TABLE OF CONTENTS
Page
WRL SERIES ANNUITY ACCOUNT
Report of Independent Accountants .............................. 1
Statement of Assets and Liabilities ............................ 3
Statement of Operations ........................................ 9
Statement of Changes in Net Assets ............................. 12
Financial Highlights ........................................... 18
Notes to the Financial Statements .............................. 30
<PAGE>
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
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
each of the Sub-Accounts constituting the WRL Freedom Variable Annuity, WRL
Freedom Attainer, WRL Freedom Bellwether, WRL Freedom Conqueror and WRL Freedom
Wealth Creator 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, 1998, the results of each of their
operations, the changes in each of their net assets and the financial highlights
for each of the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
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.
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 29, 1999
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
MONEY
MARKET BOND GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- -------------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ...................................... 143,019 12,371 27,417
========== ========== ==========
Cost ........................................ $ 143,019 $ 141,968 $ 936,730
========== ========== ==========
Investment, at net asset value ..................... $ 143,019 $ 143,431 $1,643,367
Transfers receivable from depositor ................ 0 0 0
---------- ---------- ----------
Total assets ................................. 143,019 143,431 1,643,367
---------- ---------- ----------
LIABILITIES:
Accrued expenses ................................... 0 0 0
Transfers payable to depositor ..................... 240 754 117
---------- ---------- ----------
Total liabilities ............................ 240 754 117
---------- ---------- ----------
Net assets ................................... $ 142,779 $ 142,677 $1,643,250
========== ========== ==========
NET ASSETS CONSISTS OF:
Contract Owners' equity:
Class A ....................................... $ 48,797 $ 50,893 $ 817,014
Class B ....................................... 93,982 91,784 826,236
Depositor's equity:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
---------- ---------- ----------
Net assets applicable to units outstanding $ 142,779 $ 142,677 $1,643,250
========== ========== ==========
Contract Owners' units:
Class A ....................................... 3,396 2,415 13,063
Class B ....................................... 7,839 6,351 27,435
Depositor's units:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
---------- ---------- ----------
Units outstanding ........................ 11,235 8,766 40,498
========== ========== ==========
Accumulation unit value - Class A ............. $ 14.37 $ 21.08 $ 62.54
========== ========== ==========
Accumulation unit value - Class B ............. $ 11.99 $ 14.45 $ 30.12
========== ========== ==========
</TABLE>
The notes to the financial statements are an integral part of this report.
3
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
STRATEGIC EMERGING
GLOBAL TOTAL RETURN GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ...................................... 34,670 29,841 21,627
======== ======== ========
Cost ........................................ $649,971 $409,291 $410,871
======== ======== ========
Investment, at net asset value ..................... $821,980 $489,540 $582,292
Transfers receivable from depositor ................ 890 0 967
-------- -------- --------
Total assets ................................. 822,870 489,540 583,259
-------- -------- --------
LIABILITIES:
Accrued expenses ................................... 0 0 0
Transfers payable to depositor ..................... 0 29 0
-------- -------- --------
Total liabilities ............................ 0 29 0
-------- -------- --------
Net assets ................................... $822,870 $489,511 $583,259
======== ======== ========
NET ASSETS CONSISTS OF:
Contract Owners' equity:
Class A ....................................... $298,285 $160,783 $201,838
Class B ....................................... 524,585 328,728 381,421
Depositor's equity:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
-------- -------- --------
Net assets applicable to units outstanding $822,870 $489,511 $583,259
======== ======== ========
Contract Owners' units:
Class A ....................................... 9,640 7,983 6,443
Class B ....................................... 17,105 16,462 12,279
Depositor's units:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
-------- -------- --------
Units outstanding ........................ 26,745 24,445 18,722
======== ======== ========
Accumulation unit value - Class A ............. $ 30.94 $ 20.14 $ 31.33
======== ======== ========
Accumulation unit value - Class B ............. $ 30.67 $ 19.97 $ 31.06
======== ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
4
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
AGGRESSIVE GROWTH &
GROWTH BALANCED INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ...................................... 17,282 6,282 5,661
======== ======== ========
Cost ........................................ $281,400 $ 73,205 $ 70,109
======== ======== ========
Investment, at net asset value ..................... $387,788 $ 78,793 $ 69,506
Transfers receivable from depositor ................ 461 0 0
-------- -------- --------
Total assets ................................. 388,249 78,793 69,506
-------- -------- --------
LIABILITIES:
Accrued expenses ................................... 0 0 0
Transfers payable to depositor ..................... 0 45 856
-------- -------- --------
Total liabilities ............................ 0 45 856
-------- -------- --------
Net assets ................................... $388,249 $ 78,748 $ 68,650
======== ======== ========
NET ASSETS CONSISTS OF:
Contract Owners' equity:
Class A ....................................... $106,742 $ 19,730 $ 16,502
Class B ....................................... 281,507 59,018 52,148
Depositor's equity:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
-------- -------- --------
Net assets applicable to units outstanding $388,249 $ 78,748 $ 68,650
======== ======== ========
Contract Owners' units:
Class A ....................................... 4,069 1,336 1,021
Class B ....................................... 10,807 4,024 3,248
Depositor's units:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
-------- -------- --------
Units outstanding ........................ 14,876 5,360 4,269
======== ======== ========
Accumulation unit value - Class A ............. $ 26.23 $ 14.77 $ 16.17
======== ======== ========
Accumulation unit value - Class B ............. $ 26.05 $ 14.67 $ 16.06
======== ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
5
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
TACTICAL ASSET C.A.S.E.
