 (275)
Change in unrealized appreciation
(depreciation)................................... 313 (117) 40 (90) 198
---------- ---------- ---------- ---------- ----------
Net gain (loss) on investment securities........ 320 (129) 17 (37) (77)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations..................... $ 306 $ (137) $ 8 $ (44) $ (91)
========== ========== ========== ========== ==========
See accompanying notes which are an integral part of the financial statements.
9
WRL Series Life Account
Statements of Operations
For the Period Ended June 30, 2001
All Amounts in Thousands
(unaudited)
WRL WRL
WRL Pilgrim Baxter WRL WRL Great
Salomon Mid Cap Dreyfus Value Line Companies-
All Cap Growth Mid Cap Aggressive Growth America/SM/
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................... $ 0 $ 0 $ 0 $ 0 $ 0
Capital gain distributions........................ 0 0 0 0 0
---------- ---------- ---------- ---------- ----------
Total investment income......................... 0 0 0 0 0
Expenses:
Mortality and expense risk........................ 73 150 12 5 46
---------- ---------- ---------- ---------- ----------
Net investment income (loss).................... (73) (150) (12) (5) (46)
---------- ---------- ---------- ---------- ----------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities. 15 (2,802) (70) (47) 26
Change in unrealized appreciation
(depreciation)................................... 550 (7,320) 27 (10) (1,260)
---------- ---------- ---------- ---------- ----------
Net gain (loss) on investment securities........ 565 (10,122) (43) (57) (1,234)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations..................... $ 492 $ (10,272) $ (55) $ (62) $ (1,280)
========== ========== ========== ========== ==========
WRL WRL WRL WRL
Great Great Gabelli LKCM
Companies- Companies- Global Capital
Technology/SM/ Global/2/ Growth Growth
Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................... $ 0 $ 0 $ 0 $ 0
Capital gain distributions........................ 0 0 0 0
---------- ---------- ---------- ----------
Total investment income......................... 0 0 0 0
Expenses:
Mortality and expense risk........................ 16 4 13 0
---------- ---------- ---------- ----------
Net investment income (loss).................... (16) (4) (13) 0
---------- ---------- ---------- ----------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities. (934) (37) (5) (8)
Change in unrealized appreciation
(depreciation)................................... (458) (77) (194) (15)
---------- ---------- ---------- ----------
Net gain (loss) on investment securities........ (1,392) (114) (199) (23)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations..................... $ (1,408) $ (118) $ (212) $ (23)
========== ========== ========== ==========
See accompanying notes which are an integral part of the financial statements.
10
WRL Series Life Account
Statements of Operations
For the Period Ended June 30, 2001
All Amounts in Thousands
(unaudited)
Fidelity VIP III
Growth Fidelity VIP II Fidelity VIP
Opportunities Contrafund(R) Equity-Income
Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................... $ 2 $ 9 $ 13
Capital gain distributions........................ 0 33 37
---------- ---------- ----------
Total investment income......................... 2 42 50
Expenses:
Mortality and expense risk........................ 3 6 7
---------- ---------- ----------
Net investment income (loss).................... (1) 36 43
---------- ---------- ----------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities. (41) (26) (43)
Change in unrealized appreciation
(depreciation)................................... (23) (137) (12)
---------- ---------- ----------
Net gain (loss) on investment securities........ (64) (163) (55)
---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations..................... $ (65) $ (127) $ (12)
========== ========== ==========
See accompanying notes which are an integral part of the financial statements.
11
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
J.P. Morgan AEGON Janus
Money Market Bond Growth
Subaccount Subaccount Subaccount
--------------------- ---------------------- ----------------------
June 30, December 31, June 30, December 31, June 30, December 31,
-------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000
-------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss).............. $ 1,196 $ 2,389 $ (135) $ 1,147 $ (3,824) $ 152,896
Net gain (loss) on investment securities.. 0 0 854 1,222 (155,161) (555,143)
-------- ---------- --------- ---------- --------- -----------
Net increase (decrease) in net assets
resulting from operations................ 1,196 2,389 719 2,369 (158,985) (402,247)
-------- ---------- --------- ---------- --------- -----------
Capital Unit Transactions:
Proceeds from units sold (transferred).... (9,368) 12,540 8,695 897 78,320 168,047
-------- ---------- --------- ---------- --------- -----------
Less cost of units redeemed:
Administrative charges.................. 2,069 3,274 1,303 2,341 36,029 69,288
Policy loans............................ 908 1,672 323 1,361 9,789 44,968
Surrender benefits...................... 2,086 5,687 483 735 12,293 38,262
Death benefits.......................... 110 87 41 23 1,042 6,224
-------- ---------- --------- ---------- --------- -----------
5,173 10,720 2,150 4,460 59,153 158,742
-------- ---------- --------- ---------- --------- -----------
Increase (decrease) in net assest
from capital unit transactions......... (14,541) 1,820 6,545 (3,563) 19,167 9,305
-------- ---------- --------- ---------- --------- -----------
Net increase (decrease) in net assets... (13,345) 4,209 7,264 (1,194) (139,818) (392,942)
Depositor's equity contribution
(net redemption)......................... 0 0 0 0 0 0
Net Assets:
Beginning of period....................... 60,279 56,070 25,935 27,129 961,015 1,353,957
-------- ---------- --------- ---------- --------- -----------
End of period............................. $ 46,934 $ 60,279 $ 33,199 $ 25,935 $ 821,197 $ 961,015
======== ========== ========= ========== ========= ===========
Unit Activity:
Units outstanding - beginning of period... 3,278 3,206 1,072 1,232 9,366 9,293
Units issued.............................. 15,948 50,376 516 427 1,982 2,459
Units redeemed............................ (16,725) (50,304) (252) (587) (1,779) (2,386)
-------- ---------- --------- ---------- --------- -----------
Units outstanding - end of period......... 2,501 3,278 1,336 1,072 9,569 9,366
======== ========== ========= ========== ========= ===========
See accompanying notes which are an integral part of the financial statements.
12
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL
WRL LKCM WRL
Janus Strategic Van Kampen
Global Total Return Emerging Growth
Subaccount Subaccount Subaccount
---------------------- ---------------------- ----------------------
June 30, December 31, June 30, December 31, June 30, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000
--------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss).............. $ (1,662) $ 98,726 $ (426) $ 7,415 $ (2,168) $ 168,610
Net gain (loss) on investment securities.. (55,422) (191,334) (1,929) (12,297) (134,384) (261,688)
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations................ (57,084) (92,608) (2,355) (4,882) (136,552) (93,078)
--------- --------- --------- --------- --------- ---------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 27,940 112,253 6,799 10,776 44,119 145,357
--------- --------- --------- --------- --------- ---------
Less cost of units redeemed:
Administrative charges.................. 16,254 31,746 4,031 7,939 19,450 35,247
Policy loans............................ 3,443 15,396 828 2,710 5,044 22,735
Surrender benefits...................... 5,531 12,985 1,424 2,844 7,618 20,687
Death benefits.......................... 221 907 57 600 455 1,538
--------- --------- --------- --------- --------- ---------
25,449 61,034 6,340 14,093 32,567 80,207
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions......... 2,491 51,219 459 (3,317) 11,552 65,150
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets... (54,593) (41,389) (1,896) (8,199) (125,000) (27,928)
Depositor's equity contribution
(net redemption)......................... 0 0 0 0 0 0
Net Assets:
Beginning of period....................... 410,109 451,498 98,466 106,665 580,202 608,130
--------- --------- --------- --------- --------- ---------
End of period............................. $ 355,516 $ 410,109 $ 96,570 $ 98,466 $ 455,202 $ 580,202
========= ========= ========= ========= ========= =========
Unit Activity:
Units outstanding--beginning of period.... 12,899 11,605 4,523 4,674 10,226 9,357
Units issued.............................. 1,944 4,570 638 1,327 5,048 11,606
Units redeemed............................ (1,868) (3,276) (617) (1,478) (4,823) (10,737)
--------- --------- --------- --------- --------- ---------
Units outstanding--end of period.......... 12,975 12,899 4,544 4,523 10,451 10,226
========= ========= ========= ========= ========= =========
See accompanying notes which are an integral part of the financial statements.
13
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
Alger AEGON Federated
Aggressive Growth Balanced Growth & Income
Subaccount Subaccount Subaccount
---------------------- ---------------------- ----------------------
June 30, December 31, June 30, December 31, June 30, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000
--------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss).............. $ (1,150) $ 41,268 $ (95) $ 215 $ (151) $ 1,001
Net gain (loss) on investment securities.. (32,453) (168,747) (380) 742 3,738 4,230
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations................ (33,603) (127,479) (475) 957 3,587 5,231
--------- --------- --------- --------- --------- ---------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 33,246 103,588 3,123 4,955 13,873 7,863
--------- --------- --------- --------- --------- ---------
Less cost of units redeemed:
Administrative charges.................. 14,457 26,734 1,149 2,124 1,519 2,328
Policy loans............................ 2,675 12,341 260 442 222 628
Surrender benefits...................... 3,548 10,374 389 559 558 534
Death benefits.......................... 126 666 31 18 38 110
--------- --------- --------- --------- --------- ---------
20,806 50,115 1,829 3,143 2,337 3,600
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions......... 12,440 53,473 1,294 1,812 11,536 4,263
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets... (21,163) (74,006) 819 2,769 15,123 9,494
Depositor's equity contribution
(net redemption)......................... 0 0 0 0 0 0
Net Assets:
Beginning of period....................... 280,172 354,178 20,952 18,183 26,883 17,389
--------- --------- --------- --------- --------- ---------
End of period............................. $ 259,009 $ 280,172 $ 21,771 $ 20,952 $ 42,006 $ 26,883
========= ========= ========= ========= ========= =========
Unit Activity:
Units outstanding - beginning of period... 9,215 7,928 1,303 1,186 1,349 1,117
Units issued.............................. 2,115 3,925 314 569 982 996
Units redeemed............................ (1,678) (2,638) (232) (452) (430) (764)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of period......... 9,652 9,215 1,385 1,303 1,901 1,349
========= ========= ========= ========= ========= =========
See accompanying notes which are an integral part of the financial statements.
14
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
Transamerica C.A.S.E. NWQ
Value Balanced Growth Value Equity
Subaccount Subaccount Subaccount
--------------------- --------------------- ---------------------
June 30, December 31, June 30, December 31, June 30, December 31,
-------- ------------ -------- ------------ -------- ------------
2001 2000 2001 2000 2001 2000
-------- ------------ -------- ------------ -------- ------------
Operations:
Net investment income (loss).............. $ (169) $ 2,290 $ (109) $ 4,321 $ (136) $ 412
Net gain (loss) on investment securities.. 2,033 2,493 (1,354) (10,421) 894 2,965
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ 1,864 4,783 (1,463) (6,100) 758 3,377
-------- -------- -------- -------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 7,633 1,235 4,537 5,488 5,165 2,652
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges.................. 1,645 3,204 1,444 2,868 1,256 2,467
Policy loans............................ 484 785 378 767 222 596
Surrender benefits...................... 534 1,058 383 885 440 660
Death benefits.......................... 31 75 24 33 15 96
-------- -------- -------- -------- -------- --------
2,694 5,122 2,229 4,553 1,933 3,819
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions......... 4,939 (3,887) 2,308 935 3,232 (1,167)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets... 6,803 896 845 (5,165) 3,990 2,210
Depositor's equity contribution
(net redemption)......................... 0 0 0 0 0 0
Net Assets:
Beginning of period....................... 34,213 33,317 22,344 27,509 28,888 26,678
-------- -------- -------- -------- -------- --------
End of period............................. $ 41,016 $ 34,213 $ 23,189 $ 22,344 $ 32,878 $ 28,888
======== ======== ======== ======== ======== ========
Unit Activity:
Units outstanding - beginning of period... 1,881 2,128 1,713 1,657 1,797 1,895
Units issued.............................. 583 729 672 1,014 553 907
Units redeemed............................ (324) (976) (516) (958) (355) (1,005)
-------- -------- -------- -------- -------- --------
Units outstanding - end of period......... 2,140 1,881 1,869 1,713 1,995 1,797
======== ======== ======== ======== ======== ========
See accompanying notes which are an integral part of the financial statements.
15
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL
WRL GE Third Avenue
International Equity U.S. Equity Value
Subaccount Subaccount Subaccount
--------------------- --------------------- ---------------------
June 30, December 31, June 30, December 31, June 30, December 31,
-------- ------------ -------- ------------ -------- ------------
2001 2000 2001 2000 2001 2000
-------- ------------ -------- ------------ -------- ------------
Operation:
Net investment income (loss).............. $ (36) $ 1,124 $ (135) $ 1,071 $ (97) $ 426
Net gain (loss) on investment securities.. (1,062) (2,405) (1,733) (1,646) 1,739 1,699
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ (1,098) (1,281) (1,868) (575) 1,642 2,125
-------- -------- -------- -------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 2,309 3,155 5,375 7,853 10,176 12,970
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges.................. 447 663 1,479 2,712 785 560
Policy loans............................ 42 150 244 440 176 894
Surrender benefits...................... 106 125 311 744 248 306
Death benefits.......................... 3 5 13 27 6 11
-------- -------- -------- -------- -------- --------
598 943 2,047 3,923 1,215 1,771
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions......... 1,711 2,212 3,328 3,930 8,961 11,199
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets... 613 931 1,460 3,355 10,603 13,324
Depositor's equity contribution
(net redemption)......................... 0 0 0 0 0 0
Net Assets:
Beginning of period....................... 7,944 7,013 29,771 26,416 16,735 3,411
-------- -------- -------- -------- -------- --------
End of period............................. $ 8,557 $ 7,944 $ 31,231 $ 29,771 $ 27,338 $ 16,735
======== ======== ======== ======== ======== ========
Unit Activity:
Units outstanding - beginning of period... 639 475 1,683 1,468 1,177 322
Units issued.............................. 368 474 525 1,064 1,116 1,432
Units redeemed............................ (221) (310) (332) (849) (498) (577)
-------- -------- -------- -------- -------- --------
Units outstanding - end of period......... 786 639 1,876 1,683 1,795 1,177
======== ======== ======== ======== ======== ========
See accompanying notes which are an integral part of the financial statements.
16
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
J.P. Morgan Goldman Sachs Munder
Real Estate Securities Growth Net50
Subaccount Subaccount Subaccount
--------------------- --------------------- ---------------------
June 30, December 31, June 30, December 31, June 30, December 31,
-------- ------------ -------- ------------ -------- ------------
2001 2000 2001 2000 2001 2000
-------- ------------ -------- ------------ -------- ------------
Operations:
Net investment income (loss).............. $ (14) $ 17 $ (8) $ 7 $ (9) $ 11
Net gain (loss) on investment securities.. 320 345 (129) (156) 17 (27)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ 306 362 (137) (149) 8 (16)
-------- -------- -------- -------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 1,786 2,080 786 1,002 2,390 622
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges.................. 169 86 107 123 75 52
Policy loans............................ 103 60 8 44 13 7
Surrender benefits...................... 43 36 8 8 18 2
Death benefits.......................... 0 0 3 0 0 0
-------- -------- -------- -------- -------- --------
315 182 126 175 106 61
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions......... 1,471 1,898 660 827 2,284 561
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets... 1,777 2,260 523 678 2,292 545
Depositor's equity contribution
(net redemption)......................... 0 (411) 0 (28) 0 (27)
Net Assets:
Beginning of period....................... 2,476 627 1,627 977 862 344
-------- -------- -------- -------- -------- --------
End of period............................. $ 4,253 $ 2,476 $ 2,150 $ 1,627 $ 3,154 $ 862
======== ======== ======== ======== ======== ========
Unit Activity:
Units outstanding - beginning of period... 239 78 158 87 80 31
Units issued.............................. 330 816 121 161 255 80
Units redeemed............................ (190) (655) (54) (90) (46) (31)
-------- -------- -------- -------- -------- --------
Units outstanding - end of period......... 379 239 225 158 289 80
======== ======== ======== ======== ======== ========
See accompanying notes which are an integral part of the financial statements.
17
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
T. Rowe Price T. Rowe Price Salomon
Dividend Growth Small Cap All Cap
Subaccount Subaccount Subaccount
--------------------- --------------------- ---------------------
June 30, December 31, June 30, December 31, June 30, December 31,
-------- ------------ -------- ------------ -------- ------------
2001 2000 2001 2000 2001 2000
-------- ------------ -------- ------------ -------- ------------
Operations:
Net investment income (loss).............. $ (7) $ (4) $ (14) $ 5 $ (73) $ 57
Net gain (loss) on investment securities.. (37) 87 (77) (412) 565 161
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ (44) 83 (91) (407) 492 218
-------- -------- -------- -------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 1,049 516 2,559 2,291 16,349 7,892
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges.................. 79 83 188 167 827 257
Policy loans............................ 5 7 35 27 336 76
Surrender benefits...................... 26 2 40 15 211 58
Death benefits.......................... 0 0 0 0 5 0
-------- -------- -------- -------- -------- --------
110 92 263 209 1,379 391
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions......... 939 424 2,296 2,082 14,970 7,501
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets... 895 507 2,205 1,675 15,462 7,719
Depositor's equity contribution
(net redemption)......................... 0 (23) 0 (32) 0 (30)
Net Assets:
Beginning of period....................... 985 501 2,568 925 8,072 383
-------- -------- -------- -------- -------- --------
End of period............................. $ 1,880 $ 985 $ 4,773 $ 2,568 $ 23,534 $ 8,072
======== ======== ======== ======== ======== ========
Unit Activity:
Units outstanding - beginning of period... 99 55 230 75 643 36
Units issued.............................. 194 132 376 301 1,540 836
Units redeemed............................ (98) (88) (158) (146) (395) (229)
-------- -------- -------- -------- -------- --------
Units outstanding - end of period......... 195 99 448 230 1,788 643
======== ======== ======== ======== ======== ========
See accompanying notes which are an integral part of the financial statements.
18
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
Pilgrim Baxter Dreyfus Value Line
Mid Cap Growth Mid Cap Aggressive Growth
Subaccount Subaccount Subaccount
--------------------- ---------------------- ---------------------
June 30, December 31, June 30, December 31, June 30, December 31,
-------- ------------ --------- ------------ -------- ------------
2001 2000 2001 2000 2001 2000/ (1)/
-------- ------------ --------- ------------ -------- ------------
Operations:
Net investment income (loss).............. $ (150) $ 81 $ (12) $ 20 $ (5) $ (4)
Net gain (loss) on investment securities.. (10,122) (16,860) (43) 40 (57) (185)
-------- -------- --------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ (10,272) (16,779) (55) 60 (62) (189)
-------- -------- --------- -------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 9,534 55,513 2,761 1,562 181 1,091
-------- -------- --------- -------- -------- --------
Less cost of units redeemed:
Administrative charges.................. 2,735 2,546 159 96 28 19
Policy loans............................ 346 1,156 44 21 29 16
Surrender benefits...................... 231 323 22 4 3 0
Death benefits.......................... 16 72 3 0 9 0
-------- -------- --------- -------- -------- --------
3,328 4,097 228 121 69 35
-------- -------- --------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions......... 6,206 51,416 2,533 1,441 112 1,056
-------- -------- --------- -------- -------- --------
Net increase (decrease) in net assets... (4,066) 34,637 2,478 1,501 50 867
Depositor's equity contribution
(net redemption)......................... 0 0 0 (27) 0 200
Net Assets:
Beginning of period....................... 39,702 5,065 1,811 337 1,067 0
-------- -------- --------- -------- -------- --------
End of period............................. $ 35,636 $ 39,702 $ 4,289 $ 1,811 $ 1,117 $ 1,067
======== ======== ========= ======== ======== ========
Unit Activity:
Units outstanding - beginning of period... 2,929 317 159 33 119 0
Units issued.............................. 1,914 4,015 373 311 52 132
Units redeemed............................ (1,367) (1,403) (144) (185) (39) (13)
-------- -------- --------- -------- -------- --------
Units outstanding - end of period......... 3,476 2,929 388 159 132 119
======== ======== ========= ======== ======== ========
See accompanying notes which are an integral part of the financial statements.
19
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
Great Great Great
Companies- Companies- Companies-
America/SM/ Technology/SM/ Global/2/
Subaccount Subaccount Subaccount
--------------------- --------------------- ---------------------
June 30, December 31, June 30, December 31, June 30, December 31,
-------- ------------ -------- ------------ -------- ------------
2001 2000/(1)/ 2001 2000/(1)/ 2001 2000/(1)/
-------- ------------ -------- ------------ -------- ------------
Operations:
Net investment income (loss).............. $ (46) $ (28) $ (16) $ (13) $ (4) $ (1)
Net gain (loss) on investment securities.. (1,234) 715 (1,392) (1,437) (114) (16)
-------- --------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ (1,280) 687 (1,408) (1,450) (118) (17)
-------- --------- -------- -------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 5,685 8,008 2,504 4,240 918 494
-------- --------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges.................. 461 177 206 80 51 7
Policy loans............................ 37 110 35 53 9 1
Surrender benefits...................... 50 117 24 69 14 0
Death benefits.......................... 0 0 6 0 0 0
-------- --------- -------- -------- -------- --------
548 404 271 202 74 8
-------- --------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions......... 5,137 7,604 2,233 4,038 844 486
-------- --------- -------- -------- -------- --------
Net increase (decrease) in net assets... 3,857 8,291 825 2,588 726 469
Depositor's equity contribution
(net redemption)......................... 0 200 0 200 0 25
Net Assets:
Beginning of period....................... 8,491 0 2,788 0 494 0
-------- --------- -------- -------- -------- --------
End of period............................. $ 12,348 $ 8,491 $ 3,613 $ 2,788 $ 1,220 $ 494
======== ========= ======== ======== ======== ========
Unit Activity:
Units outstanding - beginning of period... 751 0 416 0 58 0
Units issued.............................. 771 878 752 557 201 63
Units redeemed............................ (268) (127) (410) (141) (89) (5)
-------- --------- -------- -------- -------- --------
Units outstanding - end of period......... 1,254 751 758 416 170 58
======== ========= ======== ======== ======== ========
See accompanying notes which are an integral part of the financial statements.
20
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL
Gabelli LKCM
Global Growth Capital Growth
Subaccount Subaccount
--------------------- --------------
June 30, December 31, June 30,
-------- ------------ --------------
2001 2000/(1)/ 2001/(1)/
-------- ------------ --------------
Operations:
Net investment income (loss).............. $ (13) $ (1) $ 0
Net gain (loss) on investment securities.. (199) (34) (23)
-------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ (212) (35) (23)
-------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 4,505 1,014 133
-------- -------- --------
Less cost of units redeemed:
Administrative charges.................. 280 33 3
Policy loans............................ 15 0 0
Surrender benefits...................... 15 0 0
Death benefits.......................... 0 0 0
-------- -------- --------
310 33 3
-------- -------- --------
Increase (decrease) in net assets
from capital unit transactions......... 4,195 981 130
-------- -------- --------
Net increase (decrease) in net assets... 3,983 946 107
Depositor's equity contribution
(net redemption)......................... 0 25 25
Net Assets:
Beginning of period....................... 971 0 0
-------- -------- --------
End of period............................. $ 4,954 $ 971 $ 132
======== ======== ========
Unit Activity:
Units outstanding - beginning of period... 107 0 0
Units issued.............................. 606 123 25
Units redeemed............................ (135) (16) (7)
-------- -------- --------
Units outstanding - end of period......... 578 107 18
======== ======== ========
See accompanying notes which are an integral part of the financial statements.
21
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
Fidelity VIP III
Growth Fidelity VIP II Fidelity VIP
Opportunities Contrafund(R) Equity-Income
Subaccount Subaccount Subaccount
--------------------- --------------------- ---------------------
June 30, December 31, June 30, December 31, June 30, December 31,
-------- ------------ -------- ------------ -------- ------------
2001 2000/(1)/ 2001 2000/(1)/ 2001 2000/(1)/
-------- ------------ -------- ------------ -------- ------------
Operations:
Net investment income (loss).............. $ (1) $ (2) $ 36 $ (3) $ 43 $ (1)
Net gain (loss) on investment securities.. (64) (73) (163) (48) (55) 17
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ (65) (75) (127) (51) (12) 16
-------- -------- -------- -------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 641 633 1,044 1,085 2,241 276
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges.................. 40 14 78 23 55 8
Policy loans............................ 11 5 7 5 0 2
Surrender benefits...................... 0 2 1 1 10 0
Death benefits.......................... 0 0 0 0 0 0
-------- -------- -------- -------- -------- --------
51 21 86 29 65 10
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions......... 590 612 958 1,056 2,176 266
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets... 525 537 831 1,005 2,164 282
Depositor's equity contribution
(net redemption)......................... 0 25 0 25 (27) 25
Net Assets:
Beginning of period....................... 562 0 1,030 0 307 0
-------- -------- -------- -------- -------- --------
End of period............................. $ 1,087 $ 562 $ 1,861 $ 1,030 $ 2,444 $ 307
======== ======== ======== ======== ======== ========
Unit Activity:
Units outstanding - beginning of period... 66 0 110 0 28 0
Units issued.............................. 102 76 149 124 303 39
Units redeemed............................ (27) (10) (37) (14) (105) (11)
-------- -------- -------- -------- -------- --------
Units outstanding - end of period......... 141 66 222 110 226 28
======== ======== ======== ======== ======== ========
See accompanying notes which are an integral part of the financial statements.
22
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL J.P. Morgan Money Market Subaccount
----------------------------------------------------
June 30, December 31,
-------- ------------------------------------------
2001 2000 1999 1998 1997 1996
-------- ------- -------- ------- ------- --------
Accumulation unit value, beginning of period.. $ 18.39 $ 17.49 $ 16.83 $ 16.13 $ 15.45 $ 14.83
-------- ------- -------- ------- ------- --------
Income from operations:
Net investment income (loss).............. 0.38 0.90 0.66 0.70 0.68 0.62
Net realized and unrealized gain (loss)
on investment............................ 0.00 0.00 0.00 0.00 0.00 0.00
-------- ------- -------- ------- ------- --------
Net income (loss) from operations........ 0.38 0.90 0.66 0.70 0.68 0.62
-------- ------- -------- ------- ------- --------
Accumulation unit value, end of period........ $ 18.77 $ 18.39 $ 17.49 $ 16.83 $ 16.13 $ 15.45
======== ======= ======== ======= ======= ========
Total return.................................. 2.04 % 5.17 % 3.92 % 4.36 % 4.37 % 4.17 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 46,934 $60,279 $ 56,070 $24,576 $16,440 $ 12,740
Ratio of net investment income (loss) to
average net assets......................... 4.08 % 5.05 % 3.87 % 4.24 % 4.28 % 4.07 %
WRL AEGON Bond Subaccount
----------------------------------------------------
June 30, December 31,
-------- ------------------------------------------
2001 2000 1999 1998 1997 1996
-------- ------- -------- ------- ------- --------
Accumulation unit value, beginning of period.. $ 24.19 $ 22.01 $ 22.89 $ 21.12 $ 19.53 $ 19.67
-------- ------- -------- ------- ------- --------
Income from operations:
Net investment income (loss).............. (0.11) 1.04 1.13 1.01 1.01 0.99
Net realized and unrealized gain (loss)
on investment............................ 0.76 1.14 (2.01) 0.76 0.58 (1.13)
-------- ------- -------- ------- ------- --------
Net income (loss) from operations........ 0.65 2.18 (0.88) 1.77 1.59 (0.14)
-------- ------- -------- ------- ------- --------
Accumulation unit value, end of period........ $ 24.84 $ 24.19 $ 22.01 $ 22.89 $ 21.12 $ 19.53
======== ======= ======== ======= ======= ========
Total return.................................. 2.69 % 9.90 % (3.81)% 8.34 % 8.18 % (0.75)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 33,199 $25,935 $ 27,129 $24,934 $17,657 $ 11,585
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 4.58 % 5.10 % 4.58 % 5.06 % 5.34 %
See accompanying notes which are an integral part of the financial statements.
23
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Janus Growth Subaccount
------------------------------------------------------------
June 30, December 31,
--------- -------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- ----------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 102.61 $ 145.70 $ 92.07 $ 56.48 $ 48.48 $ 41.47
--------- --------- ----------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.41) 16.41 25.03 0.13 5.83 2.88
Net realized and unrealized gain (loss)
on investment............................ (16.38) (59.50) 28.60 35.46 2.17 4.13
--------- --------- ----------- -------- -------- --------
Net income (loss) from operations........ (16.79) (43.09) 53.63 35.59 8.00 7.01
--------- --------- ----------- -------- -------- --------
Accumulation unit value, end of period........ $ 85.82 $ 102.61 $ 145.70 $ 92.07 $ 56.48 $ 48.48
========= ========= =========== ======== ======== ========
Total return.................................. (16.36)% (29.58)% 58.25 % 63.01 % 16.50 % 16.91 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 821,197 $ 961,015 $ 1,353,957 $798,027 $450,271 $349,491
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 11.75 % 22.67 % 0.19 % 10.84 % 6.41 %
WRL Janus Global Subaccount
------------------------------------------------------------
June 30, December 31,
--------- -------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- ----------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 31.79 $ 38.91 $ 22.94 $ 17.80 $ 15.13 $ 11.95
--------- --------- ----------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.13) 7.93 2.44 0.82 2.30 1.50
Net realized and unrealized gain (loss)
on investment............................ (4.26) (15.05) 13.53 4.32 0.37 1.68
--------- --------- ----------- -------- -------- --------
Net income (loss) from operations........ (4.39) (7.12) 15.97 5.14 2.67 3.18
--------- --------- ----------- -------- -------- --------
Accumulation unit value, end of period........ $ 27.40 $ 31.79 $ 38.91 $ 22.94 $ 17.80 $ 15.13
========= ========= =========== ======== ======== ========
Total return.................................. (13.82)% (18.28)% 69.58 % 28.86 % 17.69 % 26.60 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 355,516 $ 410,109 $ 451,498 $233,256 $145,017 $ 83,159
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 20.55 % 9.07 % 3.92 % 13.39 % 11.09 %
See accompanying notes which are an integral part of the financial statements.
24
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL LKCM Strategic Total Return Subaccount
----------------------------------------------------------
June 30, December 31,
--------- -----------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- --------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 21.77 $ 22.82 $ 20.55 $ 18.91 $ 15.66 $ 13.74
--------- --------- --------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.09) 1.63 1.68 0.71 1.56 0.82
Net realized and unrealized gain (loss)
on investment............................ (0.43) (2.68) 0.59 0.93 1.69 1.10
--------- --------- --------- -------- -------- --------
Net income (loss) from operations........ (0.52) (1.05) 2.27 1.64 3.25 1.92
--------- --------- --------- -------- -------- --------
Accumulation unit value, end of period........ $ 21.25 $ 21.77 $ 22.82 $ 20.55 $ 18.91 $ 15.66
========= ========= ========= ======== ======== ========
Total return.................................. (2.38)% (4.62)% 11.07 % 8.66 % 20.77 % 13.97 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 96,570 $ 98,466 $ 106,665 $ 98,926 $ 80,753 $ 55,900
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 7.43 % 7.93 % 3.67 % 8.89 % 5.76 %
WRL Van Kampen Emerging Growth Subaccount
----------------------------------------------------------
June 30, December 31,
--------- -----------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- --------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 56.74 $ 64.99 $ 31.96 $ 23.48 $ 19.51 $ 16.56
--------- --------- --------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.21) 16.83 9.32 0.91 2.20 0.82
Net realized and unrealized gain (loss)
on investment............................ (12.98) (25.08) 23.71 7.57 1.77 2.13
--------- --------- --------- -------- -------- --------
Net income (loss) from operations........ (13.19) (8.25) 33.03 8.48 3.97 2.95
--------- --------- --------- -------- -------- --------
Accumulation unit value, end of period........ $ 43.55 $ 56.74 $ 64.99 $ 31.96 $ 23.48 $ 19.51
========= ========= ========= ======== ======== ========
Total return.................................. (23.23)% (12.70)% 103.33 % 36.11 % 20.37 % 17.82 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 455,202 $ 580,202 $ 608,130 $262,665 $164,702 $107,925
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 23.62 % 23.19 % 3.44 % 10.18 % 4.51 %
See accompanying notes which are an integral part of the financial statements.
25
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Alger Aggressive Growth Subaccount
---------------------------------------------------------
June 30, December 31,
--------- ----------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- -------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 30.40 $ 44.67 $ 26.67 $ 18.10 $ 14.70 $ 13.43
--------- --------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.12) 4.76 4.90 1.33 1.75 0.36
Net realized and unrealized gain (loss)
on investment............................ (3.45) (19.03) 13.10 7.24 1.65 0.91
--------- --------- -------- -------- -------- --------
Net income (loss) from operations........ (3.57) (14.27) 18.00 8.57 3.40 1.27
--------- --------- -------- -------- -------- --------
Accumulation unit value, end of period........ $ 26.83 $ 30.40 $ 44.67 $ 26.67 $ 18.10 $ 14.70
========= ========= ======== ======== ======== ========
Total return.................................. (11.74)% (31.94)% 67.52 % 47.36 % 23.14 % 9.46 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 259,009 $ 280,172 $354,178 $177,857 $ 94,652 $ 54,408
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 11.65 % 15.54 % 6.20 % 10.26 % 2.65 %
WRL AEGON Balanced Subaccount
---------------------------------------------------------
June 30, December 31,
--------- ----------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- -------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 16.08 $ 15.33 $ 15.02 $ 14.17 $ 12.21 $ 11.13
--------- --------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.07) 0.17 0.19 0.25 1.55 0.36
Net realized and unrealized gain (loss)
on investment............................ (0.29) 0.58 0.12 0.60 0.41 0.72
--------- --------- -------- -------- -------- --------
Net income (loss) from operations........ (0.36) 0.75 0.31 0.85 1.96 1.08
--------- --------- -------- -------- -------- --------
Accumulation unit value, end of period........ $ 15.72 $ 16.08 $ 15.33 $ 15.02 $ 14.17 $ 12.21
========= ========= ======== ======== ======== ========
Total return.................................. (2.26)% 4.88 % 2.11 % 5.98 % 16.06 % 9.73 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 21,771 $ 20,952 $ 18,183 $ 14,864 $ 10,716 $ 6,418
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 1.10 % 1.26 % 1.76 % 11.62 % 3.18 %
See accompanying notes which are an integral part of the financial statements.
26
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Federated Growth & Income Subaccount
--------------------------------------------------------
June 30, December 31,
-------- ----------------------------------------------
2001 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 19.93 $ 15.57 $ 16.44 $ 16.09 $ 13.03 $ 11.77
-------- -------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.09) 0.85 1.05 0.77 2.61 0.76
Net realized and unrealized gain (loss)
on investment............................ 2.26 3.51 (1.92) (0.42) 0.45 0.50
-------- -------- -------- -------- -------- --------
Net income (loss) from operations........ 2.17 4.36 (0.87) 0.35 3.06 1.26
-------- -------- -------- -------- -------- --------
Accumulation unit value, end of period........ $ 22.10 $ 19.93 $ 15.57 $ 16.44 $ 16.09 $ 13.03
======== ======== ======== ======== ======== ========
Total return.................................. 10.90 % 28.01 % (5.31)% 2.13 % 23.54 % 10.64 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 42,006 $ 26,883 $ 17,389 $ 16,047 $ 9,063 $ 5,501
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 5.00 % 6.51 % 4.83 % 18.50 % 6.38 %
WRL Transamerica Value Balanced Subaccount
--------------------------------------------------------
June 30, December 31,
-------- ----------------------------------------------
2001 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 18.19 $ 15.66 $ 16.74 $ 15.60 $ 13.50 $ 11.90
-------- -------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.08) 1.20 0.41 1.58 1.20 0.53
Net realized and unrealized gain (loss)
on investment............................ 1.06 1.33 (1.49) (0.44) 0.90 1.07
-------- -------- -------- -------- -------- --------
Net income (loss) from operations........ 0.98 2.53 (1.08) 1.14 2.10 1.60
-------- -------- -------- -------- -------- --------
Accumulation unit value, end of period........ $ 19.17 $ 18.19 $ 15.66 $ 16.74 $ 15.60 $ 13.50
======== ======== ======== ======== ======== ========
Total return.................................. 5.38 % 16.16 % (6.48)% 7.36 % 15.55 % 13.40 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 41,016 $ 34,213 $ 33,317 $ 39,904 $ 29,123 $ 17,946
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 7.33 % 2.50 % 9.69 % 8.14 % 4.35 %
See accompanying notes which are an integral part of the financial statements.
27
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL C.A.S.E. Growth Subaccount
----------------------------------------------------------
June 30, December 31,
-------- ------------------------------------------------
2001 2000 1999 1998 1997 1996/(1)/
-------- --------- -------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 13.04 $ 16.60 $ 12.51 $ 12.32 $ 10.81 $ 10.00
-------- --------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.06) 2.56 1.52 1.24 1.51 0.37
Net realized and unrealized gain (loss)
on investment............................ (0.57) (6.12) 2.57 (1.05) 0.00 0.44
-------- --------- -------- -------- -------- --------
Net income (loss) from operations........ (0.63) (3.56) 4.09 0.19 1.51 0.81
-------- --------- -------- -------- -------- --------
Accumulation unit value, end of period........ $ 12.41 $ 13.04 $ 16.60 $ 12.51 $ 12.32 $ 10.81
======== ========= ======== ======== ======== ========
Total return.................................. (4.89)% (21.42)% 32.65 % 1.56 % 14.00 % 8.09 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 4,466
$ 23,189 $ 22,344 $ 27,509 $ 17,730 $ 11,946
Ratio of net investment income (loss) to 6.11 %
average net assets......................... (0.90)% 16.28 % 10.16 % 10.21 % 12.65 %
WRL NWQ Value Equity Subaccount
----------------------------------------------------------
June 30, December 31,
-------- ------------------------------------------------
2001 2000 1999 1998 1997 1996/(1)/
-------- --------- -------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 16.07 $ 14.08 $ 13.16 $ 13.94 $ 11.25 $ 10.00
-------- --------- -------- -------- -------- --------
Income from operations:.....................
Net investment income (loss).............. (0.07) 0.23 0.20 0.95 0.14 0.05
Net realized and unrealized gain (loss)
on investment............................ 0.48 1.76 0.72 (1.73) 2.55 1.20
-------- --------- -------- -------- -------- --------
Net income (loss) from operations........ 0.41 1.99 0.92 (0.78) 2.69 1.25
-------- --------- -------- -------- -------- --------
Accumulation unit value, end of period........ $ 16.48 $ 16.07 $ 14.08 $ 13.16 $ 13.94 $ 11.25
======== ========= ======== ======== ======== ========
Total return.................................. 2.54 % 14.17 % 6.98 % (5.63)% 23.93 % 12.51 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 32,878 $ 28,888 $ 26,678 $ 26,083 $ 26,714 $ 8,887
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 1.58 % 1.42 % 6.84 % 1.05 % 0.77 %
See accompanying notes which are an integral part of the financial statements.
28
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL International Equity Subaccount
-------------------------------------------------
June 30, December 31,
--------- --------------------------------------
2001 2000 1999 1998 1997/(1)/
--------- --------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 12.43 $ 14.76 $ 11.92 $ 10.65 $ 10.00
--------- --------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.05) 2.00 0.62 (0.09) (0.03)
Net realized and unrealized gain (loss)
on investment............................ (1.49) (4.33) 2.22 1.36 0.68
--------- --------- -------- -------- --------
Net income (loss) from operations........ (1.54) (2.33) 2.84 1.27 0.65
--------- --------- -------- -------- --------
Accumulation unit value, end of period........ $ 10.89 $ 12.43 $ 14.76 $ 11.92 $ 10.65
========= ========= ======== ======== ========
Total return.................................. (12.38)% (15.75)% 23.84 % 11.84 % 6.54 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 8,557 $ 7,944 $ 7,013 $ 5,827 $ 2,289
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 14.54 % 5.09 % (0.81)% (0.28)%
WRL GE U.S. Equity Subaccount
-------------------------------------------------
June 30, December 31,
--------- --------------------------------------
2001 2000 1999 1998 1997/(1)/
--------- --------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 17.69 $ 17.99 $ 15.33 $ 12.59 $ 10.00
--------- --------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.08) 0.68 1.38 0.73 0.99
Net realized and unrealized gain (loss)
on investment............................ (0.96) (0.98) 1.28 2.01 1.60
--------- --------- -------- -------- --------
Net income (loss) from operations........ (1.04) (0.30) 2.66 2.74 2.59
--------- --------- -------- -------- --------
Accumulation unit value, end of period........ $ 16.65 $ 17.69 $ 17.99 $ 15.33 $ 12.59
========= ========= ======== ======== ========
Total return.................................. (5.89)% (1.67)% 17.35 % 21.78 % 25.89 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 31,231 $ 29,771 $ 26,416 $ 14,084 $ 3,258
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 3.81 % 8.27 % 5.30 % 8.28 %
See accompanying notes which are an integral part of the financial statements.
29
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Third Avenue Value
Subaccount
--------------------------------------
June 30, December 31,
-------- ----------------------------
2001 2000 1999 1998/(1)/
-------- -------- -------- ---------
Accumulation unit value, beginning of period.. $ 14.22 $ 10.59 $ 9.23 $ 10.00
-------- -------- -------- ---------
Income from operations:
Net investment income (loss).............. (0.06) 0.60 0.19 (0.05)
Net realized and unrealized gain (loss)
on investment............................ 1.07 3.03 1.17 (0.72)
-------- -------- -------- ---------
Net income (loss) from operations........ 1.01 3.63 1.36 (0.77)
-------- -------- -------- ---------
Accumulation unit value, end of period........ $ 15.23 $ 14.22 $ 10.59 $ 9.23
======== ======== ======== =========
Total return.................................. 7.11 % 34.26 % 14.68 % (7.67)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 27,338 $ 16,735 $ 3,411 $ 2,807
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 4.53 % 1.98 % (0.52)%
WRL J.P. Morgan Real Estate Securities
Subaccount
--------------------------------------
June 30, December 31 ,
-------- ----------------------------
2001 2000 1999 1998/(1)/
-------- -------- -------- ---------
Accumulation unit value, beginning of period.. $ 10.36 $ 8.06 $ 8.46 $ 10.00
-------- -------- -------- ---------
Income from operations:
Net investment income (loss).............. (0.05) 0.10 0.07 (0.05)
Net realized and unrealized gain (loss)
on investment............................ 0.92 2.20 (0.47) (1.49)
-------- -------- -------- ---------
Net income (loss) from operations........ 0.87 2.30 (0.40) (1.54)
-------- -------- -------- ---------
Accumulation unit value, end of period........ $ 11.23 $ 10.36 $ 8.06 $ 8.46
======== ======== ======== =========
Total return.................................. 8.43 % 28.46 % (4.63)% (15.44)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 4,253 $ 2,476 $ 627 $ 709
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 1.07 % 0.95 % (0.90)%
See accompanying notes which are an integral part of the financial statements.
30
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Goldman Sachs Growth
Subaccount
----------------------------
June 30, December 31,
-------- ------------------
2001 2000 1999/(1)/
-------- -------- --------
Accumulation unit value, beginning of period.. $ 10.29 $ 11.29 $ 10.00
-------- -------- --------
Income from operations:
Net investment income (loss).............. (0.04) 0.06 (0.05)
Net realized and unrealized gain (loss)
on investment............................ (0.71) (1.06) 1.34
-------- -------- --------
Net income (loss) from operations........ (0.75) (1.00) 1.29
-------- -------- --------
Accumulation unit value, end of period........ $ 9.54 $ 10.29 $ 11.29
======== ======== ========
Total return.................................. (7.35)% (8.84)% 12.91 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 2,150 $ 1,627 $ 977
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 0.59 % (0.90)%
WRL Munder Net50
Subaccount
----------------------------
June 30, December 31,
-------- ------------------
2001 2000 1999/(1)/
-------- -------- --------
Accumulation unit value, beginning of period.. $ 10.80 $ 10.92 $ 10.00
-------- -------- --------
Income from operations:
Net investment income (loss).............. (0.05) 0.22 0.76
Net realized and unrealized gain (loss)
on investment............................ 0.16 (0.34) 0.16
-------- -------- --------
Net income (loss) from operations........ 0.11 (0.12) 0.92
-------- -------- --------
Accumulation unit value, end of period........ $ 10.91 $ 10.80 $ 10.92
======== ======== ========
Total return.................................. 1.02 % (1.15)% 9.23 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 3,154 $ 862 $ 344
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 2.00 % 15.66 %
See accompanying notes which are an integral part of the financial statements.
31
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL
T. Rowe Price
Dividend Growth
Subaccount
----------------------------
June 30, December 31,
-------- ------------------
2001 2000 1999/(1)/
-------- -------- --------
Accumulation unit value, beginning of period.. $ 9.98 $ 9.16 $ 10.00
-------- -------- --------
Income from operations:
Net investment income (loss).............. (0.04) (0.04) (0.04)
Net realized and unrealized gain (loss)
on investment............................ (0.28) 0.86 (0.80)
-------- -------- --------
Net income (loss) from operations........ (0.32) 0.82 (0.84)
-------- -------- --------
Accumulation unit value, end of period........ $ 9.66 $ 9.98 $ 9.16
======== ======== ========
Total return.................................. (3.19)% 8.89 % (8.37)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 1,880 $ 985 $ 501
Ratio of net investment income (loss) to
average net assets......................... (0.90)% (0.42)% (0.90)%
WRL
T. Rowe Price
Small Cap
Subaccount
----------------------------
June 30, December 31,
-------- ------------------
2001 2000 1999/(1)/
-------- -------- --------
Accumulation unit value, beginning of period.. $ 11.17 $ 12.31 $ 10.00
-------- -------- --------
Income from operations:
Net investment income (loss).............. (0.05) 0.04 0.41
Net realized and unrealized gain (loss)
on investment............................ (0.46) (1.18) 1.90
-------- -------- --------
Net income (loss) from operations........ (0.51) (1.14) 2.31
-------- -------- --------
Accumulation unit value, end of period........ $ 10.66 $ 11.17 $ 12.31
======== ======== ========
Total return.................................. (4.54)% (9.27)% 23.09 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 4,773 $ 2,568 $ 925
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 0.29 % 8.13 %
See accompanying notes which are an integral part of the financial statements.
32
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL
Salomon
All Cap
Subaccount
-------------------------------
June 30, December 31,
--------- --------------------
2001 2000 1999/(1)/
--------- --------- --------
Accumulation unit value, beginning of period.. $ 12.55 $ 10.70 $ 10.00
--------- --------- --------
Income from operations:
Net investment income (loss).............. (0.06) 0.23 0.40
Net realized and unrealized gain (loss)
on investment............................ 0.68 1.62 0.30
--------- --------- --------
Net income (loss) from operations........ 0.62 1.85 0.70
--------- --------- --------
Accumulation unit value, end of period........ $ 13.17 $ 12.55 $ 10.70
========= ========= ========
Total return.................................. 4.92 % 17.24 % 7.02 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 23,534 $ 8,072 $ 383
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 1.91 % 8.07 %
WRL
Pilgrim Baxter
Mid Cap Growth
Subaccount
-------------------------------
June 30, December 31,
--------- --------------------
2001 2000 1999/(1)/
--------- --------- --------
Accumulation unit value, beginning of period.. $ 13.56 $ 15.98 $ 10.00
--------- --------- --------
Income from operations:
Net investment income (loss).............. (0.05) 0.04 0.04
Net realized and unrealized gain (loss)
on investment............................ (3.26) (2.46) 5.94
--------- --------- --------
Net income (loss) from operations........ (3.31) (2.42) 5.98
--------- --------- --------
Accumulation unit value, end of period........ $ 10.25 $ 13.56 $ 15.98
========= ========= ========
Total return.................................. (24.37)% (15.16)% 59.78 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 35,636 $ 39,702 $ 5,065
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 0.25 % 0.62 %
See accompanying notes which are an integral part of the financial statements.
33
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL WRL
Dreyfus Value Line
Mid Cap Aggressive Growth
Subaccount Subaccount
-------------------------------- ----------------------
June 30, December 31, June 30, December 31,
--------- --------------------- --------- ------------
2001 2000 1999/(1)/ 2001 2000/(1)/
--------- ------------ -------- --------- ------------
Accumulation unit value, beginning of period.. $ 11.35 $ 10.14 $ 10.00 $ 8.98 $ 10.00
--------- -------- -------- --------- ---------
Income from operations:
Net investment income (loss).............. (0.05) 0.23 (0.04) (0.04) (0.06)
Net realized and unrealized gain (loss)
on investment............................ (0.24) 0.98 0.18 (0.46) (0.96)
--------- -------- -------- --------- ---------
Net income (loss) from operations........ (0.29) 1.21 0.14 (0.50) (1.02)
--------- -------- -------- --------- ---------
Accumulation unit value, end of period........ $ 11.06 $ 11.35 $ 10.14 $ 8.48 $ 8.98
========= ======== ======== ========= =========
Total return.................................. (2.53)% 11.91 % 1.44 % (5.51)% (10.24)%
Ratios and supplemental data:.................
Net assets at end of period (in thousands).. $ 4,289 $ 1,811 $ 337 $ 1,117 $ 1,067
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 2.02 % (0.90)% (0.90)% (0.90)%
WRL WRL
Great Companies- Great Companies-
America/SM/ Technology/SM/
Subaccount Subaccount
---------------------- ----------------------
June 30, December 31, June 30, December 31
--------- ------------ --------- ------------
2001 2000/(1)/ 2001 2000/(1)/
--------- ------------ --------- ------------
Accumulation unit value, beginning of period.. $ 11.31 $ 10.00 $ 6.70 $ 10.00
--------- -------- --------- ---------
Income from operations:
Net investment income (loss).............. (0.04) (0.06) (0.02) (0.05)
Net realized and unrealized gain (loss)
on investment............................ (1.42) 1.37 (1.91) (3.25)
--------- -------- --------- ---------
Net income (loss) from operations........ (1.46) 1.31 (1.93) (3.30)
--------- -------- --------- ---------
Accumulation unit value, end of period........ $ 9.85 $ 11.31 $ 4.77 $ 6.70
========= ======== ========= =========
Total return.................................. (12.95)% 13.12 % (28.80)% (33.01)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 12,348 $ 8,491 $ 3,613 $ 2,788
Ratio of net investment income (loss) to
average net assets......................... (0.90)% (0.90)% (0.90)% (0.90)%
See accompanying notes which are an integral part of the financial statements.
34
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL WRL
Great Companies- Gabelli
Global/2/ Global Growth
Subaccount Subaccount
-------------------------- ---------------------
June 30, December 31, June 30, December 31,
-------------- ------------ -------- ------------
2001 2000/(1)/ 2001 2000/(1)/
-------------- ------------ -------- ------------
Accumulation unit value, beginning of period.. $ 8.52 $ 10.00 $ 9.07 $ 10.00
--------- --------- -------- --------
Income from operations:
Net investment income (loss).............. (0.03) (0.03) (0.04) (0.03)
Net realized and unrealized gain (loss)
on investment............................ (1.30) (1.45) (0.45) (0.90)
--------- --------- -------- --------
Net income (loss) from operations........ (1.33) (1.48) (0.49) (0.93)
--------- --------- -------- --------
Accumulation unit value, end of period........ $ 7.19 $ 8.52 $ 8.58 $ 9.07
========= ========= ======== ========
Total return.................................. (15.60)% (14.84)% (5.47)% (9.27)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 1,220 $ 494 $ 4,954 $ 971
Ratio of net investment income (loss) to
average net assets......................... (0.90)% (0.90)% (0.90)% (0.90)%
WRL
LKCM
Capital Growth
Subaccount
--------------
June 30,
--------------
2001/(1)/
--------------
Accumulation unit value, beginning of period.. $ 10.00
---------
Income from operations:
Net investment income (loss).............. (0.03)
Net realized and unrealized gain (loss)
on investment............................ (2.36)
---------
Net income (loss) from operations........ (2.39)
---------
Accumulation unit value, end of period........ $ 7.61
=========
Total return.................................. (23.92)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 132
Ratio of net investment income (loss) to
average net assets......................... (0.90)%
See accompanying notes which are an integral part of the financial statements.
35
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
Fidelity VIP III Fidelity VIP II
Growth Opportunities Contrafund(R)
Subaccount Subaccount
--------------------- ----------------------
June 30, December 31, June 30, December 31,
-------- ------------ --------- ------------
2001 2000/(1)/ 2001 2000/(1)/
-------- ------------ --------- ------------
Accumulation unit value, beginning of period.. $ 8.56 $ 10.00 $ 9.38 $ 10.00
-------- --------- --------- --------
Income from operations:
Net investment income (loss).............. (0.01) (0.06) 0.21 (0.06)
Net realized and unrealized gain (loss)
on investment............................ (0.78) (1.38) (1.19) (0.56)
-------- --------- --------- --------
Net income (loss) from operations........ (0.79) (1.44) (0.98) (0.62)
-------- --------- --------- --------
Accumulation unit value, end of period........ $ 7.77 $ 8.56 $ 8.40 $ 9.38
======== ========= ========= ========
Total return.................................. (9.31)% (14.36)% (10.46)% (6.16)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 1,087 $ 562 $ 1,861 $ 1,030
Ratio of net investment income (loss) to
average net assets......................... (0.29)% (0.90)% 5.01 % (0.90)%
Fidelity VIP
Equity-Income
Subaccount
---------------------
June 30, December 31,
-------- ------------
2001 2000/(1)/
-------- ------------
Accumulation unit value, beginning of period.. $ 10.99 $ 10.00
-------- ---------
Income from operations:
Net investment income (loss).............. 0.30 (0.06)
Net realized and unrealized gain (loss)
on investment............................ (0.46) 1.05
-------- ---------
Net income (loss) from operations........ (0.16) 0.99
-------- ---------
Accumulation unit value, end of period........ $ 10.83 $ 10.99
======== =========
Total return.................................. (1.47)% 9.91 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 2,444 $ 307
Ratio of net investment income (loss) to
average net assets......................... 5.66 % (0.90)%
See accompanying notes which are an integral part of the financial statements.
36
WRL Series Life Account
Notes to the Financial Statements
At June 30, 2001
(unaudited)
NOTE 1 -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The 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", or the "depositor") and is registered as a unit investment trust under
the Investment Company Act of 1940, as amended. The Life Account contains
thirty-two investment options referred to as subaccounts. Each subaccount
invests exclusively in a corresponding Portfolio (the "Portfolio") of a fund,
which collectively is referred to as the "Fund". WRL Series Life Account
contains four funds (collectively referred to as the "Funds"). Each fund is a
registered management investment company under the Investment Company Act of
1940, as amended.
Subaccount Investment by Fund:
AEGON/Transamerica Series Fund, Inc. (formerly WRL Series Fund, Inc.)
J.P. Morgan Money Market (formerly WRL J.P. Morgan Money Market)
AEGON Bond (formerly WRL AEGON Bond)
Janus Growth (formerly WRL Janus Growth)
Janus Global (formerly WRL Janus Global)
LKCM Strategic Total Return (formerly WRL LKCM Strategic Total Return)
Van Kampen Emerging Growth (formerly WRL VKAM Emerging Growth)
Alger Aggressive Growth (formerly WRL Alger Aggressive Growth)
AEGON Balanced (formerly WRL AEGON Balanced)
Federated Growth & Income (formerly WRL Federated Growth & Income)
Transamerica Value Balanced (formerly WRL Dean Asset Allocation)
C.A.S.E. Growth (formerly WRL C.A.S.E. Growth)
NWQ Value Equity (formerly WRL NWQ Value Equity)
International Equity (formerly WRL GE International Equity)
GE U.S. Equity (formerly WRL GE U.S. Equity)
Third Avenue Value (formerly WRL Third Avenue Value)
J.P. Morgan Real Estate Securities (formerly WRL J.P. Morgan Real Estate
Securities)
Goldman Sachs Growth (formerly WRL Goldman Sachs Growth)
Munder Net50 (formerly WRL Goldman Sachs Small Cap)
T. Rowe Price Dividend Growth (formerly WRL T. Rowe Price Dividend Growth)
T. Rowe Price Small Cap (formerly WRL T. Rowe Price Small Cap)
Salomon All Cap (formerly WRL Salomon All Cap)
Pilgrim Baxter Mid Cap Growth (formerly WRL Pilgrim Baxter Mid Cap Growth)
Dreyfus Mid Cap (formerly WRL Dreyfus Mid Cap)
Value Line Aggressive Growth (formerly WRL Value Line Aggressive Growth)
Great Companies - America/SM/ (formerly WRL Great Companies - America/SM/)
Great Companies - Technology/SM / (formerly WRL Great Companies -
Technology/SM/)
Great Companies - Global/2/ (formerly WRL Great Companies - Global/2/)
Gabelli Global Growth (formerly WRL Gabelli Global Growth)
LKCM Capital Growth (formerly WRL LKCM Capital Growth)
Variable Insurance Products Fund III (VIP III)
Fidelity VIP III Growth Opportunities Portfolio - Service Class 2 (Referred
to as "Fidelity VIP III Growth Opportunities")
Variable Insurance Products Fund II (VIP II)
Fidelity VIP II Contrafund(R) Portfolio - Service Class 2 (Referred to as
"Fidelity VIP II Contrafund(R)")
Variable Insurance Products Fund (VIP)
Fidelity VIP Equity-Income Portfolio - Service Class 2 (Referred to as
"Fidelity VIP Equity-Income")
The AEGON/Transamerica Series Fund, Inc. has entered into annually renewable
investment advisory agreements for each Portfolio with AEGON/Transamerica Fund
Advisers, Inc. (formerly WRL Investment Management, Inc.) ("AEGON/Transamerica
Advisers") as investment adviser. Costs incurred in connection with the
advisory services rendered by AEGON/Transamerica Advisers are paid by each
Portfolio. AEGON/Transamerica Advisers has entered into sub-advisory agreements
with various management companies ("Sub-Advisers"), some of which are
affiliates of WRL. Each Sub-Adviser is compensated directly by
AEGON/Transamerica Advisers. The other three Funds have entered into
participation agreements for each Portfolio with WRL.
