- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
WRL SERIES
ANNUITY ACCOUNT
WESTERN RESERVE LIFE
ASSURANCE CO.
OF OHIO
February 1997
ACC00002 (2/97)
<PAGE>
- --------------------------------------------------------------------------------
T A B L E O F C O N T E N T S
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Accountants ......................................... 2
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
Statements of Assets, Liabilities and Equity Accounts ................... 4
Statements of Operations ................................................ 4
Statements of Changes in Equity Accounts ................................ 8
Selected Per Unit Data and Ratios ....................................... 10
Notes to Financial Statements ........................................... 13
BELLWETHER AND CONQUEROR
Statements of Assets, Liabilities and Equity Accounts ................... 16
Statements of Operations ................................................ 16
Statements of Changes in Equity Accounts ................................ 20
Selected Per Unit Data and Ratios ....................................... 22
Notes to Financial Statements ........................................... 25
</TABLE>
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
1
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Western Reserve Life Assurance Co. of Ohio and
Contract Owners of the WRL Series Annuity Account - WRL Freedom Variable Annuity
and WRL Freedom Attainer Contracts
In our opinion, the accompanying statements of assets, liabilities and equity
accounts and the related statements of operations and of changes in equity
accounts and the selected per unit data and ratios present fairly, in all
material respects, the financial position of each of the Sub-Accounts
constituting the WRL Freedom Variable Annuity and WRL Freedom Attainer Contracts
of the WRL Series Annuity Account (a separate account of Western Reserve Life
Assurance Co. of Ohio, hereafter referred to as the "Annuity Account") at
December 31, 1996, the results of each of their operations, the changes in each
of their equity accounts and the selected per unit data and ratios for each of
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and selected per unit data and ratios
(hereafter referred to as "financial statements") are the responsibility of the
Annuity 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.
PRICE WATERHOUSE LLP
Kansas City, Missouri
January 31, 1997
2
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Western Reserve Life Assurance Co. of Ohio and
Contract Owners of the WRL Series Annuity Account - WRL Freedom Bellwether and
WRL Freedom Conqueror Contracts
In our opinion, the accompanying statements of assets, liabilities and equity
accounts and the related statements of operations and of changes in equity
accounts and the selected per unit data and ratios present fairly, in all
material respects, the financial position of each of the Sub-Accounts
constituting the WRL Freedom Bellwether and WRL Freedom Conqueror Contracts of
the WRL Series Annuity Account (a separate account of Western Reserve Life
Assurance Co. of Ohio, hereafter referred to as the "Annuity Account") at
December 31, 1996, the results of each of their operations, the changes in each
of their equity accounts and the selected per unit data and ratios for each of
the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and selected per unit data and ratios
(hereafter referred to as "financial statements") are the responsibility of the
Annuity 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.
PRICE WATERHOUSE LLP
Kansas City, Missouri
January 31, 1997
3
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
STATEMENTS OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
At December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TO-
INTERMEDIATE
MONEY MARKET BOND GROWTH GOVERNMENT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investments
Investment in WRL Series Fund, Inc.:
Shares ..................................... 51,138,160.550 4,254,266.463 16,458,439.520 841,351.902
================= ================= ================== ===============
Cost ....................................... $ 51,138,161 $ 47,679,739 $ 445,847,640 $ 8,730,422
================= ================= ================== ===============
Investments, at net asset value ............. $ 51,138,161 $ 45,551,426 $ 576,066,441 $ 8,619,507
Accrued transfers from (to) depositor - net . 2,627 (35,017) 48,946 5,375
----------------- ----------------- ------------------ ---------------
Total assets ............................... 51,140,788 45,516,409 576,115,387 8,624,882
----------------- ----------------- ------------------ ---------------
LIABILITIES: .................................. 0 0 0 0
----------------- ----------------- ------------------ ---------------
Total net assets ........................... $ 51,140,788 $ 45,516,409 $ 576,115,387 $ 8,624,882
================= ================= ================== ===============
EQUITY ACCOUNTS:
Contract Owners' equity:
Units ...................................... 3,848,980.206975 2,513,341.667873 17,369,774.620879 738,461.226280
================= ================= ================== ===============
Unit value ................................. $ 13.286841 $ 18.109917 $ 33.167695 $ 11.679533
================= ================= ================== ===============
Contract Owners' equity .................... $ 51,140,788 $ 45,516,409 $ 576,115,387 $ 8,624,882
----------------- ----------------- ------------------ ---------------
Depositor's equity:
Units ...................................... N/A N/A N/A N/A
================= ================= ================== ===============
Unit value ................................. $ N/A $ N/A $ N/A $ N/A
================= ================= ================== ===============
Depositor's equity ......................... $ N/A $ N/A $ N/A $ N/A
----------------- ----------------- ------------------ ---------------
Total equity ............................... $ 51,140,788 $ 45,516,409 $ 576,115,387 $ 8,624,882
================= ================= ================== ===============
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE
GLOBAL EQUITY INCOME EMERGING GROWTH GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investments
Investment in WRL Series Fund, Inc.:
Shares ..................................... 12,233,889.584 9,786,721.502 7,754,180.658 4,503,242.177
================== ================= ================= =================
Cost ....................................... $ 182,349,154 $ 115,114,224 $ 107,887,527 $ 62,252,043
================== ================= ================= =================
Investments, at net asset value ............. $ 221,618,940 $ 136,742,208 $ 143,151,054 $ 63,847,033
Accrued transfers from (to) depositor - net . (434,311) 46,815 130,627 (4,195)
------------------ ----------------- ----------------- -----------------
Total assets ............................... 221,184,629 136,789,023 143,281,681 63,842,838
------------------ ----------------- ----------------- -----------------
LIABILITIES: .................................. 0 0 0 0
------------------ ----------------- ----------------- -----------------
Total net assets ........................... $ 221,184,629 $ 136,789,023 $ 143,281,681 $ 63,842,838
================== ================= ================= =================
EQUITY ACCOUNTS:
Contract Owners' equity:
Units ...................................... 10,764,226.518931 8,849,836.119981 7,440,062.350527 4,385,415.675763
================== ================= ================= =================
Unit value ................................. $ 20.548121 $ 15.456673 $ 19.258129 $ 14.557990
================== ================= ================= =================
Contract Owners' equity .................... $ 221,184,629 $ 136,789,023 $ 143,281,681 $ 63,842,838
------------------ ----------------- ----------------- -----------------
Depositor's equity:
Units ...................................... N/A N/A N/A N/A
================== ================= ================= =================
Unit value ................................. $ N/A $ N/A $ N/A $ N/A
================== ================= ================= =================
Depositor's equity ......................... $ N/A $ N/A $ N/A $ N/A
------------------ ----------------- ----------------- -----------------
Total equity ............................... $ 221,184,629 $ 136,789,023 $ 143,281,681 $ 63,842,838
================== ================= ================= =================
</TABLE>
<TABLE>
<CAPTION>
BALANCED UTILITY
SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C>
ASSETS:
Investments
Investment in WRL Series Fund, Inc.:
Shares ..................................... 1,193,098.378 1,053,224.651
================= ===============
Cost ....................................... $ 12,180,525 $ 11,633,916
================= ===============
Investments, at net asset value ............. $ 13,594,982 $ 12,388,918
Accrued transfers from (to) depositor - net . 2,616 8,405
----------------- ---------------
Total assets ............................... 13,597,598 12,397,323
----------------- ---------------
LIABILITIES: .................................. 0 0
----------------- ---------------
Total net assets ........................... $ 13,597,598 $ 12,397,323
================= ===============
EQUITY ACCOUNTS:
Contract Owners' equity: 1,124,365.141725 960,651.569215
Units ...................................... ================= ===============
$ 12.093578 $ 12.905119
Unit value ................................. ================= ===============
$ 13,597,598 $ 12,397,323
Contract Owners' equity .................... ----------------- ---------------
Depositor's equity: N/A N/A
Units ...................................... ================= ===============
$ N/A $ N/A
Unit value ................................. ================= ===============
$ N/A $ N/A
Depositor's equity ......................... ----------------- ---------------
$ 13,597,598 $ 12,397,323
Total equity ............................... ================= ===============
</TABLE>
4
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
STATEMENTS OF OPERATIONS
For the year or period ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TO-
INTERMEDIATE
MONEY MARKET BOND GROWTH GOVERNMENT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ................................. $2,318,177 $ 2,726,380 $ 5,703,766 $ 427,720
Capital gain distributions ...................... 0 0 30,982,138 0
---------- ------------ ----------- ---------
2,318,177 2,726,380 36,685,904 427,720
---------- ------------ ----------- ---------
EXPENSES:
Mortality and expense risk ...................... 581,835 609,357 7,089,696 108,059
---------- ------------ ----------- ---------
Net investment income (loss) ................ 1,736,342 2,117,023 29,596,208 319,661
---------- ------------ ----------- ---------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) from securities
transactions ............................... 0 (894,887) 19,049,009 203,213
Change in unrealized appreciation (depreciation) 0 (2,059,236) 36,040,068 (343,649)
---------- ------------ ----------- ---------
Net gain (loss) on investments ................ 0 (2,954,123) 55,089,077 (140,436)
---------- ------------ ----------- ---------
Net increase (decrease) in equity accounts
resulting from operations ................... $1,736,342 $ (837,100) $84,685,285 $ 179,225
========== ============ =========== =========
</TABLE>
The notes to the financial statements are an integral part of this report.
<TABLE>
<CAPTION>
AGGRESSIVE
GLOBAL EQUITY-INCOME EMERGING GROWTH GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income .................................. $ 2,398,560 $ 2,987,391 $ 5,938 $ 805,763
Capital gain distributions ....................... 16,556,571 4,643,304 6,301,328 1,108,485
----------- ----------- ----------- -----------
18,955,131 7,630,695 6,307,266 1,914,248
----------- ----------- ----------- -----------
EXPENSES:
Mortality and expense risk ....................... 2,403,768 1,588,877 1,689,428 791,978
----------- ----------- ----------- -----------
Net investment income (loss) ................. 16,551,363 6,041,818 4,617,838 1,122,270
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) from securities
transactions ................................ 3,629,444 2,456,417 5,871,308 5,388,425
Change in unrealized appreciation (depreciation) 22,139,297 7,750,988 9,527,527 (1,464,474)
----------- ----------- ----------- -----------
Net gain (loss) on investments ............... 25,768,741 10,207,405 15,398,835 3,923,951
----------- ----------- ----------- -----------
Net increase (decrease) in equity accounts
resulting from operations .................. $42,320,104 $16,249,223 $20,016,673 $ 5,046,221
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BALANCED UTILITY
SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C>
INVESTMENT INCOME:
Dividend income ................................. $ 318,130 $ 343,073
Capital gain distributions ...................... 116,253 320,533
---------- -----------
434,383 663,606
---------- -----------
EXPENSES:
Mortality and expense risk ...................... 153,488 153,091
---------- -----------
Net investment income (loss) .................. 280,895 510,515
---------- -----------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) from securities
transactions .............................. 303,521 938,461
Change in unrealized appreciation (depreciation) 510,671 (345,673)
---------- -----------
Net gain (loss) on investments .............. 814,192 592,788
---------- -----------
Net increase (decrease) in equity accounts
resulting from operations ................. $1,095,087 $ 1,103,303
========== ===========
</TABLE>
The notes to the financial statements are an integral part of this report.