ALLOCATION GROWTH GLOBAL SECTOR
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ...................................... 24,217 3,976 1,045
======== ======== ========
Cost ........................................ $314,319 $ 56,032 $ 11,468
======== ======== ========
Investment, at net asset value ..................... $323,329 $ 51,653 $ 11,552
Transfers receivable from depositor ................ 0 88 12
-------- -------- --------
Total assets ................................. 323,329 51,741 11,564
-------- -------- --------
LIABILITIES:
Accrued expenses ................................... 0 0 0
Transfers payable to depositor ..................... 5 0 0
-------- -------- --------
Total liabilities ............................ 5 0 0
-------- -------- --------
Net assets ................................... $323,324 $ 51,741 $ 11,564
======== ======== ========
NET ASSETS CONSISTS OF:
Contract Owners' equity:
Class A ....................................... $ 85,428 $ 14,161 $ 1,433
Class B ....................................... 237,896 37,580 10,131
Depositor's equity:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
-------- -------- --------
Net assets applicable to units outstanding $323,324 $ 51,741 $ 11,564
======== ======== ========
Contract Owners' units:
Class A ....................................... 5,174 887 123
Class B ....................................... 14,496 3,043 873
Depositor's units:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
-------- -------- --------
Units outstanding ........................ 19,670 3,930 996
======== ======== ========
Accumulation unit value - Class A ............. $ 16.51 $ 15.96 $ 11.66
======== ======== ========
Accumulation unit value - Class B ............. $ 16.41 $ 12.35 $ 11.61
======== ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
6
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
INTERNATIONAL U.S.
VALUE EQUITY EQUITY EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ...................................... 10,818 2,176 6,700
======== ======== ========
Cost ........................................ $143,906 $ 25,592 $ 88,930
======== ======== ========
Investment, at net asset value ..................... $131,063 $ 26,267 $ 96,618
Transfers receivable from depositor ................ 0 0 257
-------- -------- --------
Total assets ................................. 131,063 26,267 96,875
-------- -------- --------
LIABILITIES:
Accrued expenses ................................... 0 0 0
Transfers payable to depositor ..................... 206 108 0
-------- -------- --------
Total liabilities ............................ 206 108 0
-------- -------- --------
Net assets ................................... $130,857 $ 26,159 $ 96,875
======== ======== ========
NET ASSETS CONSISTS OF:
Contract Owners' equity:
Class A ....................................... $ 38,640 $ 6,783 $ 23,419
Class B ....................................... 92,217 19,376 73,456
Depositor's equity:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
-------- -------- --------
Net assets applicable to units outstanding $130,857 $ 26,159 $ 96,875
======== ======== ========
Contract Owners' units:
Class A ....................................... 2,964 573 1,538
Class B ....................................... 7,103 1,642 4,840
Depositor's units:
Class A ....................................... 0 0 0
Class B ....................................... 0 0 0
-------- -------- --------
Units outstanding ........................ 10,067 2,215 6,378
======== ======== ========
Accumulation unit value - Class A ............. $ 13.04 $ 11.83 $ 15.22
======== ======== ========
Accumulation unit value - Class B ............. $ 12.98 $ 11.80 $ 15.18
======== ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
7
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
THIRD AVENUE REAL ESTATE
VALUE SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ -----------
<S> <C> <C>
ASSETS:
Investment in WRL Series Fund, Inc.:
Shares ...................................... 1,651 201
======= =======
Cost ........................................ $15,959 $ 1,774
======= =======
Investment, at net asset value ..................... $15,335 $ 1,706
Transfers receivable from depositor ................ 5 189
------- -------
Total assets ................................. 15,340 1,895
------- -------
LIABILITIES:
Accrued expenses ................................... 0 0
Transfers payable to depositor ..................... 0 0
------- -------
Total liabilities ............................ 0 0
------- -------
Net assets ................................... $15,340 $ 1,895
======= =======
NET ASSETS CONSISTS OF:
Contract Owners' equity:
Class A ....................................... $ 5,783 $ 318
Class B ....................................... 9,281 1,071
Depositor's equity:
Class A ....................................... 138 253
Class B ....................................... 138 253
------- -------
Net assets applicable to units outstanding $15,340 $ 1,895
======= =======
Contract Owners' units:
Class A ....................................... 629 38
Class B ....................................... 1,010 127
Depositor's units:
Class A ....................................... 15 30
Class B ....................................... 15 30
------- -------
Units outstanding ........................ 1,669 225
======= =======
Accumulation unit value - Class A ............. $ 9.20 $ 8.44
======= =======
Accumulation unit value - Class B ............. $ 9.19 $ 8.43
======= =======
</TABLE>
The notes to the financial statements are an integral part of this report.
