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Previous: BEAR STEARNS COMPANIES INC, 424B5, 1999-02-25 |
Next: VAN KAMPEN LIFE INVESTMENT TRUST, N-30D, 1999-02-25 |
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
WRL SERIES LIFE ACCOUNT
Report of Independent Accountants...................... 1
Statement of Assets and Liabilities.................... 3
Statement of Operations................................ 6
Statement of Changes In Net Assets..................... 9
Financial Highlights................................... 14
Notes to the Financial Statements...................... 19
<PAGE>
REPORT OF INDEPENDENT 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 statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
each of the Sub-Accounts constituting the WRL Series Life Account (a separate
account of Western Reserve Life Assurance Co. of Ohio, hereafter referred to as
the "Life Account") at December 31, 1998, the results of each of their
operations, the changes in each of their net assets and the finanical highlights
for each of the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Life Account'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 generally accepted auditing standards
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 the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 29, 1999
1
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
MONEY
MARKET BOND GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares 24,472 2,150 13,310
========= ========= =========
Cost $ 24,472 $ 24,523 $ 423,759
========= ========= =========
Investment, at net asset value $ 24,472 $ 24,925 $ 797,795
Transfers receivable from depositor 104 9 232
--------- --------- ---------
Total assets 24,576 24,934 798,027
--------- --------- ---------
LIABILITIES:
Accrued expenses 0 0 0
Transfers payable to depositor 0 0 0
--------- --------- ---------
Total liabilities 0 0 0
--------- --------- ---------
Net assets $ 24,576 $ 24,934 $ 798,027
========= ========= =========
NET ASSETS CONSISTS OF:
Policy Owners' equity $ 24,576 $ 24,934 $ 798,027
Depositor's equity 0 0 0
--------- --------- ---------
Net assets applicable to units
outstanding $ 24,576 $ 24,934 $ 798,027
========= ========= =========
Policy Owners' units 1,460 1,090 8,668
Depositor's units 0 0 0
--------- --------- ---------
Units outstanding 1,460 1,090 8,668
========= ========= =========
Accumulation unit value $ 16.83 $ 22.89 $ 92.07
========= ========= =========
<CAPTION>
STRATEGIC EMERGING
GLOBAL TOTAL RETURN GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares 9,833 6,028 9,752
========= ========= =========
Cost $ 189,249 $ 81,865 $ 176,852
========= ========= =========
Investment, at net asset value $ 233,131 $ 98,885 $ 262,548
Transfers receivable from depositor 125 41 117
--------- --------- ---------
Total assets 233,256 98,926 262,665
--------- --------- ---------
LIABILITIES:
Accrued expenses 0 0 0
Transfers payable to depositor 0 0 0
--------- --------- ---------
Total liabilities 0 0 0
--------- --------- ---------
Net assets $ 233,256 $ 98,926 $ 262,665
========= ========= =========
NET ASSETS CONSISTS OF:
Policy Owners' equity $ 233,256 $ 98,926 $ 262,665
Depositor's equity 0 0 0
--------- --------- ---------
Net assets applicable to units
outstanding $ 233,256 $ 98,926 $ 262,665
========= ========= =========
Policy Owners' units 10,167 4,814 8,218
Depositor's units 0 0 0
--------- --------- ---------
Units outstanding 10,167 4,814 8,218
========= ========= =========
Accumulation unit value $ 22.94 $ 20.55 $ 31.96
========= ========= =========
</TABLE>
The notes to the financial statements are an integral part of this report.
3
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
AGGRESSIVE GROWTH &
GROWTH BALANCED INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares 7,923 1,185 1,306
========= ========= =========
Cost $ 126,802 $ 13,872 $ 16,213
========= ========= =========
Investment, at net asset value $ 177,787 $ 14,863 $ 16,036
Transfers receivable from depositor 70 1 11
--------- --------- ---------
Total assets 177,857 14,864 16,047
--------- --------- ---------
LIABILITIES:
Accrued expenses 0 0 0
Transfers payable to depositor 0 0 0
--------- --------- ---------
Total liabilities 0 0 0
--------- --------- ---------
Net assets $ 177,857 $ 14,864 $ 16,047
========= ========= =========
NET ASSETS CONSISTS OF:
Policy Owners' equity $ 177,857 $ 14,864 $ 16,047
Depositor's equity 0 0 0
--------- --------- ---------
Net assets applicable to units
outstanding $ 177,857 $ 14,864 $ 16,047
========= ========= =========
Policy Owners' units 6,669 990 976
Depositor's units 0 0 0
--------- --------- ---------
Units outstanding 6,669 990 976
========= ========= =========
Accumulation unit value $ 26.67 $ 15.02 $ 16.44
========= ========= =========
<CAPTION>
TACTICAL ASSET C.A.S.E.