Each period reported on within the financial statements reflects a full six or
twelve month period except as follows:
Subaccount Inception Date
---------- --------------
WRL C.A.S.E. Growth 05/01/1996
WRL NWQ Value Equity 05/01/1996
WRL International Equity (formerly WRL
GE International Equity) 01/02/1997
WRL GE U.S. Equity 01/02/1997
WRL Third Avenue Value 01/02/1998
WRL J.P. Morgan Real Estate Securities 05/01/1998
WRL Goldman Sachs Growth 07/01/1999
WRL Munder Net50 (formerly WRL Goldman
Sachs Small Cap) 07/01/1999
WRL T. Rowe Price Dividend Growth 07/01/1999
WRL T. Rowe Price Small Cap 07/01/1999
WRL Salomon All Cap 07/01/1999
WRL Pilgrim Baxter Mid Cap Growth 07/01/1999
WRL Dreyfus Mid Cap 07/01/1999
WRL Value Line Aggressive Growth 05/01/2000
WRL Great Companies - America/SM/ 05/01/2000
WRL Great Companies - Technology/SM/ 05/01/2000
WRL Great Companies - Global/2/ 09/01/2000
WRL Gabelli Global Growth 09/01/2000
WRL LKCM Capital Growth 02/05/2001
37
WRL Series Life Account
Notes to the Financial Statements (continued)
At June 30, 2001
(unaudited)
NOTE 1 -- (continued)
Subaccount Inception Date
---------- ----------
Fidelity VIP III Growth Opportunities 05/01/2000
Fidelity VIP II Contrafund(R) 05/01/2000
Fidelity VIP Equity-Income 05/01/2000
Effective September 1, 2000, the Janus Global Portfolio is not available for
investment to new policyowners. The portfolio remains open to the policyowners
who purchased the Policy before September 1, 2000.
On February 5, 2001, WRL made initial contributions totaling $ 25,000 to the
Life Account. The respective amounts of the contributions and units received
are as follows:
Subaccount Contribution Units
---------- ------------ -----
WRL LKCM Capital Growth $ 25,000 2,500
The Life Account holds assets to support the benefits under certain flexible
premium variable universal life insurance policies (the "Policies") issued by
WRL. The Life Account's equity transactions are accounted for using the
appropriate effective date at the corresponding accumulation unit value.
The following significant accounting policies, which are in conformity with
accounting principles generally accepted in the United States, have been
consistently applied in the preparation of the Life Account Financial
Statements. The preparation of the Financial Statements required management to
make estimates and assumptions that affect the reported amounts and
disclosures. Actual results could differ from those estimates.
A. Valuation of Investments and Securities Transactions
Investments in the Funds' shares are valued at the closing net asset value
("NAV") per share of the underlying Portfolio, as determined by the Funds.
Investment transactions are accounted for on the trade date at the Portfolio
NAV next determined after receipt of sale or redemption orders without sales
charges. Dividend income and capital gains 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 the Internal Revenue Code law, the investment
income of the Life Account, including realized and unrealized capital 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 the issuance and administration
of the Policies.
A. Policy Charges
Under some forms of the Policies, a sales charge and premium taxes are deducted
by WRL prior to allocation of policy owner payments to the subaccounts.
Contingent surrender charges may also apply.
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 .90 % of average daily net assets is
assessed to compensate WRL for assumption of mortality and expense risks for
administrative services in connection with issuance and administration of the
Policies. This charge (not assessed at the individual contract level)
effectively reduces the value of a unit outstanding during the year.
NOTE 3 -- DIVIDEND DISTRIBUTIONS
Dividends are not declared by the Life Account, since the increase in the value
of the underlying investment in the Fund is reflected daily in the accumulation
unit value used to calculate the equity value within the Life Account.
Consequently, a dividend distribution by the underlying Fund does not change
either the accumulation unit value or equity values within the Life Account.
NOTE 4 -- SECURITIES TRANSACTIONS
Securities transactions for the period ended June 30, 2001 are as follows (in
thousands):
Purchases Proceeds
of from Sales
Subaccount Securities of Securities
---------- ---------- -------------
WRL J.P. Morgan Money Market $ 214,086 $ 226,952
WRL AEGON Bond 8,134 1,700
WRL Janus Growth 68,447 53,273
WRL Janus Global 13,226 12,408
WRL LKCM Strategic Total Return 3,246 3,216
WRL Van Kampen Emerging Growth
(formerly WRL VKAM Emerging
Growth) 175,414 165,911
WRL Alger Aggressive Growth 19,339 7,986
WRL AEGON Balanced 2,165 972
WRL Federated Growth & Income 12,364 1,041
WRL Transamerica Value Balanced
(formerly WRL Dean Asset
Allocation) 6,028 1,349
WRL C.A.S.E. Growth 4,583 2,371
WRL NWQ Value Equity 4,815 1,703
WRL International Equity 2,668 998
WRL GE U.S. Equity 4,356 1,135
WRL Third Avenue Value 10,591 1,536
WRL J.P. Morgan Real Estate
Securities 2,457 1,022
38
WRL Series Life Account
Notes to the Financial Statements (continued)
At June 30, 2001
(unaudited)
NOTE 4 -- (continued)
Purchases Proceeds
of from Sales
Subaccount Securities of Securities
---------- --------- ---------
WRL Goldman Sachs Growth $ 881 $ 206
WRL Munder Net50 2,553 248
WRL T. Rowe Price Dividend Growth 1,632 700
WRL T. Rowe Price Small Cap 2,725 763
WRL Salomon All Cap 15,277 414
WRL Pilgrim Baxter Mid Cap Growth 9,949 4,147
WRL Dreyfus Mid Cap 3,307 785
WRL Value Line Aggressive Growth 334 227
WRL Great Companies - America/SM/ 5,682 609
WRL Great Companies -
Technology/SM/ 3,252 1,048
WRL Great Companies - Global/2/ 1,253 410
WRL Gabelli Global Growth 4,276 87
WRL LKCM Capital Growth 204 57
Fidelity VIP III Growth Opportunities 723 136
Fidelity VIP II Contrafund(R) 1,116 129
Fidelity VIP Equity-Income 2,883 694
NOTE 5 -- FINANCIAL HIGHLIGHTS
Per unit information has been computed using average units outstanding
throughout each period. Total return is not annualized for periods of less than
one year. The ratio of net investment income (loss) to average net assets is
annualized for periods of less than one year.
NOTE 6 -- SUBSEQUENT EVENTS
Effective August 24, 2001 the portfolio name changed from Dean Asset Allocation
to Transamerica Value Balanced and the subaccount from WRL Dean Asset
Allocation to WRL Transamerica Value Balanced. Effective October 5, 2001, the
portfolio name changed from GE International Equity to International Equity and
the subaccount from WRL GE International Equity to WRL International Equity.
These events will have happened subsequent to the unaudited financials.
39
Western Reserve Life Assurance Co. of Ohio
Balance Sheet - Statutory Basis
(Dollars in thousands, except per share amounts)(Unaudited)
As of June 30, 2001
Admitted Assets
Cash and invested assets:
Cash and short-term investments $15,753
Bonds 85,020
Common stock, at market 5,584
Mortgage loans on real estate 13,955
Home office properties, at cost less accumulated
depreciation 43,956
Policy loans 291,441
Other invested assets 16,685
Short-term notes receivable from affiliates 26,500
--------------------
Total cash and invested assets 498,894
Net deferred taxes 9,325
Premiums deferred and uncollected 1,158
Accrued investment income 1,375
Transfers from separate accounts due or accrued 444,014
Cash surrender value of life insurance policies 50,994
Other assets 6,963
Separate account assets 8,937,935
--------------------
Total admitted assets $9,950,658
====================
Liabilities and capital and surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life 407,416
Annuity 323,957
Policy and contract claim reserves 15,191
Other policyholders' funds 12,116
Remittances and items not allocated 14,524
Asset valuation reserve 4,894
Interest maintenance reserve 5,559
Payable to parent, subsidiaries and affiliates 2,791
Other liabilities 92,350
Separate account liabilities 8,934,259
--------------------
Total liabilities 9,813,057
Capital and surplus:
Common stock, $1.00 par value, 3,000,000 shares
authorized, 2,500,000 issued and outstanding 2,500
Paid-in surplus 120,107
Unassigned surplus 14,994
--------------------
Total capital and surplus 137,601
--------------------
Total liabilities and capital and surplus $9,950,658
====================
Western Reserve Life Assurance Co. of Ohio
Statement of Operations - Statutory Basis
(Dollars in thousands)(Unaudited)
for the Six Months Ended June 30, 2001
Revenues:
Premiums and other considerations, net of reinsurance
Life $347,193
Annuity 363,900
Net investment income 21,561
Amortization of interest maintenance reserve 729
Commissions and expense allowances on
reinsurance ceded 656
Income from fees associated with investment management,
administration and contract guarantees for separate accounts 10,884
Other income 9,010
--------------
753,933
Benefits and expenses:
Benefits paid or provided for:
Life 27,999
Surrender benefits 426,801
Other benefits 25,351
Increase (decrease) in aggregate reserves for
policies and contracts:
Life 6,721
Annuity 35,587
--------------
522,459
Insurance expenses:
Commissions 100,437
General insurance expenses 54,907
Taxes, licenses and fees 11,403
Transfer to separate accounts 94,526
Other (141)
--------------
261,132
--------------
783,591
--------------
Loss from operations before federal and foreign income
tax benefit and net realized capital losses on
investments (29,658)
Federal and foreign income tax benefit (12,363)
--------------
Loss from operations before net realized (17,295)
capital gains on investments
Net realized capital gains on investments
(net of related federal income taxes and
amounts transferred to interest maintenance
reserve) 68
--------------
Net loss $(17,227)
==============
Western Reserve Life Assurance Co. of Ohio
Statement of Changes in Capital and Surplus - Statutory Basis
(Dollars in thousands)(Unaudited)
Total
Unassigned Capital
Common Paid-in Surplus and
Stock Surplus (Deficit) Surplus
-------------------------------------------------------------------
Balance at January 1, 2001 $2,500 $120,107 $23,537 $146,144
Net loss 0 0 (17,227) (17,227)
Change in net unrealized capital losses 0 0 (90) (90)
Change in net deferred income tax 0 0 4,458 4,458
Change in non-admitted assets 0 0 (7,399) (7,399)
Change in asset valuation reserve 0 0 (168) (168)
Change in surplus in separate accounts 0 0 (709) (709)
Change is accounting principles 0 0 12,312 12,312
Tax benefits on stock options exercised 0 0 280 280
-------------------------------------------------------------------
Balance at June 30, 2001 $2,500 $120,107 $14,994 $137,601
===================================================================
Western Reserve Life Assurance Co. of Ohio
Statement of Cash Flow - Statutory Basis
(Dollars in thousands)(Unaudited)
for the Six Months Ended June 30, 2001
Operating Activities
Premiums and other considerations, net of reinsurance $731,741
Net investment income 22,771
Life and accident and health claims (27,081)
Surrender benefits and withdrawals for life contracts (426,824)
Other benefits to policyholders (25,216)
Commissions, other expenses and other taxes (172,013)
Net transfers to separate accounts (60,089)
Federal income taxes received 76,197
Other, net (50,595)
-----------------
Net cash provided by operating activities 68,891
Investing Activities
Proceeds from investments sold, matured or repaid:
Bonds 19,951
Mortgage loans on real estate 136
-----------------
20,087
Cost of investments acquired:
Bonds (11,705)
Stocks (50)
Real estate (13)
Policy loans (7,106)
Other invested assets (7,778)
Other (185)
-----------------
(26,837)
-----------------
Net cash used in investing activities (6,750)
Financing Activities
Payment of short-term note payable to
affiliate, net (71,400)
Deposits on deposit-type contracts and other liabilities
without life or disability contingencies 363
Withdrawals on deposit-type contracts and other liabilities
without life or disability contingencies (816)
-----------------
Net cash used in financing activities (71,853)
-----------------
Decrease in cash and short-term investments (9,712)
Cash and short-term investments at beginning of year 25,465
-----------------
Cash and short-term investments at end of period $15,753
=================
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements - Statutory Basis
(Dollars in thousands)(Unaudited)
for the Six Months Ended June 30, 2001
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 adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 2001 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2001. For further information, refer to the accompanying statutory
basis financial statements and notes thereto for the year ended December 31,
2000.
2. Accounting Changes
The Company prepares its statutory financial statements in conformity with
accounting practices prescribed or permitted by the State of Ohio. Effective
January 1, 2001, the State of Ohio required that insurance companies domiciled
in the State of Ohio prepare their statutory basis financial statements in
accordance with the NAIC Accounting Practices and Procedures manual - Version
effective January 1,2001, subject to any deviations prescribed or permitted by
the State of Ohio Commissioner of Insurance.
Accounting changes adopted to conform to the provisions of the NAIC Accounting
Practices and Procedures manual - Version effective January 1, 2001 are reported
as changes in accounting principles. The cumulative effect of changes in
accounting principles is reported as an adjustment to unassigned funds (surplus)
in the period of the change in accounting principle. The cumulative effect is
the difference between the amount of capital and surplus that would have been
reported at the date if the new accounting principles had been applied
retroactively for all prior periods. As a result of these changes, the Company
reported a change of accounting principle, as an adjustment that increased
unassigned funds (surplus), by $12,312 as of January 1, 2001. Making up the
majority of this amount was the establishment of deferred tax assets in the
amount of $12,696.
PROSPECTUS
----------
July 5, 2001
-------------------------------------
WRL FREEDOM ELITE BUILDER/SM/
issued through
WRL Series Life Account
by
Western Reserve Life Assurance Co.
of Ohio
570 Carillon Parkway
St. Petersburg, Florida 33716
1-800-851-9777
(727) 299-1800
-------------------------------------
AN INDIVIDUAL FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE POLICY
------------------------------------------
Consider carefully the risk factors
beginning on page 13 of this prospectus.
An investment in this Policy is not a bank
deposit. The Policy is not insured or
guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency.
If you already own a life insurance
policy, it may not be to your advantage to
buy additional insurance or to replace
your policy with the Policy described in
this prospectus.
Prospectuses for the portfolios of:
AEGON/Transamerica Series Fund, Inc.;
Variable Insurance Products Fund (VIP);
Variable Insurance Products Fund II (VIP
II); and Variable Insurance Products Fund
III (VIP III) must accompany this
prospectus.
Certain portfolios may not be available in
all states. Please read these documents
before investing and save them for future
reference.
------------------------------------------
The Securities and Exchange Commission
has not approved or disapproved these
securities or passed upon the adequacy
of this prospectus. Any representation to
the contrary is a criminal offense.
Table of Contents
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Glossary .................................................................. 1
Policy Summary ............................................................ 5
The Policy in General ............................................. 5
Premiums .......................................................... 5
Deductions from premium before we place it in a
subaccount and/or the fixed account ............................. 6
Investment Options ................................................ 6
Cash Value ........................................................ 7
Transfers ......................................................... 7
Charges and Deductions ............................................ 7
Portfolio Annual Expense Table .................................... 9
Loans ............................................................. 11
Death Benefit ..................................................... 11
Cash Withdrawals and Surrenders ................................... 12
Compensation ...................................................... 13
Inquiries ......................................................... 13
Risk Summary .............................................................. 13
Western Reserve and the Fixed Account ..................................... 17
Western Reserve ................................................... 17
The Fixed Account ................................................. 17
The Separate Account and the Portfolios ................................... 18
The Separate Account .............................................. 18
The Funds ......................................................... 18
Addition, Deletion, or Substitution of Investments ................ 22
Your Right to Vote Portfolio Shares ............................... 23
The Policy ................................................................ 23
Purchasing a Policy ............................................... 23
Tax-Free "Section 1035" Exchanges ................................. 24
Underwriting Standards ............................................ 24
When Insurance Coverage Takes Effect .............................. 25
Backdating a Policy ............................................... 27
Ownership Rights .................................................. 27
Canceling a Policy ................................................ 29
Premiums .................................................................. 29
Premium Flexibility ............................................... 29
Planned Periodic Payments ......................................... 29
Minimum Monthly Guarantee Premium ................................. 30
No Lapse Period ................................................... 30
Premium Limitations ............................................... 30
Making Premium Payments ........................................... 31
Allocating Premiums ............................................... 31
This Policy is not available in the State of New York.
i
Policy Values ............................................................. 33
Cash Value ........................................................ 33
Net Surrender Value ............................................... 33
Subaccount Value .................................................. 33
Subaccount Unit Value ............................................. 34
Fixed Account Value ............................................... 35
Transfers ................................................................. 35
General ........................................................... 35
Fixed Account Transfers ........................................... 37
Conversion Rights ................................................. 37
Dollar Cost Averaging ............................................. 37
Asset Rebalancing Program ......................................... 38
Third Party Asset Allocation Services ............................. 39
Charges and Deductions .................................................... 40
Premium Charges ................................................... 41
Monthly Deduction ................................................. 41
Mortality and Expense Risk Charge ................................. 44
Surrender Charge .................................................. 44
Decrease Charge ................................................... 46
Transfer Charge ................................................... 47
Change in Net Premium Allocation Charge ........................... 47
Cash Withdrawal Charge ............................................ 47
Taxes ............................................................. 48
Portfolio Expenses ................................................ 48
Death Benefit ............................................................. 48
Death Benefit Proceeds ............................................ 48
Death Benefit ..................................................... 49
Effects of Cash Withdrawals on the Death Benefit .................. 51
Choosing Death Benefit Options .................................... 51
Changing the Death Benefit Option ................................. 51
Increasing/Decreasing the Specified Amount ........................ 52
Payment Options ................................................... 53
Surrenders and Cash Withdrawals ........................................... 53
Surrenders ........................................................ 53
Cash Withdrawals .................................................. 54
Loans ..................................................................... 55
General ........................................................... 55
Interest Rate Charged ............................................. 56
Loan Reserve Interest Rate Credited ............................... 56
Effect of Policy Loans ............................................ 56
Policy Lapse and Reinstatement ............................................ 57
Lapse ............................................................. 57
No Lapse Period ................................................... 57
Reinstatement ..................................................... 58
Federal Income Tax Considerations ......................................... 58
Tax Status of the Policy .......................................... 59
Tax Treatment of Policy Benefits .................................. 59
Special Rules for 403(b) Arrangements ............................. 62
ii
Other Policy Information ................................................. 63
Our Right to Contest the Policy .................................. 63
Suicide Exclusion ................................................ 63
Misstatement of Age or Gender .................................... 63
Modifying the Policy ............................................. 63
Benefits at Maturity ............................................. 63
Payments We Make ................................................. 64
Settlement Options ............................................... 64
Reports to Owners ................................................ 66
Records .......................................................... 66
Policy Termination ............................................... 66
Supplemental Benefits (Riders) ........................................... 66
Children's Insurance Rider ....................................... 67
Accidental Death Benefit Rider ................................... 67
Other Insured Rider .............................................. 67
Disability Waiver Rider .......................................... 68
Disability Waiver and Income Rider ............................... 68
Primary Insured Rider ("PIR") and Primary Insured
Rider Plus ("PIR Plus")......................................... 68
Living Benefit Rider (an Accelerated Death Benefit) .............. 69
IMSA ..................................................................... 70
Performance Data ......................................................... 70
Rates of Return .................................................. 70
Hypothetical Illustrations Based on Subaccount Performance ....... 74
Other Performance Data in Advertising Sales Literature ........... 86
Western Reserve's Published Ratings .............................. 87
Additional Information ................................................... 87
Sale of the Policies ............................................. 87
Legal Matters .................................................... 88
Legal Proceedings ................................................ 88
Variations in Policy Provisions .................................. 89
Experts .......................................................... 89
Financial Statements ............................................. 89
Additional Information about Western Reserve ..................... 90
Western Reserve's Directors and Officers ......................... 90
Additional Information about the Separate Account ................ 94
Appendix A -- Illustrations .............................................. 95
Appendix B -- Wealth Indices of Investments in the U.S. Capital Market ... 99
Appendix C -- Surrender Charge Per Thousand (Based on the gender and rate
class of the insured) ...................................... 101
Index to Financial Statements ............................................ 103
WRL Series Life Account .......................................... 104
Western Reserve Life Assurance Co. of Ohio ....................... 180
iii
Glossary
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
accounts The options to which you can allocate your money. The
accounts include the fixed account and the subaccounts
in the separate account.
--------------------------------------------------------
attained age The issue age of the person insured, plus the number of
completed years since the Policy date (for the initial
specified amount) or the date of each increase in
specified amount.
--------------------------------------------------------
Base Policy The WRL Freedom Elite Builder variable life insurance
policy without any supplemental riders.
--------------------------------------------------------
beneficiary(ies) The person or persons you select to receive the death
benefit from this Policy. You name the primary
beneficiary and contingent beneficiaries.
--------------------------------------------------------
cash value The sum of your Policy's value in the subaccounts and
the fixed account. If there is a Policy loan
outstanding, the cash value includes any amounts held in
our fixed account to secure the Policy loan.
--------------------------------------------------------
death benefit The amount we will pay to the beneficiary(ies) on the
proceeds insured's death. We will reduce the death benefit
proceeds by the amount of any outstanding loan amount,
and any due and unpaid monthly deductions.
--------------------------------------------------------
decrease charge Surrender charge that may be imposed upon a decrease in
specified amount during the first 15 Policy years (or
during the 15 years subsequent to an increase in
specified amount).
--------------------------------------------------------
fixed account An option to which you may allocate net premiums and
cash value. We guarantee that any amounts you allocate
to the fixed account will earn interest at a declared
rate. The fixed account option may not be available in
all states.
--------------------------------------------------------
free-look period The period during which you may return the Policy and
receive a refund as described in this prospectus. The
length of the free-look period varies by state. The
free-look period is listed in the Policy.
--------------------------------------------------------
funds Investment companies which are registered with the U.S.
Securities and Exchange Commission. The Policy allows
you to invest in the portfolios of the funds through our
subccounts. We reserve the right to add other registered
investment companies to the Policy in the future.
--------------------------------------------------------
in force While coverage under the Policy is active and
the insured's life remains insured.
--------------------------------------------------------
initial premium The amount you must pay before insurance coverage begins
under this Policy. The initial premium is shown on the
schedule page of your Policy.
--------------------------------------------------------
insured The person whose life is insured by this Policy.
--------------------------------------------------------
1
issue age The insured's age on his or her birthday nearest to the
Policy date. When you increase the Base Policy's specified
amount of insurance coverage, the issue age for the new
segment of specified amount coverage is the insured's age on
his or her birthday nearest the date that the increase in
specified amount takes effect. This age may be different
from the attained age on other segments of specified amount
coverage.
------------------------------------------------------------
lapse When life insurance coverage ends because you do not have
enough cash value in the Policy to pay the monthly
deduction, the surrender charge and any outstanding loan
amount, and you have not made a sufficient payment by the
end of a grace period.
------------------------------------------------------------
loan amount The total amount of all outstanding Policy loans, including
both principal and interest due.
------------------------------------------------------------
loan reserve A part of the fixed account to which amounts are transferred
as collateral for Policy loans.
------------------------------------------------------------
maturity date The Policy anniversary nearest the insured's 100th birthday
if the insured is living and the Policy is still in force.
It is the date when life insurance coverage under this
Policy ends. You may continue coverage, at your option,
under the Policy's extended maturity date benefit provision.
------------------------------------------------------------
minimum monthly guarantee premium The amount shown on your Policy
monthly schedule page that we use during the no lapse period to
guarantee determine whether a grace period will begin. We will adjust
premium the minimum monthly guarantee premium if you change death
benefit options, increase or decrease the specified amount,
or add, increase or decrease a rider. A grace period will
begin whenever your net surrender value is not enough to
meet monthly deductions.
------------------------------------------------------------
Monthiversary This is the day of each month when we determine Policy
charges and deduct them from cash value. It is the same
date each month as the Policy date. If there is no valuation
date in the calendar month that coincides with the Policy
date, the Monthiversary is the next valuation date.
------------------------------------------------------------
monthly deduction The monthly Policy charge, plus the monthly cost of
insurance, plus the monthly charge for any riders added to
your Policy, plus, if any, the decrease charge incurred as a
result of a decrease in your specified amount.
------------------------------------------------------------
net premium The part of your premium that we allocate to the fixed
account or the subaccounts. The net premium is equal to the
premium you paid minus the premium expense charges and the
premium collection charge.
------------------------------------------------------------
net surrender The amount we will pay you if you surrender the Policy
value while it is in force. The net surrender value on the date
you surrender is equal to: the cash value, minus any
surrender charge, and minus any outstanding loan amount.
------------------------------------------------------------
no lapse date For a Policy issued to any insured ages 0-60, the no lapse
date is either the anniversary on which the insured's
attained age is 65 or the twentieth Policy anniversary,
whichever is less. For a Policy issued to an insured ages
61-85, the no lapse date is the fifth Policy anniversary.
The no lapse date is specified in your Policy.
------------------------------------------------------------
2
no lapse period The period of time between the Policy date and the no lapse
date during which the Policy will not lapse if certain
conditions are met.
------------------------------------------------------------
office Our administrative office and mailing address is
P.O. Box 5068, Clearwater, Florida 33758-5068. Our street
address is 570 Carillon Parkway, St. Petersburg, Florida
33716. Our phone number is 1-800-851-9777, extension 6539.
Our hours are Monday Friday from 8:00 a.m. - 7:00 p.m.
Eastern time.
------------------------------------------------------------
planned periodic A premium payment you make in a level amount at a fixed
premium interval over a specified period of time.
------------------------------------------------------------
Policy date The date when our underwriting process is complete, full
life insurance coverage goes into effect, the initial
premium payment has been received, and we begin to make the
monthly deductions. The Policy date is shown on the schedule
page of your Policy. If you request, we may backdate a
Policy by assigning a Policy date earlier than the date the
Policy is issued. We measure Policy months, years, and
anniversaries from the Policy date.
------------------------------------------------------------
portfolio One of the separate investment portfolios of a fund.
------------------------------------------------------------
premiums All payments you make under the Policy other than loan
repayments.
------------------------------------------------------------
reallocation That portion of the fixed account where we hold the net
account premium(s) from the record date until the reallocation date.
------------------------------------------------------------
reallocation The date we reallocate all cash value held in the
date reallocation account to the fixed account and subaccounts
you selected on your application. We place your net premium
in the reallocation account only if your state requires us
to return the full premium in the event you exercise your
free-look right. In those states the reallocation date is
the record date, plus the number of days in your state's
free-look period, plus five days. In all other states, the
reallocation date is the record date.
------------------------------------------------------------
record date The date we record your Policy on our books as an in force
Policy. The record date is generally the Policy date, unless
the Policy is backdated. The record date is the date when,
depending on the laws of the state governing your Policy
(usually the state where you live), we allocate your net
premium either to the reallocation account or to the fixed
account and the subaccounts you selected on your
application.
------------------------------------------------------------
separate account The WRL Series Life Account. It is a separate investment
account that is divided into subaccounts. We established the
separate account to receive and invest net premiums under
the Policy and other variable life insurance policies we
issue.
------------------------------------------------------------
3
specified amount The minimum death benefit we will pay under the Policy
provided the Policy is in force. The initial specified
amount is the amount shown on the Base Policy's schedule
page that you receive when the Policy is issued. The
specified amount in force is the initial specified amount,
adjusted for any increases or decreases in the Base Policy's
specified amount. Events such as a request to increase or
decrease the specified amount, a change in death benefit
option, or a cash withdrawal (if you choose Option A death
benefit) may affect the specified amount in force.
------------------------------------------------------------
subaccount A subdivision of the separate account that invests
exclusively in shares of one investment portfolio of a fund.
------------------------------------------------------------
surrender charge If, during the first 15 Policy years (or during the 15 year
period subsequent to an increase in specified amount), you
fully surrender the Policy, we will deduct a surrender
charge from the cash value.
------------------------------------------------------------
termination When the insured's life is no longer insured under the
Policy.
------------------------------------------------------------
valuation date Each day the New York Stock Exchange is open for trading.
Western Reserve is open for business whenever the
New York Stock Exchange is open.
------------------------------------------------------------
valuation period The period of time over which we determine the change in the
value of the subaccounts. Each valuation period begins at
the close of normal trading on the New York Stock Exchange
(currently 4:00 p.m. Eastern time on each valuation date)
and ends at the close of normal trading of the New York
Stock Exchange on the next valuation date.
------------------------------------------------------------
we, us, our Western Reserve Life Assurance Co. of Ohio
(Western Reserve)
------------------------------------------------------------
written notice The written notice you must sign and send us to request
or exercise your rights as owner under the Policy. To be
complete, it must: (1) be in a form we accept, (2) contain
the information and documentation that we determine we
need to take the action you request, and (3) be received
at our office.
------------------------------------------------------------
you, your The person entitled to exercise all rights as owner under
(owner or the Policy.
policyowner)
------------------------------------------------------------
4
Policy Summary WRL Freedom Elite Builder(SM)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This summary provides only a brief overview of the more important features
of the Policy. More detailed information about the Policy appears later in this
prospectus. Please read the remainder of this prospectus carefully.
The Policy in General
The WRL Freedom Elite Builder/SM/ is an individual flexible premium
variable life insurance policy.
The Policy is designed to be long-term in nature in order to provide
significant life insurance benefits for you. However, purchasing this Policy
involves certain risks. (See Risk Summary p. 13.) You should consider the Policy
in conjunction with other insurance you own. The Policy is not suitable as a
short-term savings vehicle.
A few of the Policy features listed below are not available in all states,
may vary depending upon when your Policy was issued and may not be suitable for
your particular situation. Certain states place restrictions on access to the
fixed account and on other Policy features. Please consult your agent and refer
to your Policy for details.
Premiums
. You select a payment plan but are not required to pay premiums according to
the plan. You can vary the frequency and amount, within limits, and can skip
premium payments.
. Unplanned premiums may be made, within limits.
. Premium payments must be at least $50 if paid monthly and $600 if paid
annually.
. You increase your risk of lapse if you do not regularly pay premiums at
least as large as the current minimum monthly guarantee premium.
. Until the no lapse date shown on your Policy schedule page, we guarantee
that your Policy will not lapse, so long as on any Monthiversary you have
paid total premiums (minus any cash withdrawals, minus any outstanding loan
amount, and minus any decrease charge) that equal or exceed the sum of the
minimum monthly guarantee premiums in effect for each month since the Policy
date up to and including the current month. If you take a cash withdrawal, a
loan, or if you increase or decrease your specified amount, you may need to
pay additional premiums in order to keep the no lapse guarantee in place.
. The minimum monthly guarantee premium on the Policy date is shown on your
Policy schedule page. We will adjust the minimum monthly guarantee premium
if you change death benefit options, increase or decrease the specified
amount, or add, increase or decrease a rider.
. Under certain circumstances, extra premiums may be required to prevent
lapse.
. Once we deliver your Policy, the free-look period begins. You may return the
Policy during this period and receive a refund. Depending on the laws of the
state governing
5
your Policy (usually the state where you live), we will either allocate your
net premium to the accounts you indicated on your application, or we will
place your net premium in the reallocation account until the reallocation
date as shown on your Policy schedule page. See Reallocation Account p. 32.
Deductions from premium before we place it in a subaccount and/or the fixed
account
. For the first ten Policy years: 6.0% premium expense charge for Policies
with a specified amount in force of less than $250,000; 4.0% for Policies
with a specified amount in force of $250,000 - $499,999.
. After the tenth Policy year: 2.5% premium expense charge for Policies with a
specified amount in force of less than $500,000.
. There is no premium expense charge for Policies with a specified amount in
force of $500,000 or higher.
. A premium collection charge of $3.00 from each premium payment for Policies
on direct pay notice. This charge does not apply to Policies under an
electronic funds transfer program.
Investment Options
Subaccounts. You may direct the money in your Policy to a total of 16
subaccounts of the WRL Series Life Account, a separate account. For
administrative reasons, we currently limit the number of subaccounts that you
can invest in at any one time to 16 active subaccounts. Each subaccount invests
exclusively in one investment portfolio of a fund. The money you place in the
subaccounts is not guaranteed. The value of each subaccount will increase or
decrease, depending on investment performance of the corresponding portfolio.
You could lose some or all of your money.
The portfolios available to you are:
AEGON/TRANSAMERICA SERIES FUND, INC.
[_] Munder Net50
[_] Van Kampen Emerging Growth
[_] T. Rowe Price Small Cap
[_] Pilgrim Baxter Mid Cap Growth
[_] Alger Aggressive Growth
[_] Third Avenue Value
[_] Value Line Aggressive Growth
[_] GE International Equity
[_] Gabelli Global Growth
[_] Great Companies -- Global/2/
[_] Great Companies -- Technology/SM/
[_] Janus Growth
[_] LKCM Capital Growth
[_] Goldman Sachs Growth
[_] GE U.S. Equity
[_] Great Companies -- America/SM/
[_] Salomon All Cap
[_] C.A.S.E. Growth
[_] Dreyfus Mid Cap
[_] NWQ Value Equity
[_] T. Rowe Price Dividend Growth
[_] Dean Asset Allocation
[_] LKCM Strategic Total Return
[_] J.P. Morgan Real Estate Securities
[_] Federated Growth & Income
[_] AEGON Balanced
[_] AEGON Bond
[_] J.P. Morgan Money Market
6
VARIABLE INSURANCE PRODUCTS FUND (VIP)
[_] Fidelity VIP Equity-Income Portfolio -- Service Class 2
VARIABLE INSURANCE PRODUCTS FUND II (VIP II)
[_] Fidelity VIP II Contrafund(R) Portfolio -- Service Class 2
VARIABLE INSURANCE PRODUCTS FUND III (VIP III)
[_] Fidelity VIP III Growth Opportunities Portfolio -- Service Class 2
Fixed Account. You may also direct the money in your Policy to the fixed
account. Unless otherwise required by state law, we may restrict your
allocations or transfers to the fixed account if the fixed account value
following the allocation or transfer would exceed $500,000. Money you place in
the fixed account is guaranteed, and will earn interest at a current interest
rate declared from time to time. The annual interest rate will equal at least
3.0%. The fixed account may not be available to residents of some states.
Cash Value
. Cash value equals the sum of your Policy's value in the subaccounts and the
fixed account. If there is a loan outstanding, the cash value includes any
amounts held in our fixed account to secure the Policy loan.
. Cash value varies from day to day, depending on the investment experience of
the subaccounts you choose, the interest credited to the fixed account, the
charges deducted and any other Policy transactions (such as additional
premium payments, transfers, withdrawals, and Policy loans).
. Cash value is the starting point for calculating important values under the
Policy, such as net surrender value and the death benefit.
. There is no guaranteed minimum cash value. The Policy may lapse if you do
not have sufficient cash value in the Policy to pay the monthly deductions,
the surrender charge and/or any outstanding loan amount(s).
. The Policy will not lapse during the no lapse period so long as you have
paid sufficient premiums. See Minimum Monthly Guarantee Premium p. 30.
Transfers
. You can transfer cash value among the subaccounts and the fixed account. We
charge a $25 transfer processing fee for each transfer after the first 12
transfers in a Policy year.
. You may make transfers in writing, by telephone or by fax.
. Policy loans reduce the amount of cash value available for transfers.
. Dollar cost averaging and asset rebalancing programs are available.
. You may make one transfer per Policy year from the fixed account, and we
must receive your request to transfer from the fixed account within 30 days
after a Policy anniversary unless you select dollar cost averaging from the
fixed account. The amount of your transfer is limited to the greater of:
. 25% of your value in the fixed account; or
. the amount you transferred from the fixed account in the preceding
Policy year.
Charges and Deductions
. Premium expense charge: During the first ten Policy years, we deduct 6.0%
from each premium payment on Policies with a specified amount in force of
less than
7
$250,000 (4.0% on Policies with a specified amount in force of $250,000 -
$499,999). After the tenth Policy year we reduce the charge to 2.5%. There
is no premium expense charge for Policies with a specified amount in force
of $500,000 or higher.
. Premium collection charge: We deduct $3.00 from each premium payment to
compensate us for billing and collection costs if we send you a bill.
. Monthly Policy charge: We currently deduct $5.00 from your cash value each
month. This charge is guaranteed not to exceed $7.50. This charge is used to
cover aggregate Policy expenses.
. Cost of insurance charges: Deducted monthly from your cash value. Your
charges vary each month with the insured's issue age on the Policy date,
issue age at the time of any increase in specified amount, length of time
from the Policy date or from the date of any increase in specified amount,
specified amount band, gender, rate class, the specified amount in force,
the death benefit option you choose, and the investment experience of the
portfolios in which you invest. We charge lower cost of insurance rates for
Policies in higher specified amount bands.
. Mortality and expense risk charge: Deducted daily from each subaccount at an
annual rate of 0.90% of your average daily net assets of each subaccount.
We guarantee to reduce this amount to 0.60% after the first 15 Policy years.
We intend to reduce this amount to 0.30% in the 16th Policy year, but we do
not guarantee that we will do so.
. Surrender charge: Deducted when a full surrender occurs during the first 15
Policy years (or during the first 15 years following each increase in
specified amount). The initial specified amount has a 15 year surrender
charge period starting on the Policy date and surrender charges that are
based upon the insured's issue age, gender and rate class on the Policy
date. Each increase in specified amount will have its own 15 year surrender
charge period starting on the date of the increase and surrender charges
that are based upon the insured's issue age, gender and rate class at the
time of the increase. The surrender charge that will apply on a full
surrender of the Policy is the total of the surrender charges calculated
for the Base Policy's initial specified amount and the surrender charges
calculated for each increase in specified amount. Surrender charges may be
significant. You may have no net surrender value if you surrender your
Policy in the initial Policy years. The surrender charges that apply for 15
years after any increase in specified amount will likely significantly
reduce your net surrender value.
. Decrease charge: If you request a decrease in the specified amount during
the first 15 Policy years or during the 15 years following any increase in
specified amount, we will deduct a decrease charge.
. Transfer charge: We deduct $25 for each transfer in excess of 12 per Policy
year.
. Change in net premium allocation charge: We currently do not charge if you
change your net premium allocation. However, we reserve the right to charge
you $25 if you make more than one change every three months in your
allocation schedule. We will notify you if we decide to impose this charge.
. Rider charges: We deduct charges each month for the optional insurance
benefits (riders) you select. Each rider will have its own charge.
8
. Cash withdrawal fee: We deduct a processing fee for cash withdrawals equal
to the lesser of $25 or 2% of the withdrawal.
. Portfolio expenses: The portfolios deduct management fees and expenses from
the amounts you have invested in the portfolios. These fees and expenses
reduce the value of your portfolio shares. Some portfolios also deduct
12b-1 fees from portfolio assets. These fees and expenses currently range
from to 1.20% annually, depending on the portfolio. See Portfolio Annual
Expense Table below. See also the fund prospectuses.
Portfolio Annual Expense Table
This table shows the fees and expenses charged by each portfolio. More detail
concerning each portfolio's fees and expenses is contained in the fund
prospectuses.
Annual Portfolio Operating Expenses(1)
(As a percentage of average portfolio assets after fee waivers and expense
reimbursements)
Total
Portfolio
Management Other Rule 12b-1 Annual
Portfolio Fees Expenses Fees Expenses
AEGON/TRANSAMERICA SERIES FUND, INC.(2)(7)
Munder Net50 0.90% 0.10% N/A 1.00%
Van Kampen Emerging Growth 0.80% 0.05% N/A 0.85%
T. Rowe Price Small Cap 0.75% 0.25% N/A 1.00%
Pilgrim Baxter Mid Cap Growth 0.85% 0.07% N/A 0.92%
Alger Aggressive Growth 0.80% 0.06% N/A 0.86%
Third Avenue Value 0.80% 0.12% N/A 0.92%
Value Line Aggressive Growth(4) 0.80% 0.20% N/A 1.00%
GE International Equity(3) 1.00% 0.20% N/A 1.20%
Gabelli Global Growth(8) 1.00% 0.20% N/A 1.20%
Great Companies -- Global/2/(8) 0.80% 0.20% N/A 1.00%
Great Companies -- Technology/SM/(4) 0.80% 0.20% N/A 1.00%
Janus Growth 0.80% 0.02% N/A 0.82%
LKCM Capital Growth(9) 0.80% 0.20% N/A 1.00%
Goldman Sachs Growth 0.90% 0.10% N/A 1.00%
GE U.S. Equity 0.80% 0.08% N/A 0.88%
Great Companies -- America/SM/(4) 0.80% 0.11% N/A 0.91%
Salomon All Cap 0.90% 0.10% N/A 1.00%
C.A.S.E. Growth 0.80% 0.20% N/A 1.00%
Dreyfus Mid Cap 0.85% 0.15% N/A 1.00%
NWQ Value Equity 0.80% 0.08% N/A 0.88%
T. Rowe Price Dividend Growth 0.90% 0.10% N/A 1.00%
Dean Asset Allocation 0.80% 0.07% N/A 0.87%
LKCM Strategic Total Return 0.80% 0.05% N/A 0.85%
J.P. Morgan Real Estate Securities 0.80% 0.20% N/A 1.00%
Federated Growth & Income 0.75% 0.11% N/A 0.86%
AEGON Balanced 0.80% 0.08% N/A 0.88%
AEGON Bond 0.45% 0.08% N/A 0.53%
J.P. Morgan Money Market 0.40% 0.04% N/A 0.44%
VARIABLE INSURANCE PRODUCTS FUND (VIP) 0.48% 0.10% 0.25%(5) 0.83%
Fidelity VIP Equity-Income Portfolio --
Service Class 2(6)
VARIABLE INSURANCE PRODUCTS FUND II (VIP II) 0.57% 0.10% 0.25%(5) 0.92%
Fidelity VIP II Contrafund(R) Portfolio --
Service Class 2(6)
VARIABLE INSURANCE PRODUCTS FUND III (VIP III) 0.58% 0.12% 0.25%(5) 0.95%
Fidelity VIP III Growth Opportunities Portfolio --
Service Class 2(6)
9
(1) The fee table information relating to the portfolios was provided to Western
Reserve by the funds. Western Reserve has not independently verified such
information.
(2) Effective January 1, 1997, the Board of the AEGON/Transamerica Series Fund,
Inc. ("Series Fund") authorized the Series Fund to charge each portfolio of
the Series Fund an annual Rule 12b-1 fee of up to 0.15% of each portfolio's
average daily net assets. However, the Series Fund will not deduct the fee
from any portfolio before April 30, 2002. You will receive advance written
notice if a Rule 12b-1 fee is to be deducted. See the Series Fund prospectus
for more details.
(3) The fee table reflects the reduction in the expense limit for this portfolio
to 1.20% effective May 1, 2000.
(4) Because this portfolio did not commence operations until May 1, 2000, the
percentages set forth as "Other Expenses" and "Total Annual Expenses" are
annualized.
(5) The 12b-1 fee deducted for the Variable Insurance Products Fund (VIP),
Variable Insurance Products Fund II (VIP II), and Variable Insurance
Products Fund III (VIP III) (the "Fidelity VIP Funds") covers certain
shareholder support services provided by companies selling variable
contracts investing in the Fidelity VIP Funds. The 12b-1 fees assessed
against the Fidelity VIP Funds shares held for the Policies will be remitted
to AFSG, the principal underwriter for the Policies.
(6) Total Portfolio Annual Expenses for Service Class 2 shares were lower than
those shown in the Fee Table because a portion of the brokerage commissions
that the Fidelity VIP Funds paid was used to reduce each Fund's expenses,
and/or because through arrangements with each Fund's custodian, credits
realized as a result of uninvested cash balances were used to reduce a
portion of each Fund's custodian expenses. See the accompanying Fidelity VIP
Funds prospectuses. Actual expenses were: Fidelity VIP Equity-Income
Portfolio -- Service Class 2 -- 0.82%; Fidelity VIP II Contrafund(R)
Portfolio -- Service Class 2 -- 0.90%; and Fidelity VIP III Growth
Opportunities Portfolio -- Service Class 2 -- 0.93%.
(7) AEGON/Transamerica Fund Advisers, Inc. ("AEGON/Transamerica Advisers"), the
Series Fund's investment adviser, has undertaken, until at least April 30,
2002, to pay expenses on behalf of the portfolios of the Series Fund to the
extent normal operating expenses of a portfolio exceed a stated percentage
of each portfolio's average daily net assets. The expense limit, the amount
reimbursed by AEGON/Transamerica Advisers during 2000 and the expense ratio
without the reimbursement are listed below for each portfolio:
Expense Ratio
Expense Reimbursement Without
Limit Amount Reimbursement
Munder Net50 1.00% $ N/A N/A
Van Kampen Emerging Growth 1.00% N/A N/A
T. Rowe Price Small Cap 1.00% 30,189 1.14 %
Pilgrim Baxter Mid Cap Growth 1.00% N/A N/A
Alger Aggressive Growth 1.00% N/A N/A
Third Avenue Value 1.00% N/A N/A
Value Line Aggressive Growth 1.00% 22,530 1.86 %
GE International Equity 1.20% 125,321 1.66 %
Gabelli Global Growth 1.20% 14,606 1.99 %
Great Companies -- Global2 1.00% 20,105 3.93 %
Great Companies -- TechnologySM 1.00% 5,276 1.05 %
Janus Growth 1.00% N/A N/A
LKCM Capital Growth 1.00% N/A N/A
Goldman Sachs Growth 1.00% 51,711 1.37 %
GE U.S. Equity 1.00% N/A N/A
Great Companies -- AmericaSM 1.00% N/A N/A
Salomon All Cap 1.00% 85,511 1.25%
C.A.S.E. Growth 1.00% N/A N/A
Dreyfus Mid Cap 1.00% 68,550 1.90%
NWQ Value Equity 1.00% N/A N/A
T. Rowe Price Dividend Growth 1.00% 55,887 1.45 %
Dean Asset Allocation 1.00% N/A N/A
LKCM Strategic Total Return 1.00% N/A N/A
J.P. Morgan Real Estate Securities 1.00% 58,192 1.71 %
Federated Growth & Income 1.00% N/A N/A
AEGON Balanced 1.00% N/A N/A
AEGON Bond 0.70% N/A N/A
J.P. Morgan Money Market 0.70% N/A N/A
(8) Because this portfolio did not commence operations until September 1, 2000,
the percentages set forth as "Other Expenses" and "Total Annual Expenses"
are annualized.
(9) Because this portfolio did not commence operations until December 1, 2000,
the percentages set forth as "Other Expenses" and "Total Annual Expenses"
are annualized.
10
The purpose of the preceding table is to help you understand the various
costs and expenses that you will bear directly and indirectly. The table
reflects charges and expenses of the portfolios of the funds for the fiscal year
ended December 31, 2000 (except as noted in the footnotes). Expenses of the
funds may be higher or lower in the future. For more information on the
portfolio expenses described in this table, see the fund prospectuses which
accompany this prospectus.
Loans
. After the first Policy year (as long as your Policy is in force), you may
take a loan against the Policy up to 90% of the cash value, minus any
surrender charge and minus any outstanding loan amount.
. We may permit a loan prior to the first anniversary for Policies issued
pursuant to 1035 Exchanges.
. The minimum loan amount is generally $500.
. You may request a loan by calling us or by writing or faxing us written
instructions.
. Prior to the 10th Policy year, we currently charge 3.75% interest annually,
payable in arrears, on any outstanding loan amount. This charge is
guaranteed not to exceed 4.0%.
. To secure the loan, we transfer a portion of your cash value to a loan
reserve account. The loan reserve account is part of the fixed account. We
will credit 3.0% interest annually on amounts in the loan reserve account.
. After the 10th Policy year, you may borrow at preferred loan rates an amount
equal to the cash value minus total premiums paid (reduced by any cash
withdrawals) and minus any outstanding loan amount. We currently charge 3.0%
interest on preferred loans. This rate is not guaranteed.
. Federal income taxes and a penalty tax may apply to loans you take against
the Policy.
. There are risks involved in taking a Policy loan. See Risk Summary p. 13.
. The federal tax consequences of loans with preferred rates is uncertain.
Death Benefit
. You must choose one of three death benefit options. We offer the following:
. Option A is the greater of:
. the current specified amount, or
. a specified percentage, multiplied by the Policy's cash value on the
date of the insured's death.
. Option B is the greater of:
. the current specified amount, plus the Policy's cash value on the
date of the insured's death, or a specified percentage, multiplied
by the Policy's cash value on the date of the insured's death.
. Option C is the greater of:
. the amount payable under Option A, or
. the current specified amount, multiplied by an age-based "factor,"
plus the Policy's cash value on the date of the insured's death.
11
. So long as the Policy does not lapse, the minimum death benefit we pay under
any option will be the current specified amount.
. We offer 4 bands of specified amount coverage. Each band has its own
minimum specified amount and cost of insurance rates. The higher the band
of specified amount you choose, the lower the cost of insurance rates. The
minimum specified amount for band 1 for a Policy for issue ages 0-49 is
$100,000. It declines to $50,000 for issue ages 50-85. We will state the
minimum specified amount in your Policy. You cannot decrease the specified
amount below this minimum.
. We will reduce the death benefit proceeds by any outstanding loan amount,
and any due and unpaid charges.
. We will increase the death benefit proceeds by any additional insurance
benefits you add by rider.
. After the third Policy year and once each Policy year thereafter, you may
make one of the following changes: change the death benefit option or
increase or decrease the specified amount. A decrease in specified amount is
limited to 20% of the specified amount prior to the decrease. The new
specified amount cannot be less than the minimum specified amount as shown
in your Policy.
. Under current tax law, the death benefit should be income tax free to the
beneficiary.
. The death benefit is available in a lump sum or a variety of payout options.
Cash Withdrawals and Surrenders
. You may take one withdrawal of cash value per Policy year after the first
Policy year.
. The amount of the withdrawal must be:
. at least $500; and
. no more than 10% of the net surrender value. After the tenth Policy
year, we currently intend to limit the withdrawal amount to no more
than 25% of the net surrender value.
. We will deduct a processing fee equal to $25 or 2% of the amount you
withdraw (whichever is less) from the withdrawal, and we will pay you the
balance.
. There is no surrender charge assessed when you take a cash withdrawal.
. A cash withdrawal will reduce the death benefit by at least the amount of
the withdrawal. We will not impose a decrease charge when the specified
amount is decreased as a result of taking a cash withdrawal.
. If you choose death benefit Option A, we will reduce the current specified
amount by the dollar amount of the withdrawal.
. When a cash withdrawal reduces the specified amount in force, we will look
to the reduced specified amount to determine the specified amount band, cost
of insurance rates and the premium expense charge we deduct from subsequent
premium payments.
. Federal income taxes and a penalty tax may apply to cash withdrawals and
surrenders.
. You may fully surrender the Policy at any time before the insured's death or
the maturity date. You will receive the net surrender value (cash value,
minus any surrender charge, and minus any outstanding loan amount). The
surrender charge will apply during the first 15 Policy years or during the
15 years following any increase in specified amount.
12
Compensation
. We will pay sales commissions to our life insurance agents who are
registered representatives of broker-dealers. Other payments may be made
for other services related to sale of the Policies. For a discussion of
these arrangements, see Sale of the Policies.
Inquiries
If you need more information, please contact us at:
Western Reserve Life
P.O. Box 5068
Clearwater, Florida 33758-5068
1-800-851-9777, extension 6539
(Monday - Friday from 8:00 a.m. - 7:00 p.m. Eastern time)
www.westernreserve.com
Risk Summary
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Investment If you invest your cash value in one or more subaccounts, you
Risk will be subject to the risk that investment performance could
be unfavorable and that the cash value of your Policy would
decrease. You could lose everything you invest, and your Policy
could lapse. If you select the fixed account, your cash value
in the fixed account is credited with a declared rate of
interest, but you assume a risk that the rate may decrease,
although it will never be lower than a guaranteed minimum
annual effective rate of 3.0%.
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Risk of Lapse If your Policy fails to meet certain conditions, we will notify
you that the Policy has entered a 61-day grace period and will
lapse unless you make a sufficient payment during the grace
period.
Your Policy contains a no lapse period. Your Policy will not
lapse before the no lapse date stated in your Policy, as long
as you pay sufficient minimum monthly guarantee premiums. If
you do not pay these premiums, you will automatically lose the
no lapse guarantee and you will increase the risk that your
Policy will lapse. In addition, if you take a cash withdrawal,
or take a Policy loan, or if you increase or decrease your
specified amount, or if you add, increase or decrease a rider,
you will increase the risk of losing the no lapse guarantee.
We deduct the total amount of your withdrawals, any outstanding
loans and any decrease charge from your premiums paid when we
determine whether your premiums are high enough to keep the no
lapse period in effect.
13
If you change death benefit options, or decrease the
specified amount, or add, increase or decrease a rider, we
will change the amount of the minimum monthly guarantee
premium you must pay to keep the no lapse period in effect.
You will lessen the risk of Policy lapse if you keep the no
lapse period in effect. Before you take a cash withdrawal,
loan, increase or decrease the specified amount or add,
increase or decrease a rider, you should consider carefully
the effect it will have on the no lapse guarantee.
After the no lapse period, your Policy may lapse if loans,
cash withdrawals, the monthly deductions, and insufficient
nvestment returns reduce the net surrender value to zero.
The Policy will enter a grace period if on any Monthiversary
the net surrender value (that is, the cash value, minus the
surrender charge, and minus any outstanding loan amount) is
not enough to pay the monthly deduction due.
A Policy lapse will have adverse tax consequences. See Federal
Income Tax Considerations p. 58 and Policy Lapse and
Reinstatement p. 57.
You may reinstate this Policy within five years after it has
lapsed (and prior to the maturity date), if the insured meets
the insurability requirements and you pay the amount we
require.
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Tax Risks We expect that the Policy will generally be deemed a life
(Income Tax insurance contract under federal tax law, so that the death
and MEC) benefit paid to the beneficiary will not be subject to federal
income tax. However, due to lack of guidance, there is less
certainty in this regard with respect to Policies issued on a
substandard basis.
Depending on the total amount of premiums you pay, the Policy
may be treated as a modified endowment contract ("MEC") under
federal tax laws. If a Policy is treated as a MEC, partial
withdrawals, surrenders and loans will be taxable as ordinary
income to the extent there are earnings in the Policy. In
addition, a 10% penalty tax may be imposed on cash withdrawals,
surrenders and loans taken before you reach age 59. If a Policy
is not treated as a MEC, partial surrenders and withdrawals
will not be subject to tax to the extent of your investment in
the Policy. Amounts in excess of your investment in the Policy,
while subject to tax as ordinary income, will not be subject to
a 10% penalty tax. You should consult a qualified tax advisor
for assistance in all tax matters involving your Policy.
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Limits on Cash The Policy permits you to take only one cash withdrawal per
Withdrawals Policy year, after the first Policy year has been completed.
The amount you may withdraw is limited to 10% of the net
surrender value. We currently intend to limit the amount you
can withdraw to 25% of the net surrender value after the tenth
Policy year.
14
A cash withdrawal will reduce cash value, so it will increase the
risk that the Policy will lapse. A cash withdrawal may also
increase the risk that the no lapse period will not remain in
effect.
A cash withdrawal will reduce the death benefit. If you select
death benefit Option A, a cash withdrawal will permanently reduce
the specified amount of the Policy by the amount of the
withdrawal. A cash withdrawal also reduces the death benefit
under Options B and C because the cash value is reduced. In
some circumstances, a cash withdrawal may reduce the death
benefit by more than the dollar amount of the withdrawal.
Federal income taxes and a penalty tax may apply to cash
withdrawals and surrenders.
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Loan Risks A Policy loan, whether or not repaid, will affect cash value
over time because we subtract the amount of the loan from the
subaccounts and the fixed account and place that amount in the
loan reserve as collateral. We then credit a fixed interest rate
of 3.0% to the loan collateral. As a result, the loan
collateral does not participate in the investment results of
the subaccounts and may not continue to receive the current
interest rates credited to the unloaned portion of the fixed
account. The longer the loan is outstanding, the greater the
effect is likely to be. Depending on the investment results of
the subaccounts and the interest rates credited to the fixed
account, the effect could be favorable or unfavorable.