8
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF OPERATIONS
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY
MARKET BOND GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ......................................................... $ 7,098 $ 6,877 $ 2,436
Capital gain distributions .............................................. 0 0 10,814
--------- --------- ---------
Total investment income ...................................... 7,098 6,877 13,250
--------- --------- ---------
EXPENSES:
Mortality and expense risk:
Class A ............................................................ 652 587 8,232
Class B ............................................................ 1,204 1,077 8,089
--------- --------- ---------
Total expenses ................................................ 1,856 1,664 16,321
--------- --------- ---------
Net investment income (loss) ............................................. 5,242 5,213 (3,071)
--------- --------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions ................... 0 2,980 84,538
Change in unrealized appreciation (depreciation) ........................ 0 772 534,463
--------- --------- ---------
Net gain (loss) on investment securities ................................ 0 3,752 619,001
--------- --------- ---------
Net increase (decrease) in net assets resulting from operations $ 5,242 $ 8,965 $ 615,930
========= ========= =========
<CAPTION>
STRATEGIC EMERGING
GLOBAL TOTAL RETURN GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ......................................................... $ 4,368 $ 11,176 $ 0
Capital gain distributions .............................................. 28,573 9,413 19,371
-------- -------- --------
Total investment income ...................................... 32,941 20,589 19,371
-------- -------- --------
EXPENSES:
Mortality and expense risk:
Class A ............................................................ 3,594 2,046 2,147
Class B ............................................................ 6,370 4,258 4,191
-------- -------- --------
Total expenses ................................................ 9,964 6,304 6,338
-------- -------- --------
Net investment income (loss) ............................................. 22,977 14,285 13,033
-------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions ................... 41,579 12,532 34,463
Change in unrealized appreciation (depreciation) ........................ 112,012 9,475 100,637
-------- -------- --------
Net gain (loss) on investment securities ................................ 153,591 22,007 135,100
-------- -------- --------
Net increase (decrease) in net assets resulting from operations $176,568 $ 36,292 $148,133
======== ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
9
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF OPERATIONS
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AGGRESSIVE GROWTH &
GROWTH BALANCED INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ......................................................... $ 810 $ 1,738 $ 2,946
Capital gain distributions .............................................. 19,054 76 518
-------- -------- --------
Total investment income ...................................... 19,864 1,814 3,464
-------- -------- --------
EXPENSES:
Mortality and expense risk:
Class A ............................................................ 1,054 236 204
Class B ............................................................ 2,857 730 643
-------- -------- --------
Total expenses ................................................ 3,911 966 847
-------- -------- --------
Net investment income (loss) ............................................. 15,953 848 2,617
-------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions ................... 11,096 2,432 1,695
Change in unrealized appreciation (depreciation) ........................ 87,922 550 (3,096)
-------- -------- --------
Net gain (loss) on investment securities ................................ 99,018 2,982 (1,401)
-------- -------- --------
Net increase (decrease) in net assets resulting from operations $114,971 $ 3,830 $ 1,216
======== ======== ========
<CAPTION>
TACTICAL ASSET C.A.S.E.
ALLOCATION GROWTH GLOBAL SECTOR
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ......................................................... $ 9,083 $ 4,661 $ 202
Capital gain distributions .............................................. 21,777 321 138
-------- -------- --------
Total investment income ...................................... 30,860 4,982 340
-------- -------- --------
EXPENSES:
Mortality and expense risk:
Class A ............................................................ 1,035 187 26
Class B ............................................................ 3,064 492 143
Total expenses ................................................ 4,099 679 169
-------- -------- --------
Net investment income (loss) ............................................. 26,761 4,303 171
-------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions ................... 4,988 (437) 208
Change in unrealized appreciation (depreciation) ........................ (12,543) (3,543) 557
-------- -------- --------
Net gain (loss) on investment securities ................................ (7,555) (3,980) 765
-------- -------- --------
Net increase (decrease) in net assets resulting from operations $ 19,206 $ 323 $ 936
======== ======== ========
</TABLE>
The notes to the financial statements are an integral part of this report.
10
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF OPERATIONS
AT DECEMBER 31, 1998
ALL AMOUNTS (EXCEPT UNIT VALUES) IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL
VALUE EQUITY EQUITY U.S. EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend income ......................................................... $ 2,672 $ 20 $ 2,868
Capital gain distributions .............................................. 9,420 0 664
-------- -------- --------
Total investment income ...................................... 12,092 20 3,532
-------- -------- --------
EXPENSES:
Mortality and expense risk:
Class A ............................................................ 604 88 209
Class B ............................................................ 1,461 231 625
-------- -------- --------
Total expenses ................................................ 2,065 319 834
-------- -------- --------
Net investment income (loss) ............................................. 10,027 (299) 2,698
-------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions ................... 7,300 892 3,078
Change in unrealized appreciation (depreciation) ........................ (29,640) 1,160 7,647
-------- -------- --------
Net gain (loss) on investment securities ................................ (22,340) 2,052 10,725
-------- -------- --------
Net increase (decrease) in net assets resulting from operations $(12,313) $ 1,753 $ 13,423
======== ======== ========
<CAPTION>
THIRD AVENUE REAL ESTATE
VALUE SECURITIES
SUB-ACCOUNT (a) SUB-ACCOUNT (b)
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income ......................................................... $ 42 $ 0
Capital gain distributions .............................................. 0 0
------- -------
Total investment income ...................................... 42 0
------- -------
EXPENSES:
Mortality and expense risk:
Class A ............................................................ 58 3
Class B ............................................................ 102 7
------- -------
Total expenses ................................................ 160 10
------- -------
Net investment income (loss) ............................................. (118) (10)
------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) from securities transactions ................... (367) (97)
Change in unrealized appreciation (depreciation) ........................ (624) (68)
------- -------
Net gain (loss) on investment securities ................................ (991) (165)
------- -------
Net increase (decrease) in net assets resulting from operations $(1,109) $ (175)
======= =======
</TABLE>
(a) The inception date of this Sub-Account was January 2, 1998.
(b) The inception date of this Sub-Account was May 1, 1998.
The notes to the financial statements are an integral part of this report.