5
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
STATEMENTS OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
At December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TACTICAL ASSET MERIDIAN/INVESCO
ALLOCATION C.A.S.E. GROWTH GLOBAL SECTOR VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investments
Investment in WRL Series Fund, Inc.:
Shares ................................... 4,923,286.903 270,709.091 228,542.062 1,478,564.186
================= ================ ================= =================
Cost ..................................... $ 56,485,830 $ 3,410,503 $ 2,328,309 $ 15,479,239
================= ================ ================= =================
Investments at net asset value ............. $ 62,086,158 $ 3,632,088 $ 2,411,645 $ 16,658,260
Accrued transfers from (to) depositor -
net ...................................... 109,274 (20,473) 5,153 20,457
----------------- ---------------- ----------------- -----------------
Total assets ............................. 62,195,432 3,611,615 2,416,798 16,678,717
----------------- ---------------- ----------------- -----------------
LIABILITIES: .................................. 0 0 0 0
----------------- ---------------- ----------------- -----------------
Total net assets ......................... $ 62,195,432 $ 3,611,615 $ 2,416,798 $ 16,678,717
================= ================ ================= =================
EQUITY ACCOUNTS:
Contract Owners' equity:
Units .................................... 4,640,508.914581 260,151.966141 179,748.125878 1,470,890.372880
================= ================ ================= =================
Unit value ............................... $ 13.402718 $ 13.882712 $ 10.519446 $ 11.224729
================= ================ ================= =================
Contract Owners' equity .................. $ 62,195,432 $ 3,611,615 $ 1,890,851 $ 16,510,346
----------------- ---------------- ----------------- -----------------
Depositor's equity:
Units .................................... N/A N/A 49,997.602730 15,000.000000
================= ================ ================= =================
Unit value ............................... $ N/A $ N/A $ 10.519446 $ 11.224729
================= ================ ================= =================
Depositor's equity ....................... $ N/A $ N/A $ 525,947 $ 168,371
----------------- ---------------- ----------------- -----------------
Total equity ............................. $ 62,195,432 $ 3,611,615 $ 2,416,798 $ 16,678,717
================= ================ ================= =================
</TABLE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
STATEMENTS OF OPERATIONS
For the year or period ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TACTICAL ASSET MERIDIAN/INVESCO
ALLOCATION C.A.S.E. GROWTH GLOBAL SECTOR VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT(A) SUB-ACCOUNT(B) SUB-ACCOUNT(B)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ................................. $1,358,726 $ 13,501 $ 4,127 $ 54,476
Capital gain distributions ...................... 1,124,308 60,238 8,435 23,016
---------- ---------- ---------- ----------
2,483,034 73,739 12,562 77,492
---------- ---------- ---------- ----------
EXPENSES:
Mortality and expense risk ...................... 625,676 16,148 13,507 62,393
---------- ---------- ---------- ----------
Net investment income (loss) ................ 1,857,358 57,591 (945) 15,099
---------- ---------- ---------- ----------
Net realized and unrealized gain (loss)
on investments:
Net realized gain (loss) from securities
transactions ................................ 1,214,979 6,286 54,832 17,249
Change in unrealized appreciation (depreciation) 3,264,959 221,585 83,336 1,179,022
---------- ---------- ---------- ----------
Net gain (loss) on investments .............. 4,479,938 227,871 138,168 1,196,271
---------- ---------- ---------- ----------
Net increase (decrease) in equity accounts
resulting from operations ................. $6,337,296 $ 285,462 $ 137,223 $1,211,370
========== ========== ========== ==========
</TABLE>
(a) This sub-account option became effective May 1, 1996.
(b) The inception date of this sub-account was May 1, 1996.
The notes to the financial statements are an integral part of this report.
6
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
7
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
STATEMENTS OF CHANGES IN EQUITY ACCOUNTS
For the year or period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET BOND
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
------------------------------- ------------------------------
1996 1995 1996 1995
-------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....... $ 1,736,342 $ 1,688,168 $ 2,117,023 $ 2,463,557
Net gain (loss) on investments ..... 0 0 (2,954,123) 7,173,790
-------------- --------------- -------------- --------------
Net increase (decrease) in equity
accounts resulting from operations 1,736,342 1,688,168 (837,100) 9,637,347
-------------- --------------- -------------- --------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) 20,115,791 (5,902,965) (1,163,641) 2,542,773
-------------- --------------- -------------- --------------
Less cost of units redeemed:
Administrative charges ............. 26,252 29,037 37,247 44,441
Policy loans ....................... 9,353 519 8,380 22,037
Surrender benefits ................. 12,019,796 8,795,944 5,573,331 4,815,578
Death benefits ..................... 251,461 682,261 973,057 381,877
-------------- --------------- -------------- --------------
12,306,862 9,507,761 6,592,015 5,263,933
-------------- --------------- -------------- --------------
Increase (decrease) in equity
accounts from capital unit
transactions ..................... 7,808,929 (15,410,726) (7,755,656) (2,721,160)
-------------- --------------- -------------- --------------
Net increase (decrease) in equity
accounts ......................... 9,545,271 (13,722,558) (8,592,756) 6,916,187
Depositors' equity contribution
(redemption) ..................... 0 0 0 0
EQUITY ACCOUNTS:
Beginning of period ................. 41,595,517 55,318,075 54,109,165 47,192,978
-------------- ------------- -------------- --------------
End of period ....................... $51,140,788 $41,595,517 $45,516,409 $54,109,165
============== ============= ============== ==============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
GROWTH
SUB-ACCOUNT
DECEMBER 31
--------------------------------
1996 1995
--------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ....... $ 29,596,208 $ 45,360,822
Net gain (loss) on investments ..... 55,089,077 124,914,006
--------------- ---------------
Net increase (decrease) in equity
accounts resulting from operations 84,685,285 170,274,828
--------------- ---------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) 20,058,281 (5,005,493)
--------------- ---------------
Less cost of units redeemed:
Administrative charges ............. 488,816 506,610
Policy loans ....................... 223,257 248,376
Surrender benefits ................. 57,167,796 39,094,973
Death benefits ..................... 3,394,348 2,653,999
--------------- ---------------
61,274,217 42,503,958
--------------- ---------------
Increase (decrease) in equity
accounts from capital unit
transactions ..................... (41,215,936) (47,509,451)
--------------- ---------------
Net increase (decrease) in equity
accounts ......................... 43,469,349 122,765,377
Depositors' equity contribution
(redemption) ..................... 0 0
EQUITY ACCOUNTS:
Beginning of period ................. 532,646,038 409,880,661
--------------- ---------------
End of period ....................... $576,115,387 $532,646,038
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TO-INTERMEDIATE
GOVERNMENT GLOBAL EQUITY-INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31 DECEMBER 31
1996 1995 1996 1995 1996 1995
---------- ---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....... $ 319,661 $ 384,381 $ 16,551,363 $ 3,845,538 $ 6,041,818 $ 4,829,923
Net gain (loss) on investments ..... (140,436) 571,227 25,768,741 21,401,529 10,207,405 16,256,046
---------- ---------- ------------ ------------ ------------ ------------
Net increase (decrease) in equity
accounts resulting from operations 179,225 955,608 42,320,104 25,247,067 16,249,223 21,085,969
---------- ---------- ------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) (75,931) 1,015,750 52,563,710 (18,151,534) 14,094,848 13,068,987
---------- ---------- ------------ ------------ ------------ ------------
Less cost of units redeemed:
Administrative charges ............ 4,880 5,833 137,643 125,566 81,004 78,077
Policy loans ...................... 0 0 83,013 93,720 43,799 76,572
Surrender benefits ................ 656,540 369,692 14,292,685 9,634,079 9,351,749 5,988,610
Death benefits .................... 29,829 218,964 610,901 522,441 452,886 244,625
---------- ---------- ------------ ------------ ------------ ------------
691,249 594,489 15,124,242 10,375,806 9,929,438 6,387,884
---------- ---------- ------------ ------------ ------------ ------------
Increase (decrease) in equity
accounts from capital unit
transactions .................... (767,180) 421,261 37,439,468 (28,527,340) 4,165,410 6,681,103
---------- ---------- ------------ ------------ ------------ ------------
Net increase (decrease) in equity
accounts ........................ (587,955) 1,376,869 79,759,572 (3,280,273) 20,414,633 27,767,072
Depositors' equity contribution
(redemption) .................... 0 0 0 0 0 0
EQUITY ACCOUNTS:
Beginning of period ................ 9,212,837 7,835,968 141,425,057 144,705,330 116,374,390 88,607,318
---------- ---------- ------------ ------------ ------------ ------------
End of period ...................... $8,624,882 $9,212,837 $221,184,629 $141,425,057 $136,789,023 $116,374,390
========== ========== ============ ============ ============ ============
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
EMERGING GROWTH AGGRESSIVE GROWTH BALANCED
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31 DECEMBER 31
--------------------------- -------------------------- -------------------------
1996 1995 1996 1995 1996 1995
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....... $ 4,617,838 $ 3,589,652 $ 1,122,270 $ 1,120,016 $ 280,895 $ 272,734
Net gain (loss) on investments ..... 15,398,835 32,014,723 3,923,951 10,026,368 814,192 1,354,330
------------ ------------ ----------- ----------- ---------- ----------
Net increase (decrease) in equity
accounts resulting from operations 20,016,673 35,604,375 5,046,221 11,146,384 1,095,087 1,627,064
------------ ------------ ----------- ----------- ---------- ----------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) 17,337,483 4,113,982 (1,289,738) 39,257,963 2,215,506 1,328,562
------------ ------------ ----------- ----------- ---------- ----------
Less cost of units redeemed:
Administrative charges ............ 99,632 87,206 47,456 33,386 8,994 7,018
Policy loans ...................... 89,701 68,066 28,385 6,188 7,719 2,452
Surrender benefits ................ 9,349,520 6,989,309 5,021,875 2,866,706 789,474 967,365
Death benefits .................... 330,930 256,599 482,273 113,112 30,797 15,181
------------ ------------ ----------- ----------- ---------- ----------
9,869,783 7,401,180 5,579,989 3,019,392 836,984 992,016
------------ ------------ ----------- ----------- ---------- ----------
Increase (decrease) in equity
accounts from capital unit
transactions .................... 7,467,700 (3,287,198) (6,869,727) 36,238,571 1,378,522 336,546
------------ ------------ ----------- ----------- ---------- ----------
Net increase (decrease) in equity
accounts ........................ 27,484,373 32,317,177 (1,823,506) 47,384,955 2,473,609 1,963,610
Depositors' equity contribution
(redemption) .................... 0 0 0 (273,355) (218,651) 0
EQUITY ACCOUNTS:
Beginning of period ................ 115,797,308 83,480,131 65,666,344 18,554,744 11,342,640 9,379,030
------------ ------------ ----------- ----------- ----------- -----------
End of period ...................... $143,281,681 $115,797,308 $63,842,838 $65,666,344 $13,597,598 $11,342,640