We also currently charge interest on Policy loans at a rate of
3.75%, payable in arrears. This charge will not exceed 4.0%.
Interest is added to the amount of the loan to be repaid.
A Policy loan affects the death benefit because a loan reduces
the death benefit proceeds and net surrender value by the loan
amount.
A Policy loan could make it more likely that a Policy would
lapse. A Policy loan will increase the risk that the no lapse
period will not remain in effect. There is also a risk that if
the loan, insurance charges and unfavorable investment experience
reduce your net surrender value and the no lapse period is no
longer in effect, then the Policy will lapse. Adverse tax
consequences would result.
If a loan from a Policy is outstanding when the Policy is
canceled or lapses or becomes a MEC, then the amount of the
outstanding indebtedness will be taxed as if it were a
distribution from the Policy. Moreover, the tax treatment of
loans with preferred rates is uncertain. See Federal Income Tax
Considerations p. 58.
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15
Effects of the The surrender charges under this Policy are significant. It
Surrender is likely you will receive no net surrender value if you
Charge surrender your Policy in the first few Policy years. In
addition, the surrender charges that apply for 15 years
after any increase in specified amount will significantly
reduce your net surrender value. You should purchase this
Policy, and increase the specified amount,only if you have
the financial ability to keep it in force for a substantial
period of time. Even if you do not ask to surrender your
Policy, the surrender charge plays a role in determining
whether your Policy will lapse. Each month we will use the
cash value (reduced by the surrender charge and reduced by
any outstanding loan amount) to measure whether your Policy
will remain in force or will enter a grace period.
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Comparison Like fixed benefit life insurance, the Policy offers a death
with Other benefit and can provide a cash value, loan privileges and a
Insurance value on surrender. However, the Policy differs from a fixed
Policies benefit policy because it allows you to place your premiums
in investment subaccounts. The amount and duration of life
insurance protection and of the Policy's cash value will
vary with the investment performance of the amounts you
place in the subaccounts. In addition, the cash value and
net surrender value will always vary with the investment
results of your selected subaccounts.
As you consider purchasing this Policy, keep in mind that it
may not be to your advantage to replace existing insurance
with the Policy.
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Illustrations The illustrations in this prospectus are based on
hypothetical rates of return that are not guaranteed. They
illustrate how the specified amount, Policy charges and
hypothetical rates of return affect death benefit levels,
cash value and net surrender value of the Policy. We may
also illustrate Policy values based on the adjusted
historical performance of the portfolios since the
portfolios' inception, reduced by Policy and subaccount
charges. The hypothetical and adjusted historic portfolio
rates illustrated should not be considered to represent
past or future performance. It is almost certain that actual
rates of return may be higher or lower than those
illustrated, so that the values under your Policy will be
different from those in the illustrations.
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16
Western Reserve and the Fixed Account
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Western Reserve
Western Reserve Life Assurance Co. of Ohio is the insurance company issuing
the Policy. Western Reserve was incorporated under Ohio law on October 1, 1957.
We have established the separate account to support the investment options under
this Policy and under other variable life insurance policies we issue. Our
general account supports the fixed account under the Policy. Western Reserve
intends to sell this Policy in the District of Columbia, and all states, except
New York.
The Fixed Account
The fixed account is part of Western Reserve's general account. We use
general account assets to support our insurance and annuity obligations other
than those funded by separate accounts. Subject to applicable law, Western
Reserve has sole discretion over the investment of the fixed account's assets.
Western Reserve bears the full investment risk for all amounts contributed to
the fixed account. Western Reserve guarantees that the amounts allocated to the
fixed account will be credited interest daily at an annual net effective
interest rate of at least 3.0%. We will determine any interest rate credited in
excess of the guaranteed rate at our sole discretion.
Money you place in the fixed account will earn interest compounded daily at
a current interest rate in effect at the time of your allocation. Unless
otherwise required by state law, we may restrict your allocations and transfers
to the fixed account if the fixed account value following the allocation or
transfer would exceed $500,000. We may declare current interest rates from time
to time. We may declare more than one interest rate for different money based
upon the date of allocation or transfer to the fixed account. When we declare a
higher current interest rate on amounts allocated to the fixed account, we
guarantee the higher rate on those amounts for at least one year (the "guarantee
period") unless those amounts are transferred to the loan reserve. At the end of
the guarantee period we may declare a new current interest rate on those amounts
and any accrued interest thereon. We will guarantee this new current interest
rate for another guarantee period. We credit interest greater than 3.0% during
any guarantee period at our sole discretion. You bear the risk that interest we
credit will not exceed 3.0%.
We allocate amounts from the fixed account for cash withdrawals, transfers
to the subaccounts, or monthly deduction charges on a last in, first out basis
("LIFO") for the purpose of crediting interest.
The fixed account may not be available in all states. This means that
residents of some states may not direct or transfer any premiums or cash value
to the fixed account.
The fixed account has not been registered with the Securities and Exchange
Commission and the staff of the Securities and Exchange Commission has not
reviewed the disclosure in this prospectus relating to the fixed account.
17
The Separate Account and the Portfolios
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The Separate Account
The separate account is divided into subaccounts, each of which invests in
shares of a specific portfolio of a fund. You may direct the money in your
Policy to a total of 16 active subaccounts of the separate account at any one
time. These subaccounts buy and sell portfolio shares at net asset value without
any sales charge. Any dividends and distributions from a portfolio are
reinvested at net asset value in shares of that portfolio.
Income, gains, and losses credited to, or charged against, a subaccount of
the separate account reflect the subaccount's own investment experience and not
the investment experience of our other assets. The separate account's assets may
not be used to pay any of our liabilities other than those arising from the
Policies. If the separate account's assets exceed the required reserves and
other liabilities, we may transfer the excess to our general account.
The separate account may include other subaccounts that are not available
under the Policies and are not discussed in this prospectus. We may substitute
another subaccount, portfolio or insurance company separate account under the
Policies if, in our judgment, investment in a subaccount or portfolio would no
longer be possible or becomes inappropriate to the purposes of the Policies, or
if investment in another subaccount or insurance company separate account is in
the best interest of owners. No substitution shall take place without notice to
owners and prior approval of the Securities and Exchange Commission ("SEC") and
insurance company regulators, to the extent required by the Investment Company
Act of 1940, as amended (the "1940 Act") and applicable law.
The Funds
The separate account invests in shares of the portfolios. Each portfolio is
an investment division of a fund, which is an open-end management investment
company registered with the SEC. Such registration does not involve supervision
of the management or investment practices or policies of the portfolios by the
SEC.
Each portfolio's assets are held separate from the assets of the other
portfolios, and each portfolio has investment objectives and policies that are
different from those of the other portfolios. Thus, each portfolio operates as a
separate investment fund, and the income or losses of one portfolio has no
effect on the investment performance of any other portfolio. Pending any prior
approval by a state insurance regulatory authority, certain subaccounts and
corresponding portfolios may not be available to residents of some states.
Each portfolio's investment objective(s) and policies are summarized below.
There is no assurance that any of the portfolios will achieve its stated
objective(s). Certain portfolios may have investment objectives and policies
similar to other portfolios that are managed by the same investment adviser or
sub-adviser. The investment results of the portfolios, however, may be higher
or lower than those of such other portfolios. We do not
18
guarantee or make any representation that the investment results of the
portfolios will be comparable to any other portfolio, even those with the same
investment adviser or manager. You can find more detailed information about the
portfolios, including a description of risks, in the fund prospectuses. You
should read the fund prospectuses carefully.
Portfolio Sub-Adviser or Adviser Investment Objective
--------- ---------------------- --------------------
Munder Net50 . Munder Capital . Seeks long-term capital
Management appreciation.
Van Kampen . Van Kampen . Seeks capital appreciation by
Emerging Asset Man-agement Inc investing primarily in common
Growth stocks of small and medium-
sized companies.
T. Rowe Price . T. Rowe Price . Seeks long-term growth of
Small Cap Associates, Inc. capital by investing primarily in
common stocks of small growth
companies.
Pilgrim Baxter . Pilgrim Baxter & . Seeks capital appreciation.
Mid Cap Growth Associates, Ltd.
Alger Aggressive . Fred Alger . Seeks long-term capital
Growth Management, Inc. appreciation.
Third Avenue . EQSF Advisers, Inc. . Seeks long-term capital
Value appreciation.
Value Line . Value Line, Inc. . Seeks to realize capital growth.
Aggressive
Growth
GE International . GE Asset Management . Seeks long-term growth of
Equity Incorporated capital.
Gabelli Global . Gabelli Asset . Seeks to provide investors with
Growth Management Company appreciation of capital. Current
income is a secondary objective.
Great Companies . Great Companies, L.L.C. . Seeks long-term growth of
-- Global/2/ capital in a manner consistent
with preservation of capital.
Great Companies . Great Companies, L.L.C. . Seeks long-term growth of
-- Technology/SM/ capital.
Janus Growth . Janus Capital . Seeks growth of capital.
Corporation
19
Portfolio Sub-Adviser or Adviser Investment Objective
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LKCM Capital Growth . Luther King Capital . Seeks long-term growth of
Management Corporation capital through a
disciplined investment
approach focusing on
companies with superior
growth prospects.
Goldman Sachs Growth . Goldman Sachs Asset . Seeks long-term growth of
Management capital.
GE U.S. Equity . GE Asset Management . Seeks long-term growth of
Incorporated capital.
Great Companies -- . Great Companies, L.L.C. . Seeks long-term growth of
America(SM) capital.
Salomon All Cap . Salomon Brothers Asset . Seeks capital appreciation.
Management Inc
Fidelity VIP II . Fidelity Management & . Seeks long-term capital
Contrafund(R) Research Company appreciation by investing
Portfolio -- primarily in a broad
Service Class 2 variety of common stocks,
using both growth-oriented
and contrarian disciplines.
C.A.S.E. Growth . C.A.S.E. Management, . Seeks annual growth of
Inc. capital through investment
in companies whose
management, financial
resources and fundamentals
appear attractive on a scale
measured against each
company's present value.
Dreyfus Mid Cap . The Dreyfus Corporation . Seeks total investment
returns (including capital
appreciation and income),
which consistently
outperform the S&P 400 Mid
Cap Index.
NWQ Value Equity . NWQ Investment . Seeks to achieve maximum,
Management Company, Inc. consistent total return with
minimum risk to principal.
Fidelity VIP . Fidelity Management & . Seeks reasonable income by
Equity-Income Research Company investing primarily in
Portfolio -- income-producing equity
Service Class 2 securities.
Fidelity VIP III . Fidelity Management & . Seeks capital growth by
Growth Opportunities Research Company investing in a wide range of
Portfolio -- common domestic and foreign
Service Class 2 stocks, and securities
convertible into common
stocks.
20
Portfolio Sub-Adviser or Adviser Investment Objective
--------- ---------------------- --------------------
T. Rowe Price . T. Rowe Price . Seeks to provide an increasing
Dividend Growth Associates, Inc. level of dividend income,
long-term capital appreciation
and reasonable current income
through investments primarily
in dividend paying stocks.
Dean Asset . Dean Investment . Seeks preservation of capital and
Allocation Associates competitive investment returns.
LKCM Strategic . Luther King Capital . Seeks to provide current income,
Total Return Management long-term growth of income and
Corporation capital appreciation.
J.P. Morgan Real . J.P. Morgan Investment . Seeks long-term total return from
Estate Securities Management Inc. investments primarily in equity
securities of real estate
companies. Total return will
consist of realized and unrealized
capital gains and losses plus
income.
Federated Growth . Federated Investment . Seeks total return by investing in
& Income Counseling securities that have defensive
characteristics.
AEGON Balanced . AEGON USA . Seeks preservation of capital,
Investment reduced volatility, and superior
Management, Inc. long-term risk-adjusted returns.
AEGON Bond . AEGON USA . Seeks the highest possible
Investment current income within the
Management, Inc. confines of the primary goal of
insuring the protection of capital.
J.P. Morgan . J.P. Morgan Investment . Seeks to obtain maximum current
Money Market Management, Inc. confines of the primary goal of
income consistent with the
preservation of principal and
maintenance of liquidity.
AEGON/Transamerica Advisers, located at 570 Carillon Parkway, St.
Petersburg, Florida 33716, a wholly-owned subsidiary of Western Reserve, serves
as investment adviser to the Series Fund and manages the Series Fund in
accordance with policies and guidelines established by the Series Fund's Board
of Directors. For certain portfolios, AEGON/Transamerica Advisers has engaged
investment sub-advisers to provide portfolio management services.
AEGON/Transamerica Advisers and each investment sub-adviser are registered
investment advisers under the Investment Advisers Act of 1940, as amended. See
the Series Fund prospectus for more information regarding AEGON/Transamerica
Advisers and the investment sub-advisers.
21
FMR, located at 82 Devonshire Street, Boston, Massachusetts 02109, serves
as investment adviser to the Fidelity VIP Funds and manages the Fidelity VIP
Funds in accordance with policies and guidelines established by the Fidelity VIP
Funds' Board of Trustees. For certain portfolios, FMR has engaged investment
sub-advisers to provide portfolio management services with regard to foreign
investments. FMR and each sub-adviser are registered investment advisers under
the Investment Advisers Act of 1940, as amended. See the Fidelity VIP Funds
prospectuses for more information regarding FMR and the investment sub-advisers.
In addition to the separate account, shares of the portfolios are also sold
to other separate accounts that we (or our affiliates) establish to support
variable annuity contracts and variable life insurance policies. It is possible
that, in the future, it may become disadvantageous for variable life insurance
separate accounts and variable annuity separate accounts to invest in the
portfolios simultaneously. Neither we nor the funds currently foresee any such
disadvantages, either to variable life insurance policyowners or to variable
annuity contract owners. However, each fund's Board of Directors/Trustees will
monitor events in order to identify any material conflicts between the interests
of such variable life insurance policyowners and variable annuity contract
owners, and will determine what action, if any, it should take. Such action
could include the sale of portfolio shares by one or more of the separate
accounts, which could have adverse consequences. Material conflicts could result
from, for example, (1) changes in state insurance laws, (2) changes in federal
income tax laws, or (3) differences in voting instructions between those given
by variable life insurance policyowners and those given by variable annuity
contract owners.
If a fund's Board of Directors/Trustees were to conclude that separate
funds should be established for variable life insurance and variable annuity
separate accounts, Western Reserve will bear the attendant expenses, but
variable life insurance policyowners and variable annuity contract owners would
no longer have the economies of scale resulting from a larger combined fund.
Addition, Deletion, or Substitution of Investments
We do not guarantee that each portfolio will always be available for
investment through the Policy. We reserve the right, subject to compliance with
applicable law, to add new portfolios, close existing portfolios, or substitute
portfolio shares that are held by any subaccount for shares of a different
portfolio. New or substitute portfolios may have different fees and expenses and
their availability may be limited to certain classes of purchasers. We will only
add, delete or substitute shares of another portfolio of a fund (or of another
open-end, registered investment company) if the shares of a portfolio are no
longer available for investment, or if in our judgement further investment in
any portfolio would become inappropriate in view of the purposes of the separate
account. We will not add, delete or substitute any shares attributable to your
interest in a subaccount without notice to you and prior approval of the SEC, to
the extent required by the 1940 Act or other applicable law. We may also decide
to purchase for the separate account securities from other portfolios. We
reserve the right to transfer separate account assets to another separate
account that we determine to be associated with the class of contracts to which
the Policy belongs.
22
We also reserve the right to establish additional subaccounts of the
separate account, each of which would invest in a new portfolio of a fund, or in
shares of another investment company, with specified investment objectives. We
may establish new subaccounts when, in our sole discretion, marketing, tax or
investment conditions warrant. We will make any new subaccounts available to
existing owners on a basis we determine. We may also eliminate one or more
subaccounts for the same reasons as stated above.
In the event of any such substitution or change, we may make such changes
in this and other policies as may be necessary or appropriate to reflect such
substitution or change. If we deem it to be in the best interests of persons
having voting rights under the Policies, and when permitted by law, the separate
account may be (1) operated as a management company under the 1940 Act, (2)
deregistered under the 1940 Act in the event such registration is no longer
required, (3) managed under the direction of a committee, or (4) combined with
one or more other separate accounts, or subaccounts.
Your Right to Vote Portfolio Shares
Even though we are the legal owner of the portfolio shares held in the
subaccounts, and have the right to vote on all matters submitted to shareholders
of the portfolios, we will vote our shares only as policyowners instruct, so
long as such action is required by law. See Tax Status of the Policy p. 59.
Before a vote of a portfolio's shareholders occurs, you will receive
voting materials from us. We will ask you to instruct us on how to vote and to
return your proxy to us in a timely manner. You will have the right to instruct
us on the number of portfolio shares that corresponds to the amount of cash
value you have in that portfolio (as of a date set by the portfolio).
If we do not receive voting instructions on time from some policyowners, we
will vote those shares in the same proportion as the timely voting instructions
we receive. Should federal securities laws, regulations and interpretations
change, we may elect to vote portfolio shares in our own right. If required by
state insurance officials, or if permitted under federal regulation, we may
disregard certain owner voting instructions. If we ever disregard voting
instructions, we will send you a summary in the next annual report to
policyowners advising you of the action and the reasons we took such action.
The Policy
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Purchasing a Policy
To purchase a Policy, you must submit a completed application and an
initial premium to us through any licensed life insurance agent who is also a
registered representative of a broker-dealer having a selling agreement with
AFSG Securities Corporation, the principal underwriter for the Policy.
23
Our address for applications submitted by World Marketing Alliance
distribution systems is:
Western Reserve
P.O. Box 9009
Clearwater, Florida 33758-9009
All other agents should submit applications to:
Western Reserve
P.O. Box 5068
Clearwater, Florida 33758-5068
You select the specified amount of insurance coverage for your Policy
within the following limits. Our current minimum specified amount for a Policy
for issue ages 0-49 is generally $100,000. It declines to $50,000 for issue ages
50-85. We currently charge lower cost of insurance rates for Policies with
specified amounts in higher bands of coverage. We offer the following specified
amount bands of coverage:
. band 1: $100,000 - $249,999 ($50,000 - $249,999 for issue ages 50 and
older)
. band 2: $250,000 - $499,999
. band 3: $500,000 - $999,999
. band 4: $1,000,000 and over
We will generally only issue a Policy to you if you provide sufficient
evidence that the insured meets our insurability standards. Your application is
subject to our underwriting rules, and we may reject any application for any
reason permitted by law. We will not issue a Policy to you if the insured is
over age 85. The insured must be insurable and acceptable to us under our
underwriting rules on the later of:
. the date of your application; or
. the date the insured completes all of the medical tests and
examinations that we require.
Tax-Free "Section 1035" Exchanges
You can generally exchange one life insurance policy for another in a
"tax-free exchange" under Section 1035 of the Internal Revenue Code. Before
making an exchange, you should compare both life insurance policies carefully.
Remember that if you exchange another life insurance policy for the one
described in this prospectus, you might have to pay a surrender charge on your
old policy, there will be a new surrender charge period for this Policy, and
other charges may be higher (or lower) and the benefits may be different. If the
exchange does not qualify for Section 1035 treatment, you may also have to pay
federal income tax on the exchange. You should not exchange another life
insurance policy for this one unless you determine, after knowing all the facts,
that the exchange is in your best interest and not just better for the person
selling you the Policy (that person will generally earn a commission if you buy
this Policy through an exchange or otherwise).
Underwriting Standards
This Policy uses mortality tables that distinguish between men and women.
As a result, the Policy pays different benefits to men and women of the same
age. Montana
24
prohibits our use of actuarial tables that distinguish between males and females
to determine premiums and policy benefits for policies issued on the lives of
its residents. Therefore, we will base the premiums and benefits in Policies
that we issue in Montana, to insure residents of that state, on actuarial tables
that do not differentiate on the basis of gender.
Your cost of insurance charge will vary by the insured's gender, issue age
on the Policy date, issue age at the time of any increase in specified amount,
rate band, length of time from the Policy date or from the date of any increase
in specified amount, and rate class. We currently place insureds into the
following rate classes:
. ultimate select (preferred) non-tobacco use;
. select (non-preferred) non-tobacco use;
. ultimate standard (preferred) tobacco use;
. standard (non-preferred) tobacco use; and
. juvenile - under 18.
We also place insureds in various sub-standard rate classes, which involve
a higher mortality risk and higher charges. We generally charge higher rates for
insureds who use tobacco. We charge lower cost of insurance rates for insureds
who are in an "ultimate class." An ultimate class is only available if our
underwriting guidelines require you to take a blood test because of the
specified amount you have chosen.
When Insurance Coverage Takes Effect
Insurance coverage under the Policy will take effect only if the insured(s)
is alive and in the same condition of health as described in the application
when the Policy is delivered to the owner, and if the initial premium required
under the Policy as issued is paid.
Conditional Insurance Coverage. If you pay the full initial premium listed
in the conditional receipt attached to the application, and we deliver the
conditional receipt to you, the insured will have conditional insurance coverage
under the terms of the conditional receipt. Conditional insurance coverage is
void if the check or draft you gave us to pay the initial premium is not honored
when we first present it for payment.
The amount of . the specified amount applied for; or
conditional insurance . $300,000
coverage is the lesser of: reduced by all amounts payable under all life insurance
applications that the insured has pending with us.
Conditional life insurance . the date of your application; or
coverage begins on the . the date the insured completes all of later of the medical tests and
. examinations that we require; or
. the date of issue, if any, requested in the application.
25
Conditional life . the date we determine the insured has satisfied our
insurance coverage underwriting requirements and the insurance applied
terminates for takes effect (the Policy date); or
automatically on
the earliest of: . 60 days from the date the application was completed;
or
. the date we determine that any person proposed for
insurance in the application is not insurable
according to our rules, limits and standards for the
plan, amount and rate class shown in the application;
or
. the date we modify the plan, amount, riders and/or
the premium rate class shown in the application, or
any supplemental agreements; or
. the date we mail notice of the ending of coverage and
we refund the first premium to the applicant at the
address shown on the application.
Special limitations . the conditional receipt will be void:
of the conditional
receipt: . if not signed by an authorized agent of Western
Reserve; or
. in the event the application contains any fraud or
material misrepresentation; or
. if, on the date of the conditional receipt, the
proposed insured is under 15 days of age or over 85
years of age.
. the conditional receipt does not provide benefits
for disability and accidental death benefits.
. the conditional receipt does not provide benefits if
any proposed insured commits suicide. In this case,
Western Reserve's liability will be limited to return
of the first premium paid with the application.
Full Insurance Coverage and Allocation of Initial Premium. Once we
determine that the insured meets our underwriting requirements and you have paid
the initial premium, full insurance coverage will begin and we will begin to
take the monthly deductions from your net premium. This date is the Policy date.
On the Policy date (or on the record date if your Policy is backdated), we will
allocate your initial net premium, minus monthly deductions, to the fixed
account and the subaccounts you selected on your application, provided you live
in a state that does not require a refund of full premium during the free-look
period. If your state requires us to return the full premium in the event you
exercise your free-look right, we will place your net premium in the
reallocation account until the reallocation date. While held in the reallocation
account, premium(s) will be credited with interest at the current fixed account
rate. See Reallocation Account p. 32.
On any day we credit net premiums or transfer cash value to a subaccount,
we will convert the dollar amount of the net premium (or transfer) into
subaccount units at the unit
26
value for that subaccount, determined at the end of the day on which we receive
the premium or transaction request at our office. We will credit amounts to the
subaccounts only on a valuation date, that is, on a date the New York Stock
Exchange ("NYSE") is open for trading. See Policy Values p. 33.
Backdating a Policy
If you request, we may backdate a Policy by assigning a Policy date earlier
than the date the Policy is issued. However, in no event will we backdate a
Policy earlier than the earliest date allowed by state law or by our
underwriting rules. Your request must be in writing and, if we approve the
request, will amend your application.
Cost of insurance charges are based in part on the age of the insured on
the Policy date or on the date of any increase in specified amount. Generally,
cost of insurance charges are lower at a younger age. We will deduct the monthly
deduction, including cost of insurance charges, for the period that the Policy
is backdated. This means that while the monthly deduction may be lower than what
would have been charged had we not backdated the Policy, you will be paying for
insurance during a period when the Policy was not in force.
Ownership Rights
The Policy belongs to the owner named in the application. The owner may
exercise all of the rights and options described in the Policy. The owner is the
insured unless the application specifies a different person as the insured. If
the owner dies before the insured and no contingent owner is named, then
ownership of the Policy will pass to the owner's estate. The owner may exercise
certain rights described below.
Changing the . Change the owner by providing written notice to us at our
Owner office at any time while the insured is alive and the Policy
is in force.
. Change is effective as of the date that the written notice is
accepted by us.
. Changing the owner does not automatically change the
beneficiary.
. Signature of owner's spouse is required if owner is a
resident of: Arizona, California, Idaho, Nevada, New
Mexico, Washington or Wisconsin.
. Changing the owner may have tax consequences. You
should consult a tax advisor before changing the owner.
. We are not liable for payments we made before we
received the written notice at our office.
27
Choosing the . The owner designates the beneficiary (the person to receive the
Beneficiary death benefit when the insured dies) in the application.
. If the owner designates more than one beneficiary, then each
beneficiary shares equally in any death benefit proceeds unless
the beneficiary designation states otherwise.
. If the beneficiary dies before the insured, then any contingent
beneficiary becomes the beneficiary.
. If both the beneficiary and contingent beneficiary die before
the insured, then the death benefit will be paid to the owner
or the owner's estate upon the insured's death.
Changing the . The owner changes the beneficiary by providing written notice to
Beneficiary us at our office.
. Change is effective as of the date the owner signs the written
notice.
. Signature of owner's spouse is required if owner is a resident
of: Arizona, California, Idaho, Nevada, New Mexico, Washington
or Wisconsin.
. We are not liable for any payments we made before we received
the written notice at our office.
Assigning . The owner may assign Policy rights while the insured is
the Policy alive.
. Signature of owner's spouse is required if owner is a resident
of: Arizona, California, Idaho, Nevada, New Mexico, Washington
or Wisconsin.
. The owner retains any ownership rights that are not assigned.
. Assignee may not change the owner or the beneficiary, and may
not elect or change an optional method of payment.
Any amount payable to the assignee will be paid in a lump sum.
. Claims under any assignment are subject to proof of interest
and the extent of the assignment.
. We are not:
. bound by any assignment unless we receive a written notice
of the assignment;
. responsible for the validity of any assignment;
. liable for any payment we made before we received written
notice of the assignment; or
. bound by any assignment which results in adverse tax
consequences to the owner, insured(s) or beneficiary(ies).
. Assigning the Policy may have tax consequences. You should
consult a tax advisor before assigning the Policy.
28
Canceling a Policy
You may cancel a Policy for a refund during the "free-look period" by
returning it to our office, to one of our branch offices or to the agent who
sold you the Policy. The free-look period expires 10 days after you receive the
Policy. In some states you may have more than 10 days. If you decide to cancel
the Policy during the free-look period, we will treat the Policy as if it had
never been issued. We will pay the refund within seven days after we receive the
returned Policy at our office. The amount of the refund will be:
. any charges and taxes we deduct from your premiums; plus
. any monthly deductions or other charges we deducted from amounts you
allocated to the subaccounts and the fixed account; plus
. your cash value in the subaccounts and the fixed account on the date we
(or our agent) receive the returned Policy at our office.
Some states may require us to refund all of the premiums you paid for the
Policy. See Reallocation Account p. 32.
Premiums
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Premium Flexibility
You generally have flexibility to determine the frequency and the amount of
the premiums you pay. Unlike conventional insurance policies, you do not have to
pay your premiums according to a rigid and inflexible premium schedule. Before
we issue the Policy to you, we may require you to pay a premium at least equal
to a minimum monthly guarantee premium set forth in your Policy. Thereafter
(subject to the limitations described below), you may make unscheduled premium
payments at any time and in any amount over $50. Under some circumstances, you
may be required to pay extra premiums to prevent a lapse. Your minimum monthly
guarantee premium may change if you request a change in your Policy. If this
happens, we will notify you of the new minimum monthly guarantee premium.
Planned Periodic Payments
You will determine a planned periodic payment schedule which allows you to
pay level premiums at fixed intervals over a specified period of time. You are
not required to pay premiums according to this schedule. You may change the
amount, frequency, and the time period over which you make your planned periodic
payments. Please be sure to notify us or your agent/registered representative of
any address changes so that we may be able to keep your current address on
record.
Even if you make your planned periodic payments on schedule, your Policy
may still lapse. The duration of your Policy depends on the Policy's net
surrender value. If the net surrender value is not high enough to pay the
monthly deduction when due (and your no lapse period has expired) then your
Policy will lapse (unless you make the payment we specify during the 61-day
grace period). See Policy Lapse and Reinstatement p. 57.
29
Minimum Monthly Guarantee Premium
The full initial premium is the only premium you are required to pay under
the Policy. However, you greatly increase your risk of lapse if you do not
regularly pay premiums at least as large as the current minimum monthly
guarantee premium.
Until the no lapse date shown on your Policy schedule page, we guarantee
that your Policy will not lapse, so long as on any Monthiversary you have paid
total premiums (minus any cash withdrawals, minus any outstanding loan amount,
and minus any decrease charge) that equal or exceed the sum of the minimum
monthly guarantee premiums in effect for each month from the Policy date up to
and including the current month. If you take a cash withdrawal, a loan, or if
you increase or decrease your specified amount, you may need to pay additional
premiums in order to keep the no lapse guarantee in place.
The initial minimum monthly guarantee premium is shown on your Policy's
schedule page, and depends on a number of factors, including the age, gender,
and rate class of the insured, and the specified amount requested. We will
adjust the minimum monthly guarantee premium if you change death benefit
options, increase or decrease the specified amount, or if any of the riders are
added, increased or decreased. We will notify you of the new minimum monthly
guarantee premium.
After the no lapse period ends, paying the current minimum monthly
guarantee premium each month will not necessarily keep your Policy in force. You
may need to pay additional premiums to keep the Policy in force.
No Lapse Period
Until the no lapse date shown on your Policy schedule page, your Policy
will remain in force and no grace period will begin, even if your net surrender
value is too low to pay the monthly deduction, so long as:
. the total amount of the premiums you paid (minus any cash withdrawals,
outstanding loan amount, and any decrease charge) is equal to or
exceeds:
. the sum of the minimum monthly guarantee premium in effect for each
month from the Policy date up to and including the current month.
Premium Limitations
Premium payments must be at least $50 if paid monthly and $600 if paid
annually ($1,000 if by wire). We may return premiums less than $50. We will not
allow you to make any premium payments that would cause the total amount of the
premiums you pay to exceed the current maximum premium limitations which qualify
the Policy as life insurance according to federal tax laws. This maximum is set
forth in your Policy. If you make a payment that would cause your total premiums
to be greater than the maximum premium limitations, we will return the excess
portion of the premium payment. We will not permit you to make additional
premium payments until they are allowed by the maximum premium
30
limitations. In addition, we reserve the right to refund a premium if the
premium would increase the death benefit by more than the amount of the premium.
Making Premium Payments
We will consider any payments you make to be premium payments, unless you
clearly mark them as loan repayments. We will deduct certain charges from your
premium payments (see Premium Charges--Premium Expense Charge p. 41). We will
accept premium payments by wire transfer.
If you wish to make payments by wire transfer, you should instruct your
bank to wire federal funds as follows:
All First Bank of Baltimore
ABA #052000113
For credit to: Western Reserve Life
Account #: 89539639
Policyowner's Name:
Policy Number:
Attention: General Accounting
Tax-Free Exchanges ("1035 Exchanges") (see Tax-Free "Section 1035"
Exchanges p. 24). We will accept part or all of your initial premium from one or
more contracts insuring the same insured that qualify for tax-free exchanges
under Section 1035 of the Internal Revenue Code. If you contemplate such an
exchange, you should consult a competent tax advisor to learn the potential tax
effects of such a transaction.
Subject to our underwriting requirements, we will permit you to make one
additional cash payment within three business days of our receipt of the
proceeds from the 1035 Exchange before we finalize your Policy's specified
amount.
Allocating Premiums
You must instruct us on how to allocate your net premium among the
subaccounts and the fixed account. You may allocate your premium to a total of
16 active subaccounts at any one time. The fixed account may not be available in
all states to direct or transfer money into. You must follow these guidelines:
. allocation percentages must be in whole numbers;
. if you select dollar cost averaging, you must have at least $5,000 in
each subaccount from which we will make transfers and you must transfer
at least a total of $100 monthly;
. if you select asset rebalancing, the cash value of your Policy, if an
existing Policy, or your minimum initial premium, if a new Policy, must
be at least $5,000; and
. unless otherwise required by state law, we may restrict your allocations
to the fixed account if the fixed account value following the allocation
would exceed $500,000.
31
Currently, you may change the allocation instructions for additional
premium payments without charge at any time by writing us or calling us at
1-800-851-9777, extension 6539 Monday - Friday 8:00 a.m. - 7:00 p.m. Eastern
time. The change will be effective at the end of the valuation date on which we
receive the change. Upon instructions from you, the registered representative/
agent of record for your Policy may also change your allocation instructions for
you. The minimum amount you can allocate to a particular subaccount is 1.0% of a
net premium payment. We reserve the right to limit the number of premium
allocation changes or to charge $25 for each change in excess of one per Policy
year quarter.
Whenever you direct money into a subaccount, we will credit your Policy
with the number of units for that subaccount that can be bought for the dollar
payment. We price each subaccount unit using the unit value determined at the
end of the day after the closing of the regular business session of the NYSE
(usually at 4:00 p.m. Eastern time). We will credit amounts to the subaccounts
only on a valuation date, that is, on a date the NYSE is open for trading. See
Policy Values below. Your cash value will vary with the investment experience of
the subaccounts in which you invest. You bear the investment risk for amounts
you allocate to the subaccounts.
You should periodically review how your cash value is allocated among the
subaccounts and the fixed account because market conditions and your overall
financial objectives may change.
Reallocation Account. If your state requires us to return your initial
premium in the event you exercise your free-look right, we will allocate the
initial net premium on the record date to the reallocation account as shown on
your Policy schedule page. While held in the reallocation account, net
premium(s) will be credited with interest at the current fixed account rate and
reduced by any monthly deductions due. The net premiums will remain in the
reallocation account until the reallocation date. The reallocation date is the
record date, plus the number of days in your state's free-look period, plus five
days. Please contact your agent for details concerning the free-look period for
your state.
On the first valuation date on or after the reallocation date, we will
reallocate all cash value from the reallocation account to the fixed account and
the subaccounts you selected on the application. If you requested dollar cost
averaging, on the reallocation date we will reallocate the cash value either to
the fixed account, the WRL J.P. Morgan Money Market subaccount or the WRL AEGON
Bond subaccount (depending on which account you selected on your application).
For states which do not require a full refund of the initial premium, the
reallocation date is the same as the record date. On the record date, we will
allocate your initial net premium, minus monthly deductions, to the fixed
account and the subaccounts in accordance with the instructions you gave us on
your application.
32
Policy Values
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Cash Value
. varies from day to day, depending on the investment experience of the
subaccounts you choose, the interest credited to the fixed account, the
charges deducted and any other Policy transactions (such as additional
premium payments, transfers, withdrawals and Policy loans).
. serves as the starting point for calculating values under a Policy.
. equals the sum of all values in each subaccount and the fixed account.
. is determined on the Policy date and on each valuation date.
. has no guaranteed minimum amount and may be more or less than premiums
paid.
. includes any amounts held in the fixed account to secure any outstanding
Policy loan.
Net Surrender Value
The net surrender value is the amount we pay when you surrender your
Policy. We determine the net surrender value at the end of the valuation period
when we receive your written surrender request at our office.
Net surrender value . the cash value as of such date; minus
on any valuation . any surrender charge as of such date; minus
date equals: . any outstanding Policy loan amount.
Subaccount Value
Each subaccount's value is the cash value in that subaccount. At the end of
any valuation period, the subaccount's value is equal to the number of units
that the Policy has in the subaccount, multiplied by the unit value of that
subaccount.
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The number of units . the initial units purchased at unit value on the
in any subaccount on reallocation date; plus
any valuation date . units purchased with additional net premium(s);
equals: plus
. units purchased via transfers from another
subaccount or the fixed account; minus
. units redeemed to pay for monthly deductions; minus
. units redeemed to pay for cash withdrawals; minus
. units redeemed as part of a transfer to another
subaccount or the fixed account; minus
. units redeemed to pay partial surrender charges,
decrease charges and transfer charges.
Every time you allocate, transfer or withdraw money to or from a
subaccount, we convert that dollar amount into units. We determine the number of
units we credit to, or subtract from, your Policy by dividing the dollar amount
of the allocation, transfer or cash withdrawal by the unit value for that
subaccount next determined at the end of the valuation period on which the
premium, transfer request or cash withdrawal request is received at our office.
Subaccount Unit Value
The value (or price) of each subaccount unit will reflect the investment
performance of the portfolio in which the subaccount invests. Unit values will
vary among subaccounts. The unit value of each subaccount was originally
established at $10 per unit. The unit value may increase or decrease from one
valuation period to the next.
The unit value of any . the total value of the portfolio shares held in the
subaccount at the end subaccount, including the value of any dividends or
of a valuation period capital gains distribution declared and reinvested
is calculated as: by the portfolio during the valuation period. This
value is determined by multiplying the number of
portfolio shares owned by the subaccount by the
portfolio's net asset value per share determined at
the end of the valuation period; minus
. a charge equal to the daily net assets of the
subaccount multiplied by the daily equivalent of
the daily charge; minus
. the accrued amount of reserve for any taxes or
other economic burden resulting from applying tax
laws that we determine to be properly attributable
to the subaccount; and the result divided by
. the number of outstanding units in the subaccount
before the purchase or redemption of any units on
that date.
The portfolio in which any subaccount invests will determine its net asset
value per share once daily, as of the close of the regular business session of
the NYSE (usually 4:00 p.m. Eastern time), which coincides with the end of each
valuation period.
34
Fixed Account Value
On the reallocation date, the fixed account value is equal to the cash
value allocated to the fixed account.
The fixed account . the sum of net premium(s) allocated to the fixed
value at the end of account; plus
any valuation period . any amounts transferred from a subaccount to the
is equal to: fixed account; plus
. total interest credited to the fixed account; minus
. amounts charged to pay for monthly deductions;
minus
. amounts withdrawn or surrendered from the fixed
account; minus
. amounts transferred from the fixed account to a
subaccount.
The fixed account may not be available to residents of all states.
Transfers
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General
You or your agent/registered representative of record may make transfers
among a total of 16 active subaccounts or from the subaccounts to the fixed
account. We determine the amount you have available for transfers at the end of
the valuation period when we receive your transfer request at our office. We may
modify or revoke the transfer privilege at any time. The following features
apply to transfers under the Policy:
. You may make an unlimited number of "non-substantive" transfers in a
Policy year among the subaccounts, although we do limit "substantive"
transfers, as discussed below.
. You may make one transfer from the fixed account in a Policy year
(unless you choose dollar cost averaging from the fixed account).
. Unless otherwise required by state law, we may restrict transfers to the
fixed account, if the fixed account value following the transfer would
exceed $500,000.
. You may request transfers in writing (in a form we accept), by fax or by
telephone.
. There is no minimum amount that must be transferred.
. There is no minimum amount that must remain in a subaccount after a
transfer.
. We deduct a $25 charge from the amount transferred for each transfer in
excess of 12 transfers in a Policy year.
. We consider all transfers made in any one day to be a single transfer.
35
. Transfers resulting from loans, conversion rights, reallocation of cash
value immediately after the reallocation date, and transfers from the
fixed account are not treated as transfers for the purpose of the
transfer charge.
. Transfers under dollar cost averaging and asset rebalancing are treated
as transfers for purposes of the transfer charge.
The Policy's transfer privilege is not intended to afford policyowners a
way to speculate on short-term movements in the market. Excessive use of the
transfer privilege can disrupt the management of the portfolios and increase
transaction costs. Accordingly, we have established a policy of limiting
excessive transfer activity. We will limit transfer activity to two substantive
transfers (at least 30 days apart) from each portfolio, except from J.P. Morgan
Money Market, during any 12-month period. We interpret "substantive" to mean
either a dollar amount large enough to have a negative impact on a portfolio's
operations or a series of movements between portfolios. We currently do not
limit non-substantive transfers.
The Policy you are purchasing was not designed for professional market
timing organizations or other persons that use programmed, large, or frequent
transfers. The use of such transfers may be disruptive to the underlying
portfolio and increase transaction costs. We reserve the right to reject any
premium payment or transfer request from any person if, in our judgment, the
payment or transfer or series of transfers would have a negative impact on a
portfolio's operations or if a portfolio would reject our purchase order. We may
impose other restrictions on transfers or even prohibit them for any owner who,
in our view, has abused, or appears likely to abuse, the transfer privilege.
Your Policy, as applied for and issued, will automatically receive
telephone transfer privileges unless you provide other instructions. The
telephone transfer privileges allow you to give authority to the registered
representative or agent of record for your Policy to make telephone transfers
and to change the allocation of future payments among the subaccounts and the
fixed account on your behalf according to your instructions. To make a telephone
transfer, you may call us at 1-800-851-9777, extension 6539 Monday - Friday 8:00
a.m. - 7:00 p.m. Eastern time, or fax your instructions to 727-299-1648.
Please note the following regarding telephone or fax transfers:
. We will employ reasonable procedures to confirm that telephone
instructions are genuine.
. If we follow these procedures, we are not liable for any loss, damage,
cost or expense from complying with telephone instructions we
reasonably believe to be authentic. You bear the risk of any such loss.
. If we do not employ reasonable confirmation procedures, we may be
liable for losses due to unauthorized or fraudulent instructions.
. Such procedures may include requiring forms of personal identification
prior to acting upon telephone instructions, providing written
confirmation of transactions to owners, and/or tape recording telephone
instructions received from owners.
. We may also require written confirmation of your order.
36
. If you do not want the ability to make telephone transfers, you should
notify us in writing.
. Telephone or fax orders must be received at our office before 4:00 p.m.
Eastern time to assure same-day pricing of the transaction.
. We will not be responsible for same-day processing of transfers if faxed
to a number other than 727-299-1648.
. We will not be responsible for any transmittal problems when you fax us
your order unless you report it to us within five business days and send
us proof of your fax transmittal.
. We may discontinue this option at any time.
We cannot guarantee that telephone and faxed transactions will always be
available. For example, our offices may be closed during severe weather
emergencies or there may be interruptions in telephone or fax service beyond our
control. If the volume of calls is unusually high, we might not have someone
immediately available to receive your order. Although we have taken precautions
to help our systems handle heavy use, we cannot promise complete reliability
under all circumstances.
We will process any transfer order we receive at our office before the NYSE
closes (usually 4:00 p.m Eastern time) using the subaccount unit value
determined at the end of that session of the NYSE. If we receive the transfer
order after the NYSE closes, we will process the order using the subaccount unit
value determined at the close of the next regular business session of the NYSE.
Fixed Account Transfers
You may make one transfer per Policy year from the fixed account unless you
select dollar cost averaging from the fixed account. We reserve the right to
require that you make the transfer request in writing. We must receive the
transfer request no later than 30 days after a Policy anniversary. We will make
the transfer at the end of the valuation date on which we receive the written
request. The maximum amount you may transfer is limited to the greater of:
. 25% of the amount in the fixed account, or
. the amount you transferred from the fixed account in the immediately
prior Policy year.
The fixed account may not be available to residents of some states. This
means that residents of some states may not direct or transfer any money to the
fixed account.
Conversion Rights
If, within 24 months of your Policy date, you transfer all of your
subaccount values to the fixed account, then we will not charge you a transfer
fee, even if applicable. You must make your request in writing.
Dollar Cost Averaging
Dollar cost averaging is an investment strategy designed to reduce the
average purchase price per unit. The strategy spreads the allocation of your
premium into the
37
subaccounts over a period of time. This potentially allows you to reduce the
risk of investing most of your premium into the subaccounts at a time when
prices are high. The success of this strategy is not assured and depends on
market trends. You should consider carefully your financial ability to continue
the program over a long enough period of time to purchase units when their value
is low as well as when it is high. We make no guarantee that dollar cost
averaging will result in a profit or protect you against loss.
Under dollar cost averaging, we automatically transfer a set dollar amount
from the WRL J.P. Morgan Money Market subaccount, the WRL AEGON Bond subaccount
or the fixed account to a subaccount that you choose. We will make the transfers
monthly as of the end of the valuation date after the first Monthiversary after
the reallocation date. We will make the first transfer in the month after we
receive your request at our office, provided that we receive the form by the
25th day of the month.
To start dollar cost . you must submit a completed form to us at our
averaging: office requesting dollar cost averaging;
. you must have at least $5,000 in each account from
which we will make transfers;
. your total transfers each month under dollar cost
averaging must be at least $100; and
. each month, you may not transfer more than
one-tenth of the amount that was in your fixed
account at the beginning of dollar cost averaging.
You may request dollar cost averaging at any time. There is no charge for
dollar cost averaging. However, each transfer under dollar cost averaging counts
towards your 12 free transfers each year.
Dollar cost averaging . we receive your request to cancel your
will terminate if: participation;
. the value in the accounts from which we make the
transfers is depleted;
. you elect to participate in the asset rebalancing
program; or
. you elect to participate in any asset allocation
services provided by a third party.
We may modify, suspend, or discontinue dollar cost averaging at any time.
Asset Rebalancing Program
We also offer an asset rebalancing program under which you may transfer
amounts periodically to maintain a particular percentage allocation among the
subaccounts you have selected. You cannot have more than 16 active subaccounts
at any one time. Cash value allocated to each subaccount will grow or decline
in value at different rates. The asset rebalancing program automatically
reallocates the cash value in the subaccounts at the end of each period to
match your Policy's currently effective premium allocation schedule. Cash
38
value in the fixed account and the dollar cost averaging program is not
available for this program. This program does not guarantee gains. A subaccount
may still have losses.
You may elect asset rebalancing to occur on each quarterly, semi-annual or
annual anniversary of the Policy date. Once we receive the asset rebalancing
request form, we will effect the initial rebalancing of cash value on the next
such anniversary, in accordance with the Policy's current premium allocation
schedule. You may modify your allocations quarterly. We will credit the amounts
transferred at the unit value next determined on the dates the transfers are
made. If a day on which rebalancing would ordinarily occur falls on a day on
which the NYSE is closed, rebalancing will occur on the next day the NYSE is
open.
To start . you must submit a completed asset rebalancing
asset rebalancing: request form to us at our office before the
maturity date; and
. you must have a minimum cash value of $5,000 or
make a $5,000 initial premium payment.
There is no charge for the asset rebalancing program. However, each
reallocation we make under the program counts towards your 12 free transfers
each year.
Asset rebalancing . you elect to participate in the dollar cost
will cease if: averaging program;
. we receive your request to discontinue
participation;
. you make any transfer to or from any subaccount
other than under a scheduled rebalancing; or
. you elect to participate in any asset
allocation services provided by a third party.
You may start and stop participation in the asset rebalancing program at
any time; but we restrict your right to re-enter the program to once each Policy
year. If you wish to resume the asset rebalancing program, you must complete a
new request form. We may modify, suspend, or discontinue the asset rebalancing
program at any time.
Third Party Asset Allocation Services
We may provide administrative or other support services to independent
third parties you authorize to conduct transfers on your behalf, or who provide
recommendations as to how your subaccount values should be allocated. This
includes, but is not limited to, transferring subaccount values among
subaccounts in accordance with various investment allocation strategies that
these third parties employ. These independent third parties may or may not be
appointed Western Reserve agents for the sale of Policies. Western Reserve does
not engage any third parties to offer investment allocation services of any
type, so that persons or firms offering such services do so independent from any
agency relationship they may have with Western Reserve for the sale of Policies.
Western Reserve therefore takes no responsibility for the investment allocations
and transfers transacted on your behalf by such third parties or any investment
allocation recommendations made by such parties. Western Reserve does not
currently charge you
39
any additional fees for providing these support services. Western Reserve
reserves the right to discontinue providing administrative and support services
to owners utilizing independent third parties who provide investment allocation
and transfer recommendations.
Charges and Deductions
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This section describes the charges and deductions that we make under the
Policy to compensate for: (1) the services and benefits we provide; (2) the
costs and expenses we incur; and (3) the risks we assume.
Services and benefits we . the death benefit, cash and loan benefits;
provide under the Policy: . investment options, including premium
allocations;
. administration of elective options; and
. the distribution of reports to owners.
Costs and expenses . costs associated with processing and
we incur: underwriting applications;
. expenses of issuing and administering the
Policy (including any Policy riders);
. overhead and other expenses for providing
services and benefits and sales and
marketing expenses, including compensation
paid in connection with the sale of the
Policies; and
. other costs of doing business, such as
collecting premiums, maintaining records,
processing claims, effecting transactions,
and paying federal, state and local premium
and other taxes and fees.
Risks we assume: . that the charges we may deduct may be
insufficient to meet our actual claims
because insureds die sooner than we
estimate; and
. that the costs of providing the services
and benefits under the Policies may exceed
the charges we are allowed to deduct.
40
Premium Charges
Before we allocate the net premiums you make, we will deduct the following
charges.
Premium expense charge . This charge equals:
. 6.0% of premiums during the first ten
Policy years on Policies with a specified
amount in force of less than $250,000 and
4.0% on Policies with a specified amount
in force of $250,000 - $499,999; and
. 2.5% of premiums thereafter on Policies
with a specified amount less than
$500,000.
. There is no premium expense charge for
Policies with a specified amount of
$500,000 or higher.
. Because certain events (such as increases or
decreases in the specified amount, a change
in death benefit option, or a cash
withdrawal if you choose the Option A
death benefit) may affect the specified
amount in force, premium expense charges
will be based on the specified amount in
force for the Base Policy at the time we
receive the premium.
. This charge compensates us for distribution
expenses and state premium taxes.
Premium collection charge . For Policies on direct pay notice, this
charge equals $3.00 per premium payment.
. This charge compensates us for premium
billing and collection costs.
. We will not increase this charge.
Monthly Deduction
We take a monthly deduction from the cash value on the Policy date and on
each Monthiversary. We deduct this charge on a pro rata basis from all accounts
(i.e., in the same proportion that the value in each subaccount and the fixed
account bears to the total cash value on the Monthiversary). Because portions of
the monthly deduction (such as cost of insurance) can vary monthly, the monthly
deduction will also vary.
41
The monthly deduction is . the monthly Policy charge; plus
equal to: . the monthly cost of insurance charge for the
Policy; plus
. the monthly charge for any benefits provided
by riders attached to the Policy; plus
. the decrease charge (if applicable) incurred
as a result of a decrease in the specified
amount.
Monthly Policy Charge:
. This charge currently equals $5.00 each
Policy month.
. We guarantee this charge will never be
more than $7.50 per month.
. We may waive this charge at issue on
additional policies (not on the original
Policy) purchased naming the same owner and
insured.
. This charge is used to cover aggregate
Policy expenses.
Cost of Insurance Charge:
. We deduct this charge each month to
compensate us for underwriting the death
benefit. It varies each month and is
determined as follows:
1. divide the death benefit on the
Monthiversary by 1.0024663 (this factor
reduces the net amount at risk, for
purposes of computing the cost of
insurance, by taking into account assumed
monthly earnings at an annual rate of
3.0%);
2. subtract the cash value on the
Monthiversary after it has been allocated
among the segments of specified amount in
force in the following order: first,
initial specified amount, then, each
increase in specified amount starting
with the oldest increase, then the next
oldest, successively, until all cash
value has been allocated;
3. multiply each segment provided under 2.
by the appropriate monthly cost of
insurance rate for that segment; and add
the results together.
. Your monthly cost of insurance rate
depends, in part, on your specified amount
band. The specified amount bands available
are:
. Band 1: $100,000 - $249,999 ($50,000 -
$249,999 for issue ages 50 and older)
. Band 2: $250,000 - $499,999
. Band 3: $500,000 - $999,999
. Band 4: $1,000,000 and over
42
. Generally, the higher the specified amount
band you choose, the lower the cost of
insurance rates.
. We determine your specified amount band by
referring to the specified amount in force
for the Base Policy (that is, the initial
specified amount on the Policy date, plus
any increases, and minus any decreases).
Riders are not included in determining the
Policy's specified amount band.
Optional Insurance Riders:
. The monthly deduction will include charges
for any optional insurance benefits you add
to your Policy by rider (see Supplemental
Benefits (Riders) p. 66).
The cost of insurance rates vary by the insured's issue age on the Policy
date, issue age at the time of any increase in specified amount, specified
amount band, gender, rate class, and the length of time from the Policy date or
from the date of any increase in specified amount.
If you increase the specified amount, different monthly cost of insurance
rates may apply to that segment of specified amount, based on the insured's
attained age and rate class at the time of the increase, gender, and the length
of time since the increase. Increases in specified amount may move the Policy
into a higher specified amount band.
Decreases in specified amount may cause the Policy to drop into a lower
band of specified amount and may result in an increase in cost of insurance
rates and premium expense charge rates. Decreases in specified amount will be
applied on a last-in, first-out basis to the specified amount in force, and will
first reduce the specified amount provided by the most recent increase in
specified amount in force, then reduce the next most recent increases,
successively, and then reduce the initial specified amount.
The actual monthly cost of insurance rates are primarily based on our
expectations as to future mortality experience and expenses. The rates will
never be greater than the guaranteed amount stated in your Policy. These
guaranteed rates are based on the 1980 Commissioners Standard Ordinary (C.S.O.)
Mortality Tables and the insured's attained age, gender, and rate class. For
standard rate classes, these guaranteed rates will never be greater than the
rates in the C.S.O. tables. We may also guarantee a rate for a specific period
of time (e.g., one year). For a listing of rate classes, see Underwriting
Standards p. 24.
We may issue certain Policies on a simplified or expedited basis. The cost
of insurance rates for Policies we issue on this basis will be no higher than
the guaranteed rates for select, non-tobacco use or standard, tobacco use
categories. However, these rates may be higher or lower than current rates
charged under otherwise identical Policies that are using standard underwriting
criteria.
43
Mortality and Expense Risk Charge
We deduct a daily charge from your cash value in each subaccount to
compensate us for certain mortality and expense risks we assume. This charge is
equal to:
. your Policy's cash value in each subaccount multiplied by
. the daily pro rata portion of the annual mortality and expense risk charge
rate of 0.90%.
The annual rate is equal to 0.90% of the average daily net assets of each
subaccount. We guarantee to reduce this charge to 0.60% after the first 15
Policy years. We intend to reduce this amount to 0.30% in the 16th Policy year,
but we do not guarantee that we will do so, and we reserve the right to maintain
this charge at the 0.60% level after the 15th Policy year.
The mortality risk is that an insured will live for a shorter time than we
project. The expense risk is that the expenses that we incur will exceed the
administrative charge limits we set in the Policy.
Surrender Charge
If you surrender your Policy completely during the first 15 years (or
during the 15 year period following an increase in specified amount), we deduct
a surrender charge from your cash value and pay the remaining cash value (less
any outstanding loan amount) to you.
The surrender charge is a charge for each $1,000 of specified amount of the
initial specified amount of your Base Policy and of each increase in specified
amount. The surrender charge that will apply on a full surrender of the Policy
is the total of the surrender charge calculated for the initial specified amount
and the surrender charges calculated for each increase in specified amount
unless there has been a reduction in specified amount for which a decrease
charge was applied.
The initial specified amount has a 15 year surrender charge period starting
on the Policy date and surrender charges that are based upon the insured's issue
age, gender and rate class on the Policy date. Each increase in specified amount
has its own 15 year surrender charge period and surrender charges that are based
upon the insured's issue age, gender and rate class at the time of the increase.
Decreases in specified amount will be applied to the specified amount in
force on a last-in, first-out basis and will first reduce the surrender charge
on the most recent increase in specified amount in force, then, if still
applicable, reduce the surrender charge on the next most recent increases,
successfully, and then reduce the surrender charge on the initial specified
amount.
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Example:
January 1, 2001 Policy issued for $300,000
January 1, 2004 Policy increased by $200,000
January 1, 2005 Policy decreased by $100,000
If the surrender charge on January 1, 2005 (before the decrease) is:
Coverage Layer Surrender Charge
-------------- ----------------
$300,000 $4,656
$200,000 $3,624
The $200,000 layer is reduced to $100,000 on January 1, 2005 and a
surrender charge of $1,812 is applied.
100 X $3,624 = $1,812
---
200
There is no surrender charge if you wait until the end of the 15th Policy
anniversary to surrender your Policy and you have not increased your specified
amount during the first 15 Policy years. The payment you receive is called the
net surrender value. The formula we use reduces the surrender charge at older
ages in compliance with state laws.
The surrender charge may be significant. You should evaluate this charge
carefully before you consider a surrender. Under some circumstances the level of
surrender charges might result in no net surrender value available if you
surrender your Policy in the early Policy years. This will depend on a number of
factors, but is more likely if:
. you pay premiums equal to or not much higher than the minimum monthly
guarantee premium shown in your Policy; and/or
. investment performance is too low.