ALLOCATION GROWTH VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares 2,988 1,364 2,152
========= ========= =========
Cost $ 38,916 $ 19,242 $ 28,825
========= ========= =========
Investment, at net asset value $ 39,889 $ 17,718 $ 26,066
Transfers receivable from depositor 15 12 17
--------- --------- ---------
Total assets 39,904 17,730 26,083
--------- --------- ---------
LIABILITIES:
Accrued expenses 0 0 0
Transfers payable to depositor 0 0 0
--------- --------- ---------
Total liabilities 0 0 0
--------- --------- ---------
Net assets $ 39,904 $ 17,730 $ 26,083
========= ========= =========
NET ASSETS CONSISTS OF:
Policy Owners' equity $ 39,904 $ 17,730 $ 26,083
Depositor's equity 0 0 0
--------- --------- ---------
Net assets applicable to units
outstanding $ 39,904 $ 17,730 $ 26,083
========= ========= =========
Policy Owners' units 2,383 1,417 1,982
Depositor's units 0 0 0
--------- --------- ---------
Units outstanding 2,383 1,417 1,982
========= ========= =========
Accumulation unit value $ 16.74 $ 12.51 $ 13.16
========= ========= =========
</TABLE>
The notes to the financial statements are an integral part of this report.
4
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
INTERNATIONAL U.S. THIRD AVENUE
EQUITY EQUITY VALUE
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares 483 976 302
========= ========= =========
Cost $ 5,705 $ 13,010 $ 2,904
========= ========= =========
Investment, at net asset value $ 5,824 $ 14,078 $ 2,801
Transfers receivable from depositor 3 6 6
--------- --------- ---------
Total assets 5,827 14,084 2,807
--------- --------- ---------
LIABILITIES:
Accrued expenses 0 0 0
Transfers payable to depositor 0 0 0
--------- --------- ---------
Total liabilities 0 0 0
--------- --------- ---------
Net assets $ 5,827 $ 14,084 $ 2,807
========= ========= =========
NET ASSETS CONSISTS OF:
Policy Owners' equity $ 5,827 $ 14,084 $ 2,622
Depositor's equity 0 0 185
--------- --------- ---------
Net assets applicable to units outstanding $ 5,827 $ 14,084 $ 2,807
========= ========= =========
Policy Owners' units 489 919 284
Depositor's units 0 0 20
--------- --------- ---------
Units outstanding 489 919 304
========= ========= =========
Accumulation unit value $ 11.92 $ 15.33 $ 9.23
========= ========= =========
<CAPTION>
REAL ESTATE
SECURITIES
SUB-ACCOUNT
-----------
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares 83
========
Cost $ 784
========
Investment, at net asset value $ 708
Transfers receivable from depositor 1
--------
Total assets 709
--------
LIABILITIES:
Accrued expenses 0
Transfers payable to depositor 0
--------
Total liabilities 0
--------
Net assets $ 709
========
NET ASSETS CONSISTS OF:
Policy Owners' equity $ 371
Depositor's equity 338
--------
Net assets applicable to units outstanding $ 709
========
Policy Owners' units 44
Depositor's units 40
--------
Units outstanding 84
========
Accumulation unit value $ 8.46
========
</TABLE>
The notes to the financial statements are an integral part of this report.
5
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
ALL AMOUNTS IN THOUSANDS
MONEY
MARKET BOND GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income $ 1,113 $ 1,196 $ 1,180
Capital gain distributions 0 0 5,200
--------- --------- ---------
Total investment income 1,113 1,196 6,380
EXPENSES:
Mortality and expense risk 194 194 5,277
--------- --------- ---------
Net investment income (loss) 919 1,002 1,103
--------- --------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities
transactions 0 642 12,232
Change in unrealized appreciation (depreciation) 0 71 283,227
--------- --------- ---------
Net gain (loss) on investment securities 0 713 295,459
--------- --------- ---------
Net increase (decrease) in net assets
resulting from operation $ 919 $ 1,715 $ 296,562
========= ========= =========
<CAPTION>
STRATEGIC EMERGING
GLOBAL TOTAL RETURN GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income $ 1,092 $ 2,240 $ 0
Capital gain distributions 8,026 1,844 8,683
--------- --------- -------
Total investment income 9,118 4,084 8,683
EXPENSES:
Mortality and expense risk 1,693 800 1,789
--------- --------- -------
Net investment income (loss) 7,425 3,284 6,894
--------- --------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities
transactions 3,529 1,097 4,995
Change in unrealized appreciation (depreciation) 34,898 3,250 54,519
--------- --------- -------
Net gain (loss) on investment securities 38,427 4,347 59,514
--------- --------- -------
Net increase (decrease) in net assets
resulting from operation $ 45,852 $ 7,631 $ 66,408
========= ========= =========
</TABLE>
The notes to the financial statements are an integral part of this report.