============ ============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
TACTICAL ASSET
UTILITY ALLOCATION C.A.S.E. GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31 DECEMBER 31
--------------------------- -------------------------- ----------------
1996 1995 1996 1995(A) 1996(B)
------------ ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....... $ 510,515 $ 374,648 $ 1,857,358 $ 1,087,280 $ 57,591
Net gain (loss) on investments ..... 592,788 1,474,907 4,479,938 2,594,191 227,871
------------ ----------- ----------- ------------ ----------
Net increase (decrease) in equity
accounts resulting from operations 1,103,303 1,849,555 6,337,296 3,681,471 285,462
------------ ----------- ----------- ------------ ----------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) 1,291,325 5,047,279 24,484,490 32,279,325 3,388,144
------------ ----------- ----------- ------------ ----------
Less cost of units redeemed:
Administrative charges ............ 6,938 5,178 25,024 10,562 462
Policy loans ...................... 1,483 3,519 0 34,893 813
Surrender benefits ................ 1,580,568 491,819 3,369,971 983,608 60,716
Death benefits .................... 67,595 12,014 141,303 14,621 0
------------ ----------- ----------- ------------ ----------
1,656,584 512,530 3,536,298 1,043,684 61,991
------------ ----------- ----------- ------------ ----------
Increase (decrease) in equity
accounts from capital unit
transactions .................... (365,259) 4,534,749 20,948,192 31,235,641 3,326,153
------------ ----------- ----------- ------------ ----------
Net increase (decrease) in equity
accounts ........................ 738,044 6,384,304 27,285,488 34,917,112 3,611,615
Depositors' equity contribution
(redemption) .................... (231,034) 0 0 (7,168) 0
EQUITY ACCOUNTS:
Beginning of period ................ 11,890,313 5,506,009 34,909,944 0 0
------------ ----------- ----------- ------------ ----------
End of period ...................... $ 12,397,323 $11,890,313 $62,195,432 $ 34,909,944 $3,611,615
============ =========== =========== ============ ==========
</TABLE>
<TABLE>
<CAPTION>
MERIDIAN/INVESCO
GLOBAL SECTOR VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
----------------- ---------------
1996(C) 1996(C)
----------------- ---------------
<C> <C>
OPERATIONS:
Net investment income (loss) ....... $ (945) $ 15,099
Net gain (loss) on investments ..... 138,168 1,196,271
----------- -----------
Net increase (decrease) in equity
accounts resulting from operations 137,223 1,211,370
----------- -----------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) 2,131,630 15,672,280
----------- -----------
Less cost of units redeemed:
Administrative charges ............ 213 1,691
Policy loans ...................... 3,515 589
Surrender benefits ................ 348,327 263,664
Death benefits .................... 0 88,989
----------- -----------
352,055 354,933
----------- -----------
Increase (decrease) in equity
accounts from capital unit
transactions .................... 1,779,575 15,317,347
----------- -----------
Net increase (decrease) in equity
accounts ........................ 1,916,798 16,528,717
Depositors' equity contribution
(redemption) .................... 500,000 150,000
EQUITY ACCOUNTS:
Beginning of period ................ 0 0
----------- -----------
End of period ...................... $ 2,416,798 $16,678,717
=========== ===========
</TABLE>
(a) The inception date of this sub-account was January 3, 1995.
(b) This sub-account option became effective May 1, 1996.
(c) The inception date of this sub-account was May 1, 1996.
The notes to the financial statements are an integral part of this report.
9
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
SELECTED PER UNIT DATA AND RATIOS*
For the period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET
SUB-ACCOUNT
DECEMBER 31
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $ 12.80 $ 12.29 $ 12.03 $ 11.89 $ 11.68
Income from operations:
Net investment income (loss) ...... 0.49 0.51 0.26 0.14 0.21
Net realized and unrealized gain
(loss) on investments ........... 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ----------
Total income (loss) from
operations .................. 0.49 0.51 0.26 0.14 0.21
---------- ---------- ---------- ---------- ----------
Accumulation unit value,
end of period ....................... $ 13.29 $ 12.80 $ 12.29 $ 12.03 $ 11.89
========== ========== ========== ========== ==========
Total return (a) ...................... 3.81% 4.12% 2.22% 1.16% 1.77%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $51,141 $41,596 $55,318 $32,943 $41,133
Ratio of net investment income (loss)
to average net assets (b) ......... 3.72% 4.03% 2.28% 1.15% 1.73%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
BOND
SUB-ACCOUNT
DECEMBER 31
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $ 18.31 $ 15.08 $ 16.40 $ 14.65 $ 13.89
Income from operations:
Net investment income (loss) ...... 0.77 0.83 0.72 1.67 1.16
Net realized and unrealized gain
(loss) on investments ........... (0.97) 2.40 (2.04) 0.08 (0.40)
---------- ---------- ---------- ---------- ----------
Total income (loss) from
operations .................. (0.20) 3.23 (1.32) 1.75 0.76
---------- ---------- ---------- ---------- ----------
Accumulation unit value,
end of period ....................... $ 18.11 $ 18.31 $ 15.08 $ 16.40 $ 14.65
========== ========== ========== ========== ==========
Total return (a) ...................... (1.10%) 21.46% (8.10%) 11.97% 5.44%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $ 45,516 $ 54,109 $ 47,193 $ 66,483 $ 52,234
Ratio of net investment income (loss)
to average net assets (b) ......... 4.34% 4.94% 4.69% 10.94% 8.18%
</TABLE>
<TABLE>
<CAPTION>
GROWTH
SUB-ACCOUNT
DECEMBER 31
---------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $ 28.47 $ 19.60 $ 21.64 $ 21.07 $ 20.85
Income from operations:
Net investment income (loss) ...... 1.64 2.35 (0.06) 0.20 0.80
Net realized and unrealized gain
(loss) on investments ........... 3.06 6.52 (1.98) 0.37 (0.58)
----------- ----------- ----------- ----------- -----------
Total income (loss) from
operations .................. 4.70 8.87 (2.04) 0.57 0.22
----------- ----------- ----------- ----------- -----------
Accumulation unit value,
end of period ....................... $ 33.17 $ 28.47 $ 19.60 $ 21.64 $ 21.07
=========== =========== =========== =========== ===========
Total return (a) ...................... 16.50% 45.29% (9.45%) 2.69% 1.07%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $576,115 $532,646 $409,881 $575,024 $555,268
Ratio of net investment income (loss)
to average net assets (b) ......... 5.22% 9.81% (0.28%) 0.99% 4.07%
</TABLE>
<TABLE>
<CAPTION>
SHORT-TO-INTERMEDIATE
GOVERNMENT
SUB-ACCOUNT
DECEMBER 31
-------------------------------------------------------
1996 1995 1994 1993 1992(C)
--------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $11.43 $ 10.19 $ 10.36 $ 10.04 $10.00
Income from operations:
Net investment income (loss) ...... 0.42 0.49 0.37 0.21 0.01
Net realized and unrealized gain
(loss) on investments ........... (0.17) 0.75 (0.54) 0.11 0.03
--------- --------- ---------- ---------- ---------
Total income (loss) from
operations .................. 0.25 1.24 (0.17) 0.32 0.04
--------- --------- ---------- ---------- ---------
Accumulation unit value,
end of period ....................... $11.68 $ 11.43 $ 10.19 $ 10.36 $10.04
========= ========== ========== ========== =========
Total return (a) ...................... 2.20% 12.13% (1.66%) 3.28% 0.36%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ..................... $8,625 $ 9,213 $ 7,836 $10,010 $ 853
Ratio of net investment income (loss)
to average net assets (b) .......... 3.70% 4.59% 3.67% 2.08% 1.68%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
GLOBAL
SUB-ACCOUNT
DECEMBER 31
-------------------------------------------------------------
1996 1995 1994 1993 1992(C)
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $ 16.29 $ 13.40 $ 13.54 $ 10.15 $ 10.00
Income from operations:
Net investment income (loss) ..... 1.62 0.42 0.45 0.16 (0.01)
Net realized and unrealized gain
(loss) on investments ........... 2.64 2.47 (0.59) 3.23 0.16
--------- --------- ---------- --------- ----------
Total income (loss) from
operations .................. 4.26 2.89 (0.14) 3.39 0.15
--------- --------- ---------- --------- ---------
Accumulation unit value,
end of period ....................... $ 20.55 $ 16.29 $ 13.40 $ 13.54 $ 10.15
========= ========= ========== ========= =========
Total return (a) ...................... 26.15% 21.53% (0.99%) 33.34% 1.52%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $221,185 $141,425 $144,705 $ 69,665 $ 254
Ratio of net investment income (loss)
to average net assets (b) ......... 8.60% 2.89% 3.40% 1.40% (1.20%)
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
EQUITY-INCOME
SUB-ACCOUNT
DECEMBER 31
------------------------------------------------
1996 1995 1994 1993(D)
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $ 13.61 $ 11.06 $ 11.25 $ 10.00
Income from operations:
Net investment income (loss) ..... 0.68 0.59 0.16 0.16
Net realized and unrealized gain
(loss) on investments ........... 1.17 1.96 (0.35) 1.09
----------- ----------- ---------- ----------
Total income (loss) from
operations .................. 1.85 2.55 (0.19) 1.25
----------- ----------- ---------- ----------
Accumulation unit value,
end of period ....................... $ 15.46 $ 13.61 $ 11.06 $ 11.25
=========== =========== ========== ==========
Total return (a) ...................... 13.57% 23.11% (1.77%) 12.54%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $136,789 $116,374 $88,607 $49,240
Ratio of net investment income (loss)
to average net assets (b) ......... 4.75% 4.74% 1.43% 1.84%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EMERGING GROWTH AGGRESSIVE GROWTH
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
------------------------------------------------ ----------------------------------
1996 1995 1994 1993(D) 1996 1995 1994(E)
----------- ----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $ 16.40 $ 11.31 $ 12.37 $ 10.00 $ 13.35 $ 9.79 $ 10.00
Income from operations:
Net investment income (loss) ..... 0.63 0.51 (0.13) (0.12) 0.25 0.29 (0.08)
Net realized and unrealized gain
(loss) on investments ........... 2.23 4.58 (0.93) 2.49 0.96 3.27 (0.13)
-------- -------- -------- -------- ------- ------- --------
Total income (loss) from
operations .................. 2.86 5.09 (1.06) 2.37 1.21 3.56 (0.21)
-------- -------- -------- -------- ------- ------- --------
Accumulation unit value,
end of period ....................... $ 19.26 $ 16.40 $ 11.31 $ 12.37 $ 14.56 $ 13.35 $ 9.79
======== ======== ======== ======== ======= ======= ========
Total return (a) ...................... 17.41% 44.97% (8.51%) 23.67% 9.07% 36.31% (2.08%)
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $143,282 $115,797 $83,480 $58,794 $63,843 $65,666 $18,555
Ratio of net investment income (loss)
to average net assets (b) .......... 3.42% 3.68% (1.21%) (1.30%) 1.77% 2.28% (1.04%)
</TABLE>
BALANCED
SUB-ACCOUNT
DECEMBER 31
----------------------------------
1996 1995 1994(E)
---------- ---------- ----------
Accumulation unit value, beginning
of period ........................... $ 11.06 $ 9.35 $ 10.00
Income from operations:
Net investment income (loss) ..... 0.26 0.29 0.21
Net realized and unrealized gain
(loss) on investments ........... 0.77 1.42 (0.86)
---------- ---------- ----------
Total income (loss) from
operations .................. 1.03 1.71 (0.65)
---------- ---------- ----------
Accumulation unit value,
end of period ....................... $ 12.09 $ 11.06 $ 9.35
========== ========== ==========
Total return (a) ...................... 9.34% 18.31% (6.52%)
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $13,598 $11,343 $ 9,379
Ratio of net investment income (loss)
to average net assets (b) ......... 2.29% 2.85% 2.63%
* The above table illustrates the change for a unit outstanding computed using
average units outstanding throughout each period. See Notes to Selected Per Unit
Data and Ratios on page 12.
