Washington National Insurance Company
One Presidential Parkway
P.O. Box 9019
Kokomo, IN 46904-9019
1-800-866-9922
February 26, 1998
Contract Owners
Washington National Variable Annuity Fund B
Attached is the statement of financial information for the
periods ending December 31, 1997 and 1996.
/s/ Joseph P. Clarke
Vice President - Financial Reporting
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Washington National Variable Annuity Fund B
December 31, 1997 and 1996
Report of Independent Accountants.......................................1
Statement of Assets and Contract Owners' Equity.........................2
Statements of Operations................................................3
Statements of Changes in Contract Owners' Equity........................4
Notes to the Financial Statements.......................................5
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REPORT OF INDEPENDENT ACCOUNTANTS
The Contract Owners of Variable Annuity Fund B and
The Board of Directors of Washington National Insurance Company
We have audited the accompanying statement of assets and
contract owners' equity of Washington National Insurance
Company Variable Annuity Fund B as of December 31, 1997, and
the related statement of operations and statement of changes
in contract owners' equity for the year then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these financial statements based on our audit. The statement
of operations and statement of changes in contract owners'
equity for the year ended December 31, 1996, was audited by
other auditors, whose report, dated January 25, 1997,
expressed an unqualified opinion on those statements.
We conducted our audit 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 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 include confirmation of
portfolio shares owned at December 31, 1997, by
correspondence with the custodian. 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 audit provides a reasonable basis for our opinion.
In our opinion, the December 31, 1997, financial statements
referred to above present fairly, in all material respects,
the financial position of Washington National Insurance
Company Variable Annuity Fund B as of December 31, 1997, and
the results of its operations and changes in contract
owners' equity for the year then ended in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Indianapolis, Indiana
February 23, 1998
1
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Washington National Variable Annuity Fund B
Statement of Assets and Contract Owners' Equity
December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investment in Fundamental Investors, Inc. -
at net asset value, $27.40 a share
(cost $293,814) - Note C $ 934,829
Cash 29,821
$ 964,650
CONTRACT OWNERS' EQUITY
Value of 32,319 accumulation units ($20.099895 per unit) $ 649,604
Annuity reserves (15,674 equivalent accumulation units) 315,046
$ 964,650
See notes to financial statements
</TABLE>
2
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Washington National Variable Annuity Fund B
Statements of Operations
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996
<S> <C> <C>
Investment income:
Dividends $ 13,536 $ 13,269
Capital gains & distributions 98,132 57,196
Less mortality and expense fees - Note D (9,237) (8,080)
NET INVESTMENT INCOME 102,431 62,385
Realized and unrealized gains on investment:
Realized gains, net - Note C 18,557 6,436
Unrealized gains on investment:
End of year 641,015 562,645
Beginning of year (562,645) (494,435)
UNREALIZED GAINS, NET 78,370 68,210
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENT 96,927 74,646
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 199,358 $ 137,031
See notes to financial statements
</TABLE>
3
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Washington National Variable Annuity Fund B
Statements of Changes in Contract Owners' Equity
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996
<S> <C> <C>
Additions (deductions):
From investment activities:
Net investment income $ 102,431 $ 62,385
Net realized and unrealized gains on investment 96,927 74,646
INCREASE IN CONTRACT OWNERS' EQUITY
FROM INVESTMENT ACTIVITIES 199,358 137,031
From capital transactions:
Annuity payments (52,641) (43,617)
Mortality assurance adjustment 27,909 21,828
Withdrawals and contracts surrendered (61,098) (31,525)
Death benefits (8,795) (551)
DECREASE IN CONTRACT OWNERS' EQUITY
FROM CAPITAL TRANSACTIONS (94,625) (53,865)
NET INCREASE IN CONTRACT OWNER'S EQUITY 104,733 83,166
Contract owners' equity:
Beginning of year 859,917 776,751
End of year $ 964,650 $ 859,917
See notes to financial statements
</TABLE>
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Washington National Variable Annuity Fund B
Notes to Financial Statements
December 31, 1997 and 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 December 1997, WNC merged with Conseco Services, L.L.C.
("Conseco"), a wholly owned subsidary of Conseco, Inc. Under
the terms of the merger, the separate corporate existence of
WNC shall cease and Conseco shall continue as the surviving
corporation. The merger is not expected to have any effect
on the Fund.
NOTE B - Management Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the
financial statements and the reported amounts of income and
expenses during the reporting period. Actual results may
differ from these estimates.
NOTE C - Investment
Investments in portfolio shares are valued using the net
asset value of the fund at the end of each New York Stock
Exchange business day. Investment share transactions are
accounted for on a trade date basis (the date the order to
purchase or redeem shares is executed) and dividend income
is recorded on the ex-dividend date. The fund does not hold
any investments which are restricted as to resale.
Net investment income and net realized gains (loses) and
unrealized appreciation (depreciation) on investments are
allocated to the contracts on each valuation date based on
contract's pro rata share of the assets of the Fund as of
the beginning of the valuation date.
Realized gains and losses on investment are determined on a
specific cost basis. The aggregate cost of purchases of
investment in 1997 and 1996 was $111,668 and $70,464
respectively. The aggregate proceeds from sales of
investment in 1997 and 1996 were $111,244 and $64,960
respectively.
NOTE D - 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 E - 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.
5
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The registrant hereby incorporates by reference the 1997
Annual Report of Fundamental Investors, file number 811-32,
filed with the Commission on March 4, 1998.