In addition, surrender charges that apply for 15 years after any increase
in specified amount will likely significantly reduce your net surrender value.
The surrender charge for . the surrender charge per thousand (varies by
each segment of specified issue age, gender and rate class on the Policy
amount is calculated as: date or date of specified amount increase);
multiplied by
. the surrender charge factor.
The surrender charge per thousand is calculated separately for initial
specified amount and for each increase in specified amount, using the rates
found in Appendix C.
The surrender charge factor is also calculated separately for the initial
specified amount and for each increase in specified amount in force. The
surrender charge factor varies by insured's issue age (on the Policy date or
date of specified amount increase) and number of years since the Policy date or
date of specified amount increase. For insureds issue ages 0-39, the surrender
charge factor is equal to 1.00 during years 1-5. It decreases by 0.10 each year
until the end of the 15th year when it is zero. If you are older than 39 on the
Policy date or on the date of specified amount increase, the factor is less than
1.00
45
at the end of the first year and decreases to zero at the end of the 15th year.
In no event are the surrender charge factors any greater than those shown on
the table below. We always determine the surrender charge factor from the Policy
date or date of specified amount increase to the surrender date, regardless of
whether there were any prior lapses and reinstatements.
Surrender Charge Factors
Issue Ages 0 - 39
End of Year* Factor
------------ ------
At Issue.................... 1.00
1-5......................... 1.00
6........................... .90
7........................... .80
8........................... .70
9........................... .60
10.......................... .50
11.......................... .40
12.......................... .30
13.......................... .20
14.......................... .10
15.......................... 0
16+......................... 0
* The factor on any date other than a Policy anniversary or anniversary
of an increase in specified amount will be determined proportionately
using the factor at the end of the year prior to surrender and the
factor at the end of the year of surrender.
. Surrender Charge Example: Assume a male tobacco user purchases the
Policy at Issue Age 35 with a specified amount of $100,000. The
Policy is surrendered in Policy year 5. The surrender charge per
thousand is $16.48. This is multiplied by the surrender charge factor
of 1.00
The surrender charge = the surrender charge per thousand ($16.48) X
the number of thousands of initial specified
amount (100) X the surrender charge factor
(1.0)
= $1,648.
The surrender charge helps us recover distribution expenses that we incur
in connection with the Policy, including agent sales commissions and printing
and advertising costs.
Decrease Charge
If you decrease the specified amount during the first 15 Policy years (or
during the 15 year period following an increase in specified amount), we will
deduct a decrease charge from your cash value. Decreases in specified amount
will be applied on a last-in, first-out basis to the current specified amount in
force. The decrease charge will first be calculated based on the current
surrender charge applicable to the most recent increase in specified amount
still in force. If the amount of the decrease in specified amount is greater
than the most recent increase in specified amount, then the charge will also be
calculated based on the surrender charges applicable to the next most recent
increases, successively, and then will
46
also be calculated based on any remaining surrender charge on the initial
specified amount, up to the amount of the requested decrease.
The decrease charge is . the surrender charge as of the date of the decrease
equal to: applicable to that portion of the segment(s) of
the specified amount that is decreased. See
Surrender Charges.
We will not deduct the decrease charge from the cash value when a specified
amount decrease results from:
. a change in the death benefit option; or
. a cash withdrawal (when you select death benefit Option A).
If a decrease charge is deducted because of a decrease in specified amount,
any future decrease charges incurred during the surrender charge period will be
based on the reduced specified amount.
We will determine the decrease charge using the above formula, regardless
of whether your Policy has lapsed and been reinstated, or you have previously
decreased your specified amount. We will not allow a decrease in specified
amount if the decrease charge will cause the Policy to go into a grace period. A
decrease in specified amount will generally decrease the insurance protection of
the Policy.
Transfer Charge
. We currently allow you to make 12 transfers each year free from
charge.
. We charge $25 for each additional transfer.
. For purposes of assessing the transfer charge, all transfers made in
one day, regardless of the number of subaccounts affected by the
transfer, is considered a single transfer.
. We deduct the transfer charge from the amount being transferred.
. Transfers due to loans, exercise of conversion rights, or from the
fixed account do not count as transfers for the purpose of assessing
this charge.
. Transfers under dollar cost averaging and asset rebalancing are
transfers for purposes of this charge.
. We will not increase this charge.
Change in Net Premium Allocation Charge
We currently do not charge you if you change your net premium allocation.
However, in the future we may decide to charge you $25 if you make more than one
change every three months in your allocation schedule. We will notify you if we
decide to impose this charge.
Cash Withdrawal Charge
. After the first Policy year, you may take one cash withdrawal per
Policy year.
47
. When you make a cash withdrawal, we charge a processing fee of $25 or
2% of the amount you withdraw, whichever is less.
. We deduct this amount from the withdrawal, and we pay you the balance.
. We will not increase this charge.
Taxes
We currently do not make any deductions for taxes from the separate
account. We may do so in the future if such taxes are imposed by federal or
state agencies.
Portfolio Expenses
The portfolios deduct management fees and expenses from the amounts you
have invested in the portfolios. These fees and expenses reduce the value of
your portfolio shares. Some portfolios also deduct 12b-1 fees from portfolio
assets. These fees and expenses currently range from 0.44% to 1.20%. See the
Portfolio Annual Expense Table on p. 9 in this prospectus, and the fund
prospectuses.
Our affiliate, AFSG, the principal underwriter for the Policies, will
receive the 12b-1 fees deducted from portfolio assets for providing shareholder
support services to the portfolios. We and our affiliates, including the
principal underwriter for the Policies, may receive compensation from the
investment advisers, administrators, and/or distributors (and an affiliate
thereof) of the portfolios in connection with administrative or other services
and cost savings experienced by the investment advisers, administrators or
distributors. It is anticipated that such compensation will be based on assets
of the particular portfolios attributable to the Policy and may be significant.
Some advisers, administrators, distributors or portfolios may pay us (and our
affiliates) more than others.
Death Benefit
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Death Benefit Proceeds
As long as the Policy is in force, we will pay the death benefit proceeds
on an individual Policy once we receive satisfactory proof of the insured's
death. We may require return of the Policy. We will pay the death benefit
proceeds to the primary beneficiary(ies), if living, or to a contingent
beneficiary. If each beneficiary dies before the insured and there is no
contingent beneficiary, we will pay the death benefit proceeds to the owner or
the owner's estate. We will pay the death benefit proceeds in a lump sum or
under a payment option. See Payment Options p. 53.
48
Death benefit . the death benefit (described below); minus
proceeds equal: . any monthly deductions due during the grace period (if
applicable); minus
. any outstanding loan amount; plus
. any additional insurance in force provided by rider.
We may further adjust the amount of the death benefit proceeds if we
contest the Policy or if you misstate the insured's age or gender. See Our
Right to Contest the Policy p. 63; and Misstatement of Age or Gender p. 63.
Death Benefit
The Policy provides a death benefit. The death benefit is determined at the
end of the valuation period in which the insured dies. You must select one of
the three death benefit options we offer in your application. No matter which
death benefit option you choose, we guarantee that, so long as the Policy does
not lapse, the death benefit will never be less than the specified amount on the
date of the insured's death.
Death benefit . the current specified amount; or
Option A equals . a specified percentage called the "limitation percentage,"
the greater of: multiplied by
. the cash value on the insured's date of death.
Under Option A, your death benefit remains level unless the limitation
percentage multiplied by the cash value is greater than the specified amount;
then the death benefit will vary as the cash value varies.
The limitation percentage is the minimum percentage of cash value we must
pay as the death benefit under federal tax requirements. It is based on the
attained age of the insured at the beginning of each Policy year. The following
table indicates the limitation percentages for different ages:
Attained Age Limitation Percentage
40 and under 250%
41 to 45 250% of cash value minus 7% for each age over age 40
46 to 50 215% of cash value minus 6% for each age over age 45
51 to 55 185% of cash value minus 7% for each age over age 50
56 to 60 150% of cash value minus 4% for each age over age 55
61 to 65 130% of cash value minus 2% for each age over age 60
66 to 70 120% of cash value minus 1% for each age over age 65
71 to 75 115% of cash value minus 2% for each age over age 70
76 to 90 105%
91 to 95 105% of cash value minus 1% for each age over age 90
96 and older 100%
If the federal tax code requires us to determine the death benefit by
reference to these limitation percentages, the Policy is described as "in the
corridor." An increase in the cash value will increase our risk, and we will
increase the cost of insurance we deduct from the cash value.
Option A Illustration. Assume that the insured's attained age is under 40,
there have been no withdrawals or decreases in specified amount, and that there
is no outstanding
49
indebtedness. Under Option A, a Policy with a $100,000 specified amount will
generally pay $100,000 in death benefits. However, because the death benefit
must be equal to or be greater than 250% of cash value, any time the cash value
of the Policy exceeds $40,000, the death benefit will exceed the $100,000
specified amount. Each additional dollar added to the cash value above $40,000
will increase the death benefit by $2.50.
Similarly, so long as the cash value exceeds $40,000, each dollar taken out
of the cash value will reduce the death benefit by $2.50. If at any time the
cash value multiplied by the limitation percentage is less than the specified
amount, the death benefit will equal the specified amount of the Policy reduced
by the dollar value of any cash withdrawals.
Death benefit . the current specified amount; plus
Option B equals the . the cash value on the insured's date of death; or
greater of: . the limitation percentage, multiplied by
. the cash value on the insured's date of death.
Under Option B, the death benefit always varies as the cash value varies.
Option B Illustration. Assume that the insured's attained age is under 40
and that there is no outstanding indebtedness. Under Option B, a Policy with a
specified amount of $100,000 will generally pay a death benefit of $100,000 plus
cash value. Thus, a Policy with a cash value of $10,000 will have a death
benefit of $110,000 ($100,000 + $10,000). The death benefit, however, must be at
least 250% of cash value. As a result, if the cash value of the Policy exceeds
$66,667, the death benefit will be greater than the specified amount plus cash
value. Each additional dollar of cash value above $66,667 will increase the
death benefit by $2.50.
Similarly, any time cash value exceeds $66,667, each dollar taken out of
cash value will reduce the death benefit by $2.50. If at any time, cash value
multiplied by the limitation percentage is less than the specified amount plus
the cash value, then the death benefit will be the specified amount plus the
cash value of the Policy.
Death benefit . death benefit Option A; or
Option C equals the . the current specified amount, multiplied by
greater of: . an age-based "factor" equal to the lesser of:
. 1.0 or
. 0.04 times (95 minus insured's attained age at
death) (the "factor" will never be less than
zero); plus
. the cash value on the insured's date of death.
Under Option C, the death benefit varies with the cash value and the
insured's attained age.
Option C -- Three Illustrations.
1. Assume that the insured is under age 40 and that there is no outstanding
indebtedness. Under Option C, a Policy with a specified amount of $100,000 and
with a
50
cash value of $10,000 will have a death benefit of $110,000 ($100,000 X the
minimum of (1.0 and (0.04 X (95 - 40))) + $10,000). Until the insured attains
age 71, this benefit is the same as the Option B benefit.
2. Assume that the insured is attained age 75 and that there is no
outstanding indebtedness. Under Option C, a Policy with a specified amount of
$100,000 and with a cash value of $22,000 will have a death benefit of $102,000
($100,000 X the minimum of (1.0 and (0.04 X (95 - 75))) + $22,000).
3. Assume that the insured is attained age 75 and that there is no
outstanding indebtedness. Under Option C, a Policy with a specified amount of
$100,000 and with a cash value of $9,000 will have a death benefit equal to the
specified amount of $100,000, since the calculation of $100,000 times the
minimum of (1.0 and (0.04 X (95 - 75))) plus $9,000 is less than the specified
amount.
Effects of Cash Withdrawals on the Death Benefit
If you choose Option A, a cash withdrawal will reduce the specified amount
by an amount equal to the amount of the cash withdrawal. We will not impose a
decrease charge when the specified amount is decreased as a result of taking a
cash withdrawal. Regardless of the death benefit option you choose, a cash
withdrawal will reduce the death benefit by at least the amount of the
withdrawal.
Choosing Death Benefit Options
You must choose one death benefit option on your application. This is an
important decision. The death benefit option you choose will have an impact on
the dollar value of the death benefit, on your cash value, and on the amount of
cost of insurance charges you pay.
If you do not select a death benefit option on your application, we will
assume you selected death benefit Option A and will ask you to confirm the
selection of Option A in writing or choose one of the other death benefit
options.
You may find Option A more suitable for you if your goal is to increase
your cash value through positive investment experience. You may find Option B
more suitable if your goal is to increase your total death benefit. You may find
Option C more suitable if your goal is to increase your total death benefit
before you reach attained age 70, and to increase your cash value through
positive investment experience thereafter.
Changing the Death Benefit Option
After the third Policy year, you may change your death benefit option once
each Policy year if you have not increased or decreased the specified amount
that year. We will notify you of the new specified amount.
51
. You must make your request in writing.
. The effective date of the change will be the Monthiversary on or
following the date when we receive your request for a change at our
office.
. You may not make a change that would decrease the specified amount
below the minimum specified amount under band 1 shown on your Policy
schedule page.
. There may be adverse federal tax consequences. You should consult a tax
advisor before changing your Policy's death benefit option.
Increasing/Decreasing the Specified Amount
After the Policy has been in force for three years, you may increase or
decrease the specified amount once each Policy year if you have not changed the
death benefit option that year. An increase or decrease in the specified amount
will affect your cost of insurance charge and your minimum monthly guarantee
premium, and may have adverse federal tax consequences.
In addition, an increase or decrease in specified amount may move the
Policy into a different specified amount band, so that your overall cost of
insurance rate and premium expense charge rate will change. An increase in
specified amount will be treated as an additional layer of coverage with its own
cost of insurance rates, surrender charges and surrender charge period. If you
increase your specified amount, you will receive a new Policy schedule page
showing your new minimum monthly guarantee premium and surrender charge
schedule. You should consult a tax advisor before increasing or decreasing your
Policy's specified amount.
Conditions for . you must make your request in writing;
decreasing the specified . you may not change your death benefit option or
amount: increase your specified amount in the same Policy
year that you decrease your specified amount;
. you may not decrease your specified amount lower
than the minimum specified amount under band 1
shown on your Policy schedule page;
. you may not decrease your specified amount if it
would disqualify your Policy as life insurance
under the Internal Revenue Code;
. we may limit the amount of the decrease to no more
than 20% of the specified amount;
. a decrease in specified amount will take effect on
the Monthiversary on or after we receive your
written request; and
. we will assess a decrease charge against the cash
value if you request a decrease in your specified
amount within the first 15 Policy years (or during
the 15 year period subsequent to an increase in
specified amount).
52
Conditions for . your request must be applied for on a supplemental
increasing the specified application and must include evidence of
amount: insurability satisfactory to us;
. an increase in specified amount requires our
approval and will take effect on the
Monthiversary on or after we approve your request;
. we may require your increase in specified amount to
be at least $50,000; and
. you may not change your death benefit option or
decrease your specified amount in the same Policy
year that you increase your specified amount.
If an increase or decrease to your Policy's specified amount causes your
specified amount band to change, then we will apply the new premium expense
charge and cost of insurance rates to the amounts in the new band as of the
effective date of the increase or decrease in specified amount. The new minimum
monthly guarantee premium is effective on the date of increase or decrease. In
addition, each increase in specified amount will have its own surrender charges
that apply for 15 years after any increase. This charge may significantly reduce
your net surrender value.
Payment Options
There are several ways of receiving proceeds under the death benefit and
surrender provisions of the Policy, other than in a lump sum. See Settlement
Options p. 64 for information concerning these settlement options.
Surrenders and Cash Withdrawals
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Surrenders
You must make a written request containing an original signature to
surrender your Policy for its net surrender value as calculated at the end of
the valuation date on which we receive your request at our office. The insured
must be alive, the Policy must be in force, and it must be before the maturity
date when you make your written request. A surrender is effective as of the date
when we receive your written request. The signature of the owner's spouse is
required if the owner is a resident of: Arizona, California, Idaho, Nevada, New
Mexico, Washington or Wisconsin. You will incur a surrender charge if you
surrender the Policy during the first 15 Policy years (or during the 15 year
period subsequent to an increase in specified amount) (see Charges and
Deductions -- Surrender Charge p. 44). Once you surrender your Policy, all
coverage and other benefits under it cease and cannot be reinstated. We will
normally pay you the net surrender value in a lump sum within seven days or
under a settlement option. A surrender may have tax consequences. See Federal
Income Tax Considerations p. 58.
53
Cash Withdrawals
After the first Policy year, you may request a cash withdrawal of a portion
of your cash value subject to certain conditions.
Cash . You must make your cash withdrawal request to us in
withdrawal writing and must contain an original signature.
conditions: . Signature of owner's spouse is required if owner is a
resident of: Arizona, California, Idaho, Nevada,
New Mexico, Washington or Wisconsin.
. We only allow one cash withdrawal per Policy year.
. We may limit the amount you can withdraw to at least
$500, and to no more than 10% of the net surrender
value. We currently intend to limit the amount you can
withdraw to 25% of the net surrender value after the
10th Policy year.
. The remaining net surrender value after the cash
withdrawal must be at least $500.
. You may not take a cash withdrawal if it will reduce
the specified amount below the minimum specified
amount set forth in the Policy.
. You may specify the subaccount(s) and the fixed
account from which to make the withdrawal. If you do
not specify an account, we will take the withdrawal
from each account in accordance with your current
premium allocation instructions.
. We generally will pay a cash withdrawal request within
seven days following the valuation date we receive
the request.
. We will deduct a processing fee equal to $25 or 2% of
the amount you withdraw, whichever is less. We deduct
this amount from the withdrawal, and we pay you the
balance.
. You may not take a cash withdrawal that would
disqualify your Policy as life insurance under the
Internal Revenue Code.
. A cash withdrawal may have tax consequences (see
Federal Income Tax Considerations p. 58).
A cash withdrawal will reduce the cash value by the amount of the cash
withdrawal, and will reduce the death benefit by at least the amount of the cash
withdrawal. When death benefit Option A is in effect, a cash withdrawal will
reduce the specified amount by an amount equal to the amount of the cash
withdrawal. This decrease in specified amount may cause your Policy to be in a
lower specified amount band, so that your cost of insurance rates would be
higher. (See Monthly Deduction p. 41.) You also may have to pay higher minimum
monthly guarantee premiums and premium expense charges. We will not impose a
decrease charge when the specified amount is decreased as a result of taking a
cash withdrawal.
54
When we incur extraordinary expenses, such as overnight mail expenses or
wire service fees, for expediting delivery of your partial withdrawal or
complete surrender payment, we will deduct that charge from the payment. We
charge $20 for an overnight delivery ($30 for Saturday delivery) and $25 for
wire service.
Loans
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General
After the first Policy year (as long as the Policy is in force) you may
borrow money from us using the Policy as the only security for the loan. We may
permit a loan prior to the first anniversary for Policies issued pursuant to
1035 Exchanges. A loan that is taken from, or secured by, a Policy may have tax
consequences. See Federal Income Tax Considerations p. 58.
Policy loans are . we may require you to borrow at least $500;
subject to certain . the maximum amount you may borrow is 90% of the
conditions: cash value, minus any surrender charge and minus
any outstanding loan amount; and
. signature of owner's spouse is required if
owner is a resident of: Arizona, California,
Idaho, Nevada, New Mexico, Washington or
Wisconsin.
When you take a loan, we will withdraw an amount equal to the requested
loan from each of the subaccounts and the fixed account based on your current
premium allocation instructions (unless you specify otherwise). We will transfer
that amount to the loan reserve. The loan reserve is the portion of the fixed
account used as collateral for a Policy loan.
We normally pay the amount of the loan within seven days after we receive a
proper loan request. We may postpone payment of loans under certain conditions.
See Payments We Make p. 64.
You may request a loan by telephone by calling us at 1-800-851-9777,
extension 6539 Monday - Friday 8:00 a.m. - 7:00 p.m. Eastern time. If the loan
amount you request exceeds $50,000 or if the address of record has been changed
within the past 10 days, we may reject your request. If you do not want the
ability to request a loan by telephone, you should notify us in writing. You
will be required to provide certain information for identification purposes when
you request a loan by telephone. We may ask you to provide us with written
confirmation of your request. We will not be liable for processing a loan
request if we believe the request is genuine.
You may also fax your loan request to us at 727-299-1667. We will not be
responsible for any transmittal problems when you fax your request unless you
report it to us within five business days and send us proof of your fax
transmittal.
55
You can repay a loan at any time while the Policy is in force. Loan
repayments must be sent to our office and will be credited as of the date
received. We will consider any payments you make on the Policy to be premium
payments unless the payments are clearly specified as loan repayments.
At each Policy anniversary, we will compare the outstanding loan amount to
the amount in the loan reserve. We will also make this comparison any time you
repay all or part of the loan, or make a request to borrow an additional amount.
At each such time, if the outstanding loan amount exceeds the amount in the loan
reserve, we will withdraw the difference from the subaccounts and the fixed
account and transfer it to the loan reserve, in the same manner as when a loan
is made. If the amount in the loan reserve exceeds the amount of the outstanding
loan, we will withdraw the difference from the loan reserve and transfer it to
the subaccounts and the fixed account in the same manner as current premiums are
allocated. No charge will be imposed for these transfers, and these transfers
are not treated as transfers in calculating the transfer charge. We reserve the
right to require a transfer to the fixed account if the loans were originally
transferred from the fixed account.
Interest Rate Charged
We currently charge you an annual interest rate on a Policy loan that is
equal to 3.75% (4.0% maximum guaranteed) and is payable in arrears on each
Policy anniversary. We may declare various lower Policy loan interest rates. We
also may apply different loan interest rates to different parts of the loan.
Loan interest that is unpaid when due will be added to the amount of the loan on
each Policy anniversary and will bear interest at the same rate. After the 10th
Policy year, you may borrow at preferred loan rates an amount equal to the cash
value minus total premiums paid (reduced by any cash withdrawals) and minus any
outstanding loan amount. This preferred loan rate is currently 3.0% and is not
guaranteed. The tax consequences of preferred loans are uncertain. See Federal
Income Tax Considerations p. 58.
Loan Reserve Interest Rate Credited
We will credit the amount in the loan reserve with interest at an
effective annual rate of 3.0%.
Effect of Policy Loans
A Policy loan reduces the death benefit proceeds and net surrender value by
the amount of any outstanding loan amount. Repaying the loan causes the death
benefit proceeds and net surrender value to increase by the amount of the
repayment. As long as a loan is outstanding, we hold an amount equal to the loan
as of the last Policy anniversary plus any accrued interest net of any loan
payments. This amount is not affected by the separate account's investment
performance and may not be credited with the interest rates accruing on the
unloaned portion of the fixed account. Amounts transferred from the separate
account to the loan reserve will affect the value in the separate account
because we credit such amounts with an interest rate declared by us rather than
a rate of return reflecting the investment results of the separate account.
56
There are risks involved in taking a Policy loan, a few of which include
the potential for a Policy to lapse if projected earnings, taking into account
outstanding loans, are not achieved. A Policy loan may also have possible
adverse tax consequences (see Federal Income Tax Considerations p. 58). You
should consult a tax advisor before taking out a Policy loan.
We will notify you (and any assignee of record) if the sum of your loan
amount is more than the net surrender value. If you do not submit a sufficient
payment within 61 days from the date of the notice, your Policy may lapse.
Policy Lapse and Reinstatement
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Lapse
Your Policy may not necessarily lapse (terminate without value) if you fail
to make a planned periodic payment. However, even if you make all your planned
periodic payments, there is no guarantee that your Policy will not lapse. This
Policy provides a no lapse period. See below. Once your no lapse period ends,
your Policy may lapse (terminate without value) if the net surrender value on
any Monthiversary is less than the monthly deductions due on that day. Such
lapse might occur if unfavorable investment experience, loans and cash
withdrawals cause a decrease in the net surrender value, or you have not paid
sufficient premiums as discussed below to offset the monthly deductions.
If the net surrender value is not enough to pay the monthly deductions, we
will mail a notice to your last known address and any assignee of record. The
notice will specify the minimum payment you must pay and the final date by which
we must receive the payment to prevent a lapse. We generally require that you
make the payment within 61 days after the date of the notice. This 61-day period
is called the grace period. If we do not receive the specified minimum payment
by the end of the grace period, all coverage under the Policy will terminate
without value.
No Lapse Period
This Policy provides a no lapse period. As long as you keep the no lapse
period in effect, your Policy will not lapse and no grace period will begin.
Even if your net surrender value is not enough to pay your monthly deduction,
the Policy will not lapse so long as the no lapse period is in effect. The no
lapse period will not extend beyond the no lapse date stated in your Policy.
Each month we determine whether the no lapse period is still in effect.
No lapse date . For a Policy issued to any insured ages 0-60, the no
lapse date is either the number of years to attained
age 65 or the twentieth Policy anniversary, whichever
is less.
. For a Policy issued to an insured ages 61-85, the no
lapse date is the fifth Policy anniversary.
. The no lapse date is specified in your Policy.
57
Early termination of the . The no lapse period coverage will end
no lapse period immediately if you do not pay sufficient
minimum monthly guarantee premiums.
. You must pay total premiums (minus
withdrawals, outstanding loan amounts,
and any decrease charge) that equal at
least:
. the sum of the minimum monthly
guarantee premiums in effect for
each month from the Policy date up to
and including the current month.
You will lessen the risk of Policy lapse if you keep the no lapse period in
effect. Before you take a cash withdrawal or a loan or decrease the specified
amount you should consider carefully the effect it will have on the no lapse
period guarantee. See Minimum Monthly Guarantee Premium p. 30.
In addition, if you change death benefit options, increase or decrease the
specified amount, or add, increase or decrease a rider, we will adjust the
minimum monthly guarantee premium. See Minimum Monthly Guarantee Premium p. 30
for a discussion of how the minimum monthly guarantee premium is calculated and
can change.
Reinstatement
We will reinstate a lapsed Policy within five years after the lapse (and
prior to the maturity date). To reinstate the Policy you must:
. submit a written application for reinstatement;
. provide evidence of insurability satisfactory to us;
. make a minimum premium payment sufficient to provide a net premium
that is large enough to cover:
. three monthly deductions; and
. any surrender charge calculated from the Policy date to the date
of reinstatement.
We will not reinstate any indebtedness. The cash value of the loan reserve on
the reinstatement date will be zero. Your net surrender value on the
reinstatement date will equal the cash value at the time your Policy lapsed,
plus any net premiums you pay at reinstatement, minus one monthly deduction and
any surrender charge. The reinstatement date for your Policy will be the
Monthiversary on or following the day we approve your application for
reinstatement. We may decline a request for reinstatement.
Federal Income Tax Considerations
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The following summarizes some of the basic federal income tax
considerations associated with a Policy and does not purport to be complete or
to cover all situations. This discussion is not intended as tax advice. Please
consult counsel or other qualified tax
58
advisors for more complete information. We base this discussion on our
understanding of the present federal income tax laws as they are currently
interpreted by the Internal Revenue Service (the "IRS"). Federal income tax
laws and the current interpretations by the IRS may change.
Tax Status of the Policy
A Policy must satisfy certain requirements set forth in the Internal
Revenue Code (the "Code") in order to qualify as a life insurance policy for
federal income tax purposes and to receive the tax treatment normally accorded
life insurance policies under federal tax law. Guidance as to how these
requirements are to be applied is limited. Nevertheless, we believe that a
Policy issued on the basis of a standard rate class should generally satisfy the
applicable Code requirements. Because of the absence of pertinent
interpretations of the Code requirements, there is, however, less certainty
about the application of such requirements to a Policy issued on a substandard
basis. If it is subsequently determined that a Policy does not satisfy the
applicable requirements, we may take appropriate steps to bring the Policy into
compliance with such requirements and we reserve the right to restrict Policy
transactions in order to do so.
In certain circumstances, owners of variable life insurance policies have
been considered for federal income tax purposes to be the owners of the assets
of the separate account supporting their policies due to their ability to
exercise investment control over those assets. Where this is the case, the
policyowners have been currently taxed on income and gains attributable to the
separate account assets. There is little guidance in this area, and some
features of the Policies, such as your flexibility to allocate premiums and cash
values, have not been explicitly addressed in published rulings. While we
believe that the Policy does not give you investment control over separate
account assets, we reserve the right to modify the Policy as necessary to
prevent you from being treated as the owner of the separate account assets
supporting the Policy.
In addition, the Code requires that the investments of the separate account
be "adequately diversified" in order to treat the Policy as a life insurance
policy for federal income tax purposes. We intend that the separate account,
through the portfolios, will satisfy these diversification requirements.
The following discussion assumes that the Policy will qualify as a life
insurance policy for federal income tax purposes.
Tax Treatment of Policy Benefits
In General. We believe that the death benefit under a Policy should be
excludible from the beneficiary's gross income. Federal, state and local
transfer, and other tax consequences of ownership or receipt of Policy proceeds
depend on your circumstances and the beneficiary's circumstances. A tax advisor
should be consulted on these consequences.
Generally, you will not be deemed to be in constructive receipt of the cash
value until there is a distribution. When distributions from a Policy occur, or
when loans are taken out
59
from or secured by a Policy (e.g., by assignment), the tax consequences depend
on whether the Policy is classified as a "Modified Endowment Contract" ("MEC").
Modified Endowment Contracts. Under the Code, certain life insurance
policies are classified as MECs and receive less favorable tax treatment than
other life insurance policies. The rules are too complex to summarize here, but
generally depend on the amount of premiums paid during the first seven Policy
years. Certain changes in the Policy after it is issued could also cause the
Policy to be classified as a MEC. Due to the Policy's flexibility, each Policy's
circumstances will determine whether the Policy is classified as a MEC. Among
other things, a reduction in benefits could in certain circumstances cause a
Policy to become a MEC. If you do not want your Policy to be classified as a
MEC, you should consult a tax advisor to determine the circumstances, if any,
under which your Policy would or would not be classified as a MEC.
Upon issue of your Policy, we will notify you as to whether or not your
Policy is classified as a MEC based on the initial premium we receive. If your
Policy is not a MEC at issue, then you will also be notified of the maximum
amount of additional premiums you can pay without causing your Policy to be
classified as a MEC. If a payment would cause your Policy to become a MEC, you
and your agent will be notified immediately. At that time, you will need to
notify us if you want to continue your Policy as a MEC. Unless you notify us
that you do want to continue your Policy as a MEC, we will refund the dollar
amount of the excess premium that caused the Policy to become a MEC.
Distributions (other than Death Benefits) from Modified Endowment
Contracts. Policies classified as MECs are subject to the following tax rules:
. All distributions other than death benefits from a MEC, including
distributions upon surrender and cash withdrawals, will be treated
first as distributions of gain taxable as ordinary income. They will
be treated as tax-free recovery of the owner's investment in the
Policy only after all gain has been distributed. Your investment in
the Policy is generally your total premium payments. When a
distribution is taken from the Policy, your investment in the Policy
is reduced by the amount of the distribution that is tax-free.
. Loans taken from or secured by (e.g., by assignment) such a Policy are
treated as distributions and taxed accordingly.
. A 10% additional federal income tax is imposed on the amount included
in income except where the distribution or loan is made when you have
attained age 59 or are disabled, or where the distribution is part of
a series of substantially equal periodic payments for your life (or
life expectancy) or the joint lives (or joint life expectancies) of
you and the beneficiary.
. If a Policy becomes a MEC, distributions that occur during the Policy
year will be taxed as distributions from a MEC. In addition,
distributions from a Policy within two years before it becomes a MEC
will be taxed in this manner. This
60
means that a distribution from a Policy that is not a MEC at the time
when the distribution is made could later become taxable as a
distribution from a MEC.
Distributions (other than Death Benefits) from Policies that are not
Modified Endowment Contracts. Distributions from a Policy that is not a MEC are
generally treated first as a recovery of your investment in the Policy, and as
taxable income after the recovery of all investment in the Policy. However,
certain distributions which must be made in order to enable the Policy to
continue to qualify as a life insurance policy for federal income tax purposes
if Policy benefits are reduced during the first 15 Policy years may be treated
in whole or in part as ordinary income subject to tax.
Loans from or secured by a Policy that is not a MEC are generally not
treated as distributions. Instead, such loans are treated as indebtedness.
However, the tax consequences associated with Policy loans outstanding after the
first 10 Policy years are less clear and a tax advisor should be consulted about
such loans.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a MEC are subject to the 10% additional tax.
Multiple Policies. All MECs that we issue (or that our affiliates issue) to
the same owner during any calendar year are treated as one MEC for purposes of
determining the amount includible in the owner's income when a taxable
distribution occurs.
Investment in the Policy. Your investment in the Policy is generally the
sum of the premium payments you made. When a distribution from the Policy
occurs, your investment in the Policy is reduced by the amount of the
distribution that is tax-free.
Policy Loans. If a loan from a Policy is outstanding when the Policy is
canceled or lapses, then the amount of the outstanding indebtedness will be
taxed as if it were a distribution.
Deductibility of Policy Loan Interest. In general, interest you pay on a
loan from a Policy will not be deductible. Before taking out a Policy loan, you
should consult a tax advisor as to the tax consequences.
Business Uses of the Policy. The Policy may be used in various
arrangements, including nonqualified deferred compensation or salary continuance
plans, split dollar insurance plans, executive bonus plans, retiree medical
benefit plans and others. The tax consequences of such plans and business uses
of the Policy may vary depending on the particular facts and circumstances of
each individual arrangement and business uses of the Policy. Therefore, if you
are contemplating using the Policy in any arrangement the value of which depends
in part on its tax consequences, you should be sure to consult a tax advisor as
to tax attributes of the arrangement. In recent years, moreover, Congress has
adopted new rules relating to life insurance owned by businesses and the IRS has
recently issued new guidelines on split-dollar arrangements. Any business
contemplating the purchase of a new Policy or a change in an existing Policy
should consult a tax advisor.
Alternative Minimum Tax. There also may be an indirect tax upon the income
in the Policy or the proceeds of a Policy under the federal corporate
alternative minimum tax, if the policyowner is subject to that tax.
61
Living Benefit Rider (an Accelerated Death Benefit). We believe that the
single-sum payment we make under this rider should be fully excludible from the
gross income of the beneficiary, as long as the beneficiary is an insured under
the Policy. You should consult a tax advisor about the consequences of adding
this rider to your Policy, or requesting a single-sum payment.
Other Tax Considerations. The transfer of the Policy or designation of a
beneficiary may have federal, state, and/or local transfer and inheritance tax
consequences, including the imposition of gift, estate, and generation-skipping
transfer taxes. The individual situation of each owner or beneficiary will
determine the extent, if any, to which federal, state, and local transfer and
inheritance taxes may be imposed and how ownership or receipt of Policy proceeds
will be treated for purposes of federal, state and local estate, inheritance,
generation-skipping and other taxes.
Possible Tax Law Changes. Although the likelihood of legislative changes is
uncertain, there is always a possibility that the tax treatment of the Policies
could change by legislation or otherwise. You should consult a tax advisor with
respect to legal developments and their effect on the Policy.
Special Rules for 403(b) Arrangements
If this Policy is purchased by public school systems and certain tax-exempt
organizations for their employees, then the federal, state and estate tax
consequences could differ from those stated in the prospectus. A competent tax
advisor should be consulted in connection with such purchase.
Certain restrictions apply. The Policy must be purchased in connection with
a tax-sheltered annuity described in section 403(b) of the Code. Premiums,
distributions, and other transactions in connection with the Policy must be
administered in coordination with the section 403(b) annuity.
The amount of life insurance that may be purchased on behalf of a
participant in a 403(b) plan is limited. The current cost of insurance for the
net amount at risk is treated under the Code as a "current fringe benefit" and
must be included annually in the plan participant's gross income. This cost
(generally referred to as the "P.S. 58" cost) is reported to the participant
annually.
If the plan participant dies while covered by the 403(b) plan and the
Policy proceeds are paid to the participant's beneficiary, then the excess of
the death benefit over the cash value will generally not be taxable. However,
the cash value will generally be taxable to the extent it exceeds the
participant's cost basis in the Policy.
Policies owned under these types of plans may be subject to the Employee
Retirement Income Security Act of 1974 ("ERISA"), which may impose additional
requirements of Policy loans and other Policy provisions. Plan loans must also
satisfy tax requirements in order to be treated as non-taxable. Plan loan
requirements and provisions may differ from the Policy loan provisions stated in
the prospectus. You should consult a qualified advisor regarding ERISA.
62
Other Policy Information
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Our Right to Contest the Policy
In issuing this Policy, we rely on all statements made by or for the
insured in the application or in a supplemental application. Therefore, if you
make any material misrepresentation of a fact in the application (or any
supplemental application), then we may contest the Policy's validity or may
resist a claim under the Policy.
A new two year contestability period shall apply to each increase in
specified amount beginning on the effective date of each increase and will apply
only to statements made in the application for the increase.
In the absence of fraud, we cannot bring any legal action to contest the
validity of the Policy after the Policy has been in force during the insured's
lifetime for two years from the Policy date, or if reinstated, for two years
from the date of reinstatement.
Suicide Exclusion
If the insured commits suicide, while sane or insane, within two years of
the Policy date (or two years from the reinstatement date; if the Policy lapses
and is reinstated), the Policy will terminate and our liability is limited to an
amount equal to the premiums paid, less any outstanding loan amount, and less
any cash withdrawals. We will pay this amount to the beneficiary in one sum.
If the insured commits suicide, while sane or insane, within two years from
the effective date of any increase in specified amount, our liability with
respect to such increase will be its cost of insurance.
Misstatement of Age or Gender
If the age or gender of the insured was stated incorrectly in the
application or any supplemental application, then the death benefit will be
adjusted based on what the cost of insurance charge for the most recent monthly
deduction would have purchased based on the insured's correct age and gender.
Modifying the Policy
Only our President or Secretary may modify this Policy or waive any of our
rights or requirements under this Policy. Any modification or waiver must be in
writing. No agent may bind us by making any promise not contained in this
Policy.
If we modify the Policy, we will provide you notice and we will make
appropriate endorsements to the Policy.
Benefits at Maturity
If the insured is living and the Policy is in force, the Policy will mature
on the Policy anniversary nearest the insured's 100th birthday. This is the
maturity date. On the maturity date we will pay you the net surrender value of
your Policy.
63
If requested in writing, we will extend the maturity date if your Policy is
still in force on the maturity date. Any riders in force on the scheduled
maturity date will terminate on that date and will not be extended. Policy
loans, partial withdrawals, and subaccount transfers may continue during the
extension. Interest on any outstanding Policy loans will continue to accrue
during the period for which the maturity date is extended. You must submit a
written request for the extension between 90 and 180 days prior to the maturity
date and elect one of the following:
1. If you had previously selected death benefit Option B or C, we will
change the death benefit to Option A. On each valuation date, we will
adjust the specified amount to equal the cash value, and the
limitation percentage will be 100%. We will not permit you to make
additional premium payments unless it is required to prevent the
Policy from lapsing. We will waive all future monthly deductions; or
2. We will automatically extend the maturity date until the next Policy
anniversary. You must submit a written request, between 90 and 180
days before each subsequent Policy anniversary, stating that you wish
to extend the maturity date for another Policy year. All benefits and
charges will continue as set forth in your Policy. We will charge the
then current cost of insurance rates.
If you choose 2 above, you may change your election to 1 above at any time.
However, if you choose 1 above, then you may not change your election to 2
above.
The tax consequences of extending the maturity date beyond the 100th
birthday of the insured are uncertain. You should consult a tax advisor as to
those consequences.
Payments We Make
We usually pay the amounts of any surrender, cash withdrawal, death benefit
proceeds, or settlement options within seven business days after we receive all
applicable written notices and/or due proofs of death at our office. However, we
can postpone such payments if:
. the NYSE is closed, other than customary weekend and holiday closing,
or trading on the NYSE is restricted as determined by the SEC; or
. the SEC permits, by an order, the postponement for the protection of
policyowners; or
. the SEC determines that an emergency exists that would make the
disposal of securities held in the separate account or the
determination of their value not reasonably practicable.
If you have submitted a recent check or draft, we have the right to defer
payment of surrenders, cash withdrawals, death benefit proceeds, or payments
under a settlement option until such check or draft has been honored. We also
reserve the right to defer payment of transfers, cash withdrawals, death benefit
proceeds, or surrenders from the fixed account for up to six months.
Settlement Options
If you surrender the Policy, you may elect to receive the net surrender
value in either a lump sum or as a series of regular income payments under one
of the three settlement
64
options described below. In either event, life insurance coverage ends. Also,
when the insured dies, the beneficiary may apply the lump sum death benefit
proceeds to one of the same settlement options. If the regular payment under a
settlement option would be less than $100, we will instead pay the proceeds in
one lump sum. We may make other settlement options available in the future.
Once we begin making payments under a settlement option, you or the
beneficiary will no longer have any value in the subaccounts or the fixed
account. Instead, the only entitlement will be the amount of the regular payment
for the period selected under the terms of the settlement option chosen.
Depending upon the circumstances, the effective date of a settlement option is
the surrender date or the insured's date of death.
Under any settlement option, the dollar amount of each payment will depend
on four things:
. the amount of the surrender or death benefit proceeds on the surrender
date or insured's date of death;
. the interest rate we credit on those amounts (we guarantee a minimum
annual interest rate of 3.0%);
. the mortality tables we use; and
. the specific payment option(s) you choose.
Option 1 - Equal . We will pay the proceeds, plus interest, in equal
Monthly Installments monthly installments for a fixed period of your
for a Fixed Period choice, but not longer than 240 months.
. We will stop making payments once we have made all
the payments for the period selected.
Option 2 - Equal At your or the beneficiary's direction, we will make
Monthly Installments equal monthly installments:
for Life (Life Income) . only for the life of the payee, at the end of
which payments will end; or
. for the longer of the payee's life, or for 10
years if the payee dies before the end of the
first 10 years of payments; or
. until the total amount of all payments we have
made equals the proceeds that were applied to
the settlement option.
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Option 3 - Equal . We will make equal monthly payments during the joint
Monthly Installments lifetime of two persons, first to a chosen payee,
for the Life of the and then to a co-payee, if living, upon the death
Payee and then to a of the payee.
Designated Survivor . Payments to the co-payee, if living, upon the
(Joint and Survivor) payee's death will equal either:
. the full amount made to the payee before the
payee's death; or
. two-thirds of the amount paid to the payee
before the payee's death. All payments will
cease upon the death of the co-payee.
Reports to Owners
At least once each year, or more often as required by law, we will mail to
policyowners at their last known address a report showing the following
information as of the end of the report period:
. the current cash value . any activity since the last report
. the current net surrender value . projected values
. the current death benefit . investment experience of each subaccount
. any outstanding loans . any other information required by law
You may request additional copies of reports, but we may charge a fee for
such additional copies. In addition, we will send written confirmations of any
premium payments and other financial transactions you request including: premium
payments, changes in specified amount, changes in death benefit option,
transfers, partial withdrawals, increases in loan amount, loan interest
payments, loan repayments, lapses and reinstatements. We also will send copies
of the annual and semi-annual report to shareholders for each portfolio in which
you are indirectly invested.
Records
We will maintain all records relating to the separate account and the fixed
account.
Policy Termination
Your Policy will terminate on the earliest of:
. the maturity date; . the end of the grace period; or
. the date the insured dies; . the date the Policy is surrendered.
Supplemental Benefits (Riders)
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The following supplemental benefits (riders) are available and may be added
to a Policy. Monthly charges for these riders are deducted from cash value as
part of the monthly deduction. The riders available with the Policies provide
fixed benefits that do not vary with the investment experience of the separate
account. For purposes of the riders, the primary
66
insured is the person insured under the Policy, and the face amount is the level
term insurance amount we pay at death. These riders may not be available in all
states. Adding these supplemental benefits to an existing Policy or canceling
them may have tax consequences and you should consult a tax advisor before doing
so.
Children's Insurance Rider
This rider provides a face amount on the primary insured's children. Our
current minimum face amount for this rider for issue ages 15 days - 18 years of
age is $5,000. The maximum face amount is $20,000. At the age of 25 or upon the
death of the primary insured, whichever happens first, this rider may be
converted to a new policy with a maximum face amount of up to five times the
face amount of the rider. We will pay a death benefit once we receive proof that
the insured child died while both the rider and coverage were in force for that
child. If the primary insured dies while the rider is in force, we will
terminate the rider 31 days after the death, and we will offer a separate life
insurance policy to each insured child.
Accidental Death Benefit Rider
Our current minimum face amount for this rider for issue ages 15-59 is
$10,000. The maximum face amount available for this rider is $150,000 (up to
150% of specified amount).
Subject to certain limitations, we will pay a face amount if the primary
insured's death results solely from accidental bodily injury where:
. the death is caused by external, violent, and accidental means;
. the death occurs within 90 days of the accident; and
. the death occurs while the rider is in force.
The rider will terminate on the earliest of:
. the Policy anniversary nearest the primary insured's 70th birthday;
. the date the Policy terminates; or
. the Monthiversary when the rider terminates at the owner's request.
Other Insured Rider
This rider insures the spouse or life partner and/or dependent children of
the primary insured. Our current minimum face amount for this rider for issue
ages 0-85 is $10,000. The maximum face amount is the lesser of $500,000 or the
amount of coverage on the primary insured. We will pay the rider's face amount
when we receive proof of the other insured's death. On any Monthiversary while
the rider is in force, you may replace it with a new policy on the other
insured's life (without evidence of insurability).
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Conditions to . your request must be in writing;
replace the rider: . the rider has not reached the anniversary nearest to
the other insured's 70th birthday;
. the new policy is any permanent insurance policy
that we currently offer;
. subject to the minimum specified amount required
for the new policy, the amount of the insurance
under the new policy will equal the face amount in
force under the rider as long as it meets the
minimum face amount requirements of the original
Policy; and
. we will base your premium on the other insured's
rate class under the rider.
Disability Waiver Rider
Subject to certain conditions, we will waive the Policy's monthly
deductions while you are disabled. This rider may be purchased if your issue age
is 15-55 years of age. We must receive proof that:
. you are totally disabled;
. the rider was in force when you became disabled;
. you became disabled before the anniversary nearest your 60th birthday;
and
. you are continuously disabled for at least six months.
We will not waive any deduction which becomes due more than one year before we
receive written notice of your claim.
Disability Waiver and Income Rider
This rider has the same benefits as the Disability Waiver Rider, but adds a
monthly income benefit for up to 120 months. This rider may be purchased if your
issue age is 15-55 years of age. The minimum income amount for this rider is
$10. The maximum income amount is the lesser of 0.2% of your specified amount or
$300 per month.
Primary Insured Rider ("PIR") and Primary Insured Rider Plus ("PIR Plus")
Under the PIR and the PIR Plus, we provide term insurance coverage on a
different basis from the coverage in your Policy.
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Features of PIR and . the rider increases the Policy's death benefit
PIR Plus: by the rider's face amount;
. the PIR may be purchased from issue ages 0-85;
. the PIR Plus may be purchased from issue ages
18-85;
. the PIR terminates when the insured turns 95,
and the PIR Plus terminates when the insured turns
90;
. the minimum purchase amount for the PIR and PIR
Plus is $25,000. There is no maximum purchase
amount;
. we do not assess any additional surrender charge
for PIR and PIR Plus;
. generally PIR and PIR Plus coverage costs less than
the insurance coverage under the Policy, but has no
cash value;
. you may cancel or reduce your rider coverage
without decreasing your Policy's specified amount;
and
. you may generally decrease your specified amount
without reducing your rider coverage.
It may cost you less to reduce your PIR or PIR Plus coverage than to
decrease your Policy's specified amount, because we do not deduct a surrender
charge in connection with your PIR or PIR Plus. It may cost you more to keep a
higher specified amount, because the specified amount may have a cost of
insurance that is higher than the cost of the same amount of coverage under your
PIR or PIR Plus.
You should consult your registered representative to determine if you would
benefit from PIR or PIR Plus. We may discontinue offering PIR or PIR Plus at any
time. We may also modify the terms of these riders for new policies.
Living Benefit Rider (an Accelerated Death Benefit)
This rider allows us to pay all or a portion of the death benefit once we
receive satisfactory proof that the insured is ill and has a life expectancy of
one year or less. A doctor must certify the insured's life expectancy.
We will pay a "single-sum benefit" equal to:
. the death benefit on the date we pay the single-sum benefit; multiplied
by
. the election percentage of the death benefit you elect to receive;
divided by
. 1 + i ("i" equals the current yield on 90-day Treasury bills or the
Policy loan interest rate, whichever is greater); minus
. any indebtedness at the time we pay the single-sum benefit, multiplied
by the election percentage.
The maximum terminal illness death benefit used to determine the single-sum
benefit as defined above is equal to:
. the death benefit available under the Policy once we receive
satisfactory proof that the insured is ill; plus
69
. the benefit available under any PIR or PIR Plus in force.
. a single-sum benefit may not be greater than $500,000.
The election percentage is a percentage that you select. It may not be
greater than 100% of your Policy's death benefit under the rider.
We will not pay a benefit under the rider if the insured's terminal
condition results from self-inflicted injuries which occur during the period
specified in your Policy's suicide provision.
The rider terminates at the earliest of:
. the date the Policy terminates;
. the date a settlement option takes effect;
. the date we pay a single-sum benefit; or
. the date you terminate the rider.
We do not charge for this rider. This rider may not be available in all
states, or its terms may vary depending on a state's insurance law requirements.
The tax consequences of adding this rider to an existing Policy or
requesting payment under the rider are uncertain and you should consult a tax
advisor before doing so.
IMSA
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We are a member of the Insurance Marketplace Standards Association
("IMSA"). IMSA is an independent, voluntary organization of life insurance
companies. It promotes high ethical standards in the sales and advertising of
individual life insurance and annuity products. Companies must undergo a
rigorous self and independent assessment of their practices to become a member
of IMSA. The IMSA logo in our sales literature shows our ongoing commitment to
these standards.
Performance Data
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Rates of Return
The rates of return in Table 1 reflect each subaccount's actual investment
performance. The Table shows the historical investment experience of the
subaccounts based on the subaccounts' historical investment experience. We do
not show performance for subaccounts in operation for less than six months. This
information does not represent or project future investment performance.
Some portfolios began operation before their corresponding subaccount. For
these portfolios, we have included in Table 2 below adjusted portfolio
performance from the portfolio's inception date. The adjusted portfolio
performance is designed to show the performance that would have resulted if the
subaccount had been in operation during the time the portfolio was in operation.
70
The numbers reflect the annual mortality and expense risk charge,
investment management fees and direct fund expenses.
These rates of return do not reflect other charges that are deducted under
the Policy or from the separate account (such as the premium expense charge,
monthly deduction or the surrender charge). If these charges were deducted,
performance would be significantly lower. These rates of return are not
estimates, projections or guarantees of future performance.
We also show below comparable figures for the unmanaged Standard & Poor's
Index of 500 Common Stocks ("S&P 500"), a widely used measure of stock market
performance. The S&P 500 does not reflect any deduction for the expenses of
operating and managing an investment portfolio.
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Table 1
Average Annual Subaccount Total Return
For the Periods Ended on December 31, 2000
10 Years Subaccount
or Inception
Subaccount 1 Year 3 Years 5 Years Inception Date
---------- -------- ------- ------- --------- ----------
WRL Van Kampen Emerging Growth ........................................... (12.70)% 34.18% 27.93% 24.80% 03/01/93
WRL T. Rowe Price Small Cap .............................................. (9.27)% N/A N/A 6.87% 07/01/99
WRL Pilgrim Baxter Mid Cap Growth ........................................ (15.16)% N/A N/A 22.46% 07/01/99
WRL Alger Aggressive Growth .............................................. (31.94)% 18.88% 17.76% 17.67% 03/01/94
WRL Third Avenue Value ................................................... 34.26% N/A N/A 12.47% 01/02/98
WRL Value Line Aggressive Growth/(1)/ .................................... N/A N/A N/A (10.24)% 05/01/00
WRL GE International Equity .............................................. (15.75)% 5.28% N/A 5.60% 01/02/97
WRL Great Companies -- Technology/SM(1)/ ................................. N/A N/A N/A (33.01)% 05/01/00
WRL Janus Growth+ ........................................................ (29.58)% 22.02% 19.86% 18.43% 10/02/86
WRL Goldman Sachs Growth ................................................. (8.84)% N/A N/A 1.94% 07/01/99
WRL GE U.S. Equity ....................................................... (1.67)% 12.01% N/A 15.35% 01/02/97
WRL Great Companies -- America/SM(1)/ .................................... N/A N/A N/A 13.12% 05/01/00
WRL Salomon All Cap ...................................................... 17.24% N/A N/A 16.32% 07/01/99
WRL C.A.S.E. Growth ...................................................... (21.42)% 1.91% N/A 5.86% 05/01/96
WRL Dreyfus Mid Cap ...................................................... 11.91% N/A N/A 7.93% 07/01/99
WRL NWQ Value Equity ..................................................... 14.17% 4.85% N/A 10.70% 05/01/96
WRL T. Rowe Price Dividend Growth ........................................ 8.89% N/A N/A (0.14)% 07/01/99
WRL Dean Asset Allocation ................................................ 16.16% 5.26% 8.85% 10.50% 01/03/95
WRL LKCM Strategic Total Return .......................................... (4.62)% 4.80% 9.64% 10.44% 03/01/93
WRL J.P. Morgan Real Estate Securities ................................... 28.46% N/A N/A 1.33% 05/01/98
WRL Federated Growth & Income ............................................ 28.01% 7.38% 11.09% 10.61% 03/01/94
WRL AEGON Balanced ....................................................... 4.88% 4.31% 7.65% 7.20% 03/01/94
WRL AEGON Bond+ .......................................................... 9.90% 4.63% 4.22% 6.85% 10/02/86
WRL J.P. Morgan Money Market/(2)/+ ....................................... 5.17% 4.48% 4.40% 3.71% 10/02/86
Fidelity VIP Equity-Income Portfolio -- Service Class 2/(1)/ ............. N/A N/A N/A 9.91% 05/01/00
Fidelity VIP II Contrafund(R) Portfolio -- Service Class 2/(1)/ .......... N/A N/A N/A (6.16)% 05/01/00
Fidelity VIP III Growth Opportunities Portfolio -- Service Class 2/(1)/ .. N/A N/A N/A (14.36)% 05/01/00
S&P 500+ ................................................................. (9.10)% 12.25% 18.31% 17.44% 12/31/90
+ Shows ten year performance.
(1) Not annualized.
(2) Yield more closely reflects the current earnings than its total return. An
investment in this subaccount is not insured or guaranteed by the FDIC.
While this subaccount seeks to preserve its value at $1.00 per share, it is
possible to lose money by investing in this subaccount.
72
Table 2
Adjusted Historical Portfolio Average Annual Total Return
For the Periods Ended on December 31, 2000
10 Years Subaccount
or Inception
Subaccount 1 Year 3 Years 5 Years Inception Date
---------- -------- ------- ------- --------- ----------
Van Kampen Emerging Growth .......................................... (12.70)% 34.18% 27.93% 24.80% 03/01/93
T. Rowe Price Small Cap ............................................. (9.27)% N/A N/A 14.30% 05/03/99
Pilgrim Baxter Mid Cap Growth ....................................... (15.16)% N/A N/A 27.66% 05/03/99
Alger Aggressive Growth ............................................. (31.94)% 18.88% 17.76% 17.67% 03/01/94
Third Avenue Value .................................................. 34.26% N/A N/A 12.47% 01/02/98
Value Line Aggressive Growth/(2)/ ................................... N/A N/A N/A (10.24)% 05/01/00
GE International Equity ............................................. (15.75)% 5.28% N/A 5.60% 01/02/97
Great Companies -- Technology/SM(2)/ ................................ N/A N/A N/A (33.01)% 05/01/00
Janus Growth+ ....................................................... (29.58)% 22.02% 19.86% 18.43% 10/02/86
Goldman Sachs Growth ................................................ (8.84)% N/A N/A 3.84% 05/03/99
GE U.S. Equity ...................................................... (1.67)% 12.01% N/A 15.35% 01/02/97
Great Companies -- America/SM(2)/ ................................... N/A N/A N/A 13.12% 05/01/00
Salomon All Cap ..................................................... 17.24% N/A N/A 19.60% 05/03/99
C.A.S.E. Growth ..................................................... (21.43)% 1.91% 7.03% 9.64% 05/01/95
Dreyfus Mid Cap ..................................................... 11.91% N/A N/A 11.16% 05/03/99
NWQ Value Equity .................................................... 14.17% 4.85% N/A 10.70% 05/01/96
T. Rowe Price Dividend Growth ....................................... 8.89% N/A N/A 0.13% 05/03/99
Dean Asset Allocation ............................................... 16.16% 5.26% 8.85% 10.50% 01/03/95
LKCM Strategic Total Return ......................................... (4.62)% 4.80% 9.64% 10.44% 03/01/93
J.P. Morgan Real Estate Securities .................................. 28.46% N/A N/A 1.33% 05/01/98
Federated Growth & Income ........................................... 28.01% 7.38% 11.09% 10.61% 03/01/94
AEGON Balanced ...................................................... 4.88% 4.31% 7.65% 7.20% 03/01/94
AEGON Bond+ ......................................................... 9.90% 4.63% 4.22% 6.85% 10/02/86
J.P. Morgan Money Market/(1)/+ ...................................... 5.17% 4.48% 4.40% 3.71% 10/02/86
Fidelity VIP Equity-Income Portfolio -- Service Class 2+ ............ 7.16% 7.64% 12.38% 16.24% 10/09/86
Fidelity VIP II Contrafund(R) Portfolio -- Service Class 2 .......... (7.67)% 13.51% 16.66% 20.05% 01/03/95
Fidelity VIP III Growth Opportunities Portfolio -- Service Class 2 .. (18.02)% 1.46% 9.53% 12.90% 01/03/95
S&P 500+ ............................................................ (9.10)% 12.25% 18.31% 17.44% 12/31/90
+ Shows ten year performance.