11
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET BOND GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------ ------------------------ -------------------------
1998 1997 1998 1997 1998 1997
----------- ---------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................ $ 5,242 $ 4,323 $ 5,213 $ 3,787 $ (3,071) $ 95,008
Net gain (loss) on investment securities .... 0 0 3,752 2,297 619,001 44,193
----------- ---------- ----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations .............. 5,242 4,323 8,965 6,084 615,930 139,201
----------- ---------- ----------- ---------- ----------- -----------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ...... 89,466 24,672 39,699 34,812 176,685 100,049
----------- ---------- ----------- ---------- ----------- -----------
Less cost of units redeemed:
Administrative charges ................. 67 56 74 60 924 824
Policy loans ........................... 10 44 9 29 276 291
Surrender benefits ..................... 51,046 35,358 15,360 12,801 145,324 122,338
Death benefits ......................... 2,489 1,410 1,002 1,119 6,422 6,036
----------- ---------- ----------- ---------- ----------- -----------
53,612 36,868 16,445 14,009 152,946 129,489
----------- ---------- ----------- ---------- ----------- -----------
Increase (decrease) in net assets
from capital unit transactions .... 35,854 (12,196) 23,254 20,803 23,739 (29,440)
----------- ---------- ----------- ---------- ----------- -----------
Net increase (decrease) in net assets .. 41,096 (7,873) 32,219 26,887 639,669 109,761
Depositor's equity contribution (redemption) 0 0 0 0 0 0
NET ASSETS:
Beginning of year ........................... 101,683 109,556 110,458 83,571 1,003,581 893,820
----------- ---------- ----------- ---------- ----------- -----------
End of year ................................. $ 142,779 $ 101,683 $ 142,677 $ 110,458 $ 1,643,250 $ 1,003,581
=========== ========== =========== ========== =========== ===========
UNIT ACTIVITY:
Class A:
Units outstanding - beginning of year .... 2,861 3,849 2,360 2,513 14,842 17,370
Units issued ............................. 12,716 11,575 1,411 863 2,325 2,279
Units redeemed ........................... (12,181) (12,563) (1,356) (1,016) (4,104) (4,807)
----------- ---------- ----------- ---------- ----------- -----------
Units outstanding - end of year ....... 3,396 2,861 2,415 2,360 13,063 14,842
=========== ========== =========== ========== =========== ===========
Class B:
Units outstanding - beginning of year .... 5,383 5,254 4,801 3,055 23,273 19,833
Units issued ............................. 42,233 26,457 5,846 3,754 14,632 9,817
Units redeemed ........................... (39,777) (26,328) (4,296) (2,008) (10,470) (6,377)
----------- ---------- ----------- ---------- ----------- -----------
Units outstanding - end of year ....... 7,839 5,383 6,351 4,801 27,435 23,273
=========== ========== =========== ========== =========== ===========
CAPITAL UNIT TRANSACTIONS BY CLASS:
Class A
Proceeds from units issued ............. $ 179,547 $ 156,967 $ 29,044 $ 16,414 $ 115,049 $ 83,258
Cost of units redeemed ................. (172,316) (170,491) (27,598) (18,763) (196,117) (173,750)
----------- ---------- ----------- ---------- ----------- -----------
Increase (decrease) in net assets
from capital unit transactions $ 7,231 $ (13,524) $ 1,446 $ (2,349) $ (81,068) $ (90,492)
=========== ========== =========== ========== =========== ===========
Class B
Proceeds from units issued ............. $ 498,610 $ 300,223 $ 82,089 $ 49,003 $ 349,932 $ 172,646
Cost of units redeemed ................. (469,987) (298,895) (60,281) (25,851) (245,125) (111,594)
----------- ---------- ----------- ---------- ----------- -----------
Increase (decrease) in net assets
from capital unit transactions $ 28,623 $ 1,328 $ 21,808 $ 23,152 $ 104,807 $ 61,052
=========== ========== =========== ========== =========== ===========
</TABLE>
The notes to the financial statements are an integral part of this report.
12
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
STRATEGIC
GLOBAL TOTAL RETURN EMERGING GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
---------------------- ---------------------- ----------------------
1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................ $ 22,977 $ 67,753 $ 14,285 $ 31,906 $ 13,033 $ 34,075
Net gain (loss) on investment securities .... 153,591 16,167 22,007 39,238 135,100 32,074
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations .............. 176,568 83,920 36,292 71,144 148,133 66,149
--------- --------- --------- --------- --------- ---------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ...... 84,146 153,435 53,733 73,224 52,394 65,278
--------- --------- --------- --------- --------- ---------
Less cost of units redeemed:
Administrative charges ................. 531 415 257 230 370 305
Policy loans ........................... 169 179 75 78 81 148
Surrender benefits ..................... 67,089 50,878 41,421 31,156 39,571 28,049
Death benefits ......................... 2,884 2,194 2,375 2,384 1,824 1,218
--------- --------- --------- --------- --------- ---------
70,673 53,666 44,128 33,848 41,846 29,720
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions .... 13,473 99,769 9,605 39,376 10,548 35,558
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets .. 190,041 183,689 45,897 110,520 158,681 101,707
Depositor's equity contribution (redemption) 0 0 0 0 0 0
NET ASSETS:
Beginning of year ........................... 632,829 449,140 443,614 333,094 424,578 322,871
--------- --------- --------- --------- --------- ---------
End of year ................................. $ 822,870 $ 632,829 $ 489,511 $ 443,614 $ 583,259 $ 424,578
========= ========= ========= ========= ========= =========
UNIT ACTIVITY:
Class A:
Units outstanding - beginning of year .... 10,843 10,764 8,831 8,850 7,180 7,440
Units issued ............................. 2,177 3,749 1,416 2,112 1,612 2,547
Units redeemed ........................... (3,380) (3,670) (2,264) (2,131) (2,349) (2,807)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of year ....... 9,640 10,843 7,983 8,831 6,443 7,180
========= ========= ========= ========= ========= =========
Class B:
Units outstanding - beginning of year .... 15,530 11,159 15,125 12,771 11,279 9,377
Units issued ............................. 8,478 9,373 5,389 5,551 6,337 6,544
Units redeemed ........................... (6,903) (5,002) (4,052) (3,197) (5,337) (4,642)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of year ....... 17,105 15,530 16,462 15,125 12,279 11,279
========= ========= ========= ========= ========= =========
CAPITAL UNIT TRANSACTIONS BY CLASS:
Class A
Proceeds from units issued ............. $ 60,997 $ 85,424 $ 27,037 $ 36,001 $ 41,764 $ 53,282
Cost of units redeemed ................. (93,858) (85,013) (43,014) (36,499) (59,104) (58,078)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions $ (32,861) $ 411 $ (15,977) $ (498) $ (17,340) $ (4,796)
========= ========= ========= ========= ========= =========
Class B
Proceeds from units issued ............. $ 236,884 $ 215,509 $ 101,973 $ 94,632 $ 162,954 $ 137,690
Cost of units redeemed ................. (190,550) (116,151) (76,391) (54,758) (135,066) (97,336)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions $ 46,334 $ 99,358 $ 25,582 $ 39,874 $ 27,888 $ 40,354
========= ========= ========= ========= ========= =========
</TABLE>
The notes to the financial statements are an integral part of this report.