The notes to the financial statements are an integral part of this report.
11
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
SELECTED PER UNIT DATA AND RATIOS*
For the period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TACTICAL ASSET C.A.S.E.
UTILITY ALLOCATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31 DECEMBER 31
---------------------------------- ---------------------- --------------
1996 1995 1994(E) 1996 1995(F) 1996(G)
---------- ---------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $ 11.71 $ 9.46 $ 10.00 $ 11.86 $ 10.00 $12.87
Income from operations:
Net investment income (loss) ..... 0.50 0.45 0.32 0.46 0.58 .39
Net realized and unrealized gain
(loss) on investments ........... 0.70 1.80 (0.86) 1.08 1.28 .62
---------- ---------- ---------- ---------- ---------- ----------
Total income (loss) from
operations .................. 1.20 2.25 (0.54) 1.54 1.86 1.01
---------- ---------- ---------- ---------- ---------- ----------
Accumulation unit value,
end of period ....................... $ 12.91 $ 11.71 $ 9.46 $ 13.40 $ 11.86 $13.88
========== ========== ========== ========== ========== ==========
Total return (a) ...................... 10.25% 23.70% (5.37%) 13.00% 18.61% 7.84%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $12,397 $11,890 $ 5,506 $62,195 $34,910 $3,612
Ratio of net investment income (loss)
to average net assets (b) ......... 4.17% 4.26% 4.07% 3.71% 5.25% 4.43%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
MERIDIAN/
INVESCO
GLOBAL SECTOR VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
------------- ------------
1996(H) 1996(H)
------------- ------------
Accumulation unit value, beginning
of period ........................... $10.00 $10.00
Income from operations:
Net investment income (loss) ..... (0.01) 0.02
Net realized and unrealized gain
(loss) on investments ........... 0.53 1.20
------ ------
Total income (loss) from
operations ................... 0.52 1.22
------ ------
Accumulation unit value,
end of period ....................... $10.52 $11.22
====== ======
Total return (a) ...................... 5.19% 12.25%
Ratios and supplemental data:
Net assets at end of period
(in thousands) .................... $2,417 $16,679
Ratio of net investment income (loss)
to average net assets (b) ......... (0.09%) 0.30%
* The above table illustrates the change for a unit outstanding computed
using average units outstanding throughout each period. See Notes to
Selected Per Unit Data and Ratios below.
NOTES TO SELECTED PER UNIT DATA AND RATIOS
- ------------------------------------------
(a) For periods less than one year the total return is not annualized.
(b) For periods less than one year the ratio of net investment income to
average net assets is annualized.
(c) The inception date of this sub-account was December 3, 1992.
(d) The inception date of this sub-account was March 1, 1993.
(e) The inception date of this sub-account was March 1, 1994.
(f) The inception date of this sub-account was January 3, 1995.
(g) This sub-account option became effective May 1, 1996.
(h) The inception date of this sub-account was May 1, 1996.
The notes to the financial statements are an integral part of this report.
12
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
The WRL Series Annuity Account (the "Annuity Account") was established as
a variable accumulation deferred annuity 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
Annuity Account encompasses various contract types: the WRL Freedom Variable
Annuity and the WRL Freedom Attainer ("Annuity #1"); the WRL Freedom Bellwether
and the WRL Freedom Conqueror ("Annuity #2"). Each contains fourteen investment
options referred to as sub-accounts. Each sub-account invests in the
corresponding portfolio of the WRL Series Fund, Inc. (the "Fund"), a registered
management investment company under the investment Company Act of 1940, as
amended. These portfolios and their respective investment management
organizations are as follows:
PORTFOLIO INVESTMENT MANAGER
- --------------------- -------------------------------
Money Market J.P. Morgan Investment
Management Inc.
Bond Janus Capital Corporation
("JCC")
Growth JCC
Short-to-Intermediate AEGON USA Investment
Government Management, Inc. ("AEGON
Management")
Global JCC
Equity-Income Luther King Capital Management
Corporation
Emerging Growth Van Kampen American Capital
Asset
Management, Inc.
Aggressive Growth Fred Alger Management, Inc.
Balanced AEGON Management
Utility Federated Investment Counseling
Tactical Asset Dean Investment Associates
Allocation
C.A.S.E. Growth C.A.S.E. Management, Inc.
Meridian/INVESCO Meridian Investment
Global Sector Management
Corporation/INVESCO
Global Asset
Management Limited
Value Equity NWQ Investment
Management
Company, Inc
WRL and AEGON Management are indirect wholly-owned subsidiaries of AEGON USA,
Inc., which is an indirect wholly-owned subsidiary of AEGON nv, a Netherlands
corporation.
On May 1, 1996 WRL made an initial contribution to the Annuity Account. The
amount of the contribution and units received from the corresponding sub-account
are as follows:
SUB-ACCOUNT CONTRIBUTION UNITS
- ----------------- --------------- ----------------
Meridian/INVESCO
Global Sector $ 500,000 49,997.602730
Value Equity $ 150,000 15,000.000000
Annuity #1 sub-accounts hold assets to support the benefits under certain
flexible payment variable accumulation deferred annuity contracts (the
"Contracts") issued by WRL, which issued the first of such Contracts on February
24, 1989. The Annuity Account equity transactions are accounted for using the
appropriate effective date at the corresponding accumulation unit value.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The following significant accounting policies, which are in conformity with
generally accepted accounting principles for unit investment trusts, have been
consistently used in preparation of the Trust's financial statements.
13
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FREEDOM AND ATTAINER
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 (CONTINUED)
A. VALUATION OF INVESTMENTS
The investments in the Fund's shares are stated at the closing net asset
value ("NAV") per share as determined by the Fund on December 31, 1996.
Investment transactions are accounted for on the trade date, using the Fund
NAV next determined after receipt of sale or redemption order without sales
charges. Dividend income and capital gain distributions are recorded on the
ex-dividend date. The cost of investments sold is determined on a first-in,
first-out basis.
B. FEDERAL INCOME TAXES
The operations of the Annuity Account are a part of and are taxed with the
total operations of WRL, which is taxed as a life insurance company under the
Internal Revenue Code. Under current law, the investment income of the
Annuity 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 issuance and administration of
the Contracts.
A. CONTRACT CHARGES
No deduction for sales expenses are made from the purchase payments. A
contingent deferred sales charge may, however, be assessed against contract
values when withdrawn or surrendered.
On each anniversary through maturity date, WRL will deduct an annual contract
charge as partial compensation for providing administrative services under
the Contracts.
B. ANNUITY #1 SUB-ACCOUNTS CHARGES
A daily charge equal to an annual rate of 1.25% 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 Contracts. This charge (not assessed at the individual contract level)
effectively reduces the value of a unit outstanding during the year.
NOTE 3--DIVIDENDS AND DISTRIBUTIONS
Dividends of the Fund's Money Market Portfolio are declared daily and
reinvested monthly. Dividends of the remaining portfolios are typically declared
and reinvested semiannually, while capital gain distributions are typically
declared and reinvested annually. Dividends and distributions of the Fund are
generally paid to and reinvested by the Annuity Account the next business day
after declaration.