6
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
ALL AMOUNTS IN THOUSANDS
AGGRESSIVE GROWTH &
GROWTH BALANCED INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income $ 356 $ 329 $ 651
Capital gain distributions 8,627 13 112
-------- -------- --------
Total investment income 8,983 342 763
EXPENSES:
Mortality and expense risk 1,132 115 119
-------- -------- --------
Net investment income (loss) 7,851 227 644
-------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions 2,395 262 390
Change in unrealized appreciation (depreciation) 41,953 314 (659)
-------- -------- --------
Net gain (loss) on investment securities 44,348 576 (269)
-------- -------- --------
Net increase (decrease) in net assets resulting
from operation $ 52,199 $ 803 $ 375
======== ======== ========
<CAPTION>
TACTICAL ASSET C.A.S.E.
ALLOCATION GROWTH VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income $ 1,115 $ 1,514 $ 530
Capital gain distributions 2,619 90 1,755
--------- --------- --------
Total investment income 3,734 1,604 2,285
EXPENSES:
Mortality and expense risk 315 129 264
--------- --------- --------
Net investment income (loss) 3,419 1,475 2,021
--------- --------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions 429 175 1,254
Change in unrealized appreciation (depreciation) (1,516) (1,289) (5,937)
--------- --------- --------
Net gain (loss) on investment securities (1,087) (1,114) (4,683)
--------- --------- --------
Net increase (decrease) in net assets resulting
from operation $ 2,332 $ 361 $ (2,662)
========= ========= ========
</TABLE>
The notes to the financial statements are an integral part of this report.
7
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
ALL AMOUNTS IN THOUSANDS
INTERNATIONAL U.S. THIRD AVENUE
EQUITY EQUITY VALUE
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (A)
------------- ----------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income $ 3 $ 413 $ 8
Capital gain distributions 0 94 0
------- -------- -------
Total investment income 3 507 8
EXPENSES:
Mortality and expense risk 35 73 19
------- -------- -------
Net investment income (loss) (32) 434 (11)
------- -------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions 147 358 (39)
Change in unrealized appreciation (depreciation) 222 1,053 (103)
------- -------- -------
Net gain (loss) on investment securities 369 1,411 (142)
------- -------- -------
Net increase (decrease) in net assets
resulting from operation $ 337 $ 1,845 $ (153)
======= ======== =======
<CAPTION>
REAL ESTATE
SECURITIES
SUB-ACCOUNT (B)
---------------
<S> <C>
INVESTMENT INCOME:
Dividend income $ 0
Capital gain distributions 0
-------
Total investment income 0
EXPENSES:
Mortality and expense risk 4
-------
Net investment income (loss) (4)
-------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions (36)
Change in unrealized appreciation (depreciation) (76)
-------
Net gain (loss) on investment securities (112)
-------
Net increase (decrease) in net assets
resulting from operation $ (116)
=======
</TABLE>
(a) The inception date of this Sub-Account was January 2, 1998.
(b) The inception date of this Sub-Account was May 1, 1998.
The notes to the financial statements are an integral part of this report.
8
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
MONEY MARKET BOND GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------- ------------------ ------------------
1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 919 $ 639 $ 1,002 $ 661 $ 1,103 $ 44,206
Net gain (loss) on investment securities 0 0 713 418 295,459 15,238
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations 919 639 1,715 1,079 296,562 59,444
-------- -------- -------- -------- -------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) 12,763 7,719 9,472 7,506 140,684 106,236
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges 3,123 3,108 2,292 1,633 44,910 37,231
Policy loans 1,163 687 594 428 18,083 11,212
Surrender benefits 1,250 854 865 437 22,312 15,746
Death benefits 10 9 159 15 4,185 711
5,546 4,658 3,910 2,513 89,490 64,900
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions 7,217 3,061 5,562 4,993 51,194 41,336
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets 8,136 3,700 7,277 6,072 347,756 100,780
Depositor's equity contribution
(redemption) 0 0 0 0 0 0
NET ASSETS:
Beginning of year 16,440 12,740 17,657 11,585 450,271 349,491
-------- -------- -------- -------- -------- --------
End of year $ 24,576 $ 16,440 $ 24,934 $ 17,657 $798,027 $450,271
======== ======== ======== ======== ======== ========
UNIT ACTIVITY:
Units outstanding - beginning of year 1,020 825 836 593 7,972 7,208
Units issued 11,339 9,509 1,030 568 2,967 2,877
Units redeemed (10,899) (9,314) (776) (325) (2,271) (2,113)
-------- -------- -------- -------- -------- --------
Units outstanding - end of year 1,460 1,020 1,090 836 8,668 7,972
======== ======== ======== ======== ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
9
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