(1) Yield more closely reflects the current earnings than its total return. An
investment in this subaccount is not insured ot guaranteed by the FDIC.
While this subaccount seeks to preserve its value at $1.00 per share, it is
possible to lose money by investing in this subaccount.
(2) Not annualized.
Because the WRL Gabelli Global Growth and WRL Great Companies -- Global2
subaccounts and the corresponding portfolios commenced operations on September
1, 2000 (and have less than six months performance) and WRL LKCM Capital Growth
subaccount commenced operations on February 5, 2001, and the WRL Munder Net50
subaccount commenced operations on May 29, 2001, the above Tables do not reflect
rates of return for these subaccounts or portfolios.
73
The annualized yield for the WRL J.P. Morgan Money Market subaccount for
the seven days ended December 31, 2000 was 5.34%.
Additional information regarding the investment performance of the
portfolios appears in the fund prospectuses, which accompany this prospectus.
Hypothetical Illustrations Based on Subaccount Performance
This section contains hypothetical illustrations of Policy values based on
the historical experience of the subaccounts. We started selling the Policies in
1997. The separate account and the Series Fund commenced operations on October
2, 1986. The rates of return below show the actual investment experience of each
subaccount for the periods shown. The illustrations of cash value and net
surrender value below depict these Policy values as if you had purchased the
Policy on the last valuation date prior to January 1 of the year after the
subaccount began operations and had elected death benefit Option A. The
illustrations are based on the historical investment experience of the
subaccount indicated as of the last valuation date prior to January 1 of the
year after the subaccount began operations. We assumed the rate of return for
each subaccount in each calendar year to be uniformly earned throughout the
year; however, the subaccount's actual performance did and will vary throughout
the year.
In order to demonstrate how the actual investment experience of the
subaccounts could have affected the Option A death benefit, cash value and net
surrender value of the Policy, we provide hypothetical illustrations for a
hypothetical insured. These hypothetical illustrations are designed to show the
performance that could have resulted if the hypothetical insured had held the
Policy during the period illustrated. These illustrations do not represent what
may happen in the future.
The amounts we show for death benefits, cash values, and net surrender
values take into account all charges and deductions from the Policy, the
separate account, and the subaccounts. For each subaccount, we base one
illustration on the guaranteed cost of insurance rates and one on the current
cost of insurance rates for a hypothetical male insured age 35. The insured's
age, gender and rate class, amount and timing of premium payments, cash
withdrawals, and loans would affect individual Policy benefits.
For each subaccount, the illustrations below assume death benefit Option A
was selected based on an annual premium of $5,500 and a specified amount of
$500,000 for a male age 35, non-tobacco use, ultimate select rate class.
74
The following example shows how the hypothetical net return of the WRL Janus
Growth subaccount would have affected benefits for a Policy dated on the last
valuation date prior to January 1, 1987. This example assumes that net premiums
and cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL JANUS GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1988 ................................... $ 5,206 $ 5,206 $ 0 $ 0
1989 ................................... 11,714 11,587 3,954 3,827
1990 ................................... 24,098 23,742 16,338 15,982
1991 ................................... 28,442 27,920 20,682 20,160
1992 ................................... 52,632 51,576 44,872 43,816
1993 ................................... 58,054 56,798 51,070 49,814
1994 ................................... 64,520 63,045 58,332 56,837
1995 ................................... 62,695 61,135 57,263 55,703
1996 ................................... 98,087 95,598 93,431 90,942
1997 ................................... 119,897 116,817 116,017 112,937
1998 ................................... 144,818 141,101 141,714 137,997
1999 ................................... 243,607 237,390 241,279 235,062
2000 ................................... 392,722 382,762 391,170 381,210
2001 ................................... 279,362 272,258 278,586 271,482
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
75
The following example shows how the hypothetical net return of the WRL AEGON
Bond subaccount would have affected benefits for a Policy dated on the last
valuation date prior to January 1, 1987. This example assumes that net premiums
and cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL AEGON BOND
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
1988 ................................... $ 4,430 $ 4,430 $ 0 $ 0
1989 ................................... 9,762 9,641 2,002 1,881
1990 ................................... 16,520 16,232 8,760 8,472
1991 ................................... 22,293 21,812 14,533 14,052
1992 ................................... 31,724 30,959 23,964 23,199
1993 ................................... 38,523 37,515 31,539 30,531
1994 ................................... 48,438 47,087 42,230 40,879
1995 ................................... 48,758 47,302 43,326 41,870
1996 ................................... 64,858 62,881 60,202 58,225
1997 ................................... 68,618 66,487 64,738 62,607
1998 ................................... 78,780 76,338 75,676 73,234
1999 ................................... 89,840 87,042 87,512 84,714
2000 ................................... 90,260 87,402 88,708 85,850
2001 ................................... 103,596 100,257 102,820 99,481
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
76
The following example shows how the hypothetical net return of the WRL J.P.
Morgan Money Market subaccount would have affected benefits for a Policy dated
on the last valuation date prior to January 1, 1987. This example assumes that
net premiums and cash values were in the subaccount for the entire period and
that the values were determined on each Policy anniversary thereafter.
WRL J.P. MORGAN MONEY MARKET
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
1988 ................................... $ 4,963 $ 4,963 $ 0 $ 0
1989 ................................... 10,182 10,063 2,422 2,303
1990 ................................... 15,946 15,673 8,186 7,913
1991 ................................... 21,955 21,485 14,195 13,725
1992 ................................... 27,736 27,059 19,976 19,299
1993 ................................... 33,031 32,143 26,047 25,159
1994 ................................... 38,113 37,003 31,905 30,795
1995 ................................... 43,674 42,309 38,242 36,877
1996 ................................... 50,186 48,571 45,530 43,915
1997 ................................... 56,727 54,867 52,847 50,987
1998 ................................... 63,531 61,452 60,427 58,348
1999 ................................... 70,545 68,222 68,217 65,894
2000 ................................... 77,458 74,866 75,906 73,314
2001 ................................... 85,584 82,659 84,808 81,883
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of the WRL Van
Kampen Emerging Growth subaccount would have affected benefits for a Policy
dated on the last valuation date prior to January 1, 1994. This example assumes
that net premiums and cash values were in the subaccount for the entire period
and that the values were determined on each Policy anniversary thereafter.
WRL VAN KAMPEN EMERGING GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
1995 ................................... $ 4,285 $ 4,285 $ 0 $ 0
1996 ................................... 13,237 13,095 5,477 5,335
1997 ................................... 21,173 20,853 13,413 13,093
1998 ................................... 31,184 30,609 23,424 22,849
1999 ................................... 48,903 47,911 41,143 40,151
2000 ................................... 109,323 107,038 102,339 100,054
2001 ................................... 99,445 97,283 93,237 91,075
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
77
The following example shows how the hypothetical net return of the WRL LKCM
Strategic Total Return subaccount would have affected benefits for a Policy
dated on the last valuation date prior to January 1, 1994. This example assumes
that net premiums and cash values were in the subaccount for the entire period
and that the values were determined on each Policy anniversary thereafter.
WRL LKCM STRATEGIC TOTAL RETURN
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1995.................................... $ 4,627 $ 4,627 $ 0 $ 0
1996.................................... 11,601 11,471 3,841 3,711
1997.................................... 18,600 18,302 10,840 10,542
1998.................................... 28,176 27,625 20,416 19,865
1999.................................... 35,674 34,887 27,914 27,127
2000.................................... 44,757 43,683 37,773 36,699
2001.................................... 46,986 45,763 40,778 39,555
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of the WRL Alger
Aggressive Growth subaccount would have affected benefits for a Policy dated on
the last valuation date prior to January 1, 1995. This example assumes that net
premiums and cash values were in the subaccount for the entire period and that
the values were determined on each Policy anniversary thereafter.
WRL ALGER AGGRESSIVE GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1996.................................... $ 6,572 $ 6,572 $ 0 $ 0
1997.................................... 12,364 12,243 4,604 4,483
1998.................................... 21,071 20,766 13,311 13,006
1999.................................... 38,125 37,464 30,365 29,704
2000.................................... 71,953 70,614 64,193 62,854
2001.................................... 51,996 50,937 45,012 43,953
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
78
The following example shows how the hypothetical net return of the WRL Dean
Asset Allocation subaccount would have affected benefits for a Policy dated on
the last valuation date prior to January 1, 1995. This example assumes that net
premiums and cash values were in the subaccount for the entire period and that
the values were determined on each Policy anniversary thereafter.
WRL DEAN ASSET ALLOCATION
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1996.................................... $ 5,666 $ 5,666 $ 0 $ 0
1997.................................... 11,795 11,671 4,035 3,911
1998.................................... 19,088 18,794 11,328 11,034
1999.................................... 25,525 25,030 17,765 17,270
2000.................................... 28,160 27,522 20,400 19,762
2001.................................... 38,086 37,136 31,102 30,152
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of the WRL Federated
Growth & Income subaccount would have affected benefits for a Policy dated on
the last valuation date prior to January 1, 1995. This example assumes that net
premiums and cash values were in the subaccount for the entire period and that
the values were determined on each Policy anniversary thereafter.
WRL FEDERATED GROWTH & INCOME
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1996.................................... $ 5,926 $ 5,926 $ 0 $ 0
1997.................................... 11,786 11,664 4,026 3,904
1998.................................... 20,426 20,119 12,666 12,359
1999.................................... 25,631 25,143 17,871 17,383
2000.................................... 28,618 27,980 20,858 20,220
2001.................................... 42,609 41,573 35,625 34,589
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
79
The following example shows how the hypothetical net return of the WRL AEGON
Balanced subaccount would have affected benefits for a Policy dated on the last
valuation date prior to January 1, 1995. This example assumes that net premiums
and cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL AEGON BALANCED
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1996.................................... $ 5,651 $ 5,651 $ 0 $ 0
1997.................................... 11,383 11,262 3,623 3,502
1998.................................... 18,696 18,403 10,936 10,643
1999.................................... 24,775 24,288 17,015 16,528
2000.................................... 30,019 29,337 22,259 21,577
2001.................................... 36,295 35,383 29,311 28,399
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of the WRL C.A.S.E.
Growth subaccount would have affected benefits for a Policy dated on the last
valuation date prior to January 1, 1996. This example assumes that net premiums
and cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL C.A.S.E. GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1997.................................... $ 5,534 $ 5,534 $ 0 $ 0
1998.................................... 11,709 11,584 3,949 3,824
1999.................................... 16,639 16,372 8,879 8,612
2000.................................... 28,383 27,827 20,623 20,067
2001.................................... 25,843 25,246 18,083 17,486
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
80
The following example shows how the hypothetical net return of the WRL GE
U.S. Equity subaccount would have affected benefits for a Policy dated on the
last valuation date prior to January 1, 1997. This example assumes that net
premiums and cash values were in the subaccount for the entire period and that
the values were determined on each Policy anniversary thereafter.
WRL GE U.S. EQUITY
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1998.................................... $ 6,016 $ 6,016 $ 0 $ 0
1999.................................... 13,122 12,993 5,362 5,233
2000.................................... 20,952 20,649 13,192 12,889
2001.................................... 25,180 24,712 17,420 16,952
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of the WRL NWQ Value
Equity subaccount would have affected benefits for a Policy dated on the last
valuation date prior to January 1, 1997. This example assumes that net premiums
and cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL NWQ VALUE EQUITY
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1998.................................... $ 5,916 $ 5,916 $ 0 $ 0
1999.................................... 9,987 9,875 2,227 2,115
2000.................................... 15,705 15,440 7,945 7,680
2001.................................... 23,302 22,813 15,542 15,053
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
81
The following example shows how the hypothetical net return of the WRL GE
International Equity subaccount would have affected benefits for a Policy dated
on the last valuation date prior to January 1, 1997. This example assumes that
net premiums and cash values were in the subaccount for the entire period and
that the values were determined on each Policy anniversary thereafter.
WRL GE INTERNATIONAL EQUITY
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1998.................................... $ 5,031 $ 5,031 $ 0 $ 0
1999.................................... 10,916 10,792 3,156 3,032
2000.................................... 19,397 19,087 11,637 11,327
2001.................................... 20,206 19,788 12,446 12,028
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of the WRL Third
Avenue Value subaccount would have affected benefits for a Policy dated on the
last valuation date prior to January 1, 1998. This example assumes that net
premiums and cash values were in the subaccount for the entire period and that
the values were determined on each Policy anniversary thereafter.
WRL THIRD AVENUE VALUE
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
1999.................................... $ 4,311 $ 4,311 $ 0 $ 0
2000.................................... 10,376 10,251 2,616 2,491
2001.................................... 20,339 20,007 12,579 12,247
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
82
The following example shows how the hypothetical net return of the WRL J.P.
Morgan Real Estate Securities subaccount would have affected benefits for a
Policy dated on the last valuation date prior to January 1, 1999. This example
assumes that net premiums and cash values were in the subaccount for the entire
period and that the values were determined on each Policy anniversary
thereafter.
WRL J.P. MORGAN REAL ESTATE SECURITIES
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
2000.................................... $ 4,465 $ 4,465 $ 0 $ 0
2001.................................... 11,869 11,736 4,109 3,976
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of WRL Goldman
Sachs Growth subaccount would have affected benefits for a Policy dated on the
last valuation date prior to January 1, 2000. This example assumes that premiums
and cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL GOLDMAN SACHS GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- -------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- ------- ---------- ------- ----------
2001.................................... $4,252 $ 4,252 $ 0 $ 0
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
83
The following example shows how the hypothetical net return of the WRL T. Rowe
Price Dividend Growth subaccount would have affected benefits for a Policy dated
on the last valuation date prior to January 1, 2000. This example assumes that
premiums and cash values were in the subaccount for the entire period and that
the values were determined on each Policy anniversary thereafter.
WRL T. ROWE PRICE DIVIDEND GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
2001.................................... $4,249 $4,249 $0 $0
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of the WRL T. Rowe
Price Small Cap subaccount would have affected benefits for a Policy dated on
the last valuation date prior to January 1, 2000. This example assumes that
premiums and cash values were in the subaccount for the entire period and that
the values were determined on each Policy anniversary thereafter.
WRL T. ROWE PRICE SMALL CAP
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
2001.................................... $4,230 $4,230 $0 $0
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
84
The following example shows how the hypothetical net return of the WRL Salomon
All Cap subaccount would have affected benefits for a Policy dated on the last
valuation date prior to January 1, 2000. This example assumes that premiums and
cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL SALOMON ALL CAP
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
2001.................................... $5,575 $5,575 $0 $0
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
The following example shows how the hypothetical net return of the WRL Pilgrim
Baxter Mid Cap Growth subaccount would have affected benefits for a Policy dated
on the last valuation date prior to January 1, 2000. This example assumes that
premiums and cash values were in the subaccount for the entire period and that
the values were determined on each Policy anniversary thereafter.
WRL PILGRIM BAXTER MID CAP GROWTH
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
2001.................................... $3,933 $3,933 $0 $0
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
85
The following example shows how the hypothetical net return of the WRL Munder
Net50 subaccount would have affected benefits for a Policy dated on the last
valuation date prior to January 1, 2000. This example assumes that premiums and
cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL MUNDER NET50**
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
2001.................................... $4,252 $4,252 $0 $0
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
** Formerly, WRL Goldman Sachs Small Cap. During May 2001, this portfolio
changed sub-adviser and investment objective.
The following example shows how the hypothetical net return of the WRL Dreyfus
Mid Cap subaccount would have affected benefits for a Policy dated on the last
valuation date prior to January 1, 2000. This example assumes that premiums and
cash values were in the subaccount for the entire period and that the values
were determined on each Policy anniversary thereafter.
WRL DREYFUS MID CAP
Male Issue Age 35, $5,500 Annual Premium
($500,000 Specified Amount, Non-Tobacco Use, Ultimate Select Class)
Death Benefit Option A
Both Current and Guaranteed Cost of Insurance Rates
Cash Value Net Surrender Value
-------------------- --------------------
Last valuation date prior to January 1*: Current Guaranteed Current Guaranteed
---------------------------------------- -------- ----------- -------- -----------
2001.................................... $5,304 $5,304 $0 $0
* For each year shown, benefits and values reflect only premiums paid during
previous Policy years.
Because the Fidelity VIP Equity-Income Portfolio -- Service Class 2,
Fidelity VIP II Contrafund(R) Portfolio -- Service Class 2 and Fidelity VIP III
Growth Opportunities Portfolio -- Service Class 2, WRL Great Companies --
AmericaSM, WRL Great Companies -- TechnologySM, and WRL Value Line Aggressive
Growth subaccounts did not commence operations until May 1, 2000, the WRL Great
Companies -- Global2 and WRL Gabelli Global Growth subaccounts did not commence
operations until September 1, 2000, and the WRL LKCM Capital Growth subaccount
did not commence operations until February 5, 2001, there are no hypothetical
illustrations for these subaccounts.
Other Performance Data in Advertising Sales Literature
We may compare each subaccount's performance to the performance of:
. other variable life issuers in general;
. variable life insurance policies which invest in mutual funds with
similar
86
investment objectives and policies, as reported by Lipper Analytical
Services, Inc. ( "Lipper") and Morningstar, Inc. ( "Morningstar"); and
other services, companies, individuals, or industry or financial
publications (e.g., Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Kiplinger's Personal Finance, and Fortune);
. Lipper and Morningstar rank variable annuity contracts and variable
life policies. Their performance analysis ranks such policies and
contracts on the basis of total return, and assumes reinvestment of
distributions; but it does not show sales charges, redemption fees or
certain expense deductions at the separate account level.
. the Standard & Poor's Index of 500 Common Stocks, or other widely
recognized indices;
. unmanaged indices may assume the reinvestment of dividends, but
usually do not reflect deductions for the expenses of operating or
managing an investment portfolio; or
. other types of investments, such as:
. certificates of deposit;
. savings accounts and U.S. Treasuries;
. certain interest rate and inflation indices (e.g., the Consumer
Price Index); or
. indices measuring the performance of a defined group of securities
recognized by investors as representing a particular segment of the
securities markets (e.g., Donoghue Money Market Institutional
Average, Lehman Brothers Corporate Bond Index, or Lehman Brothers
Government Bond Index).
Western Reserve's Published Ratings
We may publish in advertisements, sales literature, or reports we send to
you the ratings and other information that an independent ratings organization
assigns to us. These organizations include: A.M. Best Company, Moody's Investors
Service, Inc., Standard & Poor's Insurance Rating Services, and Duff & Phelps
Credit Rating Co. These ratings are opinions regarding an operating insurance
company's financial capacity to meet the obligations of its insurance policies
in accordance with their terms. These ratings do not apply to the separate
account, the subaccounts, the funds or their portfolios, or to their
performance.
Additional Information
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Sale of the Policies
The Policy will be sold by individuals who are licensed as our life
insurance agents and who are also registered representatives of broker-dealers
having written sales agreements for the Policy with AFSG Securities Corporation
("AFSG"), the principal underwriter of the Policy. AFSG is located at 4333
Edgewood Road, N.E., Cedar Rapids, Iowa 52499. AFSG is
87
registered with the SEC under the Securities Exchange Act of 1934 as a
broker-dealer, and is a member of the National Association of Securities
Dealers, Inc. ( "NASD"). AFSG was organized on March 12, 1986 under the laws of
the State of Pennsylvania. The Principal Underwriting Agreement between AFSG and
Western Reserve on behalf of its separate account went into effect May 1, 1999.
More information about AFSG is available at http://www.nasdr.com or by calling
1-800-289-9999. The sales commission payable to Western Reserve agents or other
registered representatives may vary with the sales agreement, but it is not
expected to be greater than:
. 65% of all premiums you make during the first Policy year, plus
. 2.50% of all premiums you make during Policy years 2 through 10.
We will pay an additional sales commission of up to 0.15% of the Policy's cash
value on the fifth Policy anniversary and each anniversary thereafter where the
cash value (minus amounts attributable to loans) equals at least $5,000. Sales
commissions may also be payable on premiums paid as a result of an increase in
specified amount. The sales commission payable to Western Reserve agents or
other registered representatives may vary with the sales agreement, but it is
not expected to be greater than 65% of all premiums you make during the year
subsequent to an increase. In addition, certain production, persistency and
managerial bonuses may be paid.
To the extent permitted by NASD rules, promotional incentives or payments
may also be provided to broker-dealers based on sales volumes, the assumption of
wholesaling functions or other sales-related criteria. Other payments may be
made for other services that do not directly involve the sale of the Policies.
These services may include the recruitment and training of personnel, production
of promotional literatures, and similar services.
We intend to recoup commissions and other sales expenses through: the
premium expense charge, the surrender charge, the cost of insurance charge, the
mortality and expense risk charge, and earnings on amounts allocated under the
Policies to the fixed account and the loan account. Commissions paid on sales of
the Policies, including other sales incentives, are not directly charged to
Policyowners.
AFSG will receive the 12b-1 fees assessed against the Fidelity VIP Funds
shares held for the Policies as compensation for providing certain shareholder
support services. AFSG will also receive an additional fee based on the value of
shares of the Fidelity VIP Funds held for the Policies as compensation for
providing certain recordkeeping services.
Legal Matters
Sutherland Asbill & Brennan LLP of Washington, D.C. has provided advice on
certain matters relating to the federal securities laws. All matters of Ohio
law pertaining to the Policy have been passed upon by Kimberly A. Scouller,
Vice President and Senior General Counsel of Western Reserve.
Legal Proceedings
Western Reserve, like other life insurance companies, is involved in
lawsuits, including class action lawsuits. In some lawsuits involving insurers,
substantial damages have been
88
sought and/or material settlement payments have been made. Although the outcome
of any litigation cannot be predicted with certainty, at the present time, it
appears that there are no pending or threatened lawsuits that are likely to have
a material adverse impact on the separate account, on AFSG's ability to perform
under its principal underwriting agreement, or on Western Reserve's ability to
meet its obligations under the Policy.
Variations in Policy Provisions
Certain provisions of the Policy may vary from the descriptions in this
prospectus, depending on when and where the Policy was issued, in order to
comply with different state laws. These variations may include restrictions on
use of the fixed account and different interest rates charged and credited on
Policy loans. Please refer to your Policy, since any variations will be included
in your Policy or in riders or endorsements attached to your Policy.
Experts
The financial statements and financial highlights of WRL Series Life
Account as of December 31, 2000 and for the year then ended, appearing in this
prospectus and registration statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein and are included in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
The statutory-basis financial statements and schedules of Western Reserve
at December 31, 2000 and 1999 and for each of the three years in the period
ended December 31, 2000, appearing in this prospectus and registration statement
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein which, as to the statutory-basis
balance sheet at December 31, 1999, is based in part on the report of
PricewaterhouseCoopers LLP, independent auditors. The financial statements and
schedules referred to above are included in reliance upon such reports given on
the authority of such firms as experts in accounting and auditing.
The statement of changes in net assets of the WRL Series Life Account for
the year ended December 31, 1999, included in this prospectus and registration
statement, have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent certified public accountants, given on
the authority of said firm as experts in auditing and accounting.
Actuarial matters included in this prospectus have been examined by Alan
Yaeger, Executive Vice President, Actuary and Chief Financial Officer of Western
Reserve, as stated in the opinion filed as an exhibit to the registration
statement.
Financial Statements
Western Reserve's financial statements and schedules appear on the
following pages. These financial statements and schedules should be
distinguished from the separate account's financial statements and you should
consider these financial statements and schedules only as bearing upon Western
Reserve's ability to meet our obligations under the Policies. You
89
should not consider our financial statements and schedules as bearing upon the
investment performance of the assets held in the separate account.
Western Reserve's financial statements and schedules at December 31, 2000
and 1999 and for each of the three years in the period ended December 31, 2000,
have been prepared on the basis of statutory accounting principles rather than
accounting principles generally accepted in the United States.
Additional Information about Western Reserve
Western Reserve is a stock life insurance company that is wholly-owned by
First AUSA Life Insurance Company, which, in turn, is wholly-owned indirectly by
AEGON USA, Inc. Western Reserve's office is located at 570 Carillon Parkway, St.
Petersburg, Florida 33716-1202 and the mailing address is P.O. Box 5068,
Clearwater, Florida 33758-5068.
Western Reserve was incorporated in 1957 under the laws of Ohio and is
subject to regulation by the Insurance Department of the State of Ohio, as well
as by the insurance departments of all other states and jurisdictions in which
it does business. Western Reserve is licensed to sell insurance in all states
(except New York), Puerto Rico, Guam, and in the District of Columbia. Western
Reserve submits annual statements on its operations and finances to insurance
officials in all states and jurisdictions in which it does business. The Policy
described in this prospectus has been filed with, and where required, approved
by, insurance officials in those jurisdictions in which it is sold.
Western Reserve's Directors and Officers
We are governed by a board of directors. The following table sets forth the
name, address and principal occupation during the past five years of each of our
directors.
Board of Directors**
-------------------------------------------------------------------------------------------------
Name and Address Position with Principal Occupation
Western Reserve During Past 5 years
-------------------------------------------------------------------------------------------------
John R. Kenney Chairman of the Board and President (12/92 - 12/99),
570 Carillon Parkway Chief Executive Officer Director 7/93 - present) of WRL;
St. Petersburg, Florida 33716 Chairman of the Board (3/93 -
33716 present), President (3/93 - 6/00)
of Series Fund; Chairman of the
Board (1990 - present) of IDEX
Funds; Chairman of the Board
(9/96 - present), President
(9/97 - present) of ATFA;
Chairman of the Board (9/96 -
present), President (9/97 -
present) of ATSI; Chairman of
the Board, Director and Co-CEO
(3/00 - present) of Great Cos.
-------------------------------------------------------------------------------------------------
90
-------------------------------------------------------------------------------------------------
Name and Address Position with Principal Occupation
Western Reserve During Past 5 years
-------------------------------------------------------------------------------------------------
Jerome C. Vahl Director and President Executive VP (6/98 - 12/99), VP
570 Carillon Parkway (12/95 - 6/98), Assistant VP (1994
St. Petersburg, Florida 33716 - 1995) of WRL; Executive VP (9/00
- present) of IDEX Funds;
Director (3/00 - present) of Great
Cos., Director 11/99 - present)
of ATSI and ATFA.
-------------------------------------------------------------------------------------------------
Jack E. Zimmerman Director Trustee, (1987 - present) of IDEX
507 St. Michel Circle Funds; retired from Martin
Kettering, Ohio 45429 Marietta (1993).
-------------------------------------------------------------------------------------------------
James R. Walker Director Self-employed public accountant
3320 Office Park Dr. (1996 - present); Partner, (1990 -
Dayton, Ohio 45439 1995) of Walker-Davis C.P.A.'s,
Dayton, Ohio.
-------------------------------------------------------------------------------------------------
** Western Reserve = WRL
AEGON/Transamerica Series Fund, Inc. = Series Fund
IDEX Mutual Funds = IDEX Funds
AEGON/Transamerica Fund Advisers, Inc. = ATFA
AEGON/Transamerica Services, Inc. = ATSI
Great Companies, L.L.C. = Great Cos.
The following table gives the name, address and principal occupation during
the past five years of the principal officers of Western Reserve (other than
officers listed above as directors).
Principal Officers**
-------------------------------------------------------------------------------------------------
Name and Address Position with Principal Occupation
Western Reserve During Past 5 years
-------------------------------------------------------------------------------------------------
Alan M. Yaeger* Executive Vice President, Executive VP (1993 - present) of
Actuary and Chief Series Fund; Director (9/96 -
Financial Officer present) of ATFA; Director (9/96 -
present) of ATSI.
-------------------------------------------------------------------------------------------------
Herb T. Collins* Executive Vice President Executive VP (1996 - present),
Chief Administrative Officer
(1996 - 7/00) of WRL; VP,
Administration (1986 - 1996) of
Monumental Life Insurance
Company.
-------------------------------------------------------------------------------------------------
* Located at 570 Carillon Parkway, St. Petersburg, Florida 33716-1202.
** Western Reserve = WRL
AEGON/Transamerica Series Fund, Inc. = Series Fund
IDEX Mutual Funds = IDEX Funds
AEGON/Transamerica Fund Advisers, Inc. = ATFA
AEGON/Transamerica Services, Inc. = ATSI
Great Companies, L.L.C. = Great Cos.
91
-------------------------------------------------------------------------------------------------
Name and Address Position with Principal Occupation
Western Reserve During Past 5 years
-------------------------------------------------------------------------------------------------
William H. Geiger* Senior Vice President, Senior VP, Secretary, Corporate
Secretary, Corporate Counsel Counsel, and Group VP --
and Group Vice President -- Compliance (1998 - present);
Compliance Senior VP, Secretary, General
Counsel and Group VP-Compliance
(1996 - 1998), Senior VP,
Secretary, and General Counsel
(1990 - 1996) of WRL; Group
VP-Compliance and Corporate
Counsel (1996 - present) of AUSA
Life Insurance Company, Inc.,
Bankers United Life Assurance
Company, Life Investors Insurance
Company of America, Monumental
Life Insurance Company and
Transamerica Life Insurance
Company.***
-------------------------------------------------------------------------------------------------
Allan J. Hamilton* Vice President, Treasurer VP and Controller (8/87 - present)
and Controller Treasurer (2/97 - present) of WRL;
Treasurer and Chief Financial
Officer (2/97 - present) of
Series Fund; VP and Controller
(3/99 - present) of ATFA.
Terry L. Garvin* Senior Vice President and Senior VP and Chief Marketing
Chief Marketing Officer Officer (9/00 - present), VP and
Chief Marketing Officer
(12/95 - 9/00) of WRL.
-------------------------------------------------------------------------------------------------
* Located at 570 Carillon Parkway, St. Petersburg, Florida 33716-1202.
** Western Reserve = WRL
AEGON/Transamerica Series Fund, Inc. = Series Fund
IDEX Mutual Funds = IDEX Funds
AEGON/Transamerica Fund Advisers, Inc. = ATFA
AEGON/Transamerica Services, Inc. = ATSI
Great Companies, L.L.C. = Great Cos.
*** Transamerica Life Insurance Company previously was known as PFL Life
Insurance Company. Each of the companies listed for the position held by Mr.
Geiger from 1996 to the present is a subsidiary of AEGON USA, Inc.
92
----------------------------------------------------------------------------------------
Name and Address Position with Western Reserve Principal Occupation
During Past 5 years
----------------------------------------------------------------------------------------
Carolyn M. Johnson* Senior Vice President and Senior VP and Chief Operations
Chief Operations Officer Officer (9/00 - present), VP (3/98 -
9/00) of WRL; VP (8/98 -
present) of Life Investors
Insurance Company of
America; VP (6/98 - present)
of Peoples Benefit Life
Insurance Company; VP (11/97
- present) of Transamerica
Life Insurance Company
(formerly, PFL Life
Insurance Company); VP (2/00
- present) of Transamerica
Occidental Life Insurance
Company; (2/00 - present) of
Transamerica Life
Insurance and Annuity
Company; VP (12/97 -
present), Responsible
Officer (9/99 - present),
Illustration Actuary (9/99 -
11/00) of Monumental Life
Insurance Company.
-----------------------------------------------------------------------------------------
Thomas R. Moriarty* Senior Vice President VP (6/93 - 12/99) of WRL; Director,
President and CEO (11/99 -
present) of AEGON Asset
Management Services, Inc.;
Executive VP, Treasurer and
Principal Financial Officer (9/00 -
present) of IDEX Funds; VP (6/99
- present) of AFSG Securities
Corporation; Chairman of the
Board, CEO and President (7/99 -
present), Senior VP (6/91 - 7/99) of
InterSecurities, Inc.
------------------------------------------------------------------------------------------
Thomas E. Pierpan* Senior Vice President, Senior VP and General Counsel
Counsel General and Assistant Secretary
(12/99 - present), VP (12/93
- 12/99), Counsel (4/95 -
1/97), Associate General
Counsel (1/97 - 12/99),
Assistant VP (11/92 - 12/93)
of WRL; VP (3/95 - present),
Assistant Secretary (3/95 -
12/97 and 12/99 - present),
Associate General Counsel
and Secretary (12/97 -
12/99) of Series Fund.
* Located at 570 Carillon Parkway, St. Petersburg, Florida 33716-1202.
93
------------------------------------------------------------------------------------
Name and Address Position with Western Reserve Principal Occupation
During Past 5 years
------------------------------------------------------------------------------------
Tim Stonehocker* Senior VP Senior VP, WMA Business Unit
(2000 - present); President (1997 -
2000) of Academy Life Insurance
Company; VP (1997 - present) of
Life Investors Insurance Company
of America; VP (1997 - present) of
Bankers United Life Assurance
Company; VP (1997 - present) of
Transamerica Life Insurance
Company (formerly, PFL Life
Insurance Company, Inc.)
-----------------------------------------------------------------------------------
* Located at 570 Carillon Parkway, St. Petersburg, Florida 33716-1202.
Western Reserve holds the assets of the separate account physically
segregated and apart from the general account. Western Reserve maintains records
of all purchases and sales of portfolio shares by each of the subaccounts. A
blanket bond was issued to AEGON USA, Inc. ("AEGON USA") in the aggregate amount
of $12 million, covering all of the employees of AEGON USA and its affiliates,
including Western Reserve. A Stockbrokers Blanket Bond, issued to AEGON U.S.A.
Securities, Inc. providing fidelity coverage, covers the activities of
registered representatives of AFSG to a limit of $10 million.
Additional Information about the Separate Account
Western Reserve established the separate account as a separate investment
account under Ohio law in 1985. We own the assets in the separate account and
are obligated to pay all benefits under the Policies. The separate account is
used to support other life insurance policies of Western Reserve, as well as for
other purposes permitted by law. The separate account is registered with the SEC
as a unit investment trust under the 1940 Act and qualifies as a "separate
account" within the meaning of the federal securities laws.
94
Appendix A
Illustrations
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The following illustrations show how certain values under a sample Policy
would change with different rates of fictional investment performance over an
extended period of time. In particular, the illustrations show how the death
benefit, cash value, and net surrender value under a Policy issued to an insured
of a given age, would change over time if the premiums indicated were paid and
the return on the assets in the subaccounts were a uniform gross annual rate
(before any expenses) of 0%, 6% or 12%. The tables illustrate Policy values that
would result based on assumptions that you pay the premiums indicated, you do
not change your specified amount, and you do not take any cash withdrawals or
Policy loans. The values under the Policy will be different from those shown
even if the returns averaged 0%, 6% or 12%, but fluctuated over and under those
averages throughout the years shown.
We based the illustration on page 97 on a Policy for an insured who is a 35
year old male in the Ultimate Select, non-tobacco use rate class, annual
premiums of $5,500, a $500,000 specified amount and death benefit Option A. The
illustration on that page also assumes cost of insurance charges based on our
current cost of insurance rates.
The illustration on page 98 is based on the same factors as those on page
97, except that cost of insurance rates are based on the guaranteed cost of
insurance rates (based on the 1980 Commissioners Standard Ordinary Mortality
Table).
The amounts we show for the death benefits, cash values and net surrender
values take into account (1) the daily charge for assuming mortality and expense
risks assessed against each subaccount. This charge is equivalent to an annual
charge of 0.90% of the average net assets of the subaccounts during the first 15
Policy years (we guarantee to reduce this charge to 0.60% after the first 15
Policy years). We intend to reduce this charge to 0.30% in the 16th Policy year
but we do not guarantee that we will do so, and we reserve the right to maintain
this charge at the 0.60% level after the 15th Policy year. The following
illustrations use 0.30% after the 15th Policy year; (2) estimated daily expenses
equivalent to an effective arithmetic average annual expense level of 0.92% of
the portfolios' average daily net assets; and (3) all applicable premium expense
charges and cash value charges using the current monthly Policy charge. The
0.92% average portfolio expense level assumes an equal allocation of amounts
among the 31 subaccounts. We used annualized actual audited expenses incurred
during 2000 as shown in the Portfolio Annual Expense Table for the portfolios to
calculate the average annual expense level.
Taking into account the assumed charges of 1.82%, the gross annual
investment return rates of 0%, 6% and 12% are equivalent to net annual
investment return rates of -1.82%, 4.18%, and 10.18% during the first 15 Policy
years and -1.22%, 4.78% and 10.78% thereafter.
During 2000, AEGON/Transamerica Advisers undertook to pay normal operating
expenses of certain Series Fund portfolios that exceeded a certain stated
percentage of those
95
portfolios' average daily net assets. AEGON/Transamerica Advisers has undertaken
until at least April 30, 2002 to pay expenses to the extent normal operating
expenses of certain portfolios of the Series Fund exceed a stated percentage of
the portfolio's average daily net assets. For details on these expense limits,
the amounts reimbursed by AEGON/Transamerica Advisers during 2000, and the
expense ratios without the reimbursements, see the Portfolio Annual Expense
Table on page 9 of this prospectus.
Without these waivers and reimbursements, total annual expenses for the
portfolios would have been greater, and the illustrations would have assumed
that the assets in the portfolios were subject to an average annual expense
level of 1.22%.
The hypothetical returns shown in the tables are provided only to
illustrate the mechanics of a hypothetical policy and do not represent past or
future investment rates of return. Tax charges that may be attributable to the
separate account are not reflected, because we are not currently making such
charges. In order to produce after tax returns of 0%, 6% or 12% if such charges
are made in the future, the separate account would have to earn a sufficient
amount in excess of 0%, 6% or 12% to cover any tax charges.
The "Premium Accumulated at 5%" column of each table shows the amount which
would accumulate if you invested an amount equal to the premium to earn interest
at 5% per year, compounded annually.
We will furnish, upon request, a comparable illustration reflecting the
proposed insured's age, gender, risk classification and desired Policy features.
96
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 35
Specified Amount $500,000 Ultimate Select Class
Annual Premium $5,500 Option Type A
Using Current Cost of Insurance Rates
End of Premiums DEATH BENEFIT
Policy Accumulated Assuming Hypothetical Gross and Net
Year at 5% Annual Investment Return of
0% (Gross) 6% (Gross) 12% (Gross)
-1.82% (Net) Years 1-15 4.18% (Net) Years 1-15 10.18% (Net) Years 1-15
-1.22% (Net) Years 16+ 4.78% (Net) Years 16+ 10.78% (Net) Years 16+
1 5,775 500,000 500,000 500,000
2 11,839 500,000 500,000 500,000
3 18,206 500,000 500,000 500,000
4 24,891 500,000 500,000 500,000
5 31,911 500,000 500,000 500,000
6 39,281 500,000 500,000 500,000
7 47,020 500,000 500,000 500,000
8 55,146 500,000 500,000 500,000
9 63,678 500,000 500,000 500,000
10 72,637 500,000 500,000 500,000
15 124,616 500,000 500,000 500,000
20 190,956 500,000 500,000 500,000
30 (AGE 65) 383,684 500,000 500,000 1,110,503
40 (AGE 75) 697,619 500,000 512,834 2,771,261
50 (AGE 85) 1,208,985 500,000 866,604 7,579,495
60 (AGE 95) 2,041,946 500,000 1,374,867 20,002,384
End of CASH VALUE
Policy Assuming Hypothetical Gross and Net
Year Annual Investment Return of
0% (Gross) 6% (Gross) 12% (Gross)
-1.82% (Net) Years 1-15 4.18% (Net) Years 1-15 10.18% (Net) Years 1-15
-1.22% (Net) Years 16+ 4.78% (Net) Years 16+ 10.78% (Net) Years 16+
1 4,607 4,911 5,216
2 9,119 10,016 10,952
3 13,527 15,314 17,252
4 17,839 20,819 24,180
5 22,025 26,507 31,769
6 26,083 32,384 40,084
7 30,008 38,450 49,194
8 33,803 44,714 59,184
9 37,405 51,122 70,084
10 40,845 57,710 82,020
15 55,472 93,449 161,417
20 67,786 138,636 297,715
30 (AGE 65) 85,666 268,722 910,248
40 (AGE 75) 77,539 479,284 2,589,963
50 (AGE 85) 6,610 825,338 7,218,566
60 (AGE 95) * 1,361,255 19,804,340
End of NET SURRENDER VALUE
Policy Assuming Hypothetical Gross and Net
Year Annual Investment Return of
0% (Gross) 6% (Gross) 12% (Gross)
-1.82% (Net) Years 1-15 4.18% (Net) Years 1-15 10.18% (Net) Years 1-15
-1.22% (Net) Years 16+ 4.78% (Net) Years 16+ 10.78% (Net) Years 16+
1 0 0 0
2 1,359 2,256 3,192
3 5,767 7,554 9,492
4 10,079 13,059 16,420
5 14,265 18,747 24,009
6 19,099 25,400 33,100
7 23,800 32,242 42,986
8 28,371 39,282 53,752
9 32,749 46,466 65,428
10 36,965 53,830 78,140
15 55,472 93,449 161,417
20 67,786 138,636 297,715
30 (AGE 65) 85,666 268,722 910,248
40 (AGE 75) 77,539 479,284 2,589,963
50 (AGE 85) 6,610 825,338 7,218,566
60 (AGE 95) * 1,361,255 19,804,340
* In the absence of an additional payment, the Policy would lapse.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual investment rates of return may
be more or less than those shown and will depend on a number of factors,
including the investment allocations by an owner and the different investment
rates for the funds. The death benefit, cash value and net surrender value for a
Policy would be different from those shown if the actual investment rates of
return averaged 0%, 6% and 12% over a period of years, but fluctuated above or
below that average for individual Policy years. No representation can be made by
Western Reserve or the funds that these hypothetical investment rates of return
can be achieved for any one year or sustained over any period of time. This
illustration must be preceded or accompanied by current fund prospectuses.
97
WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
HYPOTHETICAL ILLUSTRATIONS
MALE ISSUE AGE 35
Specified Amount $500,000 Ultimate Select Class
Annual Premium $5,500 Option Type A
Using Current Cost of Insurance Rates
End of Premiums DEATH BENEFIT
Policy Accumulated Assuming Hypothetical Gross and Net
Year at 5% Annual Investment Return of
0% (Gross) 6% (Gross) 12% (Gross)
-1.82% (Net) Years 1-15 4.18% (Net) Years 1-15 10.18% (Net) Years 1-15
-1.22% (Net) Years 16+ 4.78% (Net) Years 16+ 10.78% (Net) Years 16+
1 5,775 500,000 500,000 500,000
2 11,839 500,000 500,000 500,000
3 18,206 500,000 500,000 500,000
4 24,891 500,000 500,000 500,000
5 31,911 500,000 500,000 500,000
6 39,281 500,000 500,000 500,000
7 47,020 500,000 500,000 500,000
8 55,146 500,000 500,000 500,000
9 63,678 500,000 500,000 500,000
10 72,637 500,000 500,000 500,000
15 124,616 500,000 500,000 500,000
20 190,956 500,000 500,000 500,000
30 (AGE 65) 383,684 500,000 500,000 1,056,811
40 (AGE 75) 697,619 500,000 500,000 2,569,910
50 (AGE 85) 1,208,985 500,000 611,581 6,819,155
60 (AGE 95) 2,041,946 500,000 939,192 17,033,001
End of CASH VALUE
Policy Assuming Hypothetical Gross and Net
Year Annual Investment Return of
0% (Gross) 6% (Gross) 12% (Gross)
-1.82% (Net) Years 1-15 4.18% (Net) Years 1-15 10.18% (Net) Years 1-15
-1.22% (Net) Years 16+ 4.78% (Net) Years 16+ 10.78% (Net) Years 16+
1 4,607 4,911 5,216
2 9,004 9,898 10,830
3 13,275 15,047 16,970
4 17,419 20,364 23,687
5 21,430 25,846 31,034
6 25,306 31,497 39,074
7 29,036 37,313 47,866
8 32,625 43,303 57,493
9 36,062 49,464 68,031
10 39,350 55,805 79,583
15 53,244 90,162 156,452
20 63,709 132,466 287,672
30 (AGE 65) 55,449 234,139 866,238
40 (AGE 75) * 360,929 2,401,785
50 (AGE 85) * 582,458 6,494,434
60 (AGE 95) * 929,893 16,864,357
End of NET SURRENDER VALUE
Policy Assuming Hypothetical Gross and Net
Year Annual Investment Return of
0% (Gross) 6% (Gross) 12% (Gross)
-1.82% (Net) Years 1-15 4.18% (Net) Years 1-15 10.18% (Net) Years 1-15
-1.22% (Net) Years 16+ 4.78% (Net) Years 16+ 10.78% (Net) Years 16+
1 0 0 0
2 1,244 2,138 3,070
3 5,515 7,287 9,210
4 9,659 12,604 15,927
5 13,670 18,086 23,274
6 18,322 24,513 32,090
7 22,828 31,105 41,658
8 27,193 37,871 52,061
9 31,406 44,808 63,375
10 35,470 51,925 75,703
15 53,244 90,162 156,452
20 63,709 132,466 287,672
30 (AGE 65) 55,449 234,139 866,238
40 (AGE 75) * 360,929 2,401,785
50 (AGE 85) * 582,458 6,494,434
60 (AGE 95) * 929,893 16,864,357
* In the absence of an additional payment, the Policy would lapse.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future rates of return. Actual investment rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations by an owner and the different investment rates of return
for the funds. The death benefit, cash value and net surrender value for a
Policy would be different from those shown if the actual investment rates of
return averaged 0%, 6% and 12% over a period of years, but fluctuated above or
below that average for individual Policy years. No representation can be made by
Western Reserve or the funds that these hypothetical investment rates of return
can be achieved for any one year or sustained over any period of time. This
illustration must be preceded or accompanied by current fund prospectuses.
98
Appendix B
Wealth Indices of Investments in the U.S. Capital Market
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The information below graphically depicts the growth of $1.00 invested in
large company stocks, small company stocks, long-term government bonds, Treasury
bills, and hypothetical asset returning the inflation rate over the period from
the end of 1925 to the end of 2000. All results assume reinvestment of dividends
on stocks or coupons on bonds and no taxes. Transaction costs are not included,
except in the small stock index starting in 1982.
Each of the cumulative index values is initialized at $1.00 at year-end
1925. The graph illustrates that large company stocks and small company stocks
have the best performance over the entire 75-year period: investments of $1.00
in these assets would have grown to $2,586.52 and $6,402.23, respectively, by
year-end 2000. This higher growth was earned by investments involving
substantial risk. In contrast, long-term government bonds (with an approximate
20-year maturity), which exposed the holder to much less risk, grew to only
$48.86.
The lowest-risk strategy over the past 75 years (for those with short-term
time horizons) was to buy U.S. Treasury bills. Since U.S. Treasury bills tended
to track inflation, the resulting real (inflation-adjusted) returns were near
zero for the entire 1925 - 2000 period.
99
[Performance Chart]
Compound Annual Rates of Return by Decade
1920s* 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000**
Large Company ..... 19.2% -0.1% 9.2% 19.4% 7.8% 5.9% 17.5% 18.2% -9.1%
Small Company ..... -4.5 1.4 20.7 16.9 15.5 11.5 15.8 15.1 -3.6
Long-Term Corp. ... 5.2 6.9 2.7 1.0 1.7 6.2 13.0 8.3 12.9
Long-Term Govt. ... 5.0 4.9 3.2 -0.1 1.4 5.5 12.6 9.0 21.5
Inter-Term Govt. .. 4.2 4.6 1.8 1.3 3.5 7.0 11.9 7.2 12.6
Treasury Bills .... 3.7 0.6 0.4 1.9 3.9 6.3 8.9 4.9 5.9
Inflation ......... -1.1 -2.0 5.4 2.2 2.5 7.4 5.1 2.9 3.4
--------------------
* Based on the period 1926-1929.
** Based on calendar year 2000 only.
Used with permission. (C)2001 Ibbotson Associates, Inc. All rights reserved.
[Certain portions of this work were derived from copyrighted works of Roger G.
Ibbotson and Rex Sinquefield.]
100
Appendix C
Surrender Charge Per Thousand
(Based on the gender and rate class of the insured)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Male Male Female Female
Issue Ultimate Select/ Ultimate Standard/ Ultimate Select/ Ultimate Standard/
Age Select Standard Select Standard
0 N/A 11.76 N/A 11.76
1 N/A 8.16 N/A 8.16
2 N/A 8.16 N/A 8.16
3 N/A 7.92 N/A 7.92
4 N/A 7.68 N/A 7.68
5 N/A 7.68 N/A 7.68
6 N/A 7.68 N/A 7.68
7 N/A 7.68 N/A 7.68
8 N/A 7.68 N/A 7.68
9 N/A 7.68 N/A 7.68
10 N/A 7.68 N/A 7.68
11 N/A 7.68 N/A 7.68
12 N/A 7.68 N/A 7.68
13 N/A 7.92 N/A 7.92
14 N/A 8.16 N/A 8.16
15 N/A 8.40 N/A 8.40
16 N/A 8.52 N/A 8.52
17 N/A 8.88 N/A 8.88
18 8.72 9.20 8.72 9.20
19 8.84 9.32 8.84 9.32
20 8.96 9.44 8.96 9.44
21 9.16 9.88 9.16 9.64
22 9.32 10.04 9.32 9.80
23 9.52 10.24 9.52 10.00
24 9.68 10.40 9.68 10.40
25 9.88 10.84 9.88 10.60
26 10.56 11.28 10.32 11.04
27 11.00 11.72 10.76 11.48
28 11.40 12.12 11.16 12.12
29 12.08 12.80 11.84 12.56
30 12.52 13.24 12.28 13.00
31 13.04 14.00 12.80 13.52
32 13.76 14.48 13.52 14.24
33 14.28 15.24 14.04 14.76
34 14.76 15.96 14.52 15.48
35 15.52 16.48 15.28 16.00
101
Appendix C -- (continued)
Surrender Charge Per Thousand
(Based on the gender and rate class of the insured)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Male Male Female Female
Issue Ultimate Select/ Ultimate Standard/ Ultimate Select/ Ultimate Standard/
Age Select Standard Select Standard
36 16.20 17.40 15.96 16.92
37 17.20 18.40 16.72 17.92
38 18.12 19.56 17.64 18.60
39 19.08 20.76 18.36 19.56
40 20.28 21.96 19.32 20.52
41 21.64 23.56 20.68 22.12
42 23.08 25.24 22.12 23.80
43 24.44 27.08 23.15 25.40
44 26.04 29.16 23.86 26.96
45 27.44 31.04 24.59 27.83
46 28.72 32.80 25.38 28.76
47 29.84 34.56 26.22 29.73
48 31.00 36.32 27.11 30.75
49 32.24 38.32 28.04 31.84
50 33.56 40.56 29.05 32.99
51 34.98 42.56 30.11 34.20
52 36.49 45.24 31.24 35.48
53 38.10 47.68 32.45 36.84
54 39.83 50.84 33.72 38.28
55 41.68 53.28 35.09 39.79
56 43.63 55.79 36.54 41.39
57 45.74 57.00 38.08 43.06
58 47.98 57.00 39.74 44.88
59 50.38 57.00 41.54 46.85
60 52.97 57.00 43.47 48.97
61 55.74 57.00 45.57 51.26
62 57.00 57.00 47.82 53.73
63 57.00 57.00 50.26 56.41
64 57.00 57.00 52.88 57.00
65 57.00 57.00 55.68 57.00
66 and over 57.00 57.00 57.00 57.00
102
Index to Financial Statements
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
WRL Series Life Account:
Statements of Assets and Liabilities at March 31, 2001 (unaudited)
Statements of Operations for the period ended March 31, 2001 (unaudited)
Statements of Changes in Net Assets for the period ended March 31, 2001
(unaudited)
Financial Highlights for the period ended March 31, 2001 (unaudited)
Notes to Financial Statements (unaudited)
Report of Independent Auditors dated January 31, 2001
Report of Independent Certified Public Accountants dated February 16, 2000
Statements of Assets and Liabilities at December 31, 2000
Statements of Operations for the period ended December 31, 2000
Statements of Changes in Net Assets for the periods ended December 31, 2000 and
1999
Financial Highlights for the periods ended December 31, 2000, 1999, 1998, 1997
and 1996
Notes to the Financial Statements
Western Reserve Life Assurance Co. of Ohio
Statutory-Basis Balance Sheet as of March 31, 2001 (unaudited)
Statutory-Basis Statement of Operations for the three months ended March 31,
2001 (unaudited)
Statutory-Basis Statement of Changes in Capital and Surplus for the three months
ended March 31, 2001 (unaudited)
Statutory-Basis Statement of Cash Flow for the three months ended March 31, 2001
(unaudited)
Notes to Statutory-Basis Financial Statements (unaudited)
Report of Independent Auditors dated February 15, 2001
Statutory-Basis Balance Sheets at December 31, 2000 and 1999
Statutory-Basis Statements of Operations for the years ended December 31, 2000,
1999 and 1998
Statutory-Basis Statements of Changes in Capital and Surplus for the years ended
December 31, 2000, 1999 and 1998
Statutory-Basis Statements of Cash Flow for the years ended December 31, 2000,
1999 and 1998
Notes to Statutory-Basis Financial Statements
Statutory-Basis Financial Statement Schedules
AG08205-7/2001
103
WRL Series Life Account
Statements of Assets and Liabilities
At March 31, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL
WRL WRL WRL WRL LKCM
J.P.Morgan AEGON Janus Janus Strategic
Money Market Bond Growth Global Total Return
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares.................... 75,575 2,817 20,149 16,945 6,636
======== ======== ========= ========= ========
Cost................................ $ 75,575 $ 32,201 $ 965,092 $ 416,059 $ 97,943
======== ======== ========= ========= ========
Investment, at net asset value........ $ 75,575 $ 32,334 $ 717,294 $ 336,353 $ 92,645
Dividend receivable................... 277 0 0 0 0
Transfers receivable from depositor... 633 0 0 0 0
-------- -------- --------- --------- --------
Total assets........................ 76,485 32,334 717,294 336,353 92,645
-------- -------- --------- --------- --------
Liabilities:
Accrued expenses...................... 2 1 17 8 3
Transfers payable to depositor........ 0 5 126 68 0
-------- -------- --------- --------- --------
Total liabilities................... 2 6 143 76 3
-------- -------- --------- --------- --------
Net assets.......................... $ 76,483 $ 32,328 $ 717,151 $ 336,277 $ 92,642
======== ======== ========= ========= ========
Net Assets Consists of:
Policy owners' equity................. $ 76,483 $ 32,328 $ 717,151 $ 336,277 $ 92,642
Depositor's equity.................... 0 0 0 0 0
-------- -------- --------- --------- --------
Net assets applicable to units
outstanding....................... $ 76,483 $ 32,328 $ 717,151 $ 336,277 $ 92,642
======== ======== ========= ========= ========
Policy owners' units.................. 4,110 1,299 9,315 12,801 4,552
Depositor's units..................... 0 0 0 0 0
-------- -------- --------- --------- --------
Units outstanding................... 4,110 1,299 9,315 12,801 4,552
======== ======== ========= ========= ========
Accumulation unit value............. $ 18.61 $ 24.88 $ 76.99 $ 26.27 $ 20.35
======== ======== ========= ========= ========
See Notes to the Financial Statements, which is an integral part of this report.
104
WRL Series Life Account
Statements of Assets and Liabilities
At March 31, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL WRL WRL WRL
Van Kampen Alger WRL Federated Dean
Emerging Aggressive AEGON Growth & Asset
Growth Growth Balanced Income Allocation
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares.................... 19,262 14,444 1,654 2,458 2,884
========= ========= ======== ======== ========
Cost................................ $ 812,499 $ 311,507 $ 20,518 $ 30,842 $ 39,059
========= ========= ======== ======== ========
Investment, at net asset value $ 434,737 $ 229,085 $ 20,478 $ 34,197 $ 38,531
Dividend receivable................... 0 0 0 0 0
Transfers receivable from depositor... 0 0 0 502 19
--------- --------- -------- -------- --------
Total assets........................ 434,737 229,085 20,478 34,699 38,550
--------- --------- -------- -------- --------
Liabilities:
Accrued expenses...................... 10 5 0 1 1
Transfers payable to depositor........ 787 3 1 0 0
--------- --------- -------- -------- --------
Total liabilities................... 797 8 1 1 1
--------- --------- -------- -------- --------
Net assets.......................... $ 433,940 $ 229,077 $ 20,477 $ 34,698 $ 38,549
========= ========= ======== ======== ========
Net Assets Consists of:
Policy owners' equity................. $ 433,940 $ 229,077 $ 20,477 $ 34,698 $ 38,549
Depositor's equity.................... 0 0 0 0 0
--------- --------- -------- -------- --------
Net assets applicable to units
outstanding....................... $ 433,940 $ 229,077 $ 20,477 $ 34,698 $ 38,549
========= ========= ======== ======== ========
Policy owners' units.................. 10,073 9,313 1,356 1,685 2,091
Depositor's units..................... 0 0 0 0 0
--------- --------- -------- -------- --------
Units outstanding................... 10,073 9,313 1,356 1,685 2,091
========= ========= ======== ======== ========
Accumulation unit value............. $ 43.08 $ 24.60 $ 15.11 $ 20.59 $ 18.44
========= ========= ======== ======== ========
See Notes to the Financial Statements, which is an integral part of this report.