13
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AGGRESSIVE GROWTH BALANCED GROWTH & INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
---------------------- ---------------------- ----------------------
1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................ $ 15,953 $ 18,672 $ 848 $ 5,486 $ 2,617 $ 6,496
Net gain (loss) on investment securities .... 99,018 19,487 2,982 1,940 (1,401) 1,829
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations .............. 114,971 38,159 3,830 7,426 1,216 8,325
--------- --------- --------- --------- --------- ---------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ...... 61,019 51,596 21,611 16,015 22,549 13,870
--------- --------- --------- --------- --------- ---------
Less cost of units redeemed:
Administrative charges ................. 253 189 47 35 37 26
Policy loans ........................... 191 69 34 5 15 14
Surrender benefits ..................... 23,320 16,218 7,504 3,892 5,368 3,255
Death benefits ......................... 922 1,009 334 615 342 622
--------- --------- --------- --------- --------- ---------
24,686 17,485 7,919 4,547 5,762 3,917
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions .... 36,333 34,111 13,692 11,468 16,787 9,953
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets .. 151,304 72,270 17,522 18,894 18,003 18,278
Depositor's equity contribution (redemption) 0 0 0 0 0 0
NET ASSETS:
Beginning of year ........................... 236,945 164,675 61,226 42,332 50,647 32,369
--------- --------- --------- --------- --------- ---------
End of year ................................. $ 388,249 $ 236,945 $ 78,748 $ 61,226 $ 68,650 $ 50,647
========= ========= ========= ========= ========= =========
UNIT ACTIVITY:
Class A:
Units outstanding - beginning of year .... 4,173 4,385 1,239 1,124 885 961
Units issued ............................. 1,588 1,851 652 511 654 478
Units redeemed ........................... (1,692) (2,063) (555) (396) (518) (554)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of year ....... 4,069 4,173 1,336 1,239 1,021 885
========= ========= ========= ========= ========= =========
Class B:
Units outstanding - beginning of year .... 9,141 6,954 3,157 2,386 2,316 1,554
Units issued ............................. 6,364 5,495 2,021 1,449 2,664 1,325
Units redeemed ........................... (4,698) (3,308) (1,154) (678) (1,732) (563)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of year ....... 10,807 9,141 4,024 3,157 3,248 2,316
========= ========= ========= ========= ========= =========
CAPITAL UNIT TRANSACTIONS BY CLASS:
Class A
Proceeds from units issued ............. $ 33,380 $ 30,741 $ 9,298 $ 6,670 $ 10,307 $ 6,632
Cost of units redeemed ................. (34,274) (33,539) (7,930) (5,169) (8,136) (7,537)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions $ (894) $ (2,798) $ 1,368 $ 1,501 $ 2,171 $ (905)
========= ========= ========= ========= ========= =========
Class B
Proceeds from units issued ............. $ 134,461 $ 91,322 $ 28,613 $ 18,801 $ 41,704 $ 18,709
Cost of units redeemed ................. (97,234) (54,413) (16,289) (8,834) (27,088) (7,851)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions $ 37,227 $ 36,909 $ 12,324 $ 9,967 $ 14,616 $ 10,858
========= ========= ========= ========= ========= =========
</TABLE>
The notes to the financial statements are an integral part of this report.
14
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TACTICAL ASSET ALLOCATION C.A.S.E. GROWTH GLOBAL SECTOR
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------- ---------------------- ----------------------
1998 1997 1998 1997 1998 1997
---------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................... $ 26,761 $ 16,973 $ 4,303 $ 3,913 $ 171 $ 505
Net gain (loss) on investment securities ........ (7,555) 15,427 (3,980) (788) 765 (407)
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations .................. 19,206 32,400 323 3,125 936 98
--------- --------- --------- --------- --------- ---------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) .......... 60,662 71,016 5,436 32,505 (627) 7,365
--------- --------- --------- --------- --------- ---------
Less cost of units redeemed:
Administrative charges ..................... 145 107 33 15 8 4
Policy loans ............................... 61 38 17 12 5 1
Surrender benefits ......................... 27,240 17,363 3,062 1,838 799 665
Death benefits ............................. 1,105 1,673 578 222 82 14
--------- --------- --------- --------- --------- ---------
28,551 19,181 3,690 2,087 894 684
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions ........ 32,111 51,835 1,746 30,418 (1,521) 6,681
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets 51,317 84,235 2,069 33,543 (585) 6,779
Depositor's equity contribution (redemption) .... 0 0 0 (25) (556) 0
NET ASSETS:
Beginning of year ............................... 272,007 187,772 49,672 16,154 12,705 5,926
--------- --------- --------- --------- --------- ---------
End of year ..................................... $ 323,324 $ 272,007 $ 51,741 $ 49,672 $ 11,564 $ 12,705
========= ========= ========= ========= ========= =========
UNIT ACTIVITY:
Class A:
Units outstanding - beginning of year ........ 5,049 4,640 1,121 260 220 230
Units issued ................................. 1,544 1,856 538 1,162 44 113
Units redeemed ............................... (1,419) (1,447) (772) (301) (141) (123)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of year ........... 5,174 5,049 887 1,121 123 220
========= ========= ========= ========= ========= =========
Class B:
Units outstanding - beginning of year ........ 12,633 9,398 2,618 1,164 965 334
Units issued ................................. 5,679 6,245 1,879 2,142 348 878
Units redeemed ............................... (3,816) (3,010) (1,454) (688) (440) (247)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of year ........... 14,496 12,633 3,043 2,618 873 965
========= ========= ========= ========= ========= =========
CAPITAL UNIT TRANSACTIONS BY CLASS:
Class A
Proceeds from units issued ................. $ 24,856 $ 26,637 $ 8,282 $ 18,073 $ 506 $ 1,229
Cost of units redeemed ..................... (22,698) (20,740) (12,019) (4,706) (1,579) (1,348)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions ... $ 2,158 $ 5,897 $ (3,737) $ 13,367 $ (1,073) $ (119)
========= ========= ========= ========= ========= =========
Class B
Proceeds from units issued ................. $ 90,625 $ 89,910 $ 22,803 $ 24,989 $ 3,952 $ 9,471
Cost of units redeemed ..................... (60,672) (43,972) (17,320) (7,963) (4,956) (2,671)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions ... $ 29,953 $ 45,938 $ 5,483 $ 17,026 $ (1,004) $ 6,800
========= ========= ========= ========= ========= =========
</TABLE>
The notes to the financial statements are an integral part of this report.