NOTE 4--OTHER MATTERS
As of December 31, 1996 the equity accounts include net unrealized
appreciation (depreciation) on investments as follows:
SUB-ACCOUNT
- ------------
Money Market $ N/A
Bond (2,128,313)
Growth 130,218,801
Short-to-Intermediate Government (110,915)
Global 39,269,786
Equity-Income 21,627,984
Emerging Growth 35,263,527
Aggressive Growth 1,594,990
Balanced 1,414,457
Utility 755,002
Tactical Asset Allocation 5,600,328
C.A.S.E. Growth 221,585
Meridian/INVESCO Global Sector 83,336
Value Equity 1,179,021
14
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
15
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
STATEMENTS OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
At December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TO-
INTERMEDIATE
MONEY MARKET BOND GROWTH GOVERNMENT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investments
Investment in WRL Series Fund, Inc.:
Shares ................................... 57,466,626.650 3,554,741.151 9,078,227.620 1,531,081.607
================= ================= ================== =================
Cost ..................................... $ 57,466,627 $ 38,253,382 $ 272,878,760 $ 15,791,132
================= ================= ================== =================
Investments, at net asset value ............ $ 57,466,627 $ 38,061,445 $ 317,749,581 $ 15,685,670
Accrued transfers from (to) depositor - net 948,168 (6,201) (44,136) (5,444)
----------------- ----------------- ------------------ -----------------
Total assets ............................. 58,414,795 38,055,244 317,705,445 15,680,226
----------------- ----------------- ------------------ -----------------
LIABILITIES: .................................. 0 0 0 0
----------------- ----------------- ------------------ -----------------
Total net assets .......................... $ 58,414,795 $ 38,055,244 $ 317,705,445 $ 15,680,226
================= ================= ================== =================
EQUITY ACCOUNTS:
Contract Owners' equity:
Units ..................................... 5,253,582.115062 3,055,304.507335 19,832,581.763517 1,350,785.453748
================= ================= ================== =================
Unit value ................................ $ 11.119041 $ 12.455467 $ 16.019369 $ 11.608228
================= ================= ================== =================
Contract Owners' equity ................... $ 58,414,795 $ 38,055,244 $ 317,705,445 $ 15,680,226
----------------- ----------------- ------------------ -----------------
Depositor's equity:
Units ..................................... N/A N/A N/A N/A
================= ================= ================== =================
Unit value ................................ $ N/A $ N/A $ N/A $ N/A
================= ================= ================== =================
Depositor's equity ........................ $ N/A $ N/A $ N/A $ N/A
----------------- ----------------- ------------------ -----------------
Total equity .............................. $ 58,414,795 $ 38,055,244 $ 317,705,445 $ 15,680,226
================= ================= ================== =================
</TABLE>
<TABLE>
<CAPTION>
GLOBAL EQUITY-INCOME EMERGING GROWTH AGGRESSIVE GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investments
Investment in WRL Series Fund, Inc.:
Shares ................................. 12,575,284.272 14,066,539.947 9,703,598.042 7,116,101.849
================== ================== ================= ==================
Cost ................................... $ 201,977,185 $ 178,748,743 $ 151,291,850 $ 97,017,065
================== ================== ================= ==================
Investments, at net asset value ......... $ 227,803,362 $ 196,540,765 $ 179,139,534 $ 100,892,191
Accrued transfers from (to)
depositor - net ....................... 151,683 (235,810) 449,315 (59,706)
------------------ ------------------ ----------------- ------------------
Total assets .......................... 227,955,045 196,304,955 179,588,849 100,832,485
------------------ ------------------ ----------------- ------------------
LIABILITIES: .............................. 0 0 0 0
------------------ ------------------ ----------------- ------------------
Total net assets ...................... $ 227,955,045 $ 196,304,955 $ 179,588,849 $ 100,832,485
================== ================== ================= ==================
EQUITY ACCOUNTS:
Contract Owners' equity:
Units .................................. 11,159,128.232837 12,770,553.738705 9,376,916.835961 6,954,084.354037
================== ================== ================= ==================
Unit value ............................. $ 20.427675 $ 15.371687 $ 19.152228 $ 14.499750
================== ================== ================= ==================
Contract Owners' equity ................ $ 227,955,045 $ 196,304,955 $ 179,588,849 $ 100,832,485
------------------ ------------------ ----------------- ------------------
Depositor's equity:
Units .................................. N/A N/A N/A N/A
================== ================== ================= ==================
Unit value ............................. $ N/A $ N/A $ N/A $ N/A
================== ================== ================= ==================
Depositor's equity ..................... $ N/A $ N/A $ N/A $ N/A
------------------ ------------------ ----------------- ------------------
Total equity ........................... $ 227,955,045 $ 196,304,955 $ 179,588,849 $ 100,832,485
================== ================== ================= ==================
</TABLE>
<TABLE>
<CAPTION>
BALANCED UTILITY
SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C>
ASSETS:
Investments
Investment in WRL Series Fund, Inc.:
Shares ................................. 2,526,763.889 1,704,322.466
================= =================
Cost ................................... $ 26,026,058 $ 18,752,418
================= =================
Investments, at net asset value .......... $ 28,791,685 $ 20,047,679
Accrued transfers from (to)
depositor - net ........................ (57,853) (75,781)
----------------- -----------------
Total assets ........................... 28,733,832 19,971,898
----------------- -----------------
LIABILITIES: ............................... 0 0
----------------- -----------------
Total net assets ....................... $ 28,733,832 $ 19,971,898
================= =================
EQUITY ACCOUNTS:
Contract Owners' equity:
Units ................................... 2,385,500.177475 1,553,810.728349
================= =================
Unit value .............................. $ 12.045202 $ 12.853495
================= =================
Contract Owners' equity ................. $ 28,733,832 $ 19,971,898
----------------- -----------------
Depositor's equity:
Units ................................... N/A N/A
================= =================
Unit value .............................. $ N/A $ N/A
================= =================
Depositor's equity ...................... $ N/A $ N/A
----------------- -----------------
Total equity ............................ $ 28,733,832 $ 19,971,898
================= =================
</TABLE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
STATEMENTS OF OPERATIONS
For the year or period ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TO-
INTERMEDIATE
MONEY MARKET BOND GROWTH GOVERNMENT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ............................ $2,143,477 $ 2,085,872 $ 3,008,593 $ 769,425
Capital gain distributions ................. 0 0 16,954,024 0
---------- ------------ ----------- ---------
2,143,477 2,085,872 19,962,617 769,425
EXPENSES:
Mortality and expense risk ................. 603,609 486,811 3,673,526 202,164
---------- ------------ ----------- ---------
Net investment income (loss) ............. 1,539,868 1,599,061 16,289,091 567,261
---------- ------------ ----------- ---------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ........................... 0 (698,802) 4,529,601 240,193
Change in unrealized appreciation
(depreciation) .......................... 0 (1,239,618) 16,387,401 (482,646)
---------- ------------ ----------- ---------
Net gain (loss) on investments .......... 0 (1,938,420) 20,917,002 (242,453)
---------- ------------ ----------- ---------
Net increase (decrease) in equity accounts
resulting from operations ............. $1,539,868 $ (339,359) $37,206,093 $ 324,808
========== ============ =========== =========
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
GLOBAL EQUITY-INCOME EMERGING GROWTH AGGRESSIVE GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income .......................... $ 2,412,240 $ 3,902,311 $ 6,904 $1,237,653
Capital gain distributions ............... 16,965,940 6,583,585 7,848,469 1,736,699
----------- ----------- ----------- ----------
19,378,180 10,485,896 7,855,373 2,974,352
EXPENSES:
Mortality and expense risk ............... 2,497,892 1,846,007 2,049,633 1,151,278
----------- ----------- ----------- ----------
Net investment income (loss) ........... 16,880,288 8,639,889 5,805,740 1,823,074
----------- ----------- ----------- ----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ......................... 7,564,103 1,404,575 8,673,249 5,886,038
Change in unrealized appreciation
(depreciation) ....................... 13,561,148 6,796,826 5,434,437 163,846
----------- ----------- ----------- ----------
Net gain (loss) on investments ....... 21,125,251 8,201,401 14,107,686 6,049,884
----------- ----------- ----------- ----------
Net increase (decrease) in equity
accounts resulting from operations . $38,005,539 $16,841,290 $19,913,426 $7,872,958
=========== =========== =========== ==========
</TABLE>
BALANCED UTILITY
SUB-ACCOUNT SUB-ACCOUNT
INVESTMENT INCOME:
Dividend income ............................ $ 643,554 $ 509,611
Capital gain distributions ................. 245,860 515,121
---------- ----------
889,414 1,024,732
EXPENSES:
Mortality and expense risk ................. 304,196 202,558
---------- ----------
Net investment income (loss) ............. 585,218 822,174
---------- ----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from securities
transactions ........................... 159,957 319,804
Change in unrealized appreciation
(depreciation) .......................... 1,434,264 496,140
---------- ----------
Net gain (loss) on investments ........... 1,594,221 815,944
---------- ----------
Net increase (decrease) in equity accounts
resulting from operations .............. $2,179,439 $1,638,118
========== ==========
The notes to the financial statements are an integral part of this report.
17
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
STATEMENTS OF ASSETS, LIABILITIES AND EQUITY ACCOUNTS
At December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TACTICAL ASSET MERIDIAN/INVESCO
ALLOCATION C.A.S.E. GROWTH GLOBAL SECTOR VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
<S> <C> <C> <C> <C>
ASSETS:
Investments
Investment in WRL Series Fund, Inc.:
Shares ..................................... 9,949,981.843 938,598.139 334,024.309 2,118,053.511
================= ================= ================ =================
Cost ....................................... $ 120,546,059 $ 11,962,847 $ 3,402,887 $ 22,330,655
================= ================= ================ =================
Investments at net asset value .............. $ 125,476,362 $ 12,593,116 $ 3,524,725 $ 23,863,074
Accrued transfers from (to) depositor - net . 100,746 (50,827) (15,359) (103,753)
----------------- ----------------- ---------------- -----------------
Total assets ............................... 125,577,108 12,542,289 3,509,366 23,759,321
----------------- ----------------- ---------------- -----------------
LIABILITIES: .................................. 0 0 0 0
----------------- ----------------- ---------------- -----------------
Total net assets ........................... $ 125,577,108 $ 12,542,289 $ 3,509,366 $ 23,759,321
================= ================= ================ =================
EQUITY ACCOUNTS:
Contract Owners' equity:
Units ...................................... 9,397,630.629186 1,161,733.311699 333,942.618296 2,103,820.411102
================= ================= ================ =================
Unit value ................................. $ 13.362635 $ 10.773003 $ 10.508888 $ 11.213466
================= ================= ================ =================
Contract Owners' equity .................... $ 125,577,108 $ 12,515,356 $ 3,509,366 $ 23,591,119
----------------- ----------------- ---------------- -----------------
Depositor's equity:
Units ...................................... N/A 2,500.000000 N/A 15,000.000000
================= ================= ================= =================
Unit value ................................. $ N/A $ 10.773003 $ N/A $ 11.213466
================= ================= ================= =================
Depositor's equity ......................... $ N/A $ 26,933 $ N/A $ 168,202
----------------- ----------------- ---------------- -----------------
Total equity ............................... $ 125,577,108 $ 12,542,289 $ 3,509,366 $ 23,759,321
================= ================= ================ =================
</TABLE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
STATEMENTS OF OPERATIONS
For the year or period ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TACTICAL ASSET MERIDIAN/INVESCO
ALLOCATION C.A.S.E. GROWTH GLOBAL SECTOR VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT(A) SUB-ACCOUNT(A) SUB-ACCOUNT(A)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ............................ $2,799,917 $ 45,209 $ 5,930 $ 77,464
Capital gain distributions ................. 2,262,947 206,171 12,122 32,728
---------- -------- --------- ----------
5,062,864 251,380 18,052 110,192
EXPENSES:
Mortality and expense risk .................. 1,384,600 51,146 12,669 90,926
---------- -------- --------- ----------
Net investment income (loss) ........... 3,678,264 200,234 5,383 19,266
---------- -------- --------- ----------
Net realized and unrealized gain (loss) on
investments:
Net realized gain (loss) from
securities transactions ................ 2,784,681 9,835 (150) 29,764
Change in unrealized appreciation
(depreciation) ......................... 3,008,787 630,268 121,838 1,532,419
---------- -------- --------- ----------
Net gain (loss) on investments ........... 5,793,468 640,103 121,688 1,562,183
---------- -------- --------- ----------
Net increase (decrease) in equity
accounts resulting from operations ..... $9,471,732 $840,337 $ 127,071 $1,581,449
========== ======== ========= ==========
</TABLE>
(a) The inception date of this sub-account was May 1, 1996.