105
WRL Series Life Account
Statements of Assets and Liabilities
At March 31, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL WRL
WRL WRL GE WRL Third
C.A.S.E. NWQ International GE Avenue
Growtht Value Equity Equity U.S. Equity Value
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares.................... 2,338 2,129 794 2,065 1,562
======== ======== ======== ======== ========
Cost................................ $ 32,191 $ 29,061 $ 9,768 $ 31,086 $ 20,677
======== ======== ======== ======== ========
Investment, at net asset value........ $ 23,099 $ 30,211 $ 7,158 $ 28,348 $ 20,949
Dividend receivable................... 0 0 0 0 0
Transfers receivable from depositor... 0 15 0 48 134
-------- -------- -------- -------- --------
Total assets........................ 23,099 30,226 7,158 28,396 21,083
-------- -------- -------- -------- --------
Liabilities:
Accrued expenses...................... 0 1 0 1 0
Transfers payable to depositor........ 19 0 32 0 0
-------- -------- -------- -------- --------
Total liabilities................... 19 1 32 1 0
-------- -------- -------- -------- --------
Net assets.......................... $ 23,080 $ 30,225 $ 7,126 $ 28,395 $ 21,083
======== ======== ======== ======== ========
Net Assets Consists of:
Policy owners' equity................. $ 23,080 $ 30,225 $ 7,126 $ 28,395 $ 21,083
Depositor's equity.................... 0 0 0 0 0
-------- -------- -------- -------- --------
Net assets applicable to units
outstanding....................... $ 23,080 $ 30,225 $ 7,126 $ 28,395 $ 21,083
======== ======== ======== ======== ========
Policy owners' units.................. 1,849 1,909 659 1,755 1,519
Depositor's units..................... 0 0 0 0 0
-------- -------- -------- -------- --------
Units outstanding................... 1,849 1,909 659 1,755 1,519
======== ======== ======== ======== ========
Accumulation unit value............. $ 12.48 $ 15.84 $ 10.82 $ 16.18 $ 13.88
======== ======== ======== ======== ========
See Notes to the Financial Statements, which is an integral part of this report.
106
WRL Series Life Account
Statements of Assets and Liabilities
At March 31, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL WRL
J.P. WRL T. Rowe WRL
Morgan Goldman WRL Price T. Rowe
Real Estate Sachs Munder Dividend Price
Securities Growth Net50 Growth Small Cap
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares...................... 286 176 201 147 246
============ =========== =========== =========== ===========
Cost.................................. $ 2,865 $ 1,979 $ 2,233 $ 1,428 $ 3,236
============ =========== =========== =========== ===========
Investment, at net asset value......... $ 2,930 $ 1,638 $ 2,031 $ 1,380 $ 2,396
Dividend receivable.................... 0 0 0 0 0
Transfers receivable from depositor.... 9 0 0 0 0
------------ ----------- ----------- ----------- -----------
Total assets.......................... 2,939 1,638 2,031 1,380 2,396
------------ ----------- ----------- ----------- -----------
Liabilities:
Accrued expenses....................... 0 0 0 0 0
Transfers payable to depositor......... 0 35 40 16 11
------------ ----------- ----------- ----------- -----------
Total liabilities..................... 0 35 40 16 11
------------ ----------- ----------- ----------- -----------
Net assets............................ $ 2,939 $ 1,603 $ 1,991 $ 1,364 $ 2,385
============ =========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.................. $ 2,939 $ 1,603 $ 1,991 $ 1,364 $ 2,385
Depositor's equity..................... 0 0 0 0 0
------------ ----------- ----------- ----------- -----------
Net assets applicable to units
outstanding......................... $ 2,939 $ 1,603 $ 1,991 $ 1,364 $ 2,385
============ =========== =========== =========== ===========
Policy owners' units................... 286 179 199 148 267
Depositor's units...................... 0 0 0 0 0
------------ ----------- ----------- ----------- -----------
Units outstanding..................... 286 179 199 148 267
============ =========== =========== =========== ===========
Accumulation unit value............... $ 10.27 $ 8.95 $ 10.00 $ 9.25 $ 8.93
============ =========== =========== =========== ===========
See Notes to the Financial Statements, which is an integral part of this report.
107
WRL Series Life Account
Statements of Assets and Liabilities
At March 31, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL
Pilgrim WRL WRL
WRL Baxter WRL Value Line Great
Salomon Mid Cap Dreyfus Aggressive Companies -
All Cap Growth Mid Cap Growth America/SM/
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares...................... 1,318 2,693 234 113 1,018
=========== =========== =========== =========== ===========
Cost.................................. $ 17,425 $ 56,245 $ 2,742 $ 1,171 $ 10,681
=========== =========== =========== =========== ===========
Investment, at net asset value......... $ 17,126 $ 25,447 $ 2,450 $ 889 $ 9,788
Dividend receivable.................... 0 0 0 0 0
Transfers receivable from depositor.... 0 68 0 0 25
----------- ----------- ----------- ----------- -----------
Total assets.......................... 17,126 25,515 2,450 889 9,813
----------- ----------- ----------- ----------- -----------
Liabilities:
Accrued expenses....................... 0 0 0 0 0
Transfers payable to depositor......... 6 0 14 0 0
----------- ----------- ----------- ----------- -----------
Total liabilities..................... 6 0 14 0 0
----------- ----------- ----------- ----------- -----------
Net assets............................ $ 17,120 $ 25,515 $ 2,436 $ 889 $ 9,813
=========== =========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.................. $ 17,120 $ 25,515 $ 2,436 $ 733 $ 9,622
Depositor's equity..................... 0 0 0 156 191
----------- ----------- ----------- ----------- -----------
Net assets applicable to units
outstanding......................... $ 17,120 $ 25,515 $ 2,436 $ 889 $ 9,813
=========== =========== =========== =========== ===========
Policy owners' units................... 1,367 3,006 244 94 1,010
Depositor's units...................... 0 0 0 20 20
----------- ----------- ----------- ----------- -----------
Units outstanding..................... 1,367 3,006 244 114 1,030
=========== =========== =========== =========== ===========
Accumulation unit value............... $ 12.52 $ 8.49 $ 9.98 $ 7.83 $ 9.53
=========== =========== =========== =========== ===========
See Notes to the Financial Statements, which is an integral part of this report.
108
WRL Series Life Account
Statements of Assets and Liabilities
At March 31, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
WRL WRL WRL WRL
Great Great Gabelli LKCM
Companies- Companies- Global Capital
Technology/SM/ Global/2/ Growth Growth
Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares...................... 623 104 320 7
============= =========== =========== ===========
Cost.................................. $ 5,094 $ 855 $ 2,951 $ 73
============= =========== =========== ===========
Investment, at net asset value......... $ 2,846 $ 730 $ 2,733 $ 62
Dividend receivable.................... 0 0 0 0
Transfers receivable from depositor.... 0 0 13 0
------------- ----------- ----------- -----------
Total assets.......................... 2,846 730 2,746 62
------------- ----------- ----------- -----------
Liabilities:
Accrued expenses....................... 0 0 0 0
Transfers payable to depositor......... 1 7 0 0
------------- ----------- ----------- -----------
Total liabilities..................... 1 7 0 0
------------- ----------- ----------- -----------
Net assets............................ $ 2,845 $ 723 $ 2,746 $ 62
============= =========== =========== ===========
Net Assets Consists of:
Policy owners' equity.................. $ 2,755 $ 706 $ 2,725 $ 42
Depositor's equity..................... 90 17 21 20
------------- ----------- ----------- -----------
Net assets applicable to units
outstanding......................... $ 2,845 $ 723 $ 2,746 $ 62
============= =========== =========== ===========
Policy owners' units................... 608 101 321 5
Depositor's units...................... 20 3 3 3
------------- ----------- ----------- -----------
Units outstanding..................... 628 104 324 8
============= =========== =========== ===========
Accumulation unit value............... $ 4.53 $ 6.97 $ 8.49 $ 7.88
============= =========== =========== ===========
See Notes to the Financial Statements, which is an integral part of this report.
109
WRL Series Life Account
Statements of Assets and Liabilities
At March 31, 2001
All Amounts (except per unit amounts) in Thousands
(unaudited)
Fidelity VIP
III Fidelity VIP
Growth II Fidelity VIP
Opportunities Contrafund(R) Equity-Income
Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares...................... 44 65 58
============== ============== ==============
Cost.................................. $ 817 $ 1,523 $ 1,397
============== ============== ==============
Investment, at net asset value......... $ 660 $ 1,290 $ 1,303
Dividend receivable.................... 0 0 0
Transfers receivable from depositor.... 0 0 5
-------------- -------------- --------------
Total assets.......................... 660 1,290 1,308
-------------- -------------- --------------
Liabilities:
Accrued expenses....................... 0 0 0
Transfers payable to depositor......... 0 0 0
-------------- -------------- --------------
Total liabilities..................... 0 0 0
-------------- -------------- --------------
Net assets............................ $ 660 $ 1,290 $ 1,308
============== ============== ==============
Net Assets Consists of:
Policy owners' equity.................. $ 642 $ 1,270 $ 1,282
Depositor's equity..................... 18 20 26
Net assets applicable to units -------------- -------------- --------------
outstanding......................... $ 660 $ 1,290 $ 1,308
============== ============== ==============
Policy owners' units................... 89 156 125
Depositor's units...................... 2 2 2
-------------- -------------- --------------
Units outstanding..................... 91 158 127
============== ============== ==============
Accumulation unit value............... $ 7.24 $ 8.14 $ 10.30
============== ============== ==============
See Notes to the Financial Statements, which is an integral part of this report.
110
WRL Series Life Account
Statements of Operations
For the Period Ended March 31, 2001
All Amounts in Thousands
(unaudited)
WRL WRL
J.P. Morgan WRL WRL WRL LKCM
Money AEGON Janus Janus Strategic
Market Bond Growth Global Total Return
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income .................................... $795 $ 0 $ 0 $ 0 $ 0
Capital gain distributions ......................... 0 0 0 0 0
---- ---- --------- -------- -------
Total investment income ........................ 795 0 0 0 0
Expenses:
Mortality and expense risk ......................... 126 62 1,987 851 211
---- ---- --------- -------- -------
Net investment income (loss) ................... 669 (62) (1,987) (851) (211)
---- ---- --------- -------- -------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities .. 0 (8) 5,845 3,305 315
Change in unrealized appreciation (depreciation) ... 0 837 (244,734) (73,757) (6,552)
---- ---- --------- -------- -------
Net gain (loss) on investment securities ....... 0 829 (238,889) (70,452) (6,237)
---- ---- --------- -------- -------
Net increase (decrease) in net assets
resulting from operations .................. $669 $767 $(240,876) $(71,303) $(6,448)
==== ==== ========= ======== =======
WRL WRL WRL WRL
Van Kampen Alger WRL Federated Dean
Emerging Aggressive AEGON Growth & Asset
Growth Growth Balanced Income Allocation
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income .................................... $ 0 $ 0 $ 0 $ 0 $ 0
Capital gain distributions ......................... 0 0 0 0 0
--------- -------- ------- ---- ----
Total investment income ........................ 0 0 0 0 0
Expenses:
Mortality and expense risk ......................... 1,140 576 46 65 80
--------- -------- ------- ---- ----
Net investment income (loss) ................... (1,140) (576) (46) (65) (80)
--------- -------- ------- ---- ----
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities .. (54,736) 865 46 41 6
Change in unrealized appreciation (depreciation) ... (84,685) (54,606) (1,301) 949 396
--------- -------- ------- ---- ----
Net gain (loss) on investment securities ....... (139,421) (53,741) (1,255) 990 402
--------- -------- ------- ---- ----
Net increase (decrease) in net assets
resulting from operations .................. $(140,561) $(54,317) $(1,301) $925 $322
========= ======== ======= ==== ====
See Notes to the Financial Statements, which is an integral part of this report.
111
WRL Series Life Account
Statements of Operations
For the Period Ended March 31, 2001
All Amounts in Thousands
(unaudited)
WRL WRL WRL
WRL WRL GE GE Third
C.A.S.E. NWQ International U.S. Avenue
Growth Value Equity Equity Equity Value
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income .................................... $ 0 $ 0 $ 0 $ 0 $ 0
Capital gain distributions ......................... 0 0 0 0 0
------- ----- ------- ------- -----
Total investment income ........................ 0 0 0 0 0
Expenses:
Mortality and expense risk ......................... 55 65 17 66 42
------- ----- ------- ------- -----
Net investment income (loss) ................... (55) (65) (17) (66) (42)
------- ----- ------- ------- -----
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities .. (489) 9 (195) 19 276
Change in unrealized appreciation (depreciation) ... (704) (425) (869) (2,609) (795)
------- ----- ------- ------- -----
Net gain (loss) on investment securities ....... (1,193) (416) (1,064) (2,590) (519)
------- ----- ------- ------- -----
Net increase (decrease) in net assets
resulting from operations .................. $(1,248) $(481) $(1,081) $(2,656) $(561)
======= ===== ======= ======= =====
WRL WRL WRL WRL
J.P. Morgan Goldman WRL T. Rowe T. Rowe
Real Estate Sachs Munder Price Price
Securities Growth Net50 Dividend Growth Small Cap
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income .................................... $ 0 $ 0 $ 0 $ 0 $ 0
Capital gain distributions ......................... 0 0 0 0 0
----- ----- ----- ----- -----
Total investment income ........................ 0 0 0 0 0
Expenses:
Mortality and expense risk ......................... 6 4 3 3 6
----- ----- ----- ----- -----
Net investment income (loss) ................... (6) (4) (3) (3) (6)
----- ----- ----- ----- -----
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities .. 6 (2) (7) 36 (82)
Change in unrealized appreciation (depreciation) ... (35) (235) (172) (138) (484)
----- ----- ----- ----- -----
Net gain (loss) on investment securities ....... (29) (237) (179) (102) (566)
----- ----- ----- ----- -----
Net increase (decrease) in net assets
resulting from operations .................. $ (35) $(241) $(182) $(105) $(572)
===== ===== ===== ===== =====
See Notes to the Financial Statements, which is an integral part of this report.
112
WRL Series Life Account
Statements of Operations
For the Period Ended March 31, 2001
All Amounts in Thousands
(unaudited)
WRL
WRL WRL WRL WRL Great
Salomon Pilgrim Baxter Dreyfus Value Line Companies -
All Cap Mid Cap Growth Mid Cap Aggressive Growth America/SM/
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income .................................... $ 0 $ 0 $ 0 $ 0 $ 0
Capital gain distributions ......................... 0 0 0 0 0
----- -------- ----- ----- -------
Total investment income ........................ 0 0 0 0 0
Expenses:
Mortality and expense risk ......................... 27 78 5 2 20
----- -------- ----- ----- -------
Net investment income (loss) ................... (27) (78) (5) (2) (20)
----- -------- ----- ----- -------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities .. 2 (1,913) (15) (37) 22
Change in unrealized appreciation (depreciation) ... (375) (13,722) (270) (99) (1,595)
----- -------- ----- ----- -------
Net gain (loss) on investment securities ....... (373) (15,635) (285) (136) (1,573)
----- -------- ----- ----- -------
Net increase (decrease) in net assets
resulting from operations .................. $(400) $(15,713) $(290) $(138) $(1,593)
===== ======== ===== ===== =======
WRL WRL WRL WRL
Great Great Gabelli LKCM
Companies - Companies - Global Capital
Technology/SM/ Global/2/ Growth Growth
Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income .................................... $ 0 $ 0 $ 0 $ 0
Capital gain distributions ......................... 0 0 0 0
------- ----- ----- ----
Total investment income ........................ 0 0 0 0
Expenses:
Mortality and expense risk ......................... 8 1 4 0
------- ----- ----- ----
Net investment income (loss) ................... (8) (1) (4) 0
------- ----- ----- ----
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities .. (570) (16) (5) 0
Change in unrealized appreciation (depreciation) ... (943) (110) (185) (11)
------- ----- ----- ----
Net gain (loss) on investment securities ....... (1,513) (126) (190) (11)
------- ----- ----- ----
Net increase (decrease) in net assets
resulting from operations .................. $(1,521) $(127) $(194) $(11)
======= ===== ===== ====
See Notes to the Financial Statements, which is an integral part of this report.
113
WRL Series Life Account
Statements of Operations
For the Period Ended March 31, 2001
All Amounts in Thousands
(unaudited)
Fidelity VIP III
Growth Fidelity VIP II Fidelity VIP
Opportunities Contrafund/(R)/ Equity-Income
Subaccount Subaccount Subaccount
Investment Income:
Dividend income .................................... $ 2 $ 9 $ 13
Capital gain distributions ......................... 0 33 37
----- ----- -----
Total investment income ........................ 2 42 50
Expenses:
Mortality and expense risk ......................... 1 3 2
----- ----- -----
Net investment income (loss) ................... 1 39 48
----- ----- -----
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities .. (21) (20) (11)
Change in unrealized appreciation (depreciation) ... (87) (186) (107)
----- ----- -----
Net gain (loss) on investment securities ....... (108) (206) (118)
----- ----- -----
Net increase (decrease) in net assets
resulting from operations .................. $(107) $(167) $ (70)
===== ===== =====
See Notes to the Financial Statements, which is an integral part of this report.
114
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
J.P. Morgan AEGON Janus
Money Market Bond Growth
Subaccount Subaccount Subaccount
----------------------- ----------------------- ------------------------
March 31, December 31, March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000
--------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss).............. $ 669 $ 2,389 $ (62) $ 1,147 $ (1,987) $ 152,896
Net gain (loss) on investment securities.. 0 0 829 1,222 (238,889) (555,143)
-------- -------- -------- -------- --------- -----------
Net increase (decrease) in net assets
resulting from operations............... 669 2,389 767 2,369 (240,876) (402,247)
-------- -------- -------- -------- --------- -----------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 17,828 12,540 6,657 897 28,493 168,047
-------- -------- -------- -------- --------- -----------
Less cost of units redeemed:
Administrative charges.................. 987 3,274 614 2,341 18,185 69,288
Policy loans............................ 370 1,672 227 1,361 6,202 44,968
Surrender benefits...................... 929 5,687 178 735 6,680 38,262
Death benefits.......................... 7 87 12 23 414 6,224
-------- -------- -------- -------- --------- -----------
2,293 10,720 1,031 4,460 31,481 158,742
-------- -------- -------- -------- --------- -----------
Increase (decrease) in net assets from
capital unit transactions............. 15,535 1,820 5,626 (3,563) (2,988) 9,305
-------- -------- -------- -------- --------- -----------
Net increase (decrease) in net assets... 16,204 4,209 6,393 (1,194) (243,864) (392,942)
Depositor's equity contribution
(net redemption)........................ 0 0 0 0 0 0
Net Assets:
Beginning of period....................... 60,279 56,070 25,935 27,129 961,015 1,353,957
-------- -------- -------- -------- --------- -----------
End of period............................. $ 76,483 $ 60,279 $ 32,328 $ 25,935 $ 717,151 $ 961,015
======== ======== ======== ======== ========= ===========
Unit Activity:
Units outstanding - beginning of period... 3,278 3,206 1,072 1,232 9,366 9,293
Units issued.............................. 7,366 50,376 335 427 717 2,459
Units redeemed............................ (6,534) (50,304) (108) (587) (768) (2,386)
-------- -------- -------- -------- --------- -----------
Units outstanding - end of period......... 4,110 3,278 1,299 1,072 9,315 9,366
======== ======== ======== ======== ========= ===========
See Notes to the Financial Statements, which is an integral part of this report.
115
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL
WRL LKCM Van Kampen
Janus Strategic Emerging
Global Total Return Growth
Subaccount Subaccount Subaccount
----------------------- ----------------------- ------------------------
March 31, December 31, March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000
--------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss).............. $ (851) $ 98,726 $ (211) $ 7,415 $ (1,140) $ 168,610
Net gain (loss) on investment securities.. (70,452) (191,334) (6,237) (12,297) (139,421) (261,688)
--------- --------- -------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations............... (71,303) (92,608) (6,448) (4,882) (140,561) (93,078)
--------- --------- -------- --------- --------- ---------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 10,924 112,253 3,808 10,776 12,042 145,357
--------- --------- -------- --------- --------- ---------
Less cost of units redeemed:
Administrative charges.................. 8,251 31,746 2,002 7,939 9,814 35,247
Policy loans............................ 2,090 15,396 449 2,710 3,188 22,735
Surrender benefits...................... 2,999 12,985 705 2,844 4,428 20,687
Death benefits.......................... 113 907 28 600 313 1,538
--------- --------- -------- --------- --------- ---------
13,453 61,034 3,184 14,093 17,743 80,207
--------- --------- -------- --------- --------- ---------
Increase (decrease) in net assets from
capital unit transactions............. (2,529) 51,219 624 (3,317) (5,701) 65,150
--------- --------- -------- --------- --------- ---------
Net increase (decrease) in net assets... (73,832) (41,389) (5,824) (8,199) (146,262) (27,928)
Depositor's equity contribution
(net redemption)........................ 0 0 0 0 0 0
Net Assets:
Beginning of period....................... 410,109 451,498 98,466 106,665 580,202 608,130
--------- --------- -------- --------- --------- ---------
End of period............................. $ 336,277 $ 410,109 $ 92,642 $ 98,466 $ 433,940 $ 580,202
========= ========= ======== ========= ========= =========
Unit Activity:
Units outstanding - beginning of period... 12,899 11,605 4,523 4,674 10,226 9,357
Units issued.............................. 963 4,570 344 1,327 2,104 11,606
Units redeemed............................ (1,061) (3,276) (315) (1,478) (2,257) (10,737)
--------- --------- -------- --------- --------- ---------
Units outstanding - end of period......... 12,801 12,899 4,552 4,523 10,073 10,226
========= ========= ======== ========= ========= =========
See Notes to the Financial Statements, which is an integral part of this report.
116
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
Alger AEGON Federated
Aggressive Growth Balanced Growth & Income
Subaccount Subaccount Subaccount
----------------------- ----------------------- ------------------------
March 31, December 31, March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000
--------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss).............. $ (576) $ 41,268 $ (46) $ 215 $ (65) $ 1,001
Net gain (loss) on investment securities.. (53,741) (168,747) (1,255) 742 990 4,230
--------- --------- -------- --------- -------- ---------
Net increase (decrease) in net assets
resulting from operations............... (54,317) (127,479) (1,301) 957 925 5,231
--------- --------- -------- --------- -------- ---------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 14,005 103,588 1,643 4,955 7,872 7,863
--------- --------- -------- --------- -------- ---------
Less cost of units redeemed:
Administrative charges.................. 7,269 26,734 561 2,124 671 2,328
Policy loans............................ 1,713 12,341 99 442 91 628
Surrender benefits...................... 1,735 10,374 150 559 215 534
Death benefits.......................... 66 666 7 18 5 110
--------- --------- -------- --------- -------- ---------
10,783 50,115 817 3,143 982 3,600
--------- --------- -------- --------- -------- ---------
Increase (decrease) in net assets from
capital unit transactions............. 3,222 53,473 826 1,812 6,890 4,263
--------- --------- -------- --------- -------- ---------
Net increase (decrease) in net assets... (51,095) (74,006) (475) 2,769 7,815 9,494
Depositor's equity contribution
(net redemption)........................ 0 0 0 0 0 0
Net Assets:
Beginning of period....................... 280,172 354,178 20,952 18,183 26,883 17,389
--------- --------- -------- --------- -------- ---------
End of period............................. $ 229,077 $ 280,172 $ 20,477 $ 20,952 $ 34,698 $ 26,883
========= ========= ======== ========= ======== ========
Unit Activity:
Units outstanding - beginning of period... 9,215 7,928 1,303 1,186 1,349 1,117
Units issued.............................. 1,046 3,925 159 569 575 996
Units redeemed............................ (948) (2,638) (106) (452) (239) (764)
--------- --------- -------- --------- -------- ---------
Units outstanding - end of period......... 9,313 9,215 1,356 1,303 1,685 1,349
========= ========= ======== ========= ======== =========
See Notes to the Financial Statements, which is an integral part of this report.
117
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
Dean C.A.S.E. NWQ
Asset Allocation Growth Value Equity
Subaccount Subaccount Subaccount
----------------------- ----------------------- ------------------------
March 31, December 31, March 31, December 31, March 31, December 31,
---------- ------------ --------- ------------ ---------- ------------
2001 2000 2001 2000 2001 2000
---------- ------------ --------- ------------ ---------- ------------
Operations:
Net investment income (loss)............... $ (80) $ 2,290 $ (55) $ 4,321 $ (65) $ 412
Net gain (loss) on investment securities... 402 2,493 (1,193) (10,421) (416) 2,965
-------- --------- -------- --------- -------- ----------
Net increase (decrease) in net assets
resulting from operations................. 322 4,783 (1,248) (6,100) (481) 3,377
-------- --------- -------- --------- -------- ----------
Capital Unit Transactions:
Proceeds from units sold (transferred)..... 5,280 1,235 3,084 5,488 2,740 2,652
-------- --------- -------- --------- -------- ----------
Less cost of units redeemed:
Administrative charges.................... 788 3,204 721 2,868 609 2,467
Policy loans.............................. 270 785 181 767 140 596
Surrender benefits........................ 193 1,058 176 885 164 660
Death benefits............................ 15 75 22 33 9 96
-------- --------- -------- --------- -------- ----------
1,266 5,122 1,100 4,553 922 3,819
-------- --------- -------- --------- -------- ----------
Increase (decrease) in net assets from
capital unit transactions................ 4,014 (3,887) 1,984 935 1,818 (1,167)
-------- --------- -------- --------- -------- ----------
Net increase (decrease) in net assets..... 4,336 896 736 (5,165) 1,337 2,210
Depositor's equity contribution
(net redemption).......................... 0 0 0 0 0 0
Net Assets:
Beginning of period........................ 34,213 33,317 22,344 27,509 28,888 26,678
-------- --------- -------- --------- -------- ----------
End of period.............................. $ 38,549 $ 34,213 $ 23,080 $ 22,344 $ 30,225 $ 28,888
======== ========= ======== ========= ======== ==========
Unit Activity:
Units outstanding - beginning of period.... 1,881 2,128 1,713 1,657 1,797 1,895
Units issued............................... 345 729 408 1,014 301 907
Units redeemed............................. (135) (976) (272) (958) (189) (1,005)
-------- --------- -------- --------- -------- ----------
Units outstanding - end of period.......... 2,091 1,881 1,849 1,713 1,909 1,797
======== ========= ======== ========= ======== ==========
See Notes to the Financial Statements, which is an integral part of this report.
118
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL
GE WRL WRL
International GE Third Avenue
Equity U.S. Equity Value
Subaccount Subaccount Subaccount
----------------------- ------------------------ ------------------------
March 31, December 31, March 31, December 31, March 31, December 31,
---------- ------------ ---------- ------------ ---------- ------------
2001 2000 2001 2000 2001 2000
---------- ------------ ---------- ------------ ---------- ------------
Operations:
Net investment income (loss)............... $ (17) $ 1,124 $ (66) $ 1,071 $ (42) $ 426
Net gain (loss) on investment securities... (1,064) (2,405) (2,590) (1,646) (519) 1,699
------- --------- -------- --------- -------- ---------
Net increase (decrease) in net assets
resulting from operations................. (1,081) (1,281) (2,656) (575) (561) 2,125
------- --------- -------- --------- -------- ---------
Capital Unit Transactions:
Proceeds from units sold (transferred)..... 519 3,155 2,258 7,853 5,439 12,970
------- --------- -------- --------- -------- ---------
Less cost of units redeemed:
Administrative charges.................... 207 663 735 2,712 338 560
Policy loans.............................. 19 150 120 440 122 894
Surrender benefits........................ 29 125 121 744 70 306
Death benefits............................ 1 5 2 27 0 11
------- --------- -------- --------- -------- ---------
256 943 978 3,923 530 1,771
------- --------- -------- --------- -------- ---------
Increase (decrease) in net assets from
capital unit transactions................ 263 2,212 1,280 3,930 4,909 11,199
------- --------- -------- --------- -------- ---------
Net increase (decrease) in net assets..... (818) 931 (1,376) 3,355 4,348 13,324
Depositor's equity contribution
(net redemption).......................... 0 0 0 0 0 0
Net Assets:
Beginning of period........................ 7,944 7,013 29,771 26,416 16,735 3,411
------- --------- -------- --------- -------- ---------
End of period............................... $ 7,126 $ 7,944 $ 28,395 $ 29,771 $ 21,083 $ 16,735
======= ========= ======== ========= ======== =========
Unit Activity:
Units outstanding - beginning of period.... 639 475 1,683 1,468 1,177 322
Units issued............................... 159 474 271 1,064 651 1,432
Units redeemed............................. (139) (310) (199) (849) (309) (577)
------- --------- -------- --------- -------- ---------
Units outstanding - end of period.......... 659 639 1,755 1,683 1,519 1,177
======= ========= ======== ========= ======== =========
See Notes to the Financial Statements, which is an integral part of this report.
119
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
J.P. Morgan Goldman Sachs Munder
Real Estate Securities Growth Net50
Subaccount Subaccount Subaccount
----------------------- ----------------------- -----------------------
March 31, December 31, March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000
--------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss) ..................... $ (6) $ 17 $ (4) $ 7 $ (3) $ 11
Net gain (loss) on investment securities ......... (29) 345 (237) (156) (179) (27)
------ ------ ------ ------ ------ ----
Net increase (decrease) in net assets
resulting from operations ...................... (35) 362 (241) (149) (182) (16)
------ ------ ------ ------ ------ ----
Capital Unit Transactions:
Proceeds from units sold (transferred) ........... 694 2,080 270 1,002 1,344 622
------ ------ ------ ------ ------ ----
Less cost of units redeemed:
Administrative charges ....................... 67 86 50 123 28 52
Policy loans ................................. 97 60 1 44 2 7
Surrender benefits ........................... 32 36 2 8 3 2
Death benefits ............................... 0 0 0 0 0 0
------ ------ ------ ------ ------ ----
196 182 53 175 33 61
------ ------ ------ ------ ------ ----
Increase (decrease) in net assets from
capital unit transactions .................. 498 1,898 217 827 1,311 561
------ ------ ------ ------ ------ ----
Net increase (decrease) in net assets ........ 463 2,260 (24) 678 1,129 545
Depositor's equity contribution (net redemption) . 0 (411) 0 (28) 0 (27)
Net Assets:
Beginning of period .............................. 2,476 627 1,627 977 862 344
------ ------ ------ ------ ------ ----
End of period .................................... $2,939 $2,476 $1,603 $1,627 $1,991 $862
====== ====== ====== ====== ====== ====
Unit Activity:
Units outstanding - beginning of period .......... 239 78 158 87 80 31
Units issued ..................................... 197 816 54 161 146 80
Units redeemed ................................... (150) (655) (33) (90) (27) (31)
------ ------ ------ ------ ------ ----
Units outstanding - end of period ................ 286 239 179 158 199 80
====== ====== ====== ====== ====== ====
See Notes to the Financial Statements, which is an integral part of this report.
120
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
T. Rowe Price T. Rowe Price Salomon
Dividend Growth Small Cap All Cap
Subaccount Subaccount Subaccount
---------------------- ------------------------ -------------------------
March 31, December 31, March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000
--------- ------------ ---------- ------------ ---------- ------------
Operations:
Net investment income (loss)............... $ (3) $ (4) $ (6) $ 5 $ (27) $ 57
Net gain (loss) on investment securities... (102) 87 (566) (412) (373) 161
------ --------- ------ --------- ------- ---------
Net increase (decrease) in net assets
resulting from operations................. (105) 83 (572) (407) (400) 218
------ --------- ------ --------- ------- ---------
Capital Unit Transactions:
Proceeds from units sold (transferred)..... 551 516 495 2,291 10,036 7,892
------ --------- ------ --------- ------- ---------
Less cost of units redeemed:
Administrative charges.................... 32 83 80 167 303 257
Policy loans.............................. 15 7 23 27 241 76
Surrender benefits........................ 20 2 3 15 44 58
Death benefits............................ 0 0 0 0 0 0
------ --------- ------ --------- ------- ---------
67 92 106 209 588 391
------ --------- ------ --------- ------- ---------
Increase (decrease)in net assets from
capital unit transactions............... 484 424 389 2,082 9,448 7,501
------ --------- ------ --------- ------- ---------
Net increase (decrease) in net assets.... 379 507 (183) 1,675 9,048 7,719
Depositor's equity contribution
(net redemption)......................... 0 (23) 0 (32) 0 (30)
Net Assets:
Beginning of period....................... 985 501 2,568 925 8,072 383
------ --------- ------ --------- ------- ---------
End of period............................. $1,364 $ 985 $2,385 $ 2,568 $17,120 $ 8,072
====== ========= ====== ========= ======= =========
Unit Activity:
Units outstanding - beginning of period... 99 55 230 75 643 36
Units issued.............................. 95 132 99 301 906 836
Units redeemed............................ (46) (88) (62) (146) (182) (229)
------ --------- ------ --------- ------- ---------
Units outstanding - end of period......... 148 99 267 230 1,367 643
====== ========= ====== ========= ======= =========
See Notes to the Financial Statements, which is an integral part of this report.
121
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
Pilgrim Baxter Dreyfus Value Line
Mid Cap Growth Mid Cap Aggressive Growth
Subaccount Subaccount Subaccount
----------------------- ----------------------- -----------------------
March 31, December 31, March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000 2001 2000 2001 2000(1)
--------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss) ................ $ (78) $ 81 $ (5) $ 20 $ (2) $ (4)
Net gain (loss) on investment securities .... (15,635) (16,860) (285) 40 (136) (185)
-------- --------- ------ ------ ------ ------
Net increase (decrease) in net assets
resulting from operations ................. (15,713) (16,779) (290) 60 (138) (189)
-------- --------- ------ ------ ------ ------
Capital Unit Transactions:
Proceeds from units sold (transferred) ...... 3,209 55,513 1,027 1,562 10 1,091
-------- --------- ------ ------ ------ ------
Less cost of units redeemed:
Administrative charges .................. 1,339 2,546 65 96 14 19
Policy loans ............................ 219 1,156 41 21 24 16
Surrender benefits ...................... 116 323 6 4 3 0
Death benefits .......................... 9 72 0 0 9 0
-------- --------- ------ ------ ------ ------
1,683 4,097 112 121 50 35
-------- --------- ------ ------ ------ ------
Increase (decrease) in net assets
from capital unit transactions ........ 1,526 51,416 915 1,441 (40) 1,056
-------- --------- ------ ------ ------ ------
Net increase (decrease) in net assets ... (14,187) 34,637 625 1,501 (178) 867
Depositor's equity contribution (net
redemption) ............................... 0 0 0 (27) 0 200
Net Assets:
Beginning of period ......................... 39,702 5,065 1,811 337 1,067 0
-------- --------- ------ ------ ------ ------
End of period ............................... $ 25,515 $ 39,702 $2,436 $1,811 $ 889 $1,067
======== ========= ====== ====== ====== ======
Unit Activity:
Units outstanding - beginning of period ..... 2,929 317 159 33 119 0
Units issued ................................ 911 4,015 145 311 23 132
Units redeemed .............................. (834) (1,403) (60) (185) (28) (13)
-------- --------- ------ ------ ------ ------
Units outstanding - end of period ........... 3,006 2,929 244 159 114 119
======== ========= ====== ====== ====== ======
See Notes to the Financial Statements, which is an integral part of this report.
122
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL WRL WRL
Great Great Great
Companies - Companies - Companies -
America/SM/ Technology/SM/ Global/2/
Subaccount Subaccount Subaccount
------------------------- ------------------------- -------------------------
March 31, December 31, March 31, December 31, March 31, December 31,
---------- ------------ ---------- ------------ -------------------------
2001 2000/(1)/ 2001 2000/(1)/ 2001 2000/(1)/
---------- ------------ ---------- ------------ ---------- ------------
Operations:
Net investment income (loss) ......... $ (20) $ (28) $ (8) $ (13) $ (1) $ (1)
Net gain (loss) on investment
securities .......................... (1,573) 715 (1,513) (1,437) (126) (16)
------- --------- ------- --------- ------ ---------
Net increase (decrease) in net
assets resulting from operations .... (1,593) 687 (1,521) (1,450) (127) (17)
------- --------- ------- --------- ------ ---------
Capital Unit Transactions:
Proceeds from units sold
(transferred) ....................... 3,191 8,008 1,719 4,240 398 494
------- --------- ------- --------- ------ ---------
Less cost of units redeemed:
Administrative charges ............. 188 177 90 80 20 7
Policy loans ....................... 44 110 23 53 9 1
Surrender benefits ................. 44 117 22 69 13 0
Death benefits ..................... 0 0 6 0 0 0
------- --------- ------- --------- ------ ---------
276 404 141 202 42 8
------- --------- ------- --------- ------ ---------
Increase (decrease) in net assets from
capital unit transactions ......... 2,915 7,604 1,578 4,038 356 486
------- --------- ------- --------- ------ ---------
Net increase (decrease) in net
assets ............................ 1,322 8,291 57 2,588 229 469
Depositor's equity contribution
(net redemption) .................... 0 200 0 200 0 25
Net Assets:
Beginning of period .................. 8,491 0 2,788 0 494 0
------- --------- ------- --------- ------ ---------
End of period ........................ $ 9,813 $ 8,491 $ 2,845 $ 2,788 $ 723 $ 494
======= ========= ======= ========= ====== =========
Unit Activity:
Units outstanding - beginning of
period .............................. 751 0 416 0 58 0
Units issued ......................... 438 878 455 557 98 63
Units redeemed ....................... (159) (127) (243) (141) (52) (5)
------- --------- ------- --------- ------ ---------
Units outstanding - end of period .... 1,030 751 628 416 104 58
======= ========= ======= ========= ====== =========
See Notes to the Financial Statements, which is an integral part of this report.
123
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
WRL
WRL LKCM
Gabelli Capital
Global Growth Growth
Subaccount Subaccount
------------------------- -----------
March 31, December 31, March 31,
--------- ------------ -----------
2001 2000(1) 2001(1)
--------- ------------ -----------
Operations:
Net investment income (loss) ................... $ (4) $ (1) $ 0
Net gain (loss) on investment securities ....... (190) (34) (11)
------ ------ ----
Net increase (decrease) in net assets
resulting from operations .................... (194) (35) (11)
------ ------ ----
Capital Unit Transactions:
Proceeds from units sold (transferred) ......... 2,073 1,014 49
------ ------ ----
Less cost of units redeemed:
Administrative charges ....................... 98 33 1
Policy loans ................................. 5 0 0
Surrender benefits ........................... 1 0 0
Death benefits ............................... 0 0 0
------ ------ ----
104 33 1
------ ------ ----
Increase (decrease) in net assets from
capital unit transactions .................. 1,969 981 48
------ ------ ----
Net increase (decrease) in net assets ........ 1,775 946 37
Depositor's equity contribution ................ 0 25 25
(net redemption)
Net Assets:
Beginning of period ............................ 971 0 0
------ ------ ----
End of period .................................. $2,746 $ 971 $ 62
====== ====== ====
Unit Activity:
Units outstanding - beginning of period ........ 107 0 0
Units issued ................................... 272 123 8
Units redeemed ................................. (55) (16) 0
------ ------ ----
Units outstanding - end of period .............. 324 107 8
====== ====== ====
See Notes to the Financial Statements, which is an integral part of this report.
124
WRL Series Life Account
Statements of Changes in Net Assets
For the Period Ended
All Amounts in Thousands
(unaudited)
Fidelity VIP III Fidelity VIP II Fidelity VIP
Growth Opportunities Contrafund(R) Equity-Income
Subaccount Subaccount Subaccount
------------------------ ------------------------ ------------------------
March 31, December 31, March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------ --------- ------------
2001 2000(1) 2001 2000(1) 2001 2000(1)
--------- ------------ --------- ------------ --------- ------------
Operations:
Net investment income (loss) ............. $ 1 $ (2) $ 39 $ (3) $ 48 $ (1)
Net gain (loss) on investment securities.. (108) (73) (206) (48) (118) 17
----- ---- ------ ------ ------ ----
Net increase (decrease) in net assets
resulting from operations ............... (107) (75) (167) (51) (70) 16
----- ---- ------ ------ ------ ----
Capital Unit Transactions:
Proceeds from units sold (transferred) ... 222 633 463 1,085 1,096 276
----- ---- ------ ------ ------ ----
Less cost of units redeemed:
Administrative charges ................. 16 14 31 23 16 8
Policy loans ........................... 1 5 5 5 1 2
Surrender benefits ..................... 0 2 0 1 8 0
Death benefits ......................... 0 0 0 0 0 0
----- ---- ------ ------ ------ ----
17 21 36 29 25 10
----- ---- ------ ------ ------ ----
Increase (decrease) in net assets from
capital unit transactions ............. 205 612 427 1,056 1,071 266
----- ---- ------ ------ ------ ----
Net increase (decrease) in net assets .. 98 537 260 1,005 1,001 282
Depositor's equity contribution
(net redemption) ........................ 0 25 0 25 0 25
Net Assets:
Beginning of period ...................... 562 0 1,030 0 307 0
----- ---- ------ ------ ------ ----
End of period ............................ $ 660 $562 $1,290 $1,030 $1,308 $307
===== ==== ====== ====== ====== ====
Unit Activity:
Units outstanding - beginning of period .. 66 0 110 0 28 0
Units issued ............................. 38 76 71 124 143 39
Units redeemed ........................... (13) (10) (23) (14) (44) (11)
----- ---- ------ ------ ------ ----
Units outstanding - end of period ........ 91 66 158 110 127 28
===== ==== ====== ====== ====== ====
See Notes to the Financial Statements, which is an integral part of this report.
125
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL J.P. Morgan Money Market Subaccount
---------------------------------------------------------------------
March 31, December 31,
--------- --------------------------------------------------------
2001 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 18.39 $ 17.49 $ 16.83 $ 16.13 $ 15.45 $ 14.83
-------- -------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).............. 0.22 0.90 0.66 0.70 0.68 0.62
Net realized and unrealized gain (loss)
on investment........................... 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- --------
Net income (loss) from operations....... 0.22 0.90 0.66 0.70 0.68 0.62
-------- -------- -------- -------- -------- --------
Accumulation unit value, end of period........ $ 18.61 $ 18.39 $ 17.49 $ 16.83 $ 16.13 $ 15.45
======== ======== ======== ======== ======== ========
Total return.................................. 1.18 % 5.17 % 3.92 % 4.36 % 4.37 % 4.17 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 76,483 $ 60,279 $ 56,070 $ 24,576 $ 16,440 $ 12,740
Ratio of net investment income (loss) to
average net assets........................ 4.68 % 5.05 % 3.87 % 4.24 % 4.28 % 4.07 %
WRL AEGON Bond Subaccount
---------------------------------------------------------------------
March 31, December 31,
--------- --------------------------------------------------------
2001 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- --------
Accumulation unit value, beginning of period.. $ 24.19 $ 22.01 $ 22.89 $ 21.12 $ 19.53 $ 19.67
-------- -------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).............. (0.05) 1.04 1.13 1.01 1.01 0.99
Net realized and unrealized gain (loss)
on investment........................... 0.74 1.14 (2.01) 0.76 0.58 (1.13)
-------- -------- -------- -------- -------- --------
Net income (loss) from operations....... 0.69 2.18 (0.88) 1.77 1.59 (0.14)
-------- -------- -------- -------- -------- --------
Accumulation unit value, end of period........ $ 24.88 $ 24.19 $ 22.01 $ 22.89 $ 21.12 $ 19.53
======== ======== ======== ======== ======== ========
Total return.................................. 2.83 % 9.90 % (3.81)% 8.34 % 8.18 % (0.75)%
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 32,328 $ 25,935 $ 27,129 $ 24,934 $ 17,657 $ 11,585
Ratio of net investment income (loss) to
average net assets........................ (0.90)% 4.58 % 5.10 % 4.58 % 5.06 % 5.34 %
See Notes to the Financial Statements, which is an integral part of this report.
126
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Janus Growth Subaccount
----------------------------------------------------------------------------
March 31, December 31,
--------- ---------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- ----------- -------- --------- ---------
Accumulation unit value, beginning of period.. $ 102.61 $ 145.70 $ 92.07 $ 56.48 $ 48.48 $ 41.47
--------- --------- ----------- --------- --------- ---------
Income from operations:
Net investment income (loss).............. (0.21) 16.41 25.03 0.13 5.83 2.88
Net realized and unrealized gain (loss)
on investment........................... (25.41) (59.50) 28.60 35.46 2.17 4.13
--------- --------- ----------- --------- --------- ---------
Net income (loss) from operations....... (25.62) (43.09) 53.63 35.59 8.00 7.01
--------- --------- ----------- --------- --------- ---------
Accumulation unit value, end of period........ $ 76.99 $ 102.61 $ 145.70 $ 92.07 $ 56.48 $ 48.48
========= ========= =========== ========= ========= =========
Total return.................................. (24.96)% (29.58)% 58.25 % 63.01 % 16.50 % 16.91 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 717,151 $ 961,015 $ 1,353,957 $ 798,027 $ 450,271 $ 349,491
Ratio of net investment income (loss) to
average net assets........................ (0.90)% 11.75 % 22.67 % 0.19 % 10.84 % 6.41 %
WRL Janus Global Subaccount
----------------------------------------------------------------------------
March 31, December 31,
--------- ---------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- ----------- -------- --------- ---------
Accumulation unit value, beginning of period.. $ 31.79 $ 38.91 $ 22.94 $ 17.80 $ 15.13 $ 11.95
--------- --------- ----------- --------- --------- ---------
Income from operations:
Net investment income (loss).............. (0.07) 7.93 2.44 0.82 2.30 1.50
Net realized and unrealized gain (loss)
on investment........................... (5.45) (15.05) 13.53 4.32 0.37 1.68
--------- --------- ----------- --------- --------- ---------
Net income (loss) from operations....... (5.52) (7.12) 15.97 5.14 2.67 3.18
--------- --------- ----------- --------- --------- ---------
Accumulation unit value, end of period........ $ 26.27 $ 31.79 $ 38.91 $ 22.94 $ 17.80 $ 15.13
========= ========= =========== ========= ========= =========
Total return.................................. (17.37)% (18.28)% 69.58 % 28.86 % 17.69 % 26.60 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 336,277 $ 410,109 $ 451,498 $ 233,256 $ 145,017 $ 83,159
Ratio of net investment income (loss) to
average net assets........................ (0.90)% 20.55 % 9.07 % 3.92 % 13.39 % 11.09 %
See Notes to the Financial Statements, which is an integral part of this report.
127
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL LKCM Strategic Total Return Subaccount
--------------------------------------------------------------------------
March 31, December 31,
--------- -------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- ---------
Accumulation unit value, beginning of period.. $ 21.77 $ 22.82 $ 20.55 $ 18.91 $ 15.66 $ 13.74
--------- --------- --------- --------- --------- ---------
Income from operations:
Net investment income (loss).............. (0.05) 1.63 1.68 0.71 1.56 0.82
Net realized and unrealized gain (loss)
on investment........................... (1.37) (2.68) 0.59 0.93 1.69 1.10
--------- --------- --------- --------- --------- ---------
Net income (loss) from operations....... (1.42) (1.05) 2.27 1.64 3.25 1.92
--------- --------- --------- --------- --------- ---------
Accumulation unit value, end of period........ $ 20.35 $ 21.77 $ 22.82 $ 20.55 $ 18.91 $ 15.66
========= ========= ========= ========= ========= =========
Total return.................................. (6.51)% (4.62)% 11.07 % 8.66 % 20.77 % 13.97 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 92,642 $ 98,466 $ 106,665 $ 98,926 $ 80,753 $ 55,900
Ratio of net investment income (loss) to
average net assets........................ (0.90)% 7.43 % 7.93 % 3.67 % 8.89 % 5.76 %
WRL Van Kampen Emerging Growth Subaccount
--------------------------------------------------------------------------
March 31, December 31,
--------- -------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- ---------
Accumulation unit value, beginning of period.. $ 56.74 $ 64.99 $ 31.96 $ 23.48 $ 19.51 $ 16.56
--------- --------- --------- --------- --------- ---------
Income from operations:
Net investment income (loss).............. (0.11) 16.83 9.32 0.91 2.20 0.82
Net realized and unrealized gain (loss)
on investment........................... (13.55) (25.08) 23.71 7.57 1.77 2.13
--------- --------- --------- --------- --------- ---------
Net income (loss) from operations....... (13.66) (8.25) 33.03 8.48 3.97 2.95
--------- --------- --------- --------- --------- ---------
Accumulation unit value, end of period........ $ 43.08 $ 56.74 $ 64.99 $ 31.96 $ 23.48 $ 19.51
========= ========= ========= ========= ========= =========
Total return.................................. (24.07)% (12.70)% 103.33 % 36.11 % 20.37 % 17.82 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 433,940 $ 580,202 $ 608,130 $ 262,665 $ 164,702 $ 107,925
Ratio of net investment income (loss) to
average net assets........................ (0.90)% 23.62 % 23.19 % 3.44 % 10.18 % 4.51 %
See Notes to the Financial Statements, which is an integral part of this report.
128
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Alger Aggressive Growth Subaccount
--------------------------------------------------------------------------
March 31, December 31,
--------- -------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- ---------
Accumulation unit value, beginning of period ....... $ 30.40 $ 44.67 $ 26.67 $ 18.10 $ 14.70 $ 13.43
--------- --------- --------- --------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.06) 4.76 4.90 1.33 1.75 0.36
Net realized and unrealized gain (loss)
on investment ................................ (5.74) (19.03) 13.10 7.24 1.65 0.91
--------- --------- --------- --------- --------- ---------
Net income (loss) from operations ............ (5.80) (14.27) 18.00 8.57 3.40 1.27
--------- --------- --------- --------- --------- ---------
Accumulation unit value, end of period ............. $ 24.60 $ 30.40 $ 44.67 $ 26.67 $ 18.10 $ 14.70
========= ========= ========= ========= ========= =========
Total return ....................................... (19.09)% (31.94)% 67.52 % 47.36 % 23.14 % 9.46 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 229,077 $ 280,172 $ 354,178 $ 177,857 $ 94,652 $ 54,408
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 11.65 % 15.54 % 6.20 % 10.26 % 2.65 %
WRL AEGON Balanced Subaccount
--------------------------------------------------------------------------
March 31, December 31,
--------- -------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- ---------
Accumulation unit value, beginning of period ....... $ 16.08 $ 15.33 $ 15.02 $ 14.17 $ 12.21 $ 11.13
--------- --------- --------- --------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.03) 0.17 0.19 0.25 1.55 0.36
Net realized and unrealized gain (loss)
on investment ................................ (0.94) 0.58 0.12 0.60 0.41 0.72
--------- --------- --------- --------- --------- ---------
Net income (loss) from operations ............ (0.97) 0.75 0.31 0.85 1.96 1.08
--------- --------- --------- --------- --------- ---------
Accumulation unit value, end of period ............. $ 15.11 $ 16.08 $ 15.33 $ 15.02 $ 14.17 $ 12.21
========= ========= ========= ========= ========= =========
Total return ....................................... (6.06)% 4.88 % 2.11 % 5.98 % 16.06 % 9.73 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 20,477 $ 20,952 $ 18,183 $ 14,864 $ 10,716 $ 6,418
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 1.10 % 1.26 % 1.76 % 11.62 % 3.18 %
See Notes to the Financial Statements, which is an integral part of this report.
129
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Federated Growth & Income Subaccount
--------------------------------------------------------------------------
March 31, December 31,
--------- -------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- ---------
Accumulation unit value, beginning of period ....... $ 19.93 $ 15.57 $ 16.44 $ 16.09 $ 13.03 $ 11.77
--------- --------- --------- --------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.04) 0.85 1.05 0.77 2.61 0.76
Net realized and unrealized gain (loss)
on investment ................................ 0.70 3.51 (1.92) (0.42) 0.45 0.50
--------- --------- --------- --------- --------- ---------
Net income (loss) from operations ............ 0.66 4.36 (0.87) 0.35 3.06 1.26
--------- --------- --------- --------- --------- ---------
Accumulation unit value, end of period ............. $ 20.59 $ 19.93 $ 15.57 $ 16.44 $ 16.09 $ 13.03
========= ========= ========= ========= ========= =========
Total return ....................................... 3.35 % 28.01 % (5.31)% 2.13 % 23.54 % 10.64 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 34,698 $ 26,883 $ 17,389 $ 16,047 $ 9,063 $ 5,501
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 5.00 % 6.51 % 4.83 % 18.50 6.38
WRL Dean Asset Allocation Subaccount
--------------------------------------------------------------------------
March 31, December 31,
--------- -------------------------------------------------------------
2001 2000 1999 1998 1997 1996
--------- --------- --------- --------- --------- ---------
Accumulation unit value, beginning of period ....... $ 18.19 $ 15.66 $ 16.74 $ 15.60 $ 13.50 $ 11.90
--------- --------- --------- --------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.04) 1.20 0.41 1.58 1.20 0.53
Net realized and unrealized gain (loss)
on investment ................................ 0.29 1.33 (1.49) (0.44) 0.90 1.07
--------- --------- --------- --------- --------- ---------
Net income (loss) from operations ............ 0.25 2.53 (1.08) 1.14 2.10 1.60
--------- --------- --------- --------- --------- ---------
Accumulation unit value, end of period ............. $ 18.44 $ 18.19 $ 15.66 $ 16.74 $ 15.60 $ 13.50
========= ========= ========= ========= ========= =========
Total return ....................................... 1.37 % 16.16 % (6.48)% 7.36 % 15.55 % 13.40 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 38,549 $ 34,213 $ 33,317 $ 39,904 $ 29,123 $ 17,946
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 7.33 % 2.50 % 9.69 % 8.14 % 4.35 %
See Notes to the Financial Statements, which is an integral part of this report.
130
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL C.A.S.E. Growth Subaccount
--------------------------------------------------------------------
March 31, December 31,
--------- -------------------------------------------------------
2001 2000 1999 1998 1997 1996(1)
--------- -------- -------- -------- -------- -------
Accumulation unit value, beginning of period.. $ 13.04 $ 16.60 $ 12.51 $ 12.32 $ 10.81 $ 10.00
-------- -------- -------- -------- -------- -------
Income from operations:
Net investment income (loss) ............. (0.03) 2.56 1.52 1.24 1.51 0.37
Net realized and unrealized gain (loss)
on investment .......................... (0.53) (6.12) 2.57 (1.05) 0.00 0.44
-------- -------- -------- -------- -------- -------
Net income (loss) from operations ...... (0.56) (3.56) 4.09 0.19 1.51 0.81
-------- -------- -------- -------- -------- -------
Accumulation unit value, end of period ....... $ 12.48 $ 13.04 $ 16.60 $ 12.51 $ 12.32 $ 10.81
======== ======== ======== ======== ======== =======
Total return ................................. (4.29)% (21.42)% 32.65 % 1.56 % 14.00 % 8.09 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 23,080 $ 22,344 $ 27,509 $ 17,730 $ 11,946 $ 4,466
Ratio of net investment income (loss) to
average net assets ........................ (0.90)% 16.28 % 10.16 % 10.21 % 12.65 % 6.11 %
WRL NWQ Value Equity Subaccount
--------------------------------------------------------------------
March 31, December 31,
--------- -------------------------------------------------------
2001 2000 1999 1998 1997 1996(1)
--------- -------- -------- -------- -------- -------
Accumulation unit value, beginning of period.. 16.07 $ 14.08 $ 13.16 $ 13.94 $ 11.25 $ 10.00
-------- -------- -------- -------- -------- -------
Income from operations:
Net investment income (loss).............. (0.03) 0.23 0.20 0.95 0.14 0.05
Net realized and unrealized gain (loss)
on investment........................... (0.20) 1.76 0.72 (1.73) 2.55 1.20
-------- -------- -------- -------- -------- -------
Net income (loss) from operations....... (0.23) 1.99 0.92 (0.78) 2.69 1.25
-------- -------- -------- -------- -------- -------
Accumulation unit value, end of period........ $ 15.84 $ 16.07 $ 14.08 $ 13.16 $ 13.94 $ 11.25
======== ======== ======== ======== ======== =======
Total return.................................. (1.47)% 14.17 % 6.98 % (5.63)% 23.93 % 12.51 %
Ratios and supplemental data:
Net assets at end of period (in thousands).. $ 30,225 $ 28,888 $ 26,678 $ 26,083 $ 26,714 $ 8,887
Ratio of net investment income (loss) to
average net assets......................... (0.90)% 1.58 % 1.42 % 6.84 % 1.05 % 0.77 %
See Notes to the Financial Statements, which is an integral part of this report.