15
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY INTERNATIONAL EQUITY U.S. EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------- --------------------- ---------------------
1998 1997 1998 1997 (a) 1998 1997 (a)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ........................ $ 10,027 $ 576 $ (299) $ (55) $ 2,698 $ 1,223
Net gain (loss) on investment securities ............ (22,340) 16,752 2,052 (273) 10,725 1,489
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations ...................... (12,313) 17,328 1,753 (328) 13,423 2,712
--------- --------- --------- --------- --------- ---------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) .............. 11,585 97,065 9,266 17,763 52,247 38,761
--------- --------- --------- --------- --------- ---------
Less cost of units redeemed:
Administrative charges ......................... 84 41 13 3 25 5
Policy loans ................................... 64 14 26 5 22 0
Surrender benefits ............................. 14,233 7,470 1,407 504 7,153 2,568
Death benefits ................................. 682 315 207 5 386 1
--------- --------- --------- --------- --------- ---------
15,063 7,840 1,653 517 7,586 2,574
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions ............ (3,478) 89,225 7,613 17,246 44,661 36,187
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net assets .......... (15,791) 106,553 9,366 16,918 58,084 38,899
Depositor's equity contribution (redemption) ........ 0 (343) (725) 600 (408) 300
NET ASSETS:
Beginning of year ................................... 146,648 40,438 17,518 0 39,199 0
--------- --------- --------- --------- --------- ---------
End of year ......................................... $ 130,857 $ 146,648 $ 26,159 $ 17,518 $ 96,875 $ 39,199
========= ========= ========= ========= ========= =========
UNIT ACTIVITY:
Class A:
Units outstanding - beginning of year ............ 3,562 1,486 601 0 987 0
Units issued ..................................... 2,145 3,436 665 717 1,779 1,742
Units redeemed ................................... (2,743) (1,360) (693) (116) (1,228) (755)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of year ............... 2,964 3,562 573 601 1,538 987
========= ========= ========= ========= ========= =========
Class B:
Units outstanding - beginning of year ............ 7,035 2,119 1,051 0 2,141 0
Units issued ..................................... 5,002 7,466 1,776 1,505 5,244 3,215
Units redeemed ................................... (4,934) (2,550) (1,185) (454) (2,545) (1,074)
--------- --------- --------- --------- --------- ---------
Units outstanding - end of year ............... 7,103 7,035 1,642 1,051 4,840 2,141
========= ========= ========= ========= ========= =========
CAPITAL UNIT TRANSACTIONS BY CLASS:
Class A
Proceeds from units issued ..................... $ 29,077 $ 43,341 $ 7,942 $ 7,704 $ 24,458 $ 20,081
Cost of units redeemed ......................... (36,336) (17,206) (8,214) (1,254) (17,106) (8,686)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions $ (7,259) $ 26,135 $ (272) $ 6,450 $ 7,352 $ 11,395
========= ========= ========= ========= ========= =========
Class B
Proceeds from units issued ..................... $ 69,109 $ 95,515 $ 20,738 $ 16,298 $ 71,783 $ 37,740
Cost of units redeemed ......................... (65,328) (32,768) (13,578) (4,902) (34,882) (12,648)
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets
from capital unit transactions ....... $ 3,781 $ 62,747 $ 7,160 $ 11,396 $ 36,901 $ 25,092
========= ========= ========= ========= ========= =========
</TABLE>
(a) The inception date of this sub-account was January 2, 1997.
The notes to the financial statements are an integral part of this report.
16
<PAGE>
WRL SERIES ANNUITY ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED
ALL AMOUNTS IN THOUSANDS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
THIRD AVENUE REAL ESTATE
VALUE SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
DECEMBER 31, DECEMBER 31,
------------ ------------
1998 (b) 1998 (c)
------------ ------------
OPERATIONS:
<S> <C> <C>
Net investment income (loss) ................ $ (118) $ (10)
Net gain (loss) on investment securities .... (991) (165)
-------- --------
Net increase (decrease) in net assets
resulting from operations .............. (1,109) (175)
-------- --------
CAPITAL UNIT TRANSACTIONS:
Proceeds from units sold (transferred) ...... 16,606 1,484
-------- --------
Less cost of units redeemed:
Administrative charges ................. 4 0
Policy loans ........................... 0 0
Surrender benefits ..................... 453 14
Death benefits ......................... 0 0
-------- --------
457 14
-------- --------
Increase (decrease) in net assets
from capital unit transactions .... 16,149 1,470
-------- --------
Net increase (decrease) in net assets .. 15,040 1,295
Depositor's equity contribution (redemption) 300 600
NET ASSETS:
Beginning of year ........................... 0 0
-------- --------
End of year ................................. $ 15,340 $ 1,895
======== ========
UNIT ACTIVITY:
Class A:
Units outstanding - beginning of year .... 0 0
Units issued ............................. 992 84
Units redeemed ........................... (348) (16)
-------- --------
Units outstanding - end of year ....... 644 68
======== ========
Class B:
Units outstanding - beginning of year .... 0 0
Units issued ............................. 1,702 302
Units redeemed ........................... (677) (145)
-------- --------
Units outstanding - end of year ....... 1,025 157
======== ========
CAPITAL UNIT TRANSACTIONS BY CLASS:
Class A
Proceeds from units issued ............. $ 9,565 $ 784
Cost of units redeemed ................. (3,245) (151)
-------- --------
Increase (decrease) in net assets
from capital unit transactions $ 6,320 $ 633
======== ========
Class B
Proceeds from units issued ............. $ 16,395 $ 2,659
Cost of units redeemed ................. (6,266) (1,222)
-------- --------
Increase (decrease) in net assets
from capital unit transactions $ 10,129 $ 1,437
======== ========
</TABLE>
(b) The inception date of this Sub-Account was January 2, 1998.