The notes to the financial statements are an integral part of this report.
18
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
19
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
STATEMENTS OF CHANGES IN EQUITY ACCOUNTS
For the year or period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET BOND
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
------------------------------ ------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................. $ 1,539,868 $ 1,313,504 $ 1,599,061 $ 1,334,567
Net gain (loss) on investments ............... 0 0 (1,938,420) 3,265,003
----------- ----------- ----------- -----------
Net increase (decrease) in equity accounts
resulting from operations .................. 1,539,868 1,313,504 (339,359) 4,599,570
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ......... 37,166,378 3,849,894 8,367,613 12,376,956
----------- ----------- ----------- -----------
Less cost of units redeemed:
Administrative charges ...................... 17,556 15,085 24,284 20,247
Policy loans ................................ 101,493 30,025 11,521 0
Surrender benefits .......................... 8,016,874 4,807,455 2,411,912 1,650,718
Death benefits .............................. 679,267 324,411 296,824 147,684
----------- ----------- ----------- ----------
8,815,190 5,176,976 2,744,541 1,818,649
----------- ----------- ----------- ----------
Increase (decrease) in equity accounts from
capital unit transactions ................. 28,351,188 (1,327,082) 5,623,072 10,558,307
----------- ----------- ----------- ----------
Net increase (decrease) in equity accounts . 29,891,056 (13,578) 5,283,713 15,157,877
Depositors' equity contribution (redemption) 0 0 0 0
EQUITY ACCOUNTS:
Beginning of period .......................... 28,523,739 28,537,317 32,771,531 17,613,654
----------- ----------- ----------- ----------
End of period ................................ $58,414,795 $28,523,739 $38,055,244 $32,771,531
=========== =========== =========== ===========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
GROWTH
SUB-ACCOUNT
DECEMBER 31
-------------------------------
1996 1995
--------------- --------------
OPERATIONS:
Net investment income (loss) ................. $ 16,289,091 $ 16,764,464
Net gain (loss) on investments ............... 20,917,002 38,316,882
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations .................. 37,206,093 55,081,346
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ......... 98,111,181 40,690,699
------------ ------------
Less cost of units redeemed:
Administrative charges ...................... 242,674 173,999
Policy loans ................................ 176,313 36,385
Surrender benefits .......................... 14,229,582 9,406,104
Death benefits .............................. 1,101,844 399,627
------------ ------------
15,750,413 10,016,115
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ................. 82,360,768 30,674,584
------------ ------------
Net increase (decrease) in equity accounts .. 119,566,861 85,755,930
Depositors' equity contribution (redemption) 0 0
EQUITY ACCOUNTS:
Beginning of period .......................... 198,138,584 112,382,654
------------ ------------
End of period ................................ $317,705,445 $198,138,584
============ ============
<TABLE>
<CAPTION>
SHORT-TO-INTERMEDIATE
GOVERNMENT GLOBAL
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
--------------------------- ----------------------------
1996 1995 1996 1995
------------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................. $ 567,261 $ 509,575 $ 16,880,288 $ 2,936,895
Net gain (loss) on investments ............... (242,453) 801,020 21,125,251 16,567,912
------------ ----------- ------------ -------------
Net increase (decrease) in equity accounts
resulting from operations .................. 324,808 1,310,595 38,005,539 19,504,807
------------ ----------- ------------ -------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ......... 4,001,808 1,293,887 88,386,336 3,172,478
------------ ----------- ------------ -------------
Less cost of units redeemed:
Administrative charges ...................... 7,051 7,052 146,170 106,341
Policy loans ................................ 0 31,238 147,825 5,024
Surrender benefits .......................... 1,514,008 1,086,564 9,450,746 5,972,420
Death benefits .............................. 110,873 143,519 650,521 464,451
------------ ----------- ------------ -------------
1,631,932 1,268,373 10,395,262 6,548,236
------------ ----------- ------------ -------------
Increase (decrease) in equity accounts from
capital unit transactions ................. 2,369,876 25,514 77,991,074 (3,375,758)
------------ ----------- ------------ -------------
Net increase (decrease) in equity accounts .. 2,694,684 1,336,109 115,996,613 16,129,049
Depositors' equity contribution (redemption) 0 0 0 0
EQUITY ACCOUNTS:
Beginning of period .......................... 12,985,542 11,649,433 111,958,432 95,829,383
------------ ----------- ------------ -------------
End of period ................................ $ 15,680,226 $12,985,542 $227,955,045 $ 111,958,432
============ =========== ============ =============
</TABLE>
EQUITY-INCOME
SUB-ACCOUNT
DECEMBER 31
---------------------------
1996 1995
------------ ------------
OPERATIONS:
Net investment income (loss) ................. $ 8,639,889 $ 4,061,486
Net gain (loss) on investments ............... 8,201,401 13,464,500
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations .................. 16,841,290 17,525,986
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) ......... 85,200,901 17,763,181
------------ ------------
Less cost of units redeemed:
Administrative charges ...................... 91,978 71,983
Policy loans ................................ 78,498 0
Surrender benefits .......................... 6,804,935 4,611,616
Death benefits .............................. 412,933 687,018
------------ ------------
7,388,344 5,370,617
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ................. 77,812,557 12,392,564
------------ ------------
Net increase (decrease) in equity accounts . 94,653,847 29,918,550
Depositors' equity contribution (redemption) 0 0
EQUITY ACCOUNTS:
Beginning of period .......................... 101,651,108 71,732,558
------------ ------------
End of period ................................ $196,304,955 $101,651,108
============ ============
20
<PAGE>
<TABLE>
<CAPTION>
EMERGING GROWTH AGGRESSIVE GROWTH
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
--------------------------- ---------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................. $ 5,805,740 $ 3,189,124 $ 1,823,074 $ 1,078,673
Net gain (loss) on investments ............... 14,107,686 27,441,608 6,049,884 5,453,504
------------ ------------ ------------ ------------
Net increase (decrease) in equity accounts
resulting from operations .................. 19,913,426 30,630,732 7,872,958 6,532,177
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) .......... 63,633,185 16,786,688 36,890,434 44,671,168
------------ ------------ ------------ ------------
Less cost of units redeemed:
Administrative charges ...................... 128,353 85,948 69,909 26,869
Policy loans ................................ 108,870 13,781 101,914 8,808
Surrender benefits .......................... 8,245,766 4,544,091 4,071,470 1,799,668
Death benefits .............................. 589,583 273,410 107,157 78,444
------------ ------------ ------------ ------------
9,072,572 4,917,230 4,350,450 1,913,789
------------ ------------ ------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ................. 54,560,613 11,869,458 32,539,984 42,757,379
------------ ------------ ------------ ------------
Net increase (decrease) in equity accounts .. 74,474,039 42,500,190 40,412,942 49,289,556
Depositors' equity contribution (redemption) . 0 0 0 (272,958)
EQUITY ACCOUNTS:
Beginning of period .......................... 105,114,810 62,614,620 60,419,543 11,402,945
------------ ------------ ------------ ------------
End of period ................................ $179,588,849 $105,114,810 $100,832,485 $ 60,419,543
============ ============ ============ ============
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
BALANCED
SUB-ACCOUNT
DECEMBER 31
----------------------------
1996 1995
------------ ------------
OPERATIONS:
Net investment income (loss) ................. $ 585,218 $ 383,272
Net gain (loss) on investments ............... 1,594,221 1,697,980
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations .................. 2,179,439 2,081,252
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) .......... 12,102,679 6,741,534
------------ ------------
Less cost of units redeemed:
Administrative charges ...................... 14,257 8,055
Policy loans ................................ 21,825 0
Surrender benefits .......................... 1,283,676 543,786
Death benefits .............................. 79,316 137,777
------------ ------------
1,399,074 689,618
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ................. 10,703,605 6,051,916
------------ ------------
Net increase (decrease) in equity accounts .. 12,883,044 8,133,168
Depositors' equity contribution (redemption) . (218,006) 0
EQUITY ACCOUNTS:
Beginning of period .......................... 16,068,794 7,935,626
------------ ------------
End of period ................................ $ 28,733,832 $ 16,068,794
============ ============
20
<PAGE>
<TABLE>
<CAPTION>
TACTICAL ASSET C.A.S.E.
