Washington National Variable Annuity Fund B
December 31, 1996
Report of Independent Auditors.......................................See below
Statement of Assets and Contract Owners' Equity......................See below
Statements of Operations.............................................See below
Statements of Changes in Contract Owners' Equity.....................See below
Supplementary Information Selected Per Share Data and Ratios.........See below
Notes to the Financial Statements....................................See below
<PAGE>
Report of Independent Auditors
Contract Owners
Washington National Variable Annuity Fund B
We have audited the accompanying statement of assets and
contract owners' equity of Washington National Variable
Annuity Fund B as of December 31, 1996, and the related
statements of operations and changes in contract owners'
equity for each of the two years in the period then ended,
and the selected per share data and ratios for each of the
five years in the period then ended. These financial
statements and per share data and ratios are the
responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and
per share data and ratios based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements and per share data
and ratios are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of the investment owned as
of December 31, 1996 by correspondence with Fundamental
Investors, Inc. 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 financial statements and the selected
per share data and ratios referred to above present fairly,
in all material respects, the financial position of
Washington National Variable Annuity Fund B at December 31,
1996, and the results of its operations and changes in
contract owners' equity for each of the two years in the
period then ended, and the selected per share data and
ratios for each of the five years in the period then ended,
in conformity with generally accepted accounting principles.
/c/Ernst & Young, LLP
Chicago, Illinois
January 25, 1997
<PAGE>
<TABLE>
Washington National Variable Annuity Fund B
Statement of Assets and Contract Owners' Equity
December 31, 1996
<S> <C>
ASSETS
Investment in Fundamental Investors, Inc. - at net asset value,
$24.54 a share (cost $274,833) - Note B $837,478
Cash 22,439
$859,917
CONTRACT OWNERS' EQUITY
Value of 37,786 accumulation units ($16.047061 per unit) $606,357
Annuity reserves (15,801 equivalent accumulation units) 253,560
$859,917
<FN>
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
Washington National Variable Annuity Fund B
Statements of Operations
<CAPTION>
Year Ended December 31
----------------------------
1996 1995
<S> <C> <C>
Investment income:
Dividends $13,269 $13,503
Capital gains 57,196 22,687
Less mortality and expense assurance - Note C (8,080) (7,010)
NET INVESTMENT INCOME $62,385 $29,180
Realized and unrealized gains on investment:
Realized gains - Note B $6,436 $4,563
Unrealized gains on investment:
End of year 562,645 494,435
Beginning of year 494,435 335,523
UNREALIZED GAINS 68,210 158,912
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENT $74,646 $163,475
<FN>
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
Washington National Variable Annuity Fund B
Statements of Changes in Contract Owners' Equity
<CAPTION>
Year Ended December 31
---------------------------
1996 1995
<S> <C> <C>
Additions (deductions) :
From investment activities:
Net investment income $62,385 $29,180
Net realized and unrealized gains on investment 74,646 163,475
INCREASE IN CONTRACT OWNERS' EQUITY
FROM INVESTMENT ACTIVITIES 137,031 192,655
From capital transactions:
Annuity payments (43,617) (37,058)
Mortality assurance adjustment 21,828 18,811
Withdrawals and contracts surrendered (31,525) (4,776)
Death benefits (551) -
DECREASE IN CONTRACT OWNERS' EQUITY
FROM CAPITAL TRANSACTIONS (53,865) (23,023)
NET INCREASE IN CONTRACT OWNER'S EQUITY 83,166 169,632
Contract owners' equity:
Beginning of year 776,751 607,119
End of year $859,917 $776,751
<FN>
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
Washington National Variable Annuity Fund B
Supplementary Information- Selected Per Share Data and Ratios
Selected data for a share of accumulation unit outstanding throughout each year
<CAPTION>
For the Year Ended December 31
-------------------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Per share data:
Dividend and capital gain income $1.29 $0.63 $0.50 $1.19 $0.64
Mortality and expense assurance (0.14) (0.12) (0.10) (0.10) (0.01)
Net investment income 1.15 0.51 0.40 1.09 0.63
Net realized and unrealized gains (losses)
on investment 1.36 2.83 (0.38) 0.38 0.09
Net increase in accumulation unit value 2.51 3.34 0.02 1.47 0.72
Accumulation unit value:
Beginning of year 13.54 10.20 10.18 8.71 7.99
End of year $16.05 $13.54 $10.20 $10.18 $8.71
Ratios:
Ratio of mortality and expense assurance to
average value of accumulation units 1.01% 1.01% 1.00% 1.02% 0.99%
Ratio of net investment income to
average value of accumulation units 7.83 4.23 3.89 11.48 8.15
<FN>
See notes to financial statements
</TABLE>
<PAGE>
Washington National Variable Annuity Fund B
Notes to Financial Statements
December 31, 1996
NOTE A - The Fund
The Washington National Variable Annuity Fund B (the "Fund")
is a segregated investment account of Washington National
Insurance Company ("WNIC"). WNIC is a wholly-owned
subsidiary of Washington National Corporation ("WNC"). The Fund is
registered as a unit investment trust under the Investment
Company Act of 1940. The Fund no longer accepts purchase
payments.
In November 1996, WNC announced a definitive agreement to
merge with PennCorp Financial Group, Inc. ("PennCorp"). Under
the terms of the merger, the separate corporate existence of
WNC shall cease and PennCorp shall continue as the surviving
corporation. The merger is anticipated to close during the
first half of 1997, pending the receipt of the required
shareholder and regulatory approval. The merger is not
expected to have any effect on the Fund.
NOTE B - Investment
Net asset value of Fund shares represents the market value
of the shares as of December 31, 1996.
Realized gains and losses on investment are determined on a
specific cost basis. The aggregate cost of purchases of
investment in 1996 and 1995 was $70,464 and $36,190,
respectively. The aggregate proceeds from sales of
investment in 1996 and 1995 were $64,960 and $36,856,
respectively.
NOTE C - Deductions for Mortality and Expense Assurance
Deductions were made from the current value of the Fund and
paid to WNIC representing .000028 per daily valuation period
(annual basis of 1.022%) of the current value of the Fund
for mortality and expense assurance.
NOTE D - Federal Income Taxes
The operations of the Fund form a part of, and are taxed
with, the operations of WNIC, which under the Internal
Revenue Code is taxed as a "life insurance company". The
Fund will not be taxed as a regulated investment company
under subchapter M of the Code. Under existing federal
income tax law, no taxes are payable on the investment
income or on the realized gains of the Fund.
<PAGE>
Washington National Variable Annuity Fund B
Notes to Financial Statements-Continued
<TABLE>
NOTE E - Accumulation Units
A summary of the additions (deductions) in accumulation units follows:
<CAPTION>
Year Ended December 31
----------------------------------
1996 1995
<S> <C> <C>
Balance at beginning of year 57,381.951 59,516.836
Mortality assurance adjustment 1,360.270 1,389.657
Annuity payments (2,976.590) (3,080.898)
Withdrawals & contracts surrendered (2,144.333) (443.644)
Death payments (34.071) -
BALANCE AT END OF YEAR 53,587.227 57,381.951
</TABLE>
<PAGE>
The registrant hereby incorporates by
reference the 1996 Annual Report
of Fundamental Investors, file number
811-32, filed with the Commission on
February 28, 1997.