(c) The inception date of this Sub-Account was May 1, 1998.
The notes to the financial statements are an integral part of this report.
17
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 13.82 $ 13.29 $ 12.80 $ 12.29 $ 12.03
Income from operations:
Net investment income (loss) ................................. 0.55 0.53 0.49 0.51 0.26
Net realized and unrealized gain (loss) on investment ........ 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- ----------
Net income (loss) from operations ....................... 0.55 0.53 0.49 0.51 0.26
--------- --------- --------- --------- ----------
Accumulation unit value, end of year ................................... $ 14.37 $ 13.82 $ 13.29 $ 12.80 $ 12.29
========= ========= ========= ========= ==========
Total return (a) ....................................................... 3.99 % 4.00 % 3.81 % 4.12 % 2.22 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 48,797 $ 39,531 $ 51,141 $ 41,596 $ 55,318
Ratios of net investment income (loss) to average net assets (b) .. 3.89 % 3.92 % 3.72 % 4.03 % 2.28 %
<CAPTION>
BOND SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 19.52 $ 18.11 $ 18.31 $ 15.08 $ 16.40
Income from operations:
Net investment income (loss) ................................. 0.82 0.73 0.77 0.83 0.72
Net realized and unrealized gain (loss) on investment ........ 0.74 0.68 (0.97) 2.40 (2.04)
--------- --------- --------- --------- ----------
Net income (loss) from operations ....................... 1.56 1.41 (0.20) 3.23 (1.32)
--------- --------- --------- --------- ----------
Accumulation unit value, end of year ................................... $ 21.08 $ 19.52 $ 18.11 $ 18.31 $ 15.08
======== ======== ========= ========== =========
Total return (a) ....................................................... 7.96 % 7.80 % (1.10)% 21.46 % (8.10)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 50,893 $ 46,082 $ 45,516 $ 54,109 $ 47,193
Ratios of net investment income (loss) to average net assets (b) .. 4.02 % 3.95 % 4.34 % 4.94 % 4.69 %
<CAPTION>
GROWTH SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 38.50 $ 33.17 $ 28.47 $ 19.60 $ 21.64
Income from operations:
Net investment income (loss) ................................. (0.08) 3.42 1.64 2.35 (0.06)
Net realized and unrealized gain (loss) on investment ........ 24.12 1.91 3.06 6.52 (1.98)
--------- --------- --------- ---------- ---------
Net income (loss) from operations ....................... 24.04 5.33 4.70 8.87 (2.04)
--------- --------- --------- ---------- ---------
Accumulation unit value, end of year ................................... $ 62.54 $ 38.50 $ 33.17 $ 28.47 $ 19.60
========= ========= ========= ========== =========
Total return (a) ....................................................... 62.43 % 16.09 % 16.50 % 45.29 % (9.45)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 817,014 $ 571,456 $ 576,115 $ 532,646 $ 409,881
Ratios of net investment income (loss) to average net assets (b) .. (0.18)% 9.36 % 5.22 % 9.81 % (0.28)%
</TABLE>
The notes to the financial statements are an integral part of this report.
18
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GLOBAL SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 24.10 $ 20.55 $ 16.29 $ 13.40 $ 13.54
Income from operations:
Net investment income (loss) ................................. 0.83 2.55 1.62 0.42 0.45
Net realized and unrealized gain (loss) on investment ........ 6.01 1.00 2.64 2.47 (0.59)
--------- ---------- ---------- --------- ----------
Net income (loss) from operations ....................... 6.84 3.55 4.26 2.89 (0.14)
--------- ---------- ---------- --------- ----------
Accumulation unit value, end of year ................................... $ 30.94 $ 24.10 $ 20.55 $ 16.29 $ 13.40
========= ========== ========== ========= ==========
Total return (a) ....................................................... 28.40 % 17.28 % 26.15 % 21.53 % (0.99)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 298,285 $ 261,317 $ 221,185 $ 141,425 $ 144,705
Ratios of net investment income (loss) to average net assets (b) .. 2.97 % 11.01 % 8.60 % 2.89 % 3.40 %
<CAPTION>
STRATEGIC TOTAL RETURN SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 18.60 $ 15.46 $ 13.61 $ 11.06 $ 11.25
Income from operations:
Net investment income (loss) ................................. 0.56 1.34 0.68 0.59 0.16
Net realized and unrealized gain (loss) on investment ........ 0.98 1.80 1.17 1.96 (0.35)
--------- ---------- ---------- ---------- ----------
Net income (loss) from operations ....................... 1.54 3.14 1.85 2.55 (0.19)
--------- ---------- ---------- ---------- ----------
Accumulation unit value, end of year ................................... $ 20.14 $ 18.60 $ 15.46 $ 13.61 $ 11.06
========= ========== ========== ========== ==========
Total return (a) ....................................................... 8.28 % 20.34 % 13.57 % 23.11 % (1.77)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 160,783 $ 164,259 $ 136,789 $ 116,374 $ 88,607
Ratios of net investment income (loss) to average net assets (b) .. 2.95 % 7.83 % 4.75 % 4.74 % 1.43 %
<CAPTION>
EMERGING GROWTH SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 23.10 $ 19.26 $ 16.40 $ 11.31 $ 12.37
Income from operations:
Net investment income (loss) ................................. 0.69 1.85 0.63 0.51 (0.13)
Net realized and unrealized gain (loss) on investment ........ 7.54 1.99 2.23 4.58 (0.93)
--------- ---------- ---------- ---------- --------
Net income (loss) from operations ....................... 8.23 3.84 2.86 5.09 (1.06)
--------- ---------- ---------- ---------- --------
Accumulation unit value, end of year ................................... $ 31.33 $ 23.10 $ 19.26 $ 16.40 $ 11.31
========= ========== ========== ========== =========
Total return (a) ....................................................... 35.63 % 19.95 % 17.41 % 44.97 % (8.51)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 201,838 $ 165,848 $ 143,282 $ 115,797 $ 83,480
Ratios of net investment income (loss) to average net assets (b) .. 2.69 % 8.73 % 3.42 % 3.68 % (1.21)%
</TABLE>
The notes to the financial statements are an integral part of this report.