STRATEGIC
GLOBAL TOTAL RETURN EMERGING GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------- ------------------ ------------------
1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 7,425 $ 15,859 $ 3,284 $ 6,101 $ 6,894 $ 13,841
Net gain (loss) on investment securities 38,427 805 4,347 6,521 59,514 10,932
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations 45,852 16,664 7,631 12,622 66,408 24,773
-------- -------- -------- -------- -------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) 72,962 64,272 24,191 22,072 64,824 54,392
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges 19,369 12,590 7,696 6,025 19,612 14,518
Policy loans 4,953 2,948 2,319 1,624 5,601 3,692
Surrender benefits 5,662 3,391 2,587 2,044 7,688 3,986
Death benefits 591 149 1,047 148 368 192
-------- -------- -------- -------- -------- --------
30,575 19,078 13,649 9,841 33,269 22,388
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions 42,387 45,194 10,542 12,231 31,555 32,004
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets 88,239 61,858 18,173 24,853 97,963 56,777
Depositor's equity contribution
(redemption) 0 0 0 0 0 0
NET ASSETS:
Beginning of year 145,017 83,159 80,753 55,900 164,702 107,925
-------- -------- -------- -------- -------- --------
End of year $233,256 $145,017 $98,926 $80,753 $262,665 $164,702
======== ======== ======= ======= ======== ========
UNIT ACTIVITY:
Units outstanding - beginning of year 8,145 5,497 4,270 3,570 7,013 5,532
Units issued 5,610 5,205 1,946 1,809 4,099 4,085
Units redeemed (3,588) (2,557) (1,402) (1,109) (2,894) (2,604)
-------- -------- -------- -------- -------- --------
Units outstanding - end of year 10,167 8,145 4,814 4,270 8,218 7,013
======== ======== ======= ======= ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
10
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
AGGRESSIVE GROWTH BALANCED GROWTH & INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------ ------------------- ------------------
1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 7,851 $ 7,795 $ 227 $ 992 $ 644 $ 1,214
Net gain (loss) on investment securities 44,348 6,524 576 226 (269) 283
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations 52,199 14,319 803 1,218 375 1,497
-------- -------- -------- -------- -------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) 53,159 40,282 5,658 4,373 8,963 3,232
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges 13,960 9,888 1,423 958 1,633 733
Policy loans 3,522 1,926 279 179 218 163
Surrender benefits 4,423 2,485 596 153 431 260
Death benefits 248 58 15 3 72 11
-------- -------- -------- -------- -------- --------
22,153 14,357 2,313 1,293 2,354 1,167
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions 31,006 25,925 3,345 3,080 6,609 2,065
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets 83,205 40,244 4,148 4,298 6,984 3,562
Depositor's equity contribution (redemption) 0 0 0 0 0 0
NET ASSETS:
Beginning of year 94,652 54,408 10,716 6,418 9,063 5,501
-------- -------- -------- -------- -------- --------
End of year $177,857 $94,652 $14,864 $10,716 $16,047 $ 9,063
======== ======= ======= ======= ======= =======
UNIT ACTIVITY:
Units outstanding - beginning of year 5,230 3,702 756 526 563 422
Units issued 3,797 3,540 578 472 966 352
Units redeemed (2,358) (2,012) (344) (242) (553) (211)
-------- -------- -------- -------- -------- --------
Units outstanding - end of year 6,669 5,230 990 756 976 563
======== ======= ======= ======= ======= =======
</TABLE>
The notes to the financial statements are an integral part of this report.
11
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
TACTICAL ASSET
ALLOCATION C.A.S.E. GROWTH VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------ ------------------- ------------------
1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 3,419 $ 1,913 $ 1,475 $ 994 $ 2,021 $ 183
Net gain (loss) on investment securities (1,087) 1,362 (1,114) (252) (4,683) 3,038
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations 2,332 3,275 361 742 (2,662) 3,221
-------- -------- -------- -------- -------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) 13,703 11,386 8,731 8,029 6,086 17,023
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges 3,421 2,219 2,433 970 2,846 1,257
Policy loans 748 463 520 146 643 542
Surrender benefits 925 742 295 144 401 388
Death benefits 160 60 60 6 165 0
-------- -------- -------- -------- -------- --------
5,254 3,484 3,308 1,266 4,055 2,187
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions 8,449 7,902 5,423 6,763 2,031 14,836
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets 10,781 11,177 5,784 7,505 (631) 18,057
Depositor's equity contribution (redemption) 0 0 0 (25) 0 (230)
NET ASSETS:
Beginning of year 29,123 17,946 11,946 4,466 26,714 8,887
-------- -------- -------- -------- -------- --------
End of year $ 39,904 $ 29,123 $ 17,730 $ 11,946 $ 26,083 $ 26,714
======== ======== ======== ======== ======== ========