131
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL GE International Equity Subaccount
-----------------------------------------------------------
March 31, December 31,
--------- ----------------------------------------------
2001 2000 1999 1998 1997/(1)/
-------- --------- --------- --------- ----------
Accumulation unit value, beginning of period .. $ 12.43 $ 14.76 $ 11.92 $ 10.65 $ 10.00
-------- --------- --------- -------- ---------
Income from operations:
Net investment income (loss) .............. (0.03) 2.00 0.62 (0.09) (0.03)
Net realized and unrealized gain (loss)
on investment ........................... (1.58) (4.33) 2.22 1.36 0.68
-------- --------- --------- -------- ---------
Net income (loss) from operations ....... (1.61) (2.33) 2.84 1.27 0.65
-------- --------- --------- -------- ---------
Accumulation unit value, end of period ........ $ 10.82 $ 12.43 $ 14.76 $ 11.92 $ 10.65
======== ========= ========= ======== =========
Total return .................................. (12.96)% (15.75)% 23.84 % 11.84 % 6.54 %
Ratios and supplemental data:
Net assets at end of period (in thousands) .. $ 7,126 $ 7,944 $ 7,013 $ 5,827 $ 2,289
Ratio of net investment income (loss) to
average net assets ........................ (0.90)% 14.54 % 5.09 % (0.81)% (0.28)%
WRL GE U.S. Equity Subaccount
-----------------------------------------------------------
March 31, December 31,
----------- ----------------------------------------------
2001 2000 1999 1998 1997/(1)/
--------- --------- --------- --------- ----------
Accumulation unit value, beginning of period... $ 17.69 $ 17.99 $ 15.33 $ 12.59 $ 10.00
--------- --------- --------- --------- ---------
Income from operations:
Net investment income (loss) .............. (0.04) 0.68 1.38 0.73 0.99
Net realized and unrealized gain (loss)
on investment ........................... (1.47) (0.98) 1.28 2.01 1.60
--------- --------- --------- --------- ---------
Net income (loss) from operations ....... (1.51) (0.30) 2.66 2.74 2.59
--------- --------- --------- --------- ---------
Accumulation unit value, end of period ........ $ 16.18 $ 17.69 $ 17.99 $ 15.33 $ 12.59
========= ========= ========= ========= =========
Total return .................................. (8.54)% (1.67)% 17.35 % 21.78 % 25.89 %
Ratios and supplemental data:
Net assets at end of period (in thousands) .. $ 28,395 $ 29,771 $ 26,416 $ 14,084 $ 3,258
Ratio of net investment income (loss) to
average net assets ........................ (0.90)% 3.81 % 8.27 % 5.30 % 8.28 %
See Notes to the Financial Statements, which is an integral part of this report.
132
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Third Avenue
Value Subaccount
--------------------------------------------
March 31, December 31,
--------- -------------------------------
2001 2000 1999 1998/(1)/
--------- --------- ------- ---------
Accumulation unit value, beginning of
period .................................... $ 14.22 $ 10.59 $ 9.23 $ 10.00
-------- --------- ------- --------
Income from operations:
Net investment income (loss) ............. (0.03) 0.60 0.19 (0.05)
Net realized and unrealized gain (loss)
on investment .......................... (0.31) 3.03 1.17 (0.72)
-------- --------- ------- --------
Net income (loss) from operations ...... (0.34) 3.63 1.36 (0.77)
-------- --------- ------- --------
Accumulation unit value, end of period ...... $ 13.88 $ 14.22 $ 10.59 $ 9.23
======== ========= ======= ========
Total return ................................ (2.40)% 34.26 % 14.68 (7.67)%
Ratios and supplemental data:
Net assets at end of period (in thousands) . $ 21,083 $ 16,735 $ 3,411 $ 2,807
Ratio of net investment income (loss) to
average net assets ........................ (0.90)% 4.53 % 1.98 (0.52)%
WRL J.P. Morgan Real Estate
Securities Subaccount
-------------------------------------------
March 31, December 31,
---------- -------------------------------
2001 2000 1999 1998/(1)/
---------- --------- -------- ---------
Accumulation unit value, beginning of
period .................................... $ 10.36 $ 8.06 $ 8.46 $ 10.00
-------- --------- ------- --------
Income from operations:
Net investment income (loss) ............. (0.02) 0.10 0.07 (0.05)
Net realized and unrealized gain (loss)
on investment .......................... (0.07) 2.20 (0.47) (1.49)
-------- --------- ------- --------
Net income (loss) from operations ...... (0.09) 2.30 (0.40) (1.54)
-------- --------- ------- --------
Accumulation unit value, end of period ...... $ 10.27 $ 10.36 $ 8.06 $ 8.46
======== ========= ======= ========
Total return ................................ (0.90)% 28.46 % (4.63)% (15.44)%
Ratios and supplemental data:
Net assets at end of period (in thousands) . $ 2,939 $ 2,476 $ 627 $ 709
Ratio of net investment income (loss) to
average net assets ..................... (0.90)% 1.07 % 0.95 % (0.90)%
See Notes to the Financial Statements, which is an integral part of this report.
133
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Goldman Sachs Growth Subaccount
-----------------------------------
March 31, December 31,
--------- ----------------------
2001 2000 1999/(1)/
--------- -------- ---------
Accumulation unit value, beginning of period ....... $ 10.29 $ 11.29 $ 10.00
--------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.02) 0.06 (0.05)
Net realized and unrealized gain (loss)
on investment ................................ (1.32) (1.06) 1.34
--------- --------- ---------
Net income (loss) from operations ............ (1.34) (1.00) 1.29
--------- --------- ---------
Accumulation unit value, end of period ............. $ 8.95 $ 10.29 $ 11.29
========= ========= =========
Total return ....................................... (13.03)% (8.84)% 12.91 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 1,603 $ 1,627 $ 977
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 0.59 % (0.90)%
WRL Munder Net50 Subaccount
-----------------------------------
March 31, December 31,
--------- ----------------------
2001 2000 1999/(1)/
--------- -------- ---------
Accumulation unit value, beginning of period ....... $ 10.80 $ 10.92 $ 10.00
--------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.02) 0.22 0.76
Net realized and unrealized gain (loss)
on investment ................................ (0.78) (0.34) 0.16
--------- --------- ---------
Net income (loss) from operations ............ (0.80) (0.12) 0.92
--------- --------- ---------
Accumulation unit value, end of period ............. $ 10.00 $ 10.80 $ 10.92
========= ========= =========
Total return ....................................... (7.37)% (1.15)% 9.23 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 1,991 $ 862 $ 344
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 2.00 % 15.66 %
See Notes to the Financial Statements, which is an integral part of this report.
134
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL T. Rowe Price
Dividend Growth Subaccount
-----------------------------------
March 31, December 31,
--------- ----------------------
2001 2000 1999/(1)/
--------- -------- ---------
Accumulation unit value, beginning of period ....... $ 9.98 $ 9.16 $ 10.00
--------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.02) (0.04) (0.04)
Net realized and unrealized gain (loss)
on investment ................................ (0.71) 0.86 (0.80)
--------- --------- ---------
Net income (loss) from operations ............ (0.73) 0.82 (0.84)
--------- --------- ---------
Accumulation unit value, end of period ............. $ 9.25 $ 9.98 $ 9.16
========= ========= =========
Total return ....................................... (7.31)% 8.89 % (8.37)%
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 1,364 $ 985 $ 501
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% (0.42)% (0.90)%
WRL T. Rowe Price
Small Cap Subaccount
-----------------------------------
March 31, December 31,
--------- ----------------------
2001 2000 1999/(1)/
--------- -------- ---------
Accumulation unit value, beginning of period ....... $ 11.17 $ 12.31 $ 10.00
--------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.02) 0.04 0.41
Net realized and unrealized gain (loss)
on investment ................................ (2.22) (1.18) 1.90
--------- --------- ---------
Net income (loss) from operations ............ (2.24) (1.14) 2.31
--------- --------- ---------
Accumulation unit value, end of period ............. $ 8.93 $ 11.17 $ 12.31
========= ========= =========
Total return ....................................... (20.01)% (9.27)% 23.09 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 2,385 $ 2,568 $ 925
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 0.29 % 8.13 %
See Notes to the Financial Statements, which is an integral part of this report.
135
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Salomon All Cap Subaccount
-----------------------------------
March 31, December 31,
--------- ----------------------
2001 2000 1999/(1)/
--------- -------- ---------
Accumulation unit value, beginning of period ....... $ 12.55 $ 10.70 $ 10.00
--------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.01) 0.23 0.40
Net realized and unrealized gain (loss)
on investment ................................ (0.02) 1.62 0.30
--------- --------- ---------
Net income (loss) from operations ............ (0.03) 1.85 0.70
--------- --------- ---------
Accumulation unit value, end of period ............. $ 12.52 $ 12.55 $ 10.70
========= ========= =========
Total return ....................................... (0.22)% 17.24 % 7.02 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 17,120 $ 8,072 $ 383
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 1.91 % 8.07 %
WRL Pilgrim Baxter
Mid Cap Growth Subaccount
-----------------------------------
March 31, December 31,
--------- ----------------------
2001 2000 1999/(1)/
--------- -------- ---------
Accumulation unit value, beginning of period ....... $ 13.56 $ 15.98 $ 10.00
--------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.03) 0.04 0.04
Net realized and unrealized gain (loss)
on investment ................................ (5.04) (2.46) 5.94
--------- --------- ---------
Net income (loss) from operations ............ (5.07) (2.42) 5.98
--------- --------- ---------
Accumulation unit value, end of period ............. $ 8.49 $ 13.56 $ 15.98
========= ========= =========
Total return ....................................... (37.39)% (15.16)% 59.78 %
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 25,515 $ 39,702 $ 5,065
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 0.25 % 0.62 %
See Notes to the Financial Statements, which is an integral part of this report.
136
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL Value Line
WRL Dreyfus Mid Cap Aggressive Growth
Subaccount Subaccount
----------------------------------- -------------------------
March 31, December 31, March 31, December 31,
--------- ---------------------- --------- ------------
2001 2000 1999/(1)/ 2001 2000/(1)/
--------- -------- --------- --------- ------------
Accumulation unit value, beginning of period ....... $ 11.35 $ 10.14 $ 10.00 $ 8.98 $ 10.00
--------- --------- --------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.02) 0.23 (0.04) (0.02) (0.06)
Net realized and unrealized gain (loss)
on investment ................................ (1.35) 0.98 0.18 (1.13) (0.96)
--------- --------- --------- --------- ---------
Net income (loss) from operations ............ (1.37) 1.21 0.14 (1.15) (1.02)
--------- --------- --------- --------- ---------
Accumulation unit value, end of period ............. $ 9.98 $ 11.35 $ 10.14 $ 7.83 $ 8.98
========= ========= ========= ========= =========
Total return ....................................... (12.13)% 11.91 % 1.44 % (12.82)% (10.24)%
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 2,436 $ 1,811 $ 337 $ 889 $ 1,067
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% 2.02 % (0.90)% (0.90)% (0.90)%
WRL Great Companies- WRL Great Companies-
America/SM/ Technology/SM/
Subaccount Subaccount
------------------------- -------------------------
March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------
2001 2000/(1)/ 2001 2000/(1)/
--------- ------------ --------- ----------
Accumulation unit value, beginning of period ....... $ 11.31 $ 10.00 $ 6.70 $ 10.00
--------- --------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.02) (0.06) (0.01) (0.05)
Net realized and unrealized gain (loss)
on investment ................................ (1.76) 1.37 (2.16) (3.25)
--------- --------- --------- ---------
Net income (loss) from operations ............ (1.78) 1.31 (2.17) (3.30)
--------- --------- --------- ---------
Accumulation unit value, end of period ............. $ 9.53 $ 11.31 $ 4.53 $ 6.70
========= ========= ========= =========
Total return ....................................... (15.74)% 13.12 % (32.35)% (33.01)%
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 9,813 $ 8,491 $ 2,845 $ 2,788
Ratio of net investment income (loss) to
average net assets ............................. (0.90)% (0.90)% (0.90)% (0.90)%
See Notes to the Financial Statements, which is an integral part of this report.
137
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
WRL WRL
Great Companies- Gabelli
Global/2/ Global Growth
Subaccount Subaccount
------------------------- -------------------------
March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------
2001 2000/(1)/ 2001 2000/(1)/
--------- ------------ --------- ------------
Accumulation unit value, beginning of period ....... $ 8.52 $ 10.00 $ 9.07 $ 10.00
--------- --------- --------- ---------
Income from operations:
Net investment income (loss) ................... (0.02) (0.03) (0.02) (0.03)
Net realized and unrealized gain (loss)
on investment ................................ (1.53) (1.45) (0.56) (0.90)
--------- --------- --------- ---------
Net income (loss) from operations ............ (1.55) (1.48) (0.58) (0.93)
--------- --------- --------- ---------
Accumulation unit value, end of period ............. $ 6.97 $ 8.52 $ 8.49 $ 9.07
========= ========= ========= =========
Total return ....................................... (18.21)% (14.84)% (6.47)% (9.27)%
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 723 $ 494 $ 2,746 $ 971
Ratio of net investment income (loss) to
average net assets ................................. (0.90)% (0.90)% (0.90)% (0.90)%
WRL
LKCM
Capital Growth
Subaccount
--------------
March 31,
---------
2001
---------
Accumulation unit value, beginning of period ....... $ 10.00
---------
Income from operations:
Net investment income (loss) ................... (0.01)
Net realized and unrealized gain (loss)
on investment ................................ (2.11)
---------
Net income (loss) from operations ............ (2.12)
---------
Accumulation unit value, end of period ............. $ 7.88
=========
Total return ....................................... (21.19)%
Ratios and supplemental data:
Net assets at end of period (in thousands) ....... $ 62
Ratio of net investment income (loss) to
average net assets ............................. (0.90)%
See Notes to the Financial Statements, which is an integral part of this report.
138
WRL Series Life Account
Financial Highlights
For the Period Ended
(unaudited)
Fidelity VIP III Fidelity VIP III
Growth Opportunities Contrafund(R)
Subaccount Subaccount
------------------------- -------------------------
March 31, December 31, March 31, December 31,
--------- ------------ --------- ------------
2001 2000(1) 2001 2000(1)
--------- ------------ --------- ------------
Accumulation unit value, beginning of period.. $ 8.56 $ 10.00 $ 9.38 $ 10.00
======== ======== ======== ========
Income from operations:
Net investment income (loss) ............. 0.01 (0.06) 0.28 (0.06)
Net realized and unrealized gain (loss)
on investment .......................... (1.33) (1.38) (1.52) (0.56)
-------- -------- -------- --------
Net income (loss) from operations ...... (1.32) (1.44) (1.24) (0.62)
-------- -------- -------- --------
Accumulation unit value, end of period ....... $ 7.24 $ 8.56 $ 8.14 $ 9.38
======== ======== ======== ========
Total return ................................. (15.45)% (14.36)% (13.27)% (6.16)%
Ratios and supplemental data:
Net assets at end of period (in thousands) . $ 660 $ 562 $ 1,290 $ 1,030
Ratio of net investment income (loss) to
average net assets ........................ 0.59 % (0.90)% 13.11 % (0.90)%
Fidelity VIP
Equity-Income
Subaccount
--------------------------
March 31, December 31,
--------- ------------
2001 2000(1)
-------- ------------
Accumulation unit value, beginning of period . $ 10.99 $ 10.00
-------- --------
Income from operations:
Net investment income (loss) ............. 0.61 (0.06)
Net realized and unrealized gain (loss)
on investment .......................... (1.30) 1.05
-------- ---------
Net income (loss) from operations ...... (0.69) 0.99
-------- ---------
Accumulation unit value, end of period ....... $ 10.30 $ 10.99
======== =========
Total return ................................. (6.31)% 9.91 %
Ratios and supplemental data:
Net assets at end of period (in thousands) 1,308 $ 307
Ratio of net investment income (loss) to
average net assets ....................... 23.25 % (0.90)%
See Notes to the Financial Statements, which is an integral part of this report.
139
WRL Series Life Account
Notes to the Financial Statements
At March 31, 2001
(unaudited)
NOTE 1 -- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The 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", or the "depositor") and is registered as a unit investment trust
under the Investment Company Act of 1940, as amended. The Life Account contains
thirty-two investment options referred to as subaccounts. Each subaccount
invests exclusively in a corresponding Portfolio (the "Portfolio") of a fund,
which collectively is referred to as the "Fund". WRL Series Life Account
contains four funds (collectively referred to as the "Funds"). Each fund is a
registered management investment company under the Investment Company Act of
1940, as amended.
Subaccount Investment by Fund:
------------------------------
AEGON/Transamerica Series Fund, Inc.
(formerly WRL Series Fund, Inc.)
J.P. Morgan Money Market
AEGON Bond
Janus Growth
Janus Global
LKCM Strategic Total Return
Van Kampen Emerging Growth
(formerly VKAM Emerging Growth)
Alger Aggressive Growth
AEGON Balanced
Federated Growth & Income
Dean Asset Allocation
C.A.S.E. Growth
NWQ Value Equity
GE International Equity
GE U.S. Equity
Third Avenue Value
J.P. Morgan Real Estate Securities
Goldman Sachs Growth
Munder Net50 (formerly Goldman Sachs Small Cap)
T. Rowe Price Dividend Growth
T. Rowe Price Small Cap
Salomon All Cap
Pilgrim Baxter Mid Cap Growth
Dreyfus Mid Cap
Value Line Aggressive Growth
Great Companies - America(SM)
Great Companies - Technology(SM)
Great Companies - Global/2/
Gabelli Global Growth
LKCM Capital Growth
Variable Insurance Products Fund III (VIP III)
Fidelity VIP III Growth Opportunities Portfolio - Service Class 2
(Referred to as "Fidelity VIP III Growth Opportunities")
Variable Insurance Products Fund II (VIP II)
Fidelity VIP II Contrafund(R) Portfolio - Service Class 2
(Referred to as "Fidelity VIP II Contrafund(R)")
Variable Insurance Products Fund (VIP)
Fidelity VIP Equity-Income Portfolio - Service Class 2
(Referred to as "Fidelity VIP Equity-Income")
The AEGON/Transamerica Series Fund, Inc. has entered into annually renewable
investment advisory agreements for each Portfolio with WRL Investment
Management, Inc. ("WRL Management") as investment adviser. Costs incurred in
connection with the advisory services rendered by WRL Management are paid by
each Portfolio. WRL Management has entered into sub-advisory agreements with
various management companies ("Sub-Advisers"), some of which are affiliates of
WRL. Each Sub-Adviser is compensated directly by WRL Management. The other three
Funds have entered into participation agreements for each Portfolio with WRL.
Each period reported on within the financial statements reflects a full three or
twelve month period except as follows:
Subaccount Inception Date
---------- --------------
WRL C.A.S.E. Growth 05/01/1996
WRL NWQ Value Equity 05/01/1996
WRL GE International Equity 01/02/1997
WRL GE U.S. Equity 01/02/1997
WRL Third Avenue Value 01/02/1998
WRL J.P. Morgan Real Estate Securities 05/01/1998
WRL Goldman Sachs Growth 07/01/1999
WRL Munder Net50 (formerly WRL 07/01/1999
Goldman Sachs Small Cap)
WRL T. Rowe Price Dividend Growth 07/01/1999
WRL T. Rowe Price Small Cap 07/01/1999
WRL Salomon All Cap 07/01/1999
WRL Pilgrim Baxter Mid Cap Growth 07/01/1999
WRL Dreyfus Mid Cap 07/01/1999
WRL Value Line Aggressive Growth 05/01/2000
WRL Great Companies - America(SM) 05/01/2000
WRL Great Companies - Technology(SM) 05/01/2000
WRL Great Companies - Global/2/ 09/01/2000
WRL Gabelli Global Growth 09/01/2000
WRL LKCM Capital Growth 02/05/2001
Fidelity VIP III Growth Opportunities 05/01/2000
Fidelity VIP II Contrafund(R) 05/01/2000
Fidelity VIP Equity-Income 05/01/2000
140
WRL Series Life Account
Notes to the Financial Statements
At March 31, 2001
(unaudited)
Note 1--(continued)
Effective September 1, 2000, the Janus Global Portfolio is not available for
investment to new policyowners. The portfolio remains open to the policyowners
who purchased the Policy before September 1, 2000.
On February 5, 2001, WRL made initial contributions totaling $25,000 to the Life
Account. The respective amounts of the contributions and units received are as
follows:
Subaccount Contribution Units
---------- ------------ -----
WRL LKCM Capital Growth $ 25,000 2,500
The Life Account holds assets to support the benefits under certain flexible
premium variable universal life insurance policies (the "Policies") issued by
WRL. The Life Account's equity transactions are accounted for using the
appropriate effective date at the corresponding accumulation unit value.
The following significant accounting policies, which are in conformity with
accounting principles generally accepted in the United States, have been
consistently applied in the preparation of the Life Account Financial
Statements. The preparation of the Financial Statements required management to
make estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.
A. Valuation of Investments and Securities Transactions
Investments in the Funds' shares are valued at the closing net asset value
("NAV") per share of the underlying Portfolio, as determined by the Funds.
Investment transactions are accounted for on the trade date at the Portfolio NAV
next determined after receipt of sale or redemption orders without sales
charges. Dividend income and capital gains 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 the Internal Revenue Code law, the investment income of the
Life Account, including realized and unrealized capital 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 the issuance and administration
of the Policies.
A. Policy Charges
Under some forms of the Policies, a sales charge and premium taxes are deducted
by WRL prior to allocation of policy owner payments to the subaccounts.
Contingent surrender charges may also apply.
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 .90% of average daily net assets is
assessed to compensate WRL for assumption of mortality and expense risks for
administrative services in connection with issuance and administration of the
Policies. This charge (not assessed at the individual contract level)
effectively reduces the value of a unit outstanding during the year.
NOTE 3 -- DIVIDEND DISTRIBUTIONS
Dividends are not declared by the Life Account, since the increase in the value
of the underlying investment in the Funds is reflected daily in the accumulation
unit value used to calculate the equity value within the Life Account.
Consequently, a dividend distribution by the underlying Funds does not change
either the accumulation unit value or equity values within the Life Account.
NOTE 4 -- SECURITIES TRANSACTIONS
Securities transactions for the period ended March 31, 2001 are as follows (in
thousands):
Purchases Proceeds
of from Sales
Subaccount Securities of Securities
---------- ---------- -------------
WRL J.P. Morgan Money Market $ 94,716 $ 79,286
WRL AEGON Bond 5,945 348
WRL Janus Growth 11,116 16,106
WRL Janus Global 5,348 8,699
WRL LKCM Strategic Total Return 1,793 1,394
WRL Van Kampen Emerging Growth
(formerly VKAM Emerging Growth) 75,338 81,290
141
WRL Series Life Account
Notes to the Financial Statements (continued)
At March 31, 2001
(unaudited)
NOTE 4 -- (continued)
Purchases Proceeds
of from Sales
Subaccount Securities of Securities
---------- ---------- -------------
WRL Alger Aggressive Growth $ 8,533 $5,775
WRL AEGON Balanced 1,090 307
WRL Federated Growth & Income 7,034 696
WRL Dean Asset Allocation 3,965 139
WRL C.A.S.E. Growth 3,097 1,141
WRL NWQ Value Equity 2,750 986
WRL GE International Equity 1,064 784
WRL GE U.S. Equity 1,994 790
WRL Third Avenue Value 5,890 925
WRL J.P. Morgan Real Estate Securities 1,490 995
WRL Goldman Sachs Growth 394 119
WRL Munder Net50 (formerly WRL Goldman 1,507 128
Sachs Small Cap)
WRL T. Rowe Price Dividend Growth 820 323
WRL T. Rowe Price Small Cap 665 244
WRL Salomon All Cap 9,556 138
WRL Pilgrim Baxter Mid Cap Growth 4,714 3,209
WRL Dreyfus Mid Cap 1,215 290
WRL Value Line Aggressive Growth 145 187
WRL Great Companies - America/SM/ 3,324 449
WRL Great Companies - Technology/SM/ 2,305 730
WRL Great Companies - Global/2/ 642 276
WRL Gabelli Global Growth 2,045 82
WRL LKCM Capital Growth 73 -
Fidelity VIP III Growth Opportunities 282 76
Fidelity VIP II Contrafund/(R)/ 569 103
Fidelity VIP Equity-Income 1,380 266
NOTE 5 -- FINANCIAL HIGHLIGHTS
Per unit information has been computed using average units outstanding
throughout each period. Total return is not annualized for periods of less than
one year. The ratio of net investment income (loss) to average net assets is
annualized for periods of less than one year.
NOTE 6 -- SUBSEQUENT EVENTS
Effective May 1, 2001 the portfolio name changed from WRL Goldman Sachs Small
Cap to Munder Net50 and the subaccount from WRL Goldman Sachs Small Cap to WRL
Munder Net50. Effective May 1, 2001, the name of WRL Management was changed to
AEGON/Transamerica Fund Advisers, Inc. and the name of the WRL Series Fund, Inc.
was changed to AEGON/Transamerica Series Fund, Inc. These events will have
happened subsequent to the audited financials.
142
Report of Independent Auditors
The Board of Directors and Policy Owners of the WRL Series Life Account
Western Reserve Life Assurance Company of Ohio
We have audited the accompanying statements of assets and liabilities of
each of the subaccounts constituting the WRL Series Life Account (the "Separate
Account," a separate account of Western Reserve Life Assurance Co. of Ohio) as
of December 31, 2000, and the related statements of operations and changes in
net assets, and financial highlights for the periods in the year ended December
31, 2000 as indicated thereon. These financial statements and financial
highlights are the responsibility of the Separate Account's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The accompanying statements of changes
in net assets for the periods ended December 31, 1999 as indicated thereon and
the financial highlights for each of the periods in the four years ended
December 31, 1999 as indicated thereon for each of the subaccounts constituting
the Separate Account, were audited by other auditors whose report dated February
16, 2000, expressed an unqualified opinion on those statements and financial
highlights.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of mutual fund shares owned as of December 31, 2000, by
correspondence with the mutual fund's transfer agent. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the 2000 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the respective subaccounts constituting the WRL Series Life
Account at December 31, 2000, and the results of their operations and changes in
net assets, and financial highlights for the periods in the year ended December
31, 2000 as indicated thereon, in conformity with accounting principles
generally accepted in the United States.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Des Moines, Iowa
January 31, 2001
143
Report of Independent Certified Public Accountants
To the Board of Directors of Western Reserve Life Assurance Co. of Ohio
and Policy Owners of the WRL Series Life Account
In our opinion, the accompanying statements of changes in net assets and
the related financial highlights present fairly, in all material respects, the
changes in net assets of each of the Subaccounts constituting the WRL Series
Life Account (a separate account of Western Reserve Life Assurance Co. of Ohio
("WRL")) for the year ended December 31, 1999, and the financial highlights for
each of the periods presented through December 31, 1999, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of WRL's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Tampa, Florida
February 16, 2000
144
WRL Series Life Account
Statements of Assets and Liabilities
At December 31, 2000
All Amounts (except per unit amounts) in Thousands
WRL
WRL WRL WRL WRL LKCM
J.P. Morgan AEGON Janus Janus Strategic
Money Market Bond Growth Global Total Return
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares ....................... 60,145 2,326 20,304 17,111 6,610
======== ======== ========= ========= ========
Cost ................................... $ 60,145 $ 26,612 $ 964,237 $ 416,105 $ 97,229
======== ======== ========= ========= ========
Investment, at net asset value ........... $ 60,145 $ 25,908 $ 961,173 $ 410,156 $ 98,483
Dividend receivable ...................... 277 0 0 0 0
Transfers receivable from depositor ...... 0 27 0 0 0
-------- -------- --------- --------- --------
Total assets ........................... 60,422 25,935 961,173 410,156 98,483
-------- -------- --------- --------- --------
Liabilities:
Accrued expenses ......................... 0 0 0 0 0
Transfers payable to depositor ........... 143 0 158 47 17
-------- -------- --------- --------- --------
Total liabilities ...................... 143 0 158 47 17
-------- -------- --------- --------- --------
Net assets ............................. $ 60,279 $ 25,935 $ 961,015 $ 410,109 $ 98,466
======== ======== ========= ========= ========
Net Assets Consists of:
Policy owners' equity .................... $ 60,279 $ 25,935 $ 961,015 $ 410,109 $ 98,466
Depositor's equity ....................... 0 0 0 0 0
-------- -------- --------- --------- --------
Net assets applicable to units
outstanding ........................... $ 60,279 $ 25,935 $ 961,015 $ 410,109 $ 98,466
======== ======== ========= ========= ========
Policy owners' units ..................... 3,278 1,072 9,366 12,899 4,523
Depositor's units ........................ 0 0 0 0 0
-------- -------- --------- --------- --------
Units outstanding ...................... 3,278 1,072 9,366 12,899 4,523
======== ======== ========= ========= ========
Accumulation unit value ................ $ 18.39 $ 24.19 $ 102.61 $ 31.79 $ 21.77
======== ======== ========= ========= ========
See Notes to the Financial Statements, which is an integral part of this report.
145
WRL Series Life Account
Statements of Assets and Liabilities
At December 31, 2000
All Amounts (except per unit amounts) in Thousands
WRL WRL WRL WRL
VKAM Alger WRL Federated Dean
Emerging Aggressive AEGON Growth & Asset
Growth Growth Balanced Income Allocation
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares..................... 19,559 14,318 1,593 2,001 2,601
========= ========= ======== ======== ========
Cost................................. $ 873,187 $ 307,884 $ 19,689 $ 24,463 $ 35,227
========= ========= ======== ======== ========
Investment, at net asset value......... $ 580,110 $ 280,068 $ 20,950 $ 26,869 $ 34,303
Dividend receivable.................... 0 0 0 0 0
Transfers receivable from depositor.... 92 104 2 14 0
--------- --------- -------- -------- --------
Total assets......................... 580,202 280,172 20,952 26,883 34,303
--------- --------- -------- -------- --------
Liabilities:
Accrued expenses....................... 0 0 0 0 0
Transfers payable to depositor......... 0 0 0 0 90
--------- --------- -------- -------- --------
Total liabilities.................... 0 0 0 0 90
--------- --------- -------- -------- --------
Net assets........................... $ 580,202 $ 280,172 $ 20,952 $ 26,883 $ 34,213
========= ========= ======== ======== ========
Net Assets Consists of:
Policy owners' equity.................. $ 580,202 $ 280,172 $ 20,952 $ 26,883 $ 34,213
Depositor's equity..................... 0 0 0 0 0
--------- --------- -------- -------- --------
Net assets applicable to units
outstanding........................ $ 580,202 $ 280,172 $ 20,952 $ 26,883 $ 34,213
========= ========= ======== ======== ========
Policy owners' units................... 10,226 9,215 1,303 1,349 1,881
Depositor's units...................... 0 0 0 0 0
--------- --------- -------- -------- --------
Units outstanding.................... 10,226 9,215 1,303 1,349 1,881
========= ========= ======== ======== ========
Accumulation unit value.............. $ 56.74 $ 30.40 $ 16.08 $ 19.93 $ 18.19
========= ========= ======== ======== ========
See Notes to the Financial Statements, which is an integral part of this report.
146
WRL Series Life Account
Statements of Assets and Liabilities
At December 31, 2000
All Amounts (except per unit amounts) in Thousands
WRL WRL WRL WRL
WRL NWQ GE GE Third
C.A.S.E. Value International U.S. Avenue
Growth Equity Equity Equity Value
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares ....................... 2,169 2,009 768 1,985 1,204
======== ======== ======= ======== ========
Cost ................................... $ 30,724 $ 27,288 $ 9,683 $ 29,863 $ 15,436
======== ======== ======= ======== ========
Investment, at net asset value ........... $ 22,336 $ 28,863 $ 7,942 $ 29,734 $ 16,503
Dividend receivable ...................... 0 0 0 0 0
Transfers receivable from depositor ...... 8 25 2 37 232
-------- -------- ------- -------- --------
Total assets ........................... 22,344 28,888 7,944 29,771 16,735
-------- -------- ------- -------- --------
Liabilities:
Accrued expenses ......................... 0 0 0 0 0
Transfers payable to depositor ........... 0 0 0 0 0
-------- -------- ------- -------- --------
Total liabilities ...................... 0 0 0 0 0
-------- -------- ------- -------- --------
Net assets ............................. $ 22,344 $ 28,888 $ 7,944 $ 29,771 $ 16,735
======== ======== ======= ======== ========
Net Assets Consists of:
Policy owners' equity .................... $ 22,344 $ 28,888 $ 7,944 $ 29,771 $ 16,735
Depositor's equity ....................... 0 0 0 0 0
-------- -------- ------- -------- --------
Net assets applicable to units
outstanding ......................... $ 22,344 $ 28,888 $ 7,944 $ 29,771 $ 16,735
======== ======== ======= ======== ========
Policy owners' units ..................... 1,713 1,797 639 1,683 1,177
Depositor's units ........................ 0 0 0 0 0
-------- -------- ------- -------- --------
Units outstanding ...................... 1,713 1,797 639 1,683 1,177
======== ======== ======= ======== ========
Accumulation unit value ................ $ 13.04 $ 16.07 $ 12.43 $ 17.69 $ 14.22
======== ======== ======= ======== ========
See Notes to the Financial Statements, which is an integral part of this report.
147
WRL Series Life Account
Statements of Assets and Liabilities
At December 31, 2000
All Amounts (except per unit amounts) in Thousands
WRL WRL WRL WRL WRL
J.P. Morgan Goldman Goldman T. Rowe T. Rowe
Real Estate Sachs Sachs Price Price
Securities Growth Small Cap Dividend Growth Small Cap
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares.................... 239 150 76 97 209
============ =========== =========== =========== ===========
Cost................................ $ 2,364 $ 1,706 $ 861 $ 895 $ 2,897
============ =========== =========== =========== ===========
Investment, at net asset value........ $ 2,464 $ 1,600 $ 831 $ 985 $ 2,541
Dividend receivable .................. 0 0 0 0 0
Transfers receivable from depositor... 12 27 31 0 27
------------ ----------- ----------- ----------- -----------
Total assets........................ 2,476 1,627 862 985 2,568
------------ ----------- ----------- ----------- -----------
Liabilities:
Accrued expenses...................... 0 0 0 0 0
Transfers payable to depositor........ 0 0 0 0 0
------------ ----------- ----------- ----------- -----------
Total liabilities................... 0 0 0 0 0
------------ ----------- ----------- ----------- -----------
Net assets.......................... $ 2,476 $ 1,627 $ 862 $ 985 $ 2,568
============ =========== =========== =========== ===========
Net Assets Consists of:
Policy owners' equity................. $ 2,476 $ 1,627 $ 862 $ 985 $ 2,568
Depositor's equity.................... 0 0 0 0 0
------------ ----------- ----------- ----------- -----------
Net assets applicable to units
outstanding....................... $ 2,476 $ 1,627 $ 862 $ 985 $ 2,568
============ =========== =========== =========== ===========
Policy owners' units.................. 239 158 80 99 230
Depositor's units..................... 0 0 0 0 0
------------ ----------- ----------- ----------- -----------
Units outstanding................... 239 158 80 99 230
============ =========== =========== =========== ===========
Accumulation unit value............. $ 10.36 $ 10.29 $ 10.80 $ 9.98 $ 11.17
============ =========== =========== =========== ===========
See Notes to the Financial Statements, which is an integral part of this report.
148
WRL Series Life Account
Statements of Assets and Liabilities
At December 31, 2000
All Amounts (except per unit amounts) in Thousands
WRL
WRL WRL WRL WRL Great
Salomon Pilgrim Baxter Dreyfus Value Line Companies -
All Cap Mid Cap Growth Mid Cap Aggressive Growth America/SM/
Subaccount Subaccount Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares ....................... 622 2,628 152 118 746
======= ======== ======= ======= =======
Cost ................................... $ 8,005 $ 56,653 $ 1,832 $ 1,250 $ 7,784
======= ======== ======= ======= =======
Investment, at net asset value ........... $ 8,081 $ 39,577 $ 1,810 $ 1,067 $ 8,486
Dividend receivable ...................... 0 0 0 0 0
Transfers receivable from depositor ...... 0 125 1 0 5
------- -------- ------- ------- -------
Total assets ........................... 8,081 39,702 1,811 1,067 8,491
------- -------- ------- ------- -------
Liabilities:
Accrued expenses ......................... 0 0 0 0 0
Transfers payable to depositor ........... 9 0 0 0 0
------- -------- ------- ------- -------
Total liabilities ...................... 9 0 0 0 0
------- -------- ------- ------- -------
Net assets ............................. $ 8,072 $ 39,702 $ 1,811 $ 1,067 $ 8,491
======= ======== ======= ======= =======
Net Assets Consists of:
Policy owners' equity .................... $ 8,072 $ 39,702 $ 1,811 $ 887 $ 8,265
Depositor's equity ....................... 0 0 0 180 226
------- -------- ------- ------- -------
Net assets applicable to units
outstanding ......................... $ 8,072 $ 39,702 $ 1,811 $ 1,067 $ 8,491
======= ======== ======= ======= =======
Policy owners' units ..................... 643 2,929 159 99 731
Depositor's units ........................ 0 0 0 20 20
------- -------- ------- ------- -------
Units outstanding ...................... 643 2,929 159 119 751
======= ======== ======= ======= =======
Accumulation unit value ................ $ 12.55 $ 13.56 $ 11.35 $ 8.98 $ 11.31
======= ======== ======= ======= =======
See Notes to the Financial Statements, which is an integral part of this report.
149
WRL Series Life Account
Statements of Assets and Liabilities
At December 31, 2000
All Amounts (except per unit amounts) in Thousands
WRL WRL WRL
Great Great Gabelli
Companies - Companies - Global
Technology/SM/ Global/2/ Growth
Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares........................ 413 57 106
====== ===== =====
Cost.................................... $4,089 $ 505 $ 993
====== ===== =====
Investment, at net asset value............ $2,784 $ 490 $ 960
Dividend receivable....................... 0 0 0
Transfers receivable from depositor....... 4 4 11
------ ----- -----
Total assets............................ 2,788 494 971
------ ----- -----
Liabilities:
Accrued expenses.......................... 0 0 0
Transfers payable to depositor............ 0 0 0
------ ----- -----
Total liabilities....................... 0 0 0
------ ----- -----
Net assets.............................. $2,788 $ 494 $ 971
====== ===== =====
Net Assets Consists of:
Policy owners' equity..................... $2,654 $ 473 $ 948
Depositor's equity........................ 134 21 23
------ ----- -----
Net assets applicable to units
outstanding............................ $2,788 $ 494 $ 971
====== ===== =====
Policy owners' units...................... 396 55 104
Depositor's units......................... 20 3 3
------ ----- -----
Units outstanding....................... 416 58 107
====== ===== =====
Accumulation unit value................. $ 6.70 $8.52 $9.07
====== ===== =====
See Notes to the Financial Statements, which is an integral part of this report.
150
WRL Series Life Account
Statements of Assets and Liabilities
At December 31, 2000
All Amounts (except per unit amounts) in Thousands
Fidelity VIP III
Growth Fidelity VIP II Fidelity VIP
Opportunities Contrafund(R) Equity-Income
Subaccount Subaccount Subaccount
Assets:
Investment in securities:
Number of shares ............................... 32 44 12
===== ====== ======
Cost ........................................... $632 $1,077 $294
===== ====== ======
Investment, at net asset value ................... $562 $1,030 $307
Dividend receivable .............................. 0 0 0
Transfers receivable from depositor .............. 0 0 0
----- ------ ------
Total assets ................................... 562 1,030 307
----- ------ ------
Liabilities:
Accrued expenses ................................. 0 0 0
Transfers payable to depositor ................... 0 0 0
----- ------ ------
Total liabilities .............................. 0 0 0
----- ------ ------
Net assets ..................................... $562 $1,030 $307
===== ====== ======
Net Assets Consists of:
Policy owners' equity ............................ $541 $1,006 $280
Depositor's equity ............................... 21 24 27
----- ------ ------
Net assets applicable to units outstanding ..... $562 $1,030 $307
===== ====== ======
Policy owners' units ............................. 63 107 25
Depositor's units ................................ 3 3 3
----- ------ ------
Units outstanding .............................. 66 110 28
===== ====== ======
Accumulation unit value ........................ $8.56 $9.38 $10.99
===== ====== ======
See Notes to the Financial Statements, which is an integral part of this report.
151
WRL Series Life Account
Statements of Operations
For the Year Ended December 31, 2000
All Amounts in Thousands
WRL WRL
J.P. Morgan WRL WRL WRL LKCM
Money AEGON Janus Janus Strategic
Market Bond Growth Global Total Return
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income ................................... $ 2,813 $ 1,372 $ 1,719 $ 14,506 $ 2,080
Capital gain distributions ........................ 0 0 162,879 88,526 6,230
--------- --------- ---------- --------- --------
Total investment income ......................... 2,813 1,372 164,598 103,032 8,310
Expenses:
Mortality and expense risk ........................ 424 225 11,702 4,306 895
--------- --------- ---------- --------- --------
Net investment income (loss) .................... 2,389 1,147 152,896 98,726 7,415
--------- --------- ---------- --------- --------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities.. 0 (316) 57,356 8,214 3,008
Change in unrealized appreciation (depreciation)... 0 1,538 (612,499) (199,548) (15,305)
--------- --------- ---------- --------- --------
Net gain (loss) on investment securities ........ 0 1,222 (555,143) (191,334) (12,297)
--------- --------- ---------- --------- --------
Net increase (decrease) in net assets resulting
from operations ............................. $ 2,389 $ 2,369 $ (402,247) $ (92,608) $ (4,882)
========= ========= ========== ========= ========
WRL WRL WRL WRL
VKAM Alger WRL Federated Dean
Emerging Aggressive AEGON Growth & Asset
Growth Growth Balanced Income Allocation
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income ................................... $ 5,938 $ 5,025 $ 388 $ 1,171 $ 1,367
Capital gain distributions ........................ 169,068 39,418 0 9 1,203
--------- ---------- --------- --------- ---------
Total investment income ......................... 175,006 44,443 388 1,180 2,570
Expenses:
Mortality and expense risk ........................ 6,396 3,175 173 179 280
--------- ---------- --------- --------- ---------
Net investment income (loss) .................... 168,610 41,268 215 1,001 2,290
--------- ---------- --------- --------- ---------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities.. 295,543 6,194 285 (440) 28
Change in unrealized appreciation (depreciation)... (557,231) (174,941) 457 4,670 2,465
--------- ---------- --------- --------- ---------
Net gain (loss) on investment securities ........ (261,688) (168,747) 742 4,230 2,493
--------- ---------- --------- --------- ---------
Net increase (decrease) in net assets resulting
from operations ............................. $ (93,078) $ (127,479) $ 957 $ 5,231 $ 4,783
========= ========== ========= ========= ========
See Notes to the Financial Statements, which is an integral part of this report.
152
WRL Series Life Account
Statements of Operations
For the Year Ended December 31, 2000
All Amounts in Thousands
WRL WRL
WRL WRL GE WRL Third
C.A.S.E. NWQ International GE Avenue
Growth Value Equity Equity U.S. Equity Value
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................ $ 3,732 $ 362 $ 138 $ 214 $ 137
Capital gain distributions..................... 826 283 1,055 1,108 372
-------- ------- -------- ------- -------
Total investment income...................... 4,558 645 1,193 1,322 509
Expenses:
Mortality and expense risk..................... 237 233 69 251 83
-------- ------- -------- ------- -------
Net investment income (loss)................. 4,321 412 1,124 1,071 426
-------- ------- -------- ------- -------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment
securities................................... (82) (519) 263 520 1,022
Change in unrealized appreciation
(depreciation)............................... (10,339) 3,484 (2,668) (2,166) 677
-------- ------- -------- ------- -------
Net gain (loss) on investment securities..... (10,421) 2,965 (2,405) (1,646) 1,699
-------- ------- -------- ------- -------
Net increase (decrease) in net assets
resulting from operations................ $ (6,100) $ 3,377 $ (1,281) $ (575) $ 2,125
======== ======= ======== ======= =======
WRL WRL WRL WRL WRL
J.P. Morgan Goldman Goldman T. Rowe T. Rowe
Real Estate Sachs Sachs Price Price
Securities Growth Small Cap Dividend Growth Small Cap
Subaccount Subaccount Subaccount Subaccount Subaccount
Investment Income:
Dividend income................................ $ 32 $ 12 $ 14 $ 4 $ 24
Capital gain distributions .................... 0 8 3 0 0
-------- ------ ------ ------- -------
Total investment income ..................... 32 20 17 4 24
Expenses:
Mortality and expense risk .................... 15 13 6 8 19
-------- ------ ------ ------- -------
Net investment income (loss) ................ 17 7 11 (4) 5
-------- ------ ------ ------- -------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment
securities................................... 203 64 24 (17) 84
Change in unrealized appreciation
(depreciation)............................... 142 (220) (51) 104 (496)
-------- ------ ------ ------- -------
Net gain (loss) on investment securities .... 345 (156) (27) 87 (412)
-------- ------ ------ ------- -------
Net increase (decrease) in net assets
resulting from operations ............... $ 362 $ (149) $ (16) $ 83 $ (407)
======== ====== ====== ======= =======
See Notes to the Financial Statements, which is an integral part of this report.
153
WRL Series Life Account
Statements of Operations
For the Year Ended December 31, 2000
All Amounts in Thousands
WRL
WRL WRL WRL WRL Great
Salomon Pilgrim Baxter Dreyfus Value Line Companies -
All Cap Mid Cap Growth Mid Cap Aggressive Growth America/SM/
Subaccount Subaccount Subaccount Subaccount/(1)/ Subaccount/(1)/
Investment Income:
Dividend income................................ $ 67 $ 370 $ 28 $ 0 $ 0
Capital gain distributions..................... 17 0 0 0 0
------- --------- ----- ------ ------
Total investment income...................... 84 370 28 0 0
Expenses:
Mortality and expense risk..................... 27 289 8 4 28
------- --------- ----- ------ ------
Net investment income (loss)................. 57 81 20 (4) (28)
------- --------- ----- ------ ------
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment
securities................................... 103 1,394 86 (2) 13
Change in unrealized appreciation
(depreciation)............................... 58 (18,254) (46) (183) 702
------- --------- ----- ------ ------
Net gain (loss) on investment securities..... 161 (16,860) 40 (185) 715
------- --------- ----- ------ ------
Net increase (decrease) in net assets
resulting from operations................ $ 218 $ (16,779) $ 60 $ (189) $ 687
======= ========= ===== ====== ======
WRL WRL WRL
Great Great Gabelli
Companies - Companies - Global
Technology/SM/ Global/2/ Growth
Subaccount/(1)/ Subaccount/(1)/ Subaccount/(1)/
Investment Income:
Dividend income................................ $ 0 $ 0 $ 0
Capital gain distributions..................... 0 0 0
-------- -------- -----
Total investment income...................... 0 0 0
Expenses:
Mortality and expense risk..................... 13 1 1
-------- -------- -----
Net investment income (loss)................. (13) (1) (1)
-------- -------- -----
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment
securities................................... (132) (1) (1)
Change in unrealized appreciation
(depreciation)............................... (1,305) (15) (33)
-------- -------- -----
Net gain (loss) on investment securities..... (1,437) (16) (34)
-------- -------- -----
Net increase (decrease) in net assets
resulting from operations................ $ (1,450) $ (17) $ (35)
======== ======== =====
See Notes to the Financial Statements, which is an integral part of this report.
154
WRL Series Life Account
Statements of Operations
For the Year Ended December 31, 2000
All Amounts in Thousands
Fidelity VIP III
Growth Fidelity VIP II Fidelity VIP
Opportunities Contrafund(R) Equity-Income
Subaccount/(1)/ Subaccount/(1)/ Subaccount/(1)/
Investment Income:
Dividend income.................................... $ 0 $ 0 $ 0
Capital gain distributions......................... 0 0 0
----- ----- ----
Total investment income........................... 0 0 0
Expenses:
Mortality and expense risk......................... 2 3 1
----- ----- ----
Net investment income (loss)...................... (2) (3) (1)
----- ----- ----
Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investment securities.. (3) (1) 4
Change in unrealized appreciation (depreciation)... (70) (47) 13
----- ----- ----
Net gain (loss) on investment securities.......... (73) (48) 17
----- ----- ----
Net increase (decrease) in net assets resulting
from operations................................. $ (75) $ (51) $ 16
===== ===== ====
See Notes to the Financial Statements, which is an integral part of this report.
155
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL WRL WRL
J.P. Morgan AEGON Janus
Money Market Bond Growth
Subaccount Subaccount Subaccount
------------------ ------------------ ------------------------
December 31, December 31, December 31,
------------------ ------------------ ------------------------
2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- ---------- -----------
Operations:
Net investment income (loss)................ $ 2,389 $ 1,474 $ 1,147 $ 1,329 $ 152,896 $ 226,095
Net gain (loss) on investment securities.... 0 0 1,222 (2,327) (555,143) 262,161
-------- -------- -------- -------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations.................. 2,389 1,474 2,369 (998) (402,247) 488,256
-------- -------- -------- -------- ---------- -----------
Capital Unit Transactions:
Proceeds from units sold (transferred)...... 12,540 38,977 897 7,560 168,047 192,993
-------- -------- -------- -------- ---------- -----------
Less cost of units redeemed:
Administrative charges..................... 3,274 3,050 2,341 2,538 69,288 57,685
Policy loans............................... 1,672 1,775 1,361 954 44,968 33,172
Surrender benefits......................... 5,687 4,017 735 846 38,262 32,554
Death benefits............................. 87 115 23 29 6,224 1,908
-------- -------- -------- -------- ---------- -----------
10,720 8,957 4,460 4,367 158,742 125,319
-------- -------- -------- -------- ---------- -----------
Increase (decrease) in net assets from
capital unit transactions................ 1,820 30,020 (3,563) 3,193 9,305 67,674
-------- -------- -------- -------- ---------- -----------
Net increase (decrease) in net assets..... 4,209 31,494 (1,194) 2,195 (392,942) 555,930
Depositor's equity contribution
(net redemption).......................... 0 0 0 0 0 0
Net Assets:
Beginning of year.......................... 56,070 24,576 27,129 24,934 1,353,957 798,027
-------- -------- -------- -------- ---------- -----------
End of year................................ $ 60,279 $ 56,070 $ 25,935 $ 27,129 $ 961,015 $ 1,353,957
======== ======== ======== ======== ========== ===========
Unit Activity:
Units outstanding - beginning of year...... 3,206 1,460 1,232 1,090 9,293 8,668
Units issued............................... 50,376 18,474 427 883 2,459 2,854
Units redeemed............................. (50,304) (16,728) (587) (741) (2,386) (2,229)
-------- -------- -------- -------- ---------- -----------
Units outstanding - end of year............ 3,278 3,206 1,072 1,232 9,366 9,293
======== ======== ======== ======== ========== ===========
See Notes to the Financial Statements, which is an integral part of this report.
156
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL WRL
WRL LKCM VKAM
Janus Strategic Emerging
Global Total Return Growth
Subaccount Subaccount Subaccount
-------------------- ------------------- --------------------
December 31, December 31, December 31,
-------------------- ------------------- --------------------
2000 1999 2000 1999 2000 1999
--------- --------- -------- --------- --------- ---------
Operations:
Net investment income (loss)............... $ 98,726 $ 26,538 $ 7,415 $ 8,072 $ 168,610 $ 81,707
Net gain (loss) on investment securities... (191,334) 153,543 (12,297) 2,825 (261,688) 217,724
--------- --------- -------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations................. (92,608) 180,081 (4,882) 10,897 (93,078) 299,431
--------- --------- -------- --------- --------- ---------
Capital Unit Transactions:
Proceeds from units sold (transferred)..... 112,253 81,308 10,776 11,792 145,357 94,168
--------- --------- -------- --------- --------- ---------
Less cost of units redeemed:
Administrative charges.................... 31,746 25,132 7,939 8,436 35,247 25,202
Policy loans.............................. 15,396 9,284 2,710 3,000 22,735 11,395
Surrender benefits........................ 12,985 8,537 2,844 3,136 20,687 11,025
Death benefits............................ 907 194 600 378 1,538 512
--------- --------- -------- --------- --------- ---------
61,034 43,147 14,093 14,950 80,207 48,134
--------- --------- -------- --------- --------- ---------
Increase (decrease) in net assets from
capital unit transactions................ 51,219 38,161 (3,317) (3,158) 65,150 46,034
--------- --------- -------- --------- --------- ---------
Net increase (decrease) in net assets..... (41,389) 218,242 (8,199) 7,739 (27,928) 345,465
Depositor's equity contribution
(net redemption).......................... 0 0 0 0 0 0
Net Assets:
Beginning of year.......................... 451,498 233,256 106,665 98,926 608,130 262,665
--------- --------- -------- --------- --------- ---------
End of year................................ $ 410,109 $ 451,498 $ 98,466 $ 106,665 $ 580,202 $ 608,130
========= ========= ======== ========= ========= =========
Unit Activity:
Units outstanding - beginning of year...... 11,605 10,167 4,674 4,814 9,357 8,218
Units issued............................... 4,570 4,823 1,327 1,538 11,606 4,977
Units redeemed............................. (3,276) (3,385) (1,478) (1,678) (10,737) (3,838)
--------- --------- -------- --------- --------- ---------
Units outstanding - end of year............ 12,899 11,605 4,523 4,674 10,226 9,357
========= ========= ======== ========= ========= =========
See Notes to the Financial Statements, which is an integral part of this report.
157
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL WRL WRL
Alger AEGON Federated
Aggressive Growth Balanced Growth & Income
Subaccount Subaccount Subaccount
-------------------- ----------------- -------------------
December 31, December 31, December 31,
-------------------- ----------------- -------------------
2000 1999 2000 1999 2000 1999
--------- --------- ------- -------- --------- --------
Operations:
Net investment income (loss)............... $ 41,268 $ 35,966 $ 215 $ 213 $ 1,001 $ 1,091
Net gain (loss) on investment securities... (168,747) 101,488 742 105 4,230 (2,078)
--------- --------- -------- -------- --------- --------
Net increase (decrease) in net assets
resulting from operations................. (127,479) 137,454 957 318 5,231 (987)
--------- --------- -------- -------- --------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 103,588 74,699 4,955 5,997 7,863 5,627
--------- --------- -------- -------- --------- --------
Less cost of units redeemed:
Administrative charges................... 26,734 19,544 2,124 1,931 2,328 2,355
Policy loans............................. 12,341 8,193 442 429 628 346
Surrender benefits....................... 10,374 7,977 559 626 534 542
Death benefits........................... 666 118 18 10 110 55
--------- --------- -------- -------- --------- --------
50,115 35,832 3,143 2,996 3,600 3,298
--------- --------- -------- -------- --------- --------
Increase (decrease) in net assets from
capital unit transactions............... 53,473 38,867 1,812 3,001 4,263 2,329
--------- --------- -------- -------- --------- --------
Net increase (decrease) in net assets.... (74,006) 176,321 2,769 3,319 9,494 1,342
Depositor's equity contribution
(net redemption)......................... 0 0 0 0 0 0
Net Assets:
Beginning of year......................... 354,178 177,857 18,183 14,864 17,389 16,047
--------- --------- -------- -------- --------- --------
End of year............................... $ 280,172 $ 354,178 $ 20,952 $ 18,183 $ 26,883 $ 17,389
========= ========= ======== ======== ========= ========
Unit Activity:
Units outstanding - beginning of year..... 7,928 6,669 1,186 990 1,117 976
Units issued.............................. 3,925 3,640 569 637 996 714
Units redeemed............................ (2,638) (2,381) (452) (441) (764) (573)
--------- --------- -------- -------- --------- --------
Units outstanding - end of year........... 9,215 7,928 1,303 1,186 1,349 1,117
========= ========= ======== ======== ========= ========
See Notes to the Financial Statements, which is an integral part of this report.