UTILITY ALLOCATION GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31 DECEMBER 31
---------------------------- --------------------------- ------------
1996 1995 1996 1995(A) 1996(B)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................$ 822,174 $ 297,189 $ 3,678,264 $ 2,115,992 $ 200,234
Net gain (loss) on investments ............... 815,944 1,157,763 5,793,468 3,169,620 640,103
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in equity accounts
resulting from operations .................. 1,638,118 1,454,952 9,471,732 5,285,612 840,337
------------ ------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) .......... 9,551,314 5,146,911 51,801,197 70,478,164 11,839,479
------------ ------------ ------------ ------------ ------------
Less cost of units redeemed:
Administrative charges ...................... 9,288 4,161 32,299 7,030 923
Policy loans ................................ 11,838 193 23,207 8,139 10,904
Surrender benefits .......................... 811,139 210,465 7,426,292 3,423,825 150,700
Death benefits .............................. 240,558 87,803 513,632 18,074 0
------------ ------------ ------------ ------------ ------------
1,072,823 302,622 7,995,430 3,457,068 162,527
------------ ------------ ------------ ------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ................. 8,478,491 4,844,289 43,805,767 67,021,096 11,676,952
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in equity accounts .. 10,116,609 6,299,241 53,277,499 72,306,708 12,517,289
Depositors' equity contribution (redemption) . (230,353) 0 0 (7,099) 25,000
EQUITY ACCOUNTS:
Beginning of period .......................... 10,085,642 3,786,401 72,299,609 0 0
------------ ------------ ------------ ------------ ------------
End of period ................................$ 19,971,898 $ 10,085,642 $125,577,108 $ 72,299,609 $ 12,542,289
============ ============ ============ ============ ============
</TABLE>
MERIDIAN/
INVESCO
GLOBAL SECTOR VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
------------ ------------
1996(B) 1996(B)
------------ ------------
OPERATIONS:
Net investment income (loss) ................. $ 5,383 $ 19,266
Net gain (loss) on investments ............... 121,688 1,562,183
------------ ------------
Net increase (decrease) in equity accounts
resulting from operations .................. 127,071 1,581,449
------------ ------------
EQUITY TRANSACTIONS:
Proceeds from units sold (redeemed) .......... 3,409,809 22,294,351
------------ ------------
Less cost of units redeemed:
Administrative charges ...................... 91 1,969
Policy loans ................................ 0 5,853
Surrender benefits .......................... 27,423 258,657
Death benefits .............................. 0 0
------------ ------------
27,514 266,479
------------ ------------
Increase (decrease) in equity accounts from
capital unit transactions ................. 3,382,295 22,027,872
------------ ------------
Net increase (decrease) in equity accounts .. 3,509,366 23,609,321
Depositors' equity contribution (redemption) . 0 150,000
EQUITY ACCOUNTS:
Beginning of period .......................... 0 0
------------ ------------
End of period ................................ $ 3,509,366 $ 23,759,321
============ ============
(a) The inception date of this sub-account was January 3, 1995.
(b) The inception date of this sub-account was May 1, 1996.
The notes to the financial statements are an integral part of this report.
21
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
SELECTED PER UNIT DATA AND RATIOS*
For the period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET
SUB-ACCOUNT
DECEMBER 31
---------------------------------------------------------
1996 1995 1994 1993 1992(C)
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ............................... $ 10.73 $ 10.32 $ 10.11 $10.01 $10.00
Income from operations:
Net investment income (loss) .......... 0.39 0.41 0.21 0.10 0.01
Net realized and unrealized gain (loss)
on investments ...................... .00 .00 .00 .00 .00
---------- ---------- ---------- --------- ---------
Total income (loss) from
operations ...................... 0.39 0.41 0.21 0.10 0.01
---------- ---------- ---------- --------- ---------
Accumulation unit value,
end of period ........................... $ 11.12 $ 10.73 $ 10.32 $10.11 $10.01
========== ========== ========== ========= =========
Total return (a) .......................... 3.65% 3.96% 2.07% 1.01% 0.09%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ........................ $58,415 $28,524 $28,537 $8,786 $ 100
Ratio of net investment income (loss) to
average net assets (b) ................ 3.57% 3.89% 2.26% 1.03% 1.08%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
BOND
SUB-ACCOUNT
DECEMBER 31
---------------------------------------------------------
1996 1995 1994 1993 1992(C)
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period .............................. $ 12.61 $ 10.40 $ 11.33 $ 10.14 $10.00
Income from operations:
Net investment income (loss) ......... 0.56 0.64 0.52 2.69 0.64
Net realized and unrealized gain (loss)
on investments ..................... (0.71) 1.57 (1.45) (1.50) (0.50)
---------- ---------- ---------- --------- ---------
Total income (loss) from
operations ..................... (0.15) 2.21 (0.93) 1.19 0.14
---------- ---------- ---------- ---------- ---------
Accumulation unit value,
end of period .......................... $ 12.46 $ 12.61 $ 10.40 $ 11.33 $10.14
========== ========== ========== ========== =========
Total return (a) ......................... (1.25%) 21.28% (8.23%) 11.81% 1.36%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ........................ $38,055 $32,772 $17,614 $17,280 $ 101
Ratio of net investment income (loss) to
average net assets (b) ................ 4.60% 5.45% 4.91% 24.79% 6.30%
</TABLE>
<TABLE>
GROWTH
SUB-ACCOUNT
DECEMBER 31
----------------------------------------------------------
1996 1995 1994 1993 1992(C)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period .............................. $ 13.77 $ 9.49 $ 10.50 $ 10.24 $ 10.00
Income from operations:
Net investment income (loss) ......... 0.95 1.30 (0.03) 0.31 0.39
Net realized and unrealized gain (loss)
on investments ..................... 1.30 2.98 (0.98) (0.05) (0.15)
-------- -------- -------- -------- --------
Total income (loss) from
operations ..................... 2.25 4.28 (1.01) 0.26 0.24
-------- -------- -------- -------- --------
Accumulation unit value,
end of period .......................... $ 16.02 $ 13.77 $ 9.49 $ 10.50 $ 10.24
======== ======== ======== ======== ========
Total return (a) ......................... 16.32% 45.08% (9.58%) 2.55% 2.38%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ........................ $317,705 $198,139 $112,383 $ 87,415 $ 102
Ratio of net investment income (loss) to
average net assets (b) ................ 6.21% 11.07% (0.26%) 3.14% 3.82%
</TABLE>
<TABLE>
<CAPTION>
SHORT-TO-INTERMEDIATE
GOVERNMENT
SUB-ACCOUNT
DECEMBER 31
-------------------------------------------------------
1996 1995 1994 1993 1992(C)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ................................ $ 11.38 $ 10.16 $ 10.35 $ 10.03 $ 10.00
Income from operations:
Net investment income (loss) ........... 0.45 0.48 0.37 0.30 0.01
Net realized and unrealized gain (loss)
on investments ....................... (0.22) 0.74 (0.56) 0.02 0.02
-------- -------- -------- -------- --------
Total income (loss) from
operations ....................... 0.23 1.22 (0.19) 0.32 0.03
-------- -------- -------- -------- --------
Accumulation unit value,
end of period ............................ $ 11.61 $ 11.38 $ 10.16 $ 10.35 $ $10.03
======== ======== ======== ======== ========
Total return (a) ........................... 2.04% 11.96% (1.81%) 3.12% 0.35%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ......................... $15,680 $12,986 $11,649 $13,564 $ 853
Ratio of net investment income (loss) to
average net assets (b) ................. 3.93% 4.39% 3.68% 2.98% 1.56%
</TABLE>
<TABLE>
<CAPTION>
GLOBAL
SUB-ACCOUNT
DECEMBER 31
----------------------------------------------------------
1996 1995 1994 1993 1992(C)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period .............................. $ 16.22 $ 13.36 $ 13.52 $ 10.15 $ 10.00
Income from operations:
Net investment income (loss) ......... 1.79 0.43 0.53 0.11 (0.01)
Net realized and unrealized gain (loss)
on investments ..................... 2.42 2.43 (0.69) 3.26 0.16
-------- -------- -------- -------- --------
Total income (loss) from
operations ..................... 4.21 2.86 (0.16) 3.37 0.15
-------- -------- -------- -------- --------
Accumulation unit value,
end of period .......................... $ 20.43 $ 16.22 $ 13.36 $ 13.52 $ 10.15
======== ======== ========= ======== ========
Total return (a) ......................... 25.96% 21.35% (1.14%) 33.17% 1.51%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ........................ $227,955 $111,958 $95,829 $29,905 $ 254
Ratio of net investment income (loss) to
average net assets (b) ................ 9.45% 2.96% 3.95% 0.99% (1.32%)
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
EQUITY-INCOME
SUB-ACCOUNT
DECEMBER 31
---------------------------------------------
1996 1995 1994 1993(D)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Accumulation unit value, beginning
of period .............................. $ 13.56 $ 11.03 $ 11.24 $ 10.00
Income from operations:
Net investment income (loss) ........... 0.94 0.59 0.16 0.20
Net realized and unrealized gain (loss)
on investments ....................... 0.87 1.94 (0.37) 1.04
-------- -------- -------- --------
Total income (loss) from
operations ....................... 1.81 2.53 (0.21) 1.24
-------- -------- -------- --------
Accumulation unit value,
end of period .......................... $ 15.37 $ 13.56 $ 11.03 $ 11.24
======== ======== ======== ========
Total return (a) ......................... 13.40% 22.93% (1.92%) 12.43%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ....................... $196,305 $101,651 $71,733 $28,312
Ratio of net investment income (loss) to
average net assets (b) ............... 6.55% 4.76% 1.49% 2.24%
<FN>
- ---------------
* The above table illustrates the change for a unit outstanding computed
using average units outstanding throughout each period. See Notes to
Selected Per Unit Data and Ratios on page 24.
</FN>
</TABLE>
The notes to the financial statements are an integral part of this report.