UNIT ACTIVITY:
Units outstanding - beginning of year 1,867 1,330 969 413 1,916 790
Units issued 1,377 1,163 1,317 931 1,748 1,772
Units redeemed (861) (626) (869) (375) (1,682) (646)
-------- -------- -------- -------- -------- --------
Units outstanding - end of year 2,383 1,867 1,417 969 1,982 1,916
======== ======== ======== ======== ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
12
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
INTERNATIONAL EQUITY U.S. EQUITY THIRD AVENUE REAL ESTATE
SUB-ACCOUNT SUB-ACCOUNT VALUE SECURITIES
DECEMBER 31, DECEMBER 31, SUB-ACCOUNT SUB-ACCOUNT
-------------------- ------------------ DECEMBER 31, DECEMBER 31,
1998 1997 (a) 1998 1997 (a) 1998 (b) 1998 (c)
--------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (32) $ (4) $ 434 $ 107 $ (11) $ (4)
Net gain (loss) on investment securities 369 31 1,411 96 (142) (112)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations 337 27 1,845 203 (153) (116)
-------- -------- -------- -------- -------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) 3,972 2,458 10,178 3,208 2,932 472
-------- -------- -------- -------- -------- --------
Less cost of units redeemed:
Administrative charges 433 117 862 91 138 4
Policy loans 196 59 159 56 8 43
Surrender benefits 35 14 113 9 26 0
Death benefits 107 0 63 0 0 0
-------- -------- -------- -------- -------- --------
771 190 1,197 156 172 47
-------- -------- -------- -------- -------- --------
Increase (decrease) in net assets
from capital unit transactions 3,201 2,268 8,981 3,052 2,760 425
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net assets 3,538 2,295 10,826 3,255 2,607 309
Depositor's equity contribution
(redemption) 0 (6) 0 3 200 400
NET ASSETS:
Beginning of year 2,289 0 3,258 0 0 0
-------- -------- -------- -------- -------- --------
End of year $ 5,827 $ 2,289 $ 14,084 $ 3,258 $ 2,807 $ 709
======== ======== ======== ======== ======== ========
UNIT ACTIVITY:
Units outstanding - beginning of year 215 0 259 0 0 0
Units issued 767 484 1,266 393 495 113
Units redeemed (493) (269) (606) (134) (191) (29)
-------- -------- -------- -------- -------- --------
Units outstanding - end of year 489 215 919 259 304 84
======== ======== ======== ======== ======== ========
<FN>
(a) The inception date of this Sub-Account was January 2, 1997.
(b) The inception date of this Sub-Account was January 2, 1998.
(c) The inception date of this Sub-Account was May 1, 1998.
</FN>
</TABLE>
The notes to the financial statements are an integral part of this report.
13
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
MONEY MARKET SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year $ 16.13 $ 15.45 $ 14.83 $ 14.19 $ 13.84
Income from operations:
Net investment income (loss) 0.70 0.68 0.62 0.64 0.35
Net realized and unrealized gain (loss)
on investment 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- --------
Net income (loss) from operations 0.70 0.68 0.62 0.64 0.35
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 16.83 $ 16.13 $ 15.45 $ 14.83 $ 14.19
======== ======== ======== ======== ========
Total return (a) 4.36 % 4.37 % 4.17 % 4.49 % 2.58 %
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 24,576 $ 16,440 $ 12,740 $ 10,759 $ 9,706
Ratios of net investment income (loss) to average
net assets (b) 4.24 % 4.28 % 4.07 % 4.37 % 2.66 %
<CAPTION>
BOND SUB-ACCOUNT
December 31,
------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year $ 21.12 $ 19.53 $ 19.67 $ 16.14 $ 17.50
Income from operations:
Net investment income (loss) 1.01 1.01 0.99 1.05 0.89
Net realized and unrealized gain (loss)
on investment 0.76 0.58 (1.13) 2.48 (2.25)
-------- -------- -------- -------- --------
Net income (loss) from operations 1.77 1.59 (0.14) 3.53 (1.36)
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 22.89 $ 21.12 $ 19.53 $ 19.67 $ 16.14
======== ======== ======== ======== ========
Total return (a) 8.34 % 8.18 % (0.75)% 21.89 % (7.77)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 24,934 $ 17,657 $ 11,585 $ 10,066 $ 6,259
Ratios of net investment income (loss) to average
net assets (b) 4.58 % 5.06 % 5.34 % 5.80 % 5.57 %
<CAPTION>
GROWTH SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year $ 56.48 $ 48.48 $ 41.47 $ 28.44 $ 31.30
Income from operations:
Net investment income (loss) 0.13 5.83 2.88 3.89 0.04
Net realized and unrealized gain (loss)
on investment 35.46 2.17 4.13 9.14 (2.90)
-------- -------- -------- -------- --------
Net income (loss) from operations 35.59 8.00 7.01 13.03 (2.86)
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 92.07 $ 56.48 $ 48.48 $ 41.47 $ 28.44
======== ======== ======== ======== ========
Total return (a) 63.01 % 16.50 % 16.91 % 45.81 % (9.13)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $798,027 $450,271 $349,491 $262,467 $161,490
Ratios of net investment income (loss) to average
net assets (b) 0.19 % 10.84 % 6.41 % 11.05 % 0.16 %
</TABLE>
The notes to the financial statements are an integral part of this report.