158
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL WRL WRL
Dean C.A.S.E. NWQ
Asset Allocation Growth Value Equity
Subaccount Subaccount Subaccount
------------------ ------------------ -------------------
December 31, December 31, December 31,
------------------ ------------------ -------------------
2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- -------- --------
Operations:
Net investment income (loss).............. $ 2,290 $ 954 $ 4,321 $ 2,402 $ 412 $ 379
Net gain (loss) on investment securities.. 2,493 (3,414) (10,421) 3,900 2,965 1,157
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations................ 4,783 (2,460) (6,100) 6,302 3,377 1,536
-------- -------- -------- -------- -------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred).... 1,235 1,729 5,488 7,781 2,652 3,283
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges................... 3,204 3,875 2,868 2,946 2,467 2,874
Policy loans............................. 785 991 767 668 596 713
Surrender benefits....................... 1,058 901 885 678 660 605
Death benefits........................... 75 89 33 12 96 32
-------- -------- -------- -------- -------- --------
5,122 5,856 4,553 4,304 3,819 4,224
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets from
capital unit transactions............... (3,887) (4,127) 935 3,477 (1,167) (941)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets.... 896 (6,587) (5,165) 9,779 2,210 595
Depositor's equity contribution
(net redemption)......................... 0 0 0 0 0 0
Net Assets:
Beginning of year......................... 33,317 39,904 27,509 17,730 6,678 26,083
-------- -------- -------- -------- -------- --------
End of year............................... $ 34,213 $ 33,317 $ 22,344 $ 27,509 $ 28,888 $ 26,678
======== ======== ======== ======== ======== ========
Unit Activity:
Units outstanding - beginning of year..... 2,128 2,383 1,657 1,417 1,895 1,982
Units issued.............................. 729 937 1,014 1,347 907 1,296
Units redeemed............................ (976) (1,192) (958) (1,107) (1,005) (1,383)
-------- -------- --------- -------- -------- --------
Units outstanding - end of year........... 1,881 2,128 1,713 1,657 1,797 1,895
======== ======== ========= ======== ======== ========
See Notes to the Financial Statements, which is an integral part of this report.
159
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL
GE WRL WRL
International GE Third Avenue
Equity U.S. Equity Value
Subaccount Subaccount Subaccount
--------------- ----------------- ------------------
December 31, December 31, December 31,
--------------- ----------------- ------------------
2000 1999 2000 1999 2000 1999
------- ------ ------- ------- --------- -------
Operations:
Net investment income (loss)................ $ 1,124 $ 325 $ 1,071 $ 1,730 $ 426 $ 61
Net gain (loss) on investment securities.... (2,405) 1,104 (1,646) 1,544 1,699 365
------- ------- -------- -------- --------- -------
Net increase (decrease) in net assets
resulting from operations.................. (1,281) 1,429 (575) 3,274 2,125 426
------- ------- -------- -------- --------- -------
Capital Unit Transactions:
Proceeds from units sold (transferred)...... 3,155 761 7,853 12,169 12,970 730
------- ------- -------- -------- --------- -------
Less cost of units redeemed:
Administrative charges..................... 663 644 2,712 2,237 560 218
Policy loans............................... 150 101 440 422 894 52
Surrender benefits......................... 125 258 744 444 306 80
Death benefits............................. 5 1 27 8 11 3
------- ------- -------- -------- --------- -------
943 1,004 3,923 3,111 1,771 353
------- ------- -------- -------- --------- -------
Increase (decrease) in net assets from
capital unit transactions................. 2,212 (243) 3,930 9,058 11,199 377
------- ------- -------- -------- --------- -------
Net increase (decrease) in net assets...... 931 1,186 3,355 12,332 13,324 803
Depositor's equity contribution
(net redemption)........................... 0 0 0 0 0 (199)
Net Assets:
Beginning of year........................... 7,013 5,827 26,416 14,084 3,411 2,807
------- ------- -------- -------- --------- -------
End of year................................. $ 7,944 $ 7,013 $ 29,771 $ 26,416 $ 16,735 $ 3,411
======= ======= ======== ======== ========= =======
Unit Activity:
Units outstanding - beginning of year....... 475 489 1,468 919 322 304
Units issued................................ 474 672 1,064 1,292 1,432 258
Units redeemed.............................. (310) (686) (849) (743) (577) (240)
------- ------- -------- -------- --------- -------
Units outstanding - end of year............. 639 475 1,683 1,468 1,177 322
======= ======= ======== ======== ========= =======
See Notes to the Financial Statements, which is an integral part of this report.
160
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL
J.P. Morgan WRL WRL
Real Estate Goldman Sachs Goldman Sachs
Securities Growth Small Cap
Subaccount Subaccount Subaccount
--------------- ------------------ -----------------
December 31, December 31, December 31,
--------------- ------------------ -----------------
2000 1999 2000 1999/(1)/ 2000 1999/(1)/
------- ----- ------- --------- ----- ---------
Operations:
Net investment income (loss).................... $ 17 $ 6 $ 7 $ (2) $ 11 $ 14
Net gain (loss) on investment securities........ 345 (41) (156) 110 (27) 20
------- ----- ------- ----- ----- -----
Net increase (decrease) in net assets
resulting from operations...................... 362 (35) (149) 108 (16) 34
------- ----- ------- ----- ----- -----
Capital Unit Transactions:
Proceeds from units sold (transferred).......... 2,080 (26) 1,002 871 622 295
------- ----- ------- ----- ----- -----
Less cost of units redeemed:
Administrative charges......................... 86 19 123 18 52 5
Policy loans................................... 60 0 44 2 7 5
Surrender benefits............................. 36 1 8 7 2 0
Death benefits................................. 0 1 0 0 0 0
------- ----- ------- ----- ----- -----
182 21 175 27 61 10
------- ----- ------- ----- ----- -----
Increase (decrease) in net assets from
capital unit transactions.................... 1,898 (47) 827 844 561 285
------- ----- ------- ----- ----- -----
Net increase (decrease) in net assets.......... 2,260 (82) 678 952 545 319
Depositor's equity contribution
(net redemption)............................... (411) 0 (28) 25 (27) 25
Net Assets:
Beginning of year............................... 627 709 977 0 344 0
------- ----- ------- ----- ----- -----
End of year..................................... $ 2,476 $ 627 $ 1,627 $ 977 $ 862 $ 344
======= ===== ======= ===== ===== =====
Unit Activity:
Units outstanding - beginning of year........... 78 84 87 0 31 0
Units issued.................................... 816 67 161 106 80 41
Units redeemed.................................. (655) (73) (90) (19) (31) (10)
------- ----- ------- ----- ----- -----
Units outstanding - end of year................. 239 78 158 87 80 31
======= ===== ======= ===== ===== =====
See Notes to the Financial Statements, which is an integral part of this report.
161
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL
T. Rowe Price WRL WRL
Dividend T. Rowe Price Salomon
Growth Small Cap All Cap
Subaccount Subaccount Subaccount
---------------- ----------------- --------------------
December 31, December 31, December 31,
---------------- ----------------- --------------------
2000 1999/(1)/ 2000 1999/(1)/ 2000 1999/(1)/
----- --------- ------ --------- --------- ---------
Operations:
Net investment income (loss)............... $ (4) $ (1) $ 5 $ 26 $ 57 $ 11
Net gain (loss) on investment securities... 87 (17) (412) 162 161 15
----- -------- ------- ------- --------- --------
Net increase (decrease) in net assets
resulting from operations................. 83 (18) (407) 188 218 26
----- -------- ------- ------- --------- --------
Capital Unit Transactions:
Proceeds from units sold (transferred)..... 516 499 2,291 727 7,892 344
----- -------- ------- ------- --------- --------
Less cost of units redeemed:
Administrative charges.................... 83 2 167 15 257 9
Policy loans.............................. 7 0 27 0 76 3
Surrender benefits........................ 2 3 15 0 58 0
Death benefits............................ 0 0 0 0 0 0
----- -------- ------- ------- --------- --------
92 5 209 15 391 12
----- -------- ------- ------- --------- --------
Increase (decrease) in net assets from
capital unit transactions................ 424 494 2,082 712 7,501 332
----- -------- ------- ------- --------- --------
Net increase (decrease) in net assets..... 507 476 1,675 900 7,719 358
Depositor's equity contribution
(net redemption).......................... (23) 25 (32) 25 (30) 25
Net Assets:
Beginning of year.......................... 501 0 925 0 383 0
----- -------- ------- ------- --------- --------
End of year................................ $ 985 $ 501 $ 2,568 $ 925 $ 8,072 $ 383
===== ======== ======= ======= ========= ========
Unit Activity:
Units outstanding - beginning of year...... 55 0 75 0 36 0
Units issued............................... 132 65 301 161 836 58
Units redeemed............................. (88) (10) (146) (86) (229) (22)
----- -------- ------- ------- --------- --------
Units outstanding - end of year............ 99 55 230 75 643 36
===== ======== ======= ======= ========= ========
See Notes to the Financial Statements, which is an integral part of this report.
162
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL WRL
Pilgrim Baxter Dreyfus
Mid Cap Growth Mid Cap
Subaccount Subaccount
-------------------- ------------------
December 31, December 31,
-------------------- ------------------
2000 1999/(1)/ 2000 1999/(1)/
-------- --------- ------- ---------
Operations:
Net investment income (loss).............. $ 81 $ 5 $ 20 $ (1)
Net gain (loss) on investment securities.. (16,860) 1,268 40 16
-------- ------- ------- -----
Net increase (decrease) in net assets
resulting from operations .............. (16,779) 1,273 60 15
-------- ------- ------- -----
Capital Unit Transactions:
Proceeds from units sold (transferred).... 55,513 3,885 1,562 297
-------- ------- ------- -----
Less cost of units redeemed:
Administrative charges.................. 2,546 37 96 0
Policy loans............................ 1,156 18 21 0
Surrender benefits...................... 323 30 4 0
Death benefits.......................... 72 0 0 0
-------- ------- ------- -----
4,097 85 121 0
-------- ------- ------- -----
Increase (decrease) in net assets from
capital unit transactions............. 51,416 3,800 1,441 297
-------- ------- ------- -----
Net increase (decrease) in net assets... 34,637 5,073 1,501 312
Depositor's equity contribution
(net redemption)........................ 0 (8) (27) 25
Net Assets:
Beginning of year......................... 5,065 0 337 0
-------- ------- ------- -----
End of year............................... $ 39,702 $ 5,065 $ 1,811 $ 337
======== ======= ======= =====
Unit Activity:
Units outstanding - beginning of year..... 317 0 33 0
Units issued.............................. 4,015 412 311 52
Units redeemed............................ (1,403) (95) (185) (19)
-------- ------- ------- -----
Units outstanding - end of year........... 2,929 317 159 33
======== ======= ======= =====
See Notes to the Financial Statements, which is an integral part of this report.
163
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL WRL WRL
WRL Great Great Great
Value Line Companies - Companies - Companies -
Aggressive Growth America/SM/ Technology/SM/ Global/2/
Subaccount Subaccount Subaccount Subaccount
----------------- ------------ ------------- ------------
December 31, December 31, December 31, December 31,
----------------- ------------ ------------- ------------
2000/(1)/ 2000/(1)/ 2000/(1)/ 2000/(1)/
----------------- ------------ ------------- ------------
Operations:
Net investment income (loss)..................... $ (4) $ (28) $ (13) $ (1)
Net gain (loss) on investment securities......... (185) 715 (1,437) (16)
------ ------ ------ ----
Net increase (decrease) in net assets
resulting from operations....................... (189) 687 (1,450) (17)
------ ------ ------ ----
Capital Unit Transactions:
Proceeds from units sold (transferred)........... 1,091 8,008 4,240 494
------ ------ ------ ----
Less cost of units redeemed:
Administrative charges.......................... 19 177 80 7
Policy loans.................................... 16 110 53 1
Surrender benefits.............................. 0 117 69 0
Death benefits.................................. 0 0 0 0
------ ------ ------ ----
35 404 202 8
------ ------ ------ ----
Increase (decrease) in net assets from
capital unit transactions...................... 1,056 7,604 4,038 486
------ ------ ------ ----
Net increase (decrease) in net assets........... 867 8,291 2,588 469
Depositor's equity contribution
(net redemption) ............................... 200 200 200 25
Net Assets:
Beginning of year................................ 0 0 0 0
------ ------ ------ ----
End of year...................................... $1,067 $8,491 $2,788 $494
====== ====== ====== ====
Unit Activity:
Units outstanding - beginning of year............ 0 0 0 0
Units issued..................................... 132 878 557 63
Units redeemed................................... (13) (127) (141) (5)
------ ------ ------ ----
Units outstanding - end of year.................. 119 751 416 58
====== ====== ====== ====
See Notes to the Financial Statements, which is an integral part of this report.
164
WRL Series Life Account
Statements of Changes in Net Assets
For the Year Ended
All Amounts in Thousands
WRL Fidelity VIP
Gabelli III Fidelity VIP
Global Growth II Fidelity VIP
Growth Opportunities Contrafund(R) Equity-Income
Subaccount Subaccount Subaccount Subaccount
------------ ------------- -------------- --------------
December 31, December 31, December 31, December 31,
------------ ------------- -------------- --------------
2000/(1)/ 2000/(1)/ 2000/(1)/ 2000/(1)/
------------ ------------- -------------- --------------
Operations:
Net investment income (loss)............... $ (1) $ (2) $ (3) $ (1)
Net gain (loss) on investment securities... (34) (73) (48) 17
------ ----- ------- -----
Net increase (decrease) in net assets
resulting from operations................. (35) (75) (51) 16
------ ----- ------- -----
Capital Unit Transactions:
Proceeds from units sold (transferred)..... 1,014 633 1,085 276
------ ----- ------- -----
Less cost of units redeemed:
Administrative charges.................... 33 14 23 8
Policy loans.............................. 0 5 5 2
Surrender benefits........................ 0 2 1 0
Death benefits............................ 0 0 0 0
------ ----- ------- -----
33 21 29 10
------ ----- ------- -----
Increase (decrease) in net assets from
capital unit transactions................ 981 612 1,056 266
------ ----- ------- -----
Net increase (decrease) in net assets..... 946 537 1,005 282
Depositor's equity contribution
(net redemption).......................... 25 25 25 25
Net Assets:
Beginning of year.......................... 0 0 0 0
------ ----- ------- -----
End of year................................ $ 971 $ 562 $ 1,030 $ 307
====== ===== ======= =====
Unit Activity:
Units outstanding - beginning of year...... 0 0 0 0
Units issued............................... 123 76 124 39
Units redeemed............................. (16) (10) (14) (11)
------ ----- ------- -----
Units outstanding - end of year............ 107 66 110 28
====== ===== ======= =====
See Notes to the Financial Statements, which is an integral part of this report.
165
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL J.P. Morgan Money Market Subaccount
---------------------------------------------------
December 31,
---------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ----- ------
Accumulation unit value, beginning of year .......... $ 17.49 $ 16.83 $ 16.13 $ 15.45 $ 14.83
------- ------- ------- ------- -------
Income from operations:
Net investment income (loss) .................... 0.90 0.66 0.70 0.68 0.62
Net realized and unrealized gain (loss) on
investment .................................... 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- -------
Net income (loss) from operations ............. 0.90 0.66 0.70 0.68 0.62
------- ------- ------- ------- -------
Accumulation unit value, end of year ................ $ 18.39 $ 17.49 $ 16.83 $ 16.13 $ 15.45
======= ======= ======= ======= =======
Total return ........................................ 5.17% 3.92% 4.36% 4.37% 4.17%
Ratios and supplemental data:
Net assets at end of year (in thousands) ........ $60,279 $56,070 $24,576 $16,440 $12,740
Ratio of net investment income (loss) to average
net assets .................................... 5.05% 3.87% 4.24% 4.28% 4.07%
WRL AEGON Bond Subaccount
---------------------------------------------
December 31,
---------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
Accumulation unit value, beginning of year ........... $ 22.01 $ 22.89 $ 21.12 $ 19.53 $ 19.67
------- ------- ------- ------- -------
Income from operations:
Net investment income (loss) .................... 1.04 1.13 1.01 1.01 0.99
Net realized and unrealized gain (loss) on
investment .................................... 1.14 (2.01) 0.76 0.58 (1.13)
------- ------- ------- ------- -------
Net income (loss) from operations ............. 2.18 (0.88) 1.77 1.59 (0.14)
------- ------- ------- ------- -------
Accumulation unit value, end of year ................. $ 24.19 $ 22.01 $ 22.89 $ 21.12 $19.53
======= ======= ======= ======= =======
Total return ......................................... 9.90% (3.81)% 8.34% 8.18% (0.75)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ......... $25,935 $27,129 $24,934 $17,657 $11,585
Ratio of net investment income (loss) to average
net assets ..................................... 4.58% 5.10% 4.58% 5.06% 5.34%
See Notes to the Financial Statements, which is an integral part of this report.
166
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL Janus Growth Subaccount
----------------------------------------------------
December 31,
----------------------------------------------------
2000 1999 1998 1997 1996
--------- ---------- -------- -------- --------
Accumulation unit value, beginning of year....................... $ 145.70 $ 92.07 $ 56.48 $ 48.48 $ 41.47
--------- ---------- -------- -------- --------
Income from operations:
Net investment income (loss)................................. 16.41 25.03 0.13 5.83 2.88
Net realized and unrealized gain (loss) on investment........ (59.50) 28.60 35.46 2.17 4.13
--------- ---------- -------- -------- --------
Net income (loss) from operations.......................... (43.09) 53.63 35.59 8.00 7.01
--------- ---------- -------- -------- --------
Accumulation unit value, end of year............................. $ 102.61 $ 145.70 $ 92.07 $ 56.48 $ 48.48
========= ========== ======== ======== ========
Total return..................................................... (29.58)% 58.25% 63.01% 16.50% 16.91%
Ratios and supplemental data:
Net assets at end of year (in thousands)....................... $ 961,015 $1,353,957 $798,027 $450,271 $349,491
Ratio of net investment income (loss) to average net assets.... 11.75% 22.67% 0.19% 10.84% 6.41%
WRL Janus Global Subaccount
--------------------------------------------------
December 31,
--------------------------------------------------
2000 1999 1998 1997 1996
--------- -------- -------- -------- --------
Accumulation unit value, beginning of year....................... $ 38.91 $ 22.94 $ 17.80 $ 15.13 $ 11.95
--------- -------- -------- -------- --------
Income from operations:
Net investment income (loss)................................. 7.93 2.44 0.82 2.30 1.50
Net realized and unrealized gain (loss) on investment........ (15.05) 13.53 4.32 0.37 1.68
--------- -------- -------- -------- --------
Net income (loss) from operations.......................... (7.12) 15.97 5.14 2.67 3.18
--------- -------- -------- -------- --------
Accumulation unit value, end of year............................. $ 31.79 $ 38.91 $ 22.94 $ 17.80 $ 15.13
========= ======== ======== ======== ========
Total return..................................................... (18.28)% 69.58% 28.86% 17.69% 26.60%
Ratios and supplemental data:
Net assets at end of year (in thousands)....................... $ 410,109 $451,498 $233,256 $145,017 $ 83,159
Ratio of net investment income (loss) to average net assets.... 20.55% 9.07% 3.92% 13.39% 11.09%
See Notes to the Financial Statements, which is an integral part of this report.
167
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL LKCM Strategic Total Return Subaccount
--------------------------------------------------
December 31,
--------------------------------------------------
2000 1999 1998 1997 1996
--------- -------- ------- ------- -------
Accumulation unit value, beginning of year....................... $ 22.82 $ 20.55 $ 18.91 $ 15.66 $ 13.74
------- -------- ------- ------- -------
Income from operations:
Net investment income (loss).................................. 1.63 1.68 0.71 1.56 0.82
Net realized and unrealized gain (loss) on investment......... (2.68) 0.59 0.93 1.69 1.10
------- -------- ------- ------- -------
Net income (loss) from operations .......................... (1.05) 2.27 1.64 3.25 1.92
------- -------- ------- ------- -------
Accumulation unit value, end of year ............................. $ 21.77 $ 22.82 $ 20.55 $ 18.91 $ 15.66
======= ======== ======= ======= =======
Total return ..................................................... (4.62)% 11.07% 8.66% 20.77% 13.97%
Ratios and supplemental data:
Net assets at end of year (in thousands) ....................... $98,466 $106,665 $98,926 $80,753 $55,900
Ratio of net investment income (loss) to average net assets .... 7.43% 7.93% 3.67% 8.89% 5.76%
WRL VKAM Emerging Growth Subaccount
--------------------------------------------------
December 31,
--------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Accumulation unit value, beginning of year ....................... $ 64.99 $ 31.96 $ 23.48 $ 19.51 $ 16.56
-------- -------- -------- -------- --------
Income from operations:
Net investment income (loss) ................................. 16.83 9.32 0.91 2.20 0.82
Net realized and unrealized gain (loss) on investment ........ (25.08) 23.71 7.57 1.77 2.13
-------- -------- -------- -------- --------
Net income (loss) from operations .......................... (8.25) 33.03 8.48 3.97 2.95
--------- -------- -------- -------- --------
Accumulation unit value, end of year ............................. $ 56.74 $ 64.99 $ 31.96 $ 23.48 $ 19.51
======== ======== ======== ======== ========
Total return ..................................................... (12.70)% 103.33% 36.11% 20.37% 17.82%
Ratios and supplemental data:
Net assets at end of year (in thousands) ....................... $580,202 $608,130 $262,665 $164,702 $107,925
Ratio of net investment income (loss) to average net assets .... 23.62% 23.19% 3.44% 10.18% 4.51%
See Notes to the Financial Statements, which is an integral part of this report.
168
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL Alger Aggressive Growth Subaccount
-----------------------------------------------------------
December 31,
-----------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- -------- --------
Accumulation unit value, beginning of year ....... $ 44.67 $ 26.67 $ 18.10 $ 14.70 $ 13.43
--------- --------- --------- -------- --------
Income from operations:
Net investment income (loss) ................. 4.76 4.90 1.33 1.75 0.36
Net realized and unrealized gain (loss) on
investment .................................. (19.03) 13.10 7.24 1.65 0.91
--------- --------- --------- -------- --------
Net income (loss) from operations .......... (14.27) 18.00 8.57 3.40 1.27
--------- --------- --------- -------- --------
Accumulation unit value, end of year ............. $ 30.40 $ 44.67 $ 26.67 $ 18.10 $ 14.70
========= ========= ========= ======== ========
Total return ..................................... (31.94)% 67.52 % 47.36 % 23.14 % 9.46 %
Ratios and supplemental data:
Net assets at end of year (in thousands) ....... $ 280,172 $ 354,178 $ 177,857 $ 94,652 $ 54,408
Ratio of net investment income (loss) to average
net assets .................................... 11.65 % 15.54 % 6.20 % 10.26 % 2.65 %
WRL AEGON Balanced Subaccount
-------------------------------------------------------
December 31,
-------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- -------
Accumulation unit value, beginning of year ....... $ 15.33 $ 15.02 $ 14.17 $ 12.21 $ 11.13
-------- -------- -------- -------- -------
Income from operations:
Net investment income (loss) ................. 0.17 0.19 0.25 1.55 0.36
Net realized and unrealized gain (loss) on
investment .................................. 0.58 0.12 0.60 0.41 0.72
-------- -------- -------- -------- -------
Net income (loss) from operations .......... 0.75 0.31 0.85 1.96 1.08
-------- -------- -------- -------- -------
Accumulation unit value, end of year ............. $ 16.08 $ 15.33 $ 15.02 $ 14.17 $ 12.21
======== ======== ======== ======== =======
Total return ..................................... 4.88 % 2.11 % 5.98 % 16.06 % 9.73 %
Ratios and supplemental data:
Net assets at end of year (in thousands) ....... $ 20,952 $ 18,183 $ 14,864 $ 10,716 $ 6,418
Ratio of net investment income (loss) to average
net assets .................................... 1.10 % 1.26 % 1.76 % 11.62 % 3.18 %
See Notes to the Financial Statements, which is an integral part of this report.
169
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL Federated Growth & Income Subaccount
----------------------------------------------------
December 31,
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Accumulation unit value, beginning of year.......... $ 15.57 $ 16.44 $ 16.09 $ 13.03 $ 11.77
-------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).................... 0.85 1.05 0.77 2.61 0.76
Net realized and unrealized gain (loss) on
investment.................................... 3.51 (1.92) (0.42) 0.45 0.50
-------- -------- -------- -------- --------
Net income (loss) from operations............. 4.36 (0.87) 0.35 3.06 1.26
-------- -------- -------- -------- --------
Accumulation unit value, end of year................ $ 19.93 $ 15.57 $ 16.44 $ 16.09 $ 13.03
======== ======== ======== ======== ========
Total return........................................ 28.01 % (5.31)% 2.13 % 23.54 % 10.64 %
Ratios and supplemental data:
Net assets at end of year (in thousands).......... $ 26,883 $ 17,389 $ 16,047 $ 9,063 $ 5,501
Ratio of net investment income (loss) to average
net assets...................................... 5.00 % 6.51 % 4.83 % 18.50 % 6.38 %
WRL Dean Asset Allocation Subaccount
----------------------------------------------------
December 31,
----------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Accumulation unit value, beginning of year.......... $ 15.66 $ 16.74 $ 15.60 $ 13.50 $ 11.90
-------- -------- -------- -------- --------
Income from operations:
Net investment income (loss).................... 1.20 0.41 1.58 1.20 0.53
Net realized and unrealized gain (loss) on
investment.................................... 1.33 (1.49) (0.44) 0.90 1.07
-------- -------- -------- -------- --------
Net income (loss) from operations............. 2.53 (1.08) 1.14 2.10 1.60
-------- -------- -------- -------- --------
Accumulation unit value, end of year................ $ 18.19 $ 15.66 $ 16.74 $ 15.60 $ 13.50
======== ======== ======== ======== ========
Total return........................................ 16.16 % (6.48)% 7.36 % 15.55 % 13.40 %
Ratios and supplemental data:
Net assets at end of year (in thousands).......... $ 34,213 $ 33,317 $ 39,904 $ 29,123 $ 17,946
Ratio of net investment income (loss) to average
net assets...................................... 7.33 % 2.50 % 9.69 % 8.14 % 4.35 %
See Notes to the Financial Statements, which is an integral part of this report.
170
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL C.A.S.E. Growth Subaccount
-----------------------------------------------
December 31,
-----------------------------------------------
2000 1999 1998 1997 1996/(1)/
-------- ------- ------- -------- ---------
Accumulation unit value, beginning of year............... $ 16.60 $ 12.51 $ 12.32 $ 10.81 $ 10.00
-------- ------- ------- ------- -------
Income from operations:
Net investment income (loss)........................... 2.56 1.52 1.24 1.51 0.37
Net realized and unrealized gain (loss) on investment.. (6.12) 2.57 (1.05) 0.00 0.44
-------- ------- ------- ------- --------
Net income (loss) from operations..................... (3.56) 4.09 0.19 1.51 0.81
-------- ------- ------- ------- --------
Accumulation unit value, end of year..................... $ 13.04 $ 16.60 $ 12.51 $ 12.32 $ 10.81
======== ======= ======= ======= ========
Total return............................................. (21.42)% 32.65% 1.56% 14.00% 8.09%
Ratios and supplemental data:
Net assets at end of year (in thousands)................ $22,344 $27,509 $17,730 $11,946 $ 4,466
Ratio of net investment income (loss) to average
net assets............................................. 16.28% 10.16% 10.21% 12.65% 6.11%
WRL NWQ Value Equity Subaccount
---------------------------------------------
December 31,
---------------------------------------------
2000 1999 1998 1997 1996/(1)/
------- ------- ------- ------- ---------
Accumulation unit value, beginning of year............... $ 14.08 $ 13.16 $ 13.94 $ 11.25 $10.00
------- ------- ------- ------- ------
Income from operations:
Net investment income (loss)........................... 0.23 0.20 0.95 0.14 0.05
Net realized and unrealized gain (loss) on investment.. 1.76 0.72 (1.73) 2.55 1.20
------- ------- ------- ------- ------
Net income (loss) from operations..................... 1.99 0.92 (0.78) 2.69 1.25
------- ------- ------- ------- ------
Accumulation unit value, end of year..................... $ 16.07 $ 14.08 $ 13.16 $ 13.94 $11.25
======= ======= ======= ======= ======
Total return............................................. 14.17% 6.98% (5.63)% 23.93% 12.51%
Ratios and supplemental data:
Net assets at end of year (in thousands)................ $28,888 $26,678 $26,083 $26,714 $8,887
Ratio of net investment income (loss) to average
net assets............................................. 1.58% 1.42% 6.84% 1.05% 0.77%
See Notes to the Financial Statements, which is an integral part of this report.
171
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL GE International Equity Subaccount
--------------------------------------
December 31,
--------------------------------------
2000 1999 1998 1997/(1)/
------ ------ -------- -----------
Accumulation unit value, beginning of year...................... $ 14.76 $11.92 $ 10.65 $ 10.00
-------- ------ ------- -------
Income from operations:
Net investment income (loss).................................. 2.00 0.62 (0.09) (0.03)
Net realized and unrealized gain (loss) on investment......... (4.33) 2.22 1.36 0.68
-------- ------ ------- -------
Net income (loss) from operations........................... (2.33) 2.84 1.27 0.65
-------- ------ ------- -------
Accumulation unit value, end of year............................ $ 12.43 $14.76 $ 11.92 $ 10.65
======== ====== ======= =======
Total return.................................................... (15.75)% 23.84% 11.84% 6.54%
Ratios and supplemental data:
Net assets at end of year (in thousands)........................ $7,944 $7,013 $ 5,827 $ 2,289
Ratio of net investment income (loss) to average
net assets.................................................... 14.54% 5.09% (0.81)% (0.28)%
WRL GE U.S. Equity Subaccount
--------------------------------------
December 31,
--------------------------------------
2000 1999 1998 1997/(1)/
------- ------- ------- ---------
Accumulation unit value, beginning of year........................ $ 17.99 $ 15.33 $ 12.59 $ 10.00
------- ------- ------- -------
Income from operations:
Net investment income (loss)...................................... 0.68 1.38 0.73 0.99
Net realized and unrealized gain (loss) on investment............. (0.98) 1.28 2.01 1.60
------- ------- ------- -------
Net income (loss) from operations................................. (0.30) 2.66 2.74 2.59
------- ------- ------- -------
Accumulation unit value, end of year.............................. $ 17.69 $ 17.99 $ 15.33 $ 12.59
======= ======= ======= =======
Total return...................................................... (1.67)% 17.35% 21.78% 25.89%
Ratios and supplemental data:
Net assets at end of year (in thousands)........................ $29,771 $26,416 $14,084 $ 3,258
Ratio of net investment income (loss) to average net assets..... 3.81% 8.27% 5.30% 8.28%
See Notes to the Financial Statements, which is an integral part of this report.
172
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL
Third Avenue
Value
Subaccount
-----------------------------
December 31,
-----------------------------
2000 1999 1998/(1)/
-------- -------- ---------
Accumulation unit value, beginning of year.......... $ 10.59 $ 9.23 $ 10.00
-------- -------- --------
Income from operations:
Net investment income (loss).................... 0.60 0.19 (0.05)
Net realized and unrealized gain (loss) on
investment.................................... 3.03 1.17 (0.72)
-------- -------- --------
Net income (loss) from operations............. 3.63 1.36 (0.77)
-------- -------- --------
Accumulation unit value, end of year................ $ 14.22 $ 10.59 $ 9.23
======== ======== ========
Total return........................................ 34.26 % 14.68 % (7.67)%
Ratios and supplemental data:
Net assets at end of year (in thousands).......... $ 16,735 $ 3,411 $ 2,807
Ratio of net investment income (loss) to average
net assets...................................... 4.53 % 1.98 % (0.52)%
WRL
J.P. Morgan
Real Estate Securities
Subaccount
-----------------------------
December 31,
-----------------------------
2000 1999 1998/(1)/
-------- -------- ---------
Accumulation unit value, beginning of year.......... $ 8.06 $ 8.46 $ 10.00
-------- -------- --------
Income from operations:
Net investment income (loss).................... 0.10 0.07 (0.05)
Net realized and unrealized gain (loss) on
investment.................................... 2.20 (0.47) (1.49)
-------- -------- --------
Net income (loss) from operations............. 2.30 (0.40) (1.54)
-------- -------- --------
Accumulation unit value, end of year................ $ 10.36 $ 8.06 $ 8.46
======== ======== ========
Total return........................................ 28.46 % (4.63)% (15.44)%
Ratios and supplemental data:
Net assets at end of year (in thousands).......... $ 2,476 $ 627 $ 709
Ratio of net investment income (loss) to average
net assets...................................... 1.07 % 0.95 % (0.90)%
See Notes to the Financial Statements, which is an integral part of this report.
173
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL
WRL WRL T. Rowe Price
Goldman Sachs Goldman Sachs Dividend
Growth Small Cap Growth
Subaccount Subaccount Subaccount
-------------------- -------------------- --------------------
December 31, December 31, December 31,
-------------------- -------------------- --------------------
2000 1999/(1)/ 2000 1999/(1)/ 2000 1999/(1)/
------- --------- ------- --------- ------- ---------
Accumulation unit value, beginning of year..... $ 11.29 $ 10.00 $ 10.92 $ 10.00 $ 9.16 $ 10.00
------- ------- ------- ------- ------- -------
Income from operations:
Net investment income (loss)............... 0.06 (0.05) 0.22 0.76 (0.04) (0.04)
Net realized and unrealized gain (loss) on
investment................................ (1.06) 1.34 (0.34) 0.16 0.86 (0.80)
------- ------- ------- ------- ------- -------
Net income (loss) from operations........ (1.00) 1.29 (0.12) 0.92 0.82 (0.84)
------- ------- ------- ------- ------- -------
Accumulation unit value, end of year........... $ 10.29 $ 11.29 $ 10.80 $ 10.92 $ 9.98 $ 9.16
======= ======= ======= ======= ======= =======
Total return................................... (8.84)% 12.91 % (1.15)% 9.23 % 8.89 % (8.37)%
Ratios and supplemental data:
Net assets at end of year (in thousands)..... $ 1,627 $ 977 $ 862 $ 344 $ 985 $ 501
Ratio of net investment income (loss) to
average net assets.......................... 0.59 % (0.90)% 2.00 % 15.66 % (0.42)% (0.90)%
WRL
WRL WRL Pilgrim Baxter
T. Rowe Price Salomon Mid Cap
Small Cap All Cap Growth
Subaccount Subaccount Subaccount
-------------------- -------------------- --------------------
December 31, December 31, December 31,
-------------------- -------------------- --------------------
2000 1999/(1)/ 2000 1999/(1)/ 2000 1999/(1)/
------- --------- ------ ---------- -------- ---------
Accumulation unit value, beginning of year..... $ 12.31 $ 10.00 $ 10.70 $ 10.00 $ 15.98 $ 10.00
------- ------- ------- ------- -------- ------
Income from operations:
Net investment income (loss)................. 0.04 0.41 0.23 0.40 0.04 0.04
Net realized and unrealized gain (loss) on
investment.................................. (1.18) 1.90 1.62 0.30 (2.46) 5.94
------- ------ ------- ------- -------- -------
Net income (loss) from operations........... (1.14) 2.31 1.85 0.70 (2.42) 5.98
------- ------ ------- ------- -------- -------
Accumulation unit value, end of year........... $ 11.17 $ 12.31 $ 12.55 $ 10.70 $ 13.56 $ 15.98
======= ======= ======= ======= ======== =======
Total return................................... (9.27)% 23.09 % 17.24 % 7.02 % (15.16)% 59.78 %
Ratios and supplemental data:
Net assets at end of year (in thousands)...... $ 2,568 $ 925 $ 8,072 $ 383 39,702 $ 5,065
Ratio of net investment income (loss) to
average net assets........................... 0.29 % 8.13 % 1.91 % 8.07 % 0.25 % 0.62 %
See Notes to the Financial Statements, which is an integral part of this report.
174
WRL Series Life Account
Financial Highlights
For the Year Ended
WRL WRL WRL
Dreyfus Value Line Great Companies -
Mid Cap Aggressive Growth America/SM/
Subaccount Subaccount Subaccount
-------------------- ----------------- -----------------
December 31, December 31, December 31,
-------------------- ----------------- -----------------
2000 1999/(1)/ 2000/(1)/ 2000/(1)/
-------- --------- ----------------- -----------------
Accumulation unit value, beginning of year...... $ 10.14 $ 10.00 $ 10.00 $ 10.00
-------- --------- --------- ---------
Income from operations:
Net investment income (loss)................ 0.23 (0.04) (0.06) (0.06)
Net realized and unrealized gain (loss) on
investment................................ 0.98 0.18 (0.96) 1.37
-------- --------- --------- ---------
Net income (loss) from operations......... 1.21 0.14 (1.02) 1.31
-------- --------- --------- ---------
Accumulation unit value, end of year............ $ 11.35 $ 10.14 $ 8.98 $ 11.31
======== ========= ========= =========
Total return.................................... 11.91 % 1.44 % (10.24)% 13.12 %
Ratios and supplemental data:
Net assets at end of year (in thousands)...... $ 1,811 $ 337 $ 1,067 $ 8,491
Ratio of net investment income (loss) to
average net assets.......................... 2.02 % (0.90)% (0.90)% (0.90)%
WRL WRL WRL
Great Companies - Great Companies - Gabelli
Technology/SM/ Global/2/ Global Growth
Subaccount Subaccount Subaccount
----------------- ----------------- -----------------
December 31, December 31, December 31,
----------------- ----------------- -----------------
2000/(1)/ 2000/(1)/ 2000/(1)/
----------------- ----------------- -----------------
Accumulation unit value, beginning of year...... $ 10.00 $ 10.00 $ 10.00
--------- --------- ---------
Income from operations:
Net investment income (loss)................ (0.05) (0.03) (0.03)
Net realized and unrealized gain (loss) on
investment................................ (3.25) (1.45) (0.90)
--------- --------- ---------
Net income (loss) from operations......... (3.30) (1.48) (0.93)
--------- --------- ---------
Accumulation unit value, end of year............ $ 6.70 $ 8.52 $ 9.07
========= ========= =========
Total return.................................... (33.01)% (14.84)% (9.27)%
Ratios and supplemental data:
Net assets at end of year (in thousands)...... $ 2,788 $ 494 $ 971
Ratio of net investment income (loss) to
average net assets.......................... (0.90)% (0.90)% (0.90)%
See Notes to the Financial Statements, which is an integral part of this report.
175
WRL Series Life Account
Financial Highlights
For the Year Ended
Fidelity VIP
III Fidelity VIP
Growth II Fidelity VIP
Opportunities Contrafund(R) Equity-Income
Subaccount Subaccount Subaccount
------------- ------------- --------------
December 31, December 31, December 31,
------------- ------------- --------------
2000/(1)/ 2000/(1)/ 2000/(1)/
------------- ------------- --------------
Accumulation unit value, beginning of year................. $ 10.00 $ 10.00 $ 10.00
-------- ------- -------
Income from operations:
Net investment income (loss)............................. (0.06) (0.06) (0.06)
Net realized and unrealized gain (loss) on investment.... (1.38) (0.56) 1.05
-------- ------- -------
Net income (loss) from operations....................... (1.44) (0.62) 0.99
-------- ------- -------
Accumulation unit value, end of year....................... $ 8.56 $ 9.38 $ 10.99
======== ======= =======
Total return............................................... (14.36)% (6.16)% 9.91 %
Ratios and supplemental data:
Net assets at end of year (in thousands).................. $ 562 $ 1,030 $ 307
Ratio of net investment income (loss) to average
net assets............................................... (0.90)% (0.90)% (0.90)%
See Notes to the Financial Statements, which is an integral part of this report.
176
WRL Series Life Account
Notes to the Financial Statements
At December 31, 2000
NOTE 1 -- ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
The 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", or the "depositor") and is registered as a unit investment trust under
the Investment Company Act of 1940, as amended. The Life Account contains
thirty-one investment options referred to as subaccounts. Each subaccount
invests exclusively in a corresponding Portfolio (the "Portfolio") of a fund,
which collectively is referred to as the "Fund". WRL Series Life Account
contains four funds (collectively referred to as the "Funds"). Each fund is a
registered management investment company under the Investment Company Act of
1940, as amended.
Subaccount Investment by Fund:
------------------------------
WRL Series Fund, Inc.
WRL J.P. Morgan Money Market
WRL AEGON Bond
WRL Janus Growth
WRL Janus Global
WRL LKCM Strategic Total Return
WRL VKAM Emerging Growth
WRL Alger Aggressive Growth
WRL AEGON Balanced
WRL Federated Growth & Income
WRL Dean Asset Allocation
WRL C.A.S.E. Growth
WRL NWQ Value Equity
WRL GE International Equity
(formerly WRL GE/Scottish Equitable
International Equity)
WRL GE U.S. Equity
WRL Third Avenue Value
WRL J.P. Morgan Real Estate Securities
WRL Goldman Sachs Growth
WRL Goldman Sachs Small Cap
WRL T. Rowe Price Dividend Growth
WRL T. Rowe Price Small Cap
WRL Salomon All Cap
WRL Pilgrim Baxter Mid Cap Growth
WRL Dreyfus Mid Cap
WRL Value Line Aggressive Growth
WRL Great Companies - America/SM/
WRL Great Companies - Technology/SM/
WRL Great Companies - Global/2/
WRL Gabelli Global Growth
Variable Insurance Products Fund III (VIP III)
Fidelity VIP III Growth Opportunities Portfolio - Service Class 2
(Referred to as "Fidelity VIP III Growth Opportunities")
Variable Insurance Products Fund II (VIP II)
Fidelity VIP II Contrafund(R) Portfolio - Service Class 2 (Referred to as
"Fidelity VIP II Contrafund(R)")
Variable Insurance Products Fund (VIP)
Fidelity VIP Equity-Income Portfolio - Service Class 2 (Referred to as
"Fidelity VIP Equity-Income")
The WRL Series Fund, Inc. has entered into annually renewable investment
advisory agreements for each Portfolio with WRL Investment Management, Inc.
("WRL Management") as investment adviser. WRL Management is a wholly-owned
subsidiary of WRL.
Costs incurred in connection with the advisory services rendered by WRL
Management are paid by each Portfolio. WRL Management has entered into
sub-advisory agreements with various management companies ("Sub-Advisers"), some
of which are affiliates of WRL. Each Sub-Adviser is compensated directly by WRL
Management. The other three Funds have each entered into a participation
agreement for their respective Portfolio among the Fund, its adviser, and WRL.
Each period reported on within the Annual Report reflects a full twelve-month
period, except as follows:
Subaccount Inception Date
---------- --------------
WRL C.A.S.E. Growth 05/01/1996
WRL NWQ Value Equity 05/01/1996
WRL GE International Equity
(formerly WRL GE/Scottish Equitable
International Equity) 01/02/1997
WRL GE U.S. Equity 01/02/1997
WRL Third Avenue Value 01/02/1998
WRL J.P. Morgan Real Estate Securities 05/01/1998
WRL Goldman Sachs Growth 07/01/1999
WRL Goldman Sachs Small Cap 07/01/1999
WRL T. Rowe Price Dividend Growth 07/01/1999
WRL T. Rowe Price Small Cap 07/01/1999
177
WRL Series Life Account
Notes to the Financial Statements (continued)
At December 31, 2000
NOTE 1 -- (continued)
Subaccount (continued) Inception Date
---------------------- --------------
WRL Salomon All Cap 07/01/1999
WRL Pilgrim Baxter Mid Cap Growth 07/01/1999
WRL Dreyfus Mid Cap 07/01/1999
WRL Value Line Aggressive Growth 05/01/2000
WRL Great Companies - America/SM/ 05/01/2000
WRL Great Companies - Technology/SM/ 05/01/2000
WRL Great Companies - Global/2/ 09/01/2000
WRL Gabelli Global Growth 09/01/2000
Fidelity VIP III Growth Opportunities 05/01/2000
Fidelity VIP II Contrafund(R) 05/01/2000
Fidelity VIP Equity-Income 05/01/2000
Effective September 1, 2000, the WRL Janus Global subaccount is not available
for investment to new policy owners. The subaccount remains open to the policy
owners who purchased the Policy before September 1, 2000.
On May 1, 2000 and September 1, 2000, WRL made initial contributions totaling
$ 675,000 and $ 50,000 to the Life Account. The respective amounts of the
contributions and units received are as follows:
Subaccount Contribution Units
---------- ------------ ------
May 1, 2000:
WRL Value Line Aggressive Growth $200,000 20,000
WRL Great Companies - America/SM/ 200,000 20,000
WRL Great Companies - Technology/SM/ 200,000 20,000
Fidelity VIP III Growth Opportunities 25,000 2,500
Fidelity VIP II Contrafund(R) 25,000 2,500
Fidelity VIP Equity-Income 25,000 2,500
September 1, 2000:
WRL Great Companies - Global/2/ 25,000 2,500
WRL Gabelli Global Growth 25,000 2,500
The Life Account holds assets to support the benefits under certain flexible
premium variable universal life insurance policies (the "Policies") issued by
WRL. The Life Account's equity transactions are accounted for using the
appropriate effective date at the corresponding accumulation unit value.
The following significant accounting policies, which are in conformity with
accounting principles generally accepted in the United States, have been
consistently applied in the preparation of the Life Account Financial
Statements. The preparation of the Financial Statements required management to
make estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.
A. Valuation of Investments and Securities Transactions
Investments in the Funds' shares are valued at the closing net asset value
("NAV") per share of the underlying Portfolio, as determined by the Funds.
Investment transactions are accounted for on the trade date at the Portfolio NAV
next determined after receipt of sale or redemption orders without sales
charges. Dividend income and capital gains 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 the Internal Revenue Code law, the investment income of the
Life Account, including realized and unrealized capital 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 the issuance and administration
of the Policies.
A. Policy Charges
Under some forms of the Policies, a sales charge and premium taxes are deducted
by WRL prior to allocation of policy owner payments to the subaccounts.
Contingent surrender charges may also apply.
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 .90 % of average daily net assets is
assessed to compensate WRL for assumption of mortality and expense risks for
administrative services in
178
WRL Series Life Account
Notes to the Financial Statements (continued)
At December 31, 2000
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 -- DIVIDEND DISTRIBUTIONS
Dividends are not declared by the Life Account, since the increase in the value
of the underlying investment in the Funds is reflected daily in the accumulation
unit value used to calculate the equity value within the Life Account.
Consequently, a dividend distribution by the underlying Funds does not change
either the accumulation unit value or equity values within the Life Account.
NOTE 4 -- SECURITIES TRANSACTIONS
Securities transactions for the period ended December 31, 2000 are as follows
(in thousands):
Purchases Proceeds
of from Sales
Subaccount Securities of Securities
---------- ---------- -------------
WRL J.P. Morgan Money Market $638,618 $636,655
WRL AEGON Bond 4,135 6,597
WRL Janus Growth 243,926 80,714
WRL Janus Global 163,941 13,299
WRL LKCM Strategic Total Return 13,451 9,338
WRL VKAM Emerging Growth 816,363 582,058
WRL Alger Aggressive Growth 106,886 11,655
WRL AEGON Balanced 3,704 1,678
WRL Federated Growth & Income 10,936 5,680
WRL Dean Asset Allocation 5,321 6,820
WRL C.A.S.E. Growth 11,454 6,201
WRL NWQ Value Equity 5,542 6,294
WRL GE International Equity 5,524 2,162
WRL GE U.S. Equity 9,487 4,466
WRL Third Avenue Value 14,811 3,442
WRL J.P. Morgan Real Estate
Securities 7,113 5,626
WRL Goldman Sachs Growth 1,393 609
WRL Goldman Sachs Small Cap 736 224
WRL T. Rowe Price Dividend
Growth 1,002 595
WRL T. Rowe Price Small Cap 2,912 883
WRL Salomon All Cap 8,645 1,108
WRL Pilgrim Baxter Mid Cap
Growth 56,247 4,861
WRL Dreyfus Mid Cap 2,964 1,516
WRL Value Line Aggressive Growth 1,336 84
WRL Great Companies -
America/SM/ 8,220 449
WRL Great Companies -
Technology/SM/ 4,615 394
WRL Great Companies - Global/2/ 515 9
WRL Gabelli Global Growth 1,003 9
Fidelity VIP III Growth
Opportunities 695 60
Fidelity VIP II Contrafund(R) 1,152 74
Fidelity VIP Equity-Income 394 104
NOTE 5 -- FINANCIAL HIGHLIGHTS
Per unit information has been computed using average units outstanding
throughout each period. Total return is not annualized for periods of less than
one year. The ratio of net investment income (loss) to average net assets is
annualized for periods of less than one year.
179
Western Reserve Life Assurance Co. of Ohio
Balance Sheet -- Statutory Basis
(Dollars in thousands, except per share amounts)(Unaudited)
As of March 31, 2001
Admitted assets
Cash and invested assets:
Cash and short-term investments $ 7,008
Bonds 90,971
Common stock, at market 5,009
Mortgage loans on real estate 13,986
Home office properties, at cost less
accumulated depreciation 33,425
Investment properties 10,741
Policy loans 292,390
Other invested assets 14,136
----------
Total cash and invested assets 467,666
Federal and foreign income tax recoverable 40,119
Premiums deferred and uncollected 1,348
Accrued investment income 1,556
Transfers from separate accounts due or accrued 422,077
Cash surrender value of life insurance policies 50,383
Other assets 14,098
Separate account assets 8,414,744
----------
Total admitted assets $9,411,991
==========
180
Liabilities and capital and surplus
Liabilities:
Aggregate reserves for policies and contracts:
Life 411,425
Annuity 331,538
Policy and contract claim reserves 16,366
Other policyholders' funds 12,565
Remittances and items not allocated 13,388
Asset valuation reserve 4,791
Interest maintenance reserve 5,915
Short-term note payable to affiliate 41,700
Payable for securities 3,691
Other liabilities 50,454
Separate account liabilities 8,410,157
----------
Total liabilities 9,301,990
Capital and surplus:
Common stock, $1.00 par value, 3,000,000 shares
authorized, 2,500,000 issued and outstanding 2,500
Paid-in surplus 120,107
Unassigned surplus (12,606)
----------
Total capital and surplus 110,001
----------
Total liabilities and capital and surplus $9,411,991
==========
181
Western Reserve Life Assurance Co. of Ohio
Statement of Operations -- Statutory Basis
(Dollars in thousands)(Unaudited)
for the Three Months Ended March 31, 2001
Revenues:
Premiums and other considerations, net of reinsurance:
Life $185,816
Annuity 203,336
Net investment income 10,777
Amortization of interest maintenance reserve 399
Commissions and expense allowances on reinsurance ceded 505
Income from fees associated with investment management,
administration and contract guarantees for separate
accounts 5,508
Other income 4,865
--------
411,206
Benefits and expenses:
Benefits paid or provided for:
Life 14,948
Surrender benefits 218,338
Other benefits 11,228
Increase (decrease) in aggregate reserves for
policies and contracts:
Life 10,730
Annuity 43,168
--------
298,412
Insurance expenses:
Commissions 53,597
General insurance expenses 25,891
Taxes, licenses and fees 6,198
Transfer to separate accounts 101,984
Other 122
--------
187,792
--------
486,204
--------
Loss from operations before federal income tax benefit
and net realized capital gains (losses) on investments (74,998)
Federal and foreign income tax benefit (27,053)
--------
Loss from operations before net realized capital gains
on investments (47,945)
Net realized capital gains on investments (net of
related federal income taxes and amounts transferred
to interest maintenance reserve) 24
--------
Net loss $(47,921)
========
182
Western Reserve Life Assurance Co. of Ohio
Statement of Changes in Capital and Surplus -- Statutory Basis
(Dollars in thousands)(Unaudited)
for the Three Months Ended March 31, 2001
Unassigned Total
Common Paid-In Surplus Capital and
Stock Surplus (Deficit) Surplus
------ -------- ---------- -----------
Balance at January 1, 2001 $2,500 $120,107 $ 23,537 $146,144
Net income (loss) -- -- (47,921) (47,921)
Change in net unrealized capital gains (losses) -- -- (66) (66)
Change in net deferred income tax -- -- 2,356 2,356
Change in non-admitted assets -- -- (2,241) (2,241)
Change in asset valuation reserve -- -- (65) (65)
Change in surplus in separate accounts -- -- (749) (749)
Change is accounting principles -- -- 12,312 12,312
Tax benefits on stock options exercised -- -- 231 231
------ -------- -------- --------
Balance at March 31, 2001 $2,500 $120,107 $(12,606) $110,001
====== ======== ======== ========
183
Western Reserve Life Assurance Co. of Ohio
Statement of Cash Flow -- Statutory Basis
(Dollars in thousands) (Unaudited)
for the Three Months Ended March 31, 2001
Operating Activities
Premiums and other considerations, net of reinsurance $399,526
Net investment income 11,378
Life and accident and health claims (12,378)
Surrender benefits and withdrawals for life contracts (218,350)
Other benefits to policyholders (11,104)
Commissions, other expenses and other taxes (92,349)
Net transfers (to) from separate accounts (45,645)
Federal income taxes received (paid) 22,460
Other, net (31,362)
--------
Net cash provided by operating activities 22,176
Investing Activities
Proceeds from investments sold, matured or repaid:
Bonds 13,568
Mortgage loans on real estate 66
--------
13,634
Cost of investments acquired:
Bonds (11,410)
Real estate (5)
Policy loans (8,055)
Other invested assets (4,642)
Other (204)
--------
(24,316)
--------
Net cash used in investing activities (10,682)
Financing Activities
Payment of short-term note payable to affiliate, net (29,700)
Deposits on deposit-type contracts and other
liabilities without life or disability contingencies 163
Withdrawals on deposit-type contracts and other
liabilities without life or disability contingencies (414)
--------
Net cash used in financing activities (29,951)
--------
Decrease in cash and short-term investments (18,457)
Cash and short-term investments at beginning of year 25,465
--------
Cash and short-term investments at end of period $ 7,008
========
184
Western Reserve Life Assurance Co. of Ohio
Notes to Financial Statements -- Statutory Basis
(Dollars in thousands)(Unaudited)
for the Three Months Ended March 31, 2001
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 adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. For further information, refer to the accompanying statutory
basis financial statements and notes thereto for the year ended December 31,
2000.
2. Accounting Changes
The Company prepares its statutory financial statements in conformity with
accounting practices prescribed or permitted by the State of Ohio. Effective
January 1, 2001, the State of Ohio required that insurance companies domiciled
in the State of Ohio prepare their statutory basis financial statements in
accordance with the NAIC Accounting Practices and Procedures manual - Version
effective January 1, 2001, subject to any deviations prescribed or permitted by
the State of Ohio Commissioner of Insurance.
Accounting changes adopted to conform to the provisions of the NAIC Accounting
Practices and Procedures manual - Version effective January 1, 2001 are reported
as changes in accounting principles. The cumulative effect of changes in
accounting principles is reported as an adjustment to unassigned funds (surplus)
in the period of the change in accounting principle. The cumulative effect is
the difference between the amount of capital and surplus that would have been
reported at the date if the new accounting principles had been applied
retroactively for all prior periods. As a result of these changes, the Company
reported a change of accounting principle, as an adjustment that increased
unassigned funds (surplus), by $12,312 as of January 1, 2001. Making up the
majority of this amount was the establishment of deferred tax assets in the
amount of $12,696.
185
Report of Independent Auditors
The Board of Directors
Western Reserve Life Assurance Co. of Ohio
We have audited the accompanying statutory-basis balance sheets of Western
Reserve Life Assurance Co. of Ohio (an indirect wholly-owned subsidiary of AEGON
N.V.) as of December 31, 2000 and 1999, and the related statutory-basis
statements of operations, changes in capital and surplus, and cash flow for each
of the three years in the period ended December 31, 2000. Our audits also
included the statutory-basis financial statement schedules required by
Regulation S-X, Article 7. These financial statements and schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedules based on our audits. We did
not audit the "Separate Account Assets" and "Separate Account Liabilities"
included in the statutory-basis balance sheet of the Company as of December 31,
1999. The Separate Account balance sheets as of December 31, 1999 were audited
by other auditors whose report has been furnished to us, and our opinion,
insofar as it relates to the data included for the Separate Accounts as of
December 31, 1999, is based solely on the report of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the report of other auditors
provide a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Insurance Department of the State of Ohio, which practices
differ from accounting principles generally accepted in the United States. The
variances between such practices and accounting principles generally accepted in
the United States also are described in Note 1. The effects on the financial
statements of these variances are not reasonably determinable but are presumed
to be material.
In our opinion, because of the effects of the matter described in the preceding
paragraph, the financial statements referred to above do not present fairly, in
conformity with accounting principles generally accepted in the United States,
the financial position of Western Reserve Life Assurance Co. of Ohio at
December 31, 2000 and 1999, or the results of its operations or its cash flow
for each of the three years in the period ended December 31, 2000.
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However, in our opinion, based on our audits and the report of other auditors,
the financial statements referred to above present fairly, in all material
respects, the financial position of Western Reserve Life Assurance Co. of Ohio
at December 31, 2000 and 1999, and the results of its operations and its cash
flow for each of the three years in the period ended December 31, 2000, in
conformity with accounting practices prescribed or permitted by the Insurance
Department of the State of Ohio. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic statutory-basis
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
/s/ Ernst & Young LLP
Des Moines, Iowa
February 15, 2001
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Western Reserve Life Assurance Co. of Ohio
Balance Sheets -- Statutory Basis
(Dollars in thousands, except per share amounts)
December 31
2000 1999
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