22
<PAGE>
<TABLE>
<CAPTION>
EMERGING GROWTH AGGRESSIVE GROWTH
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
------------------------------------------------ -----------------------------------
1996 1995 1994 1993(D) 1996 1995 1994(E)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ............................ $ 16.34 $ 11.29 $ 12.35 $ 10.00 $ 13.31 $ 9.78 $ 10.00
Income from operations:
Net investment income (loss) ....... 0.73 0.54 (0.15) (0.14) 0.31 0.40 (0.10)
Net realized and unrealized gain
(loss)on investments ............. 2.08 4.51 (0.91) 2.49 0.88 3.13 (0.12)
-------- -------- -------- -------- -------- -------- --------
Total income (loss) from
operations ................... 2.81 5.05 (1.06) 2.35 1.19 3.53 (0.22)
-------- -------- -------- -------- -------- -------- --------
Accumulation unit value,
end of period ........................ $ 19.15 $ 16.34 $ 11.29 $ 12.35 $ 14.50 $ 13.31 $ 9.78
======== ======== ======== ========= ========= ========= ========
Total return (a) ....................... 17.23% 44.75% (8.65%) 23.54% 8.91% 36.10% (2.18%)
Ratios and supplemental data:
Net assets at end of period
(in thousands) ..................... $179,589 $105,115 $62,615 $25,444 $100,832 $60,420 $11,403
Ratio of net investment income (loss)
to average net assets (b) ......... 3.96% 3.85% (1.33%) (1.44%) 2.22% 3.04% (1.19%)
</TABLE>
BALANCED
SUB-ACCOUNT
DECEMBER 31
----------------------------------
1996 1995 1994(E)
-------- ------- --------
Accumulation unit value, beginning
of period .............................. $ 11.03 $ 9.34 $ 10.00
Income from operations:
Net investment income (loss) ........ 0.30 0.32 0.27
Net realized and unrealized gain
(loss) on investments ............. 0.72 1.37 (0.93)
-------- ------- --------
Total income (loss) from
operations ..................... 1.02 1.69 (0.66)
-------- ------- --------
Accumulation unit value,
end of period .......................... $ 12.05 $ 11.03 $ 9.34
======== ======== ========
Total return (a) ......................... 9.18% 18.13% (6.61%)
======== ======== ========
Ratios and supplemental data:
Net assets at end of period
(in thousands) ........................ $ 28,734 $ 16,069 $ 7,936
Ratio of net investment income (loss)
to average net assets (b) ............ 2.69% 3.16% 3.48%
23
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
SELECTED PER UNIT DATA AND RATIOS*
For the period ended
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TACTICAL ASSET
UTILITY ALLOCATION
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31
------------------------------- ---------------------
1996 1995 1994(E) 1996 1995(F)
------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Accumulation unit value, beginning
of period ........................... $ 11.68 $ 9.45 $ 10.00 $ 11.84 $ 10.00
Income from operations:
Net investment income (loss) ....... 0.68 0.47 0.33 0.47 0.82
Net realized and unrealized gain
(loss) on investments ............. 0.49 1.76 (0.88) 1.05 1.02
------- ------- ------- -------- -------
Total income (loss) from
operations ...................... 1.17 2.23 (0.55) 1.52 1.84
------- ------- ------- -------- -------
Accumulation unit value,
end of period ....................... $ 12.85 $ 11.68 $ 9.45 $ 13.36 $ 11.84
======= ======= ======= ======== =======
Total return (a) ...................... 10.08% 23.52% (5.47%) 12.83% 18.43%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ..................... $19,972 $10,086 $ 3,786 $125,577 $72,300
Ratio of net investment income (loss)
to average net assets (b) .......... 5.68% 4.50% 4.18% 3.72% 7.29%
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
MERIDIAN/
C.A.S.E. INVESCO
GROWTH GLOBAL VALUE EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31 DECEMBER 31 DECEMBER 31
----------- ----------- ------------
1996(G) 1996(G) 1996(G)
----------- ----------- ------------
<S> <C> <C> <C>
Accumulation unit value, beginning
of period ............................ $ 10.00 $ 10.00 $ 10.00
Income from operations:
Net investment income (loss) ...... 0.36 0.04 0.02
Net realized and unrealized gain
(loss) on investments ............ 0.41 0.47 1.19
------- ------- -------
Total income (loss) from
operations .................... 0.77 0.51 1.21
------- ------- -------
Accumulation unit value,
end of period ........................ $ 10.77 $ 10.51 $ 11.21
======= ======= =======
Total return (a) ....................... 7.73% 5.09% 12.13%
Ratios and supplemental data:
Net assets at end of period
(in thousands) ..................... $12,542 $ 3,509 $23,759
Ratio of net investment income (loss)
to average net assets (b) .......... 5.46% 0.59% 0.33%
<FN>
- -----------------
* The above table illustrates the change for a unit outstanding computed
using average units outstanding throughout each period. See Notes to
Selected Per Unit Data and Ratios below.
</FN>
</TABLE>
NOTES TO SELECTED PER UNIT DATA AND RATIOS
(a) For periods less than one year the total return is not annualized.
(b) For periods less than one year the ratio of net investment income to
average net assets is annualized.
(c) The inception date of this sub-account was December 3, 1992.
(d) The inception date of this sub-account was March 1, 1993.
(e) The inception date of this sub-account was March 1, 1994.
(f) The inception date of this sub-account was January 3, 1995.
(g) The inception date of this sub-account was May 1, 1996.
The notes to the financial statements are an integral part of this report.
24
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 1996
NOTE 1--ORGANIZATION AND SUMMARY
OF SIGNIFICANT ACCOUNTING
POLICIES
The WRL Series Annuity Account (the "Annuity Account") was established as a
variable accumulation deferred annuity 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 Annuity
Account encompasses various contract types: the WRL Freedom Variable Annuity and
the WRL Freedom Attainer ("Annuity #1"); the WRL Freedom Bellwether and the WRL
Freedom Conqueror ("Annuity #2"). Each contains fourteen investment options
referred to as sub-accounts. Each sub-account invests in the corresponding
portfolio of the WRL Series Fund, Inc. (the "Fund"), a registered management
investment company under the Investment Company Act of 1040, as amended. These
portfolios and their respective investmen management organizations are as
follows:
PORTFOLIO INVESTMENT MANAGER
- --------------------- -------------------------------
Money Market J.P. Morgan Investment
Management Inc.
Bond Janus Capital Corporation
("JCC")
Growth JCC
Short-to-Intermediate AEGON USA Investment
Government Management, Inc.
("AEGON
Management")
Global JCC
Equity-Income Luther King Capital
Management
Corporation
Emerging Growth Van Kampen American
Capital Asset
Management, Inc.
Aggressive Growth Fred Alger Management, Inc.
Balanced AEGON Management
Utility Federated Investment Counseling
Tactical Asset Allocation Dean Investment Associates
C.A.S.E. Growth C.A.S.E. Management, Inc.
Meridian/INVESCO Global Meridian Investment
Sector Management
Corporation/INVESCO
Global Asset
Management Limited
Value Equity NWQ Investment
Management
Company, Inc.
WRL and AEGON Management are indirect wholly-owned subsidiaries of AEGON USA,
Inc., which is an indirect wholly-owned subsidiary of AEGON nv, a Netherlands
Corporation.
On May 1, 1996, WRL made an initial contribution of $175,000 to the Annuity
Account. The amount of the contribution and the units received are as follows:
SUB-ACCOUNT CONTRIBUTION UNITS
- ---------------- --------------- ---------------
C.A.S.E. Growth $ 25,000 2,500.000000
Value Equity $ 150,000 15,000.000000
The Annuity #2 sub-accounts were established on December 3, 1992 to hold
assets that support the benefits under certain flexible payment variable
accumulation deferred annuity contracts (the "Contracts") issued by WRL. The
Annuity Account equity transactions are accounted for using the appropriate
effective date at the corresponding accumulation unit value.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The following significant accounting policies, which are in conformity with
generally accepted accounting principles for unit investment trusts, have been
consistently used in preparation of the Trust's financial statements.
A. VALUATION OF INVESTMENTS
The investments in the Fund's shares are stated at the closing net asset
value ("NAV") per share as
25
<PAGE>
WRL SERIES ANNUITY ACCOUNT
BELLWETHER AND CONQUEROR
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 (CONTINUED)
determined by the Fund on December 31, 1996. Investment transactions are
accounted for on the trade date, using the Fund NAV next determined after
receipt of sale or redemption order without sales charges. Dividend income
and capital gain distributions are recorded on the ex-dividend date. The cost
of investments sold is determined on a first-in, first-out basis.
B. FEDERAL INCOME TAXES
The operations of the Annuity Account are a part of and are taxed with the
total operations of WRL, which is taxed as a life insurance company under
the Internal Revenue Code. Under current law, the investment income of the
Annuity 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 issuance and administration of
the Contracts.
A. CONTRACT CHARGES
No deduction for sales expenses are made from the purchase payments. A
contingent deferred sales charge may, however, be assessed against contract
values when withdrawn or surrendered.
On each anniversary through maturity date, WRL will deduct an annual contract
charge as partial compensation for providing administrative services under
the Contracts.
B. ANNUITY #2 SUB-ACCOUNTS CHARGES
A daily charge equal to an annual rate of 1.40% 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 Contracts. This charge (not assessed at the individual contract level)
effectively reduces the value of a unit outstanding during the year.
NOTE 3--DIVIDENDS AND DISTRIBUTIONS
Dividends of the Fund's Money Market Portfolio are declared daily and
reinvested monthly. Dividends of the remaining portfolios are typically declared
and reinvested semiannually, while capital gain distributions are typically
declared and reinvested annually. Dividends and distributions of the Fund are
generally paid to and reinvested by the Annuity Account the next business day
after declaration.
NOTE 4--OTHER MATTERS
As of December 31, 1996 the equity accounts include net unrealized
appreciation (depreciation) on investments as follows:
SUB-ACCOUNT
- ------------
Money Market $ N/A
Bond (191,937)
Growth 44,870,821
Short-to-Intermediate Government (105,462)
Global 25,826,177
Equity-Income 17,792,022
Emerging Growth 27,847,684
Aggressive Growth 3,875,126
Balanced 2,765,627
Utility 1,295,261
Tactical Asset Allocation 4,930,303
C.A.S.E. Growth 630,269
Meridian/INVESCO Global Sector 121,838
Value Equity 1,532,419
26
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
27
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
28
<PAGE>
- --------------------------------------------------------------------------------
W R L S E R I E S A N N U I T Y A C C O U N T
- --------------------------------------------------------------------------------
OFFICE OF THE
WRL SERIES ANNUITY ACCOUNT
201 Highland Avenue
Largo, FL 33770-2597
1-800-851-9777
- --------------------------------------------------------------------------------
DISTRIBUTOR:
InterSecurities, Inc.
201 Highland Avenue
Largo, FL 33770-2597
- --------------------------------------------------------------------------------
INSURER:
Western Reserve Life Assurance Co. of Ohio
201 Highland Avenue
Largo, FL 33770-2597
- --------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS:
Price Waterhouse LLP
1055 Broadway
Kansas City, MO 64105
<PAGE>
THIS MATERIAL IS FOR CONTRACT HOLDERS
REPORTING PURPOSES ONLY AND SHALL NOT BE
USED IN CONNECTION WITH A SOLICITATION,
OFFER OR ANY PROPOSED SALE OR PURCHASE
OF SECURITIES. THIS MATERIAL MUST BE
PRECEDED OR ACCOMPANIED BY A PROSPECTUS
A HISTORY OF PERFORMANCE/Registered Trademark/
[LOGO]
---------------------------------------------------
Western Reserve Life Assurance Co. of Ohio
Distributor InterSecurities, Inc.
201 Highland Avenue/bullet/Largo, Florida 3370-2597
February 1997
ACC00002 (2/97)