14
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
GLOBAL SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994 (c)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year $ 17.80 $ 15.13 $ 11.95 $ 9.80 $ 10.00
Income from operations:
Net investment income (loss) 0.82 2.30 1.50 0.45 0.71
Net realized and unrealized gain (loss)
on investment 4.32 0.37 1.68 1.70 (0.91)
-------- -------- -------- -------- --------
Net income (loss) from operations 5.14 2.67 3.18 2.15 (0.20)
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 22.94 $ 17.80 $ 15.13 $ 11.95 $ 9.80
======== ======== ======== ======== ========
Total return (a) 28.86 % 17.69 % 26.60.% 21.96 % (2.02)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $233,256 $145,017 $ 83,159 $ 37,049 $ 21,672
Ratios of net investment income (loss) to
average net assets (b) 3.92 % 13.39 % 11.09 % 4.25 % 8.86 %
<CAPTION>
STRATEGIC TOTAL RETURN SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Accumulation unit value, beginning of year $ 18.91 $ 15.66 $ 13.74 $ 11.12 $ 11.28
Income from operations:
Net investment income (loss) 0.71 1.56 0.82 0.68 0.18
Net realized and unrealized gain (loss)
on investment 0.93 1.69 1.10 1.94 (0.34)
-------- -------- -------- -------- --------
Net income (loss) from operations 1.64 3.25 1.92 2.62 (0.16)
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 20.55 $ 18.91 $ 15.66 $ 13.74 $ 11.12
======== ======== ======== ======== ========
Total return (a) 8.66 % 20.77 % 13.97 % 23.55 % (1.42)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 98,926 $ 80,753 $ 55,900 $ 39,648 $ 23,649
Ratios of net investment income (loss) to
average net assets (b) 3.67 % 8.89 % 5.76 % 5.47 % 1.93 %
<CAPTION>
EMERGING GROWTH SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Accumulation unit value, beginning of year $ 23.48 $ 19.51 $ 16.56 $ 11.38 $ 12.40
Income from operations:
Net investment income (loss) 0.91 2.20 0.82 0.65 (0.09)
Net realized and unrealized gain (loss)
on investment 7.57 1.77 2.13 4.53 (0.93)
-------- -------- -------- -------- --------
Net income (loss) from operations 8.48 3.97 2.95 5.18 (1.02)
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 31.96 $ 23.48 $ 19.51 $ 16.56 $ 11.38
======== ======== ======== ======== ========
Total return (a) 36.11 % 20.37 % 17.82 % 45.49 % (8.18)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $262,665 $164,702 $107,925 $ 67,905 $ 36,687
Ratios of net investment income (loss) to
average net assets (b) 3.44 % 10.18 % 4.51 % 4.66 % (0.86)%
</TABLE>
The notes to the financial statements are an integral part of this report.
15
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
AGGRESSIVE GROWTH SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994 (c)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning of year $ 18.10 $ 14.70 $ 13.43 $ 9.82 $ 10.00
Income from operations:
Net investment income (loss) 1.33 1.75 0.36 0.37 (0.06)
Net realized and unrealized gain (loss)
on investment 7.24 1.65 0.91 3.24 (0.12)
-------- -------- -------- -------- --------
Net income (loss) from operations 8.57 3.40 1.27 3.61. (0.18)
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 26.67 $ 18.10 $ 14.70 $ 13.43 $ 9.82
======== ======== ======== ======== ========
Total return (a) 47.36 % 23.14 % 9.46 % 36.79 % (1.85)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $177,857 $ 94,652 $ 54,408 $ 32,904 $ 8,909
Ratios of net investment income (loss) to
average net assets (b) 6.20 % 10.26 % 2.65 % 2.93 % (0.72)%
<CAPTION>
BALANCED SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994 (c)
-------- -------- -------- -------- --------
Accumulation unit value, beginning of year $ 14.17 $ 12.21 $ 11.13 $ 9.37 $ 10.00
Income from operations:
Net investment income (loss) 0.25 1.55 0.36 0.37 0.22
Net realized and unrealized gain (loss)
on investment 0.60 0.41 0.72 1.39 (0.85)
-------- -------- -------- -------- --------
Net income (loss) from operations 0.85 1.96 1.08 1.76 (0.63)
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 15.02 $ 14.17 $ 12.21 $ 11.13 $ 9.37
Total return (a) 5.98 % 16.06 % 9.73 % 18.73 % (6.29)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 14,864 $ 10,716 $ 6,418 $ 3,795 $ 2,145
Ratios of net investment income (loss) to
average net assets (b) 1.76 % 11.62 % 3.18 % 3.59 % 3.06 %
<CAPTION>
GROWTH & INCOME SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 1994 (c)
-------- -------- -------- -------- --------
Accumulation unit value, beginning of year $ 16.09 $ 13.03 $ 11.77 $ 9.49 $ 10.00
Income from operations:
Net investment income (loss) 0.77 2.61 0.76 0.49 0.29
Net realized and unrealized gain (loss)
on investment (0.42) 0.45 0.50 1.79 (0.80)
-------- -------- -------- -------- --------
Net income (loss) from operations 0.35 3.06 1.26 2.28 (0.51)
-------- -------- -------- -------- --------
Accumulation unit value, end of year $ 16.44 $ 16.09 $ 13.03 $ 11.77 $ 9.49
Total return (a) 2.13 % 23.54 % 10.64 % 24.14 % (5.15)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 16,047 $ 9,063 $ 5,501 $ 2,631 $ 1,215
Ratios of net investment income (loss) to
average net assets (b) 4.83 % 18.50 % 6.38 % 4.57 % 3.71 %
</TABLE>
The notes to the financial statements are an integral part of this report.
16
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
TACTICAL ASSET ALLOCATION SUB-ACCOUNT
DECEMBER 31,
-------------------------------------------
1998 1997 1996 1995 (d)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year $ 15.60 $ 13.50 $ 11.90 $ 10.00
Income from operations:
Net investment income (loss) 1.58 1.20 0.53 0.61
Net realized and unrealized gain (loss)
on investment (0.44) 0.90 1.07 1.29
-------- -------- -------- --------
Net income (loss) from operations 1.14 2.10 1.60 1.90
-------- -------- -------- --------
Accumulation unit value, end of year $ 16.74 $ 15.60 $ 13.50 $ 11.90
======== ======== ======== ========
Total return (a) 7.36 % 15.55 % 13.40 % 19.03 %
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 39,904 $ 29,123 $ 17,946 $ 9,446
Ratios of net investment income (loss)
to average net assets (b) 9.69 % 8.14 % 4.35 % 5.47 %
</TABLE>
<TABLE>
<CAPTION>
C.A.S.E. GROWTH SUB-ACCOUNT
DECEMBER 31,
-------------------------------
1998 1997 1996 (e)
-------- -------- --------
<S> <C> <C> <C>
Accumulation unit value, beginning of year $ 12.32 $ 10.81 $ 10.00
Income from operations:
Net investment income (loss) 1.24 1.51 0.37
Net realized and unrealized gain (loss)
on investment (1.05) 0.00 0.44
-------- -------- --------
Net income (loss) from operations 0.19 1.51 0.81
-------- -------- --------
Accumulation unit value, end of year $ 12.51 $ 12.32 $ 10.81
======== ======== ========
Total return (a) 1.56 % 14.00 % 8.09 %
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 17,730 $ 11,946 $ 4,466
Ratios of net investment income (loss)
to average net assets (b) 10.21 % 12.65 % 6.11 %
</TABLE>
<TABLE>
<CAPTION>
VALUE EQUITY SUB-ACCOUNT
DECEMBER 31,
-------------------------------
1998 1997 1996 (e)
-------- -------- --------
<S> <C> <C> <C>
Accumulation unit value, beginning of year $ 13.94 $ 11.25 $ 10.00
Income from operations:
Net investment income (loss) 0.95 0.14 0.05
Net realized and unrealized gain (loss)
on investment (1.73) 2.55 1.20
-------- -------- --------
Net income (loss) from operations (0.78) 2.69 1.25
-------- -------- --------
Accumulation unit value, end of year $ 13.16 $ 13.94 $ 11.25
======== ======== ========
Total return (a) (5.63)% 23.93 % 12.51 %
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 26,083 $ 26,714 $ 8,887
Ratios of net investment income (loss)
to average net assets (b) 6.84 % 1.05 % 0.77 %
</TABLE>
The notes to the financial statements are an integral part of this report.
17
<PAGE>
<TABLE>
<CAPTION>
WRL SERIES LIFE ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
INTERNATIONAL EQUITY U.S. EQUITY
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31,
-------------------- --------------------
1998 1997 (f) 1998 1997 (f)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning of year $ 10.65 $ 10.00 $ 12.59 $ 10.00
Income from operations:
Net investment income (loss) (0.09) (0.03) 0.73 0.99
Net realized and unrealized gain (loss)
on investment 1.36 0.68 2.01 1.60
-------- -------- -------- --------
Net income (loss) from operations 1.27 0.65 2.74 2.59
-------- -------- -------- --------
Accumulation unit value, end of year $ 11.92 $ 10.65 $ 15.33 $ 12.59
======== ======== ======== ========
Total return (a) 11.84 % 6.54 % 21.78 % 25.89 %
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 5,827 $ 2,289 $ 14,084 $ 3,258
Ratios of net investment income (loss)
to average net assets (b) (0.81)% (0.28)% 5.30 % 8.28 %
</TABLE>
<TABLE>
<CAPTION>
THIRD AVENUE REAL ESTATE
VALUE SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31,
1998 (g) 1998 (h)
-------- --------
<S> <C> <C>
Accumulation unit value, beginning of year $ 10.00 $ 10.00
Income from operations:
Net investment income (loss) (0.05) (0.05)
Net realized and unrealized gain (loss)
on investment (0.72) (1.49)
-------- --------
Net income (loss) from operations (0.77) (1.54)
-------- --------
Accumulation unit value, end of year $ 9.23 $ 8.46
======= =======
Total return (a) (7.67)% (15.44)%
Ratios and supplemental data:
Net assets at end of year (in thousands) $ 2,807 $ 709
Ratios of net investment income (loss)
to average net assets (b) (0.52)% (0.90)%
</TABLE>
NOTES TO FINANCIAL HIGHLIGHTS:
*Per unit information has been computed using average units outstanding
throughout each period.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) The inception date of this Sub-Account was March 1, 1994.
(d) The inception date of this Sub-Account was January 3, 1995.
(e) The inception date of this Sub-Account was May 1, 1996.
(f) The inception date of this Sub-Account was January 2, 1997.
(g) The inception date of this Sub-Account was January 2, 1998.
(h) The inception date of this Sub-Account was May 1, 1998.
The notes to the financial statements are an integral part of this report.
18
<PAGE>
WRL SERIES LIFE ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
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") and is registered as a unit investment trust ("Trust") under the
Investment Company Act of 1940, as amended. The Life Account contains sixteen
investment options referred to as sub-accounts. Each sub-account invests in the
corresponding Portfolio of the WRL Series Fund, Inc. (collectively referred to
as the "Fund" and individually as a "Portfolio"), a registered management
investment company under the Investment Company Act of 1940, as amended.
The Fund 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, some of
which are affiliates of WRL. Each sub-adviser is compensated directly by WRL
Management.
On January 2, 1998 and May 1, 1998, WRL made initial contributions totaling
$ 600,000 to the Life Account. The respective amounts of the contributions and
units received are as follows:
<TABLE>
<CAPTION>
SUB-ACCOUNT CONTRIBUTION UNITS
- ----------- ------------ -----
<S> <C> <C>
Third Avenue Value $ 200,000 20,000
Real Estate Securities $ 400,000 40,000
</TABLE>
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
generally accepted accounting principles, have been consistently applied in the
preparation of the Trust's financial statements. The preparation of financial
statements required management to make estimates and assumptions that affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
A. VALUATION OF INVESTMENTS AND SECURITIES TRANSACTIONS
Investments in the Fund's shares are stated at the closing net asset value
("NAV") per share as determined by the Fund. Investment transactions are
accounted for on the trade date at the Fund 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
sub-accounts. Thereafter, monthly administrative and cost of insurance charges
are deducted from the policies. Contingent surrender charges also apply.
Under the other forms of the Policies, such "front-end" and other
administrative charges are deducted prior to allocation of the initial premium
payment but may be subject to contingent surrender charges.
Under all forms of the Policy, monthly charges against policy cash values
are made to compensate WRL for costs of insurance provided.
B. LIFE ACCOUNT CHARGES
A daily charge equal to an annual rate of .90% of average daily net assets
is assessed to compensate WRL for assumption of mortality and expense risks and
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.
19
<PAGE>
WRL SERIES LIFE ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
NOTE 3. DIVIDENDS AND 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 year ended December 31, 1998 are as follows
(in thousands):
<TABLE>
<CAPTION>
PURCHASE PROCEEDS
SUB-ACCOUNT: OF SECURITIES OF SECURITIES
- ------------ ------------- -------------
<S> <C> <C>
Money Market $ 54,231 $ 46,140
Bond 14,451 7,857
Growth 72,758 20,484
Global 59,238 9,357
Strategic Total Return 17,619 3,754
Emerging Growth 49,088 10,679
Aggressive Growth 44,611 5,689
Balanced 4,604 1,017
Growth & Income 10,694 3,411
Tactical Asset Allocation 14,060 2,009
C.A.S.E. Growth 9,433 2,525
Value Equity 13,179 9,081
International Equity 6,220 3,048
U.S. Equity 12,496 3,076
Third Avenue Value (a) 3,849 906
Real Estate Securities (b) 1,047 226
</TABLE>
(a) The inception date of this Sub-Account was January 2, 1998.
(b) The inception date of this Sub-Account was May 1, 1998.
NOTE 5. OTHER MATTERS
At December 31, 1998 net unrealized appreciation (depreciation) on
investments was as follows (in thousands):
<TABLE>
<CAPTION>
SUB-ACCOUNT:
- ------------
<S> <C>
Money Market $ 0
Bond 402
Growth 374,036
Global 43,882
Strategic Total Return 17,020
Emerging Growth 85,696
Aggressive Growth 50,985
Balanced 991
Growth & Income (177)
Tactical Asset Allocation 973
C.A.S.E. Growth (1,524)
Value Equity (2,759)
International Equity 119
U.S. Equity 1,068
Third Avenue Value (103)
Real Estate Securities (76)
</TABLE>
20
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