19
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AGGRESSIVE GROWTH SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994(c)
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 17.86 $ 14.56 $ 13.35 $ 9.79 $ 10.00
Income from operations:
Net investment income (loss) ................................. 1.13 1.42 0.25 0.29 (0.08)
Net realized and unrealized gain (loss) on investment ........ 7.24 1.88 0.96 3.27 (0.13)
---------- ---------- ---------- ---------- --------
Net income (loss) from operations ....................... 8.37 3.30 1.21 3.56 (0.21)
---------- ---------- ---------- ---------- --------
Accumulation unit value, end of year ................................... $ 26.23 $ 17.86 $ 14.56 $ 13.35 $ 9.79
========== ========== ========== ========== ========
Total return (a) ....................................................... 46.84 % 22.71 % 9.07 % 36.31 % (2.08)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 106,742 $ 74,544 $ 63,843 $ 65,666 $ 18,555
Ratios of net investment income (loss) to average net assets (b) .. 5.39 % 8.51 % 1.77 % 2.28 % (1.04)%
<CAPTION>
BALANCED SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994(c)
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 13.99 $ 12.09 $ 11.06 $ 9.35 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.17 1.32 0.26 0.29 0.21
Net realized and unrealized gain (loss) on investment ........ 0.61 0.58 0.77 1.42 (0.86)
--------- --------- ---------- ---------- --------
Net income (loss) from operations ....................... 0.78 1.90 1.03 1.71 (0.65)
--------- --------- ---------- ---------- --------
Accumulation unit value, end of year ................................... $ 14.77 $ 13.99 $ 12.09 $ 11.06 $ 9.35
========= ========= ========== ========== ========
Total return (a) ....................................................... 5.60 % 15.65 % 9.34 % 18.31 % (6.52)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 19,730 $ 17,324 $ 13,598 $ 11,343 $ 9,379
Ratios of net investment income (loss) to average net assets (b) .. 1.19 % 10.01 % 2.29 % 2.85 % 2.63 %
<CAPTION>
GROWTH & INCOME SUB-ACCOUNT
DECEMBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994(c)
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 15.89 $ 12.91 $ 11.71 $ 9.46 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.66 2.06 0.50 0.45 0.32
Net realized and unrealized gain (loss) on investment ........ (0.38) 0.92 0.70 1.80 (0.86)
--------- --------- --------- ---------- --------
Net income (loss) from operations ....................... 0.28 2.98 1.20 2.25 (0.54)
--------- --------- --------- ---------- --------
Accumulation unit value, end of year ................................... $ 16.17 $ 15.89 $ 12.91 $ 11.71 $ 9.46
========= ========= ========= ========== ========
Total return (a) ....................................................... 1.77 % 23.10 % 10.25 % 23.70 % (5.37)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 16,502 $ 14,056 $ 12,397 $ 11,890 $ 5,506
Ratios of net investment income (loss) to average net assets (b) .. 4.17 % 14.87 % 4.17 % 4.26 % 4.07 %
</TABLE>
The notes to the financial statements are an integral part of this report.
20
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TACTICAL ASSET ALLOCATION SUB-ACCOUNT
DECEMBER 31,
-----------------------------------------------
1998 1997 1996 1995 (d)
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 15.43 $ 13.40 $ 11.86 $ 10.00
Income from operations:
Net investment income (loss) ................................. 1.40 1.02 0.46 0.58
Net realized and unrealized gain (loss) on investment ........ (0.32) 1.01 1.08 1.28
-------- -------- -------- --------
Net income (loss) from operations ....................... 1.08 2.03 1.54 1.86
-------- -------- -------- --------
Accumulation unit value, end of year ................................... $ 16.51 $ 15.43 $ 13.40 $ 11.86
======== ======== ======== ========
Total return (a) ....................................................... 6.98 % 15.14 % 13.00 % 18.61 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 85,428 $ 77,923 $ 62,195 $ 34,910
Ratios of net investment income (loss) to average net assets (b) .. 8.72 % 6.99 % 3.71 % 5.25 %
<CAPTION>
C.A.S.E. GROWTH SUB-ACCOUNT
DECEMBER 31,
--------------------------------
1998 1997 1996 (e)
---------- ---------- ---------
<S> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 15.77 $ 13.88 $ 12.87
Income from operations:
Net investment income (loss) ................................. 1.27 3.15 0.39
Net realized and unrealized gain (loss) on investment ........ (1.08) (1.26) 0.62
-------- -------- --------
Net income (loss) from operations ....................... 0.19 1.89 1.01
-------- -------- --------
Accumulation unit value, end of year ................................... $ 15.96 $ 15.77 $ 13.88
======== ======== ========
Total return (a) ....................................................... 1.20 % 13.60 % 7.84 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 14,161 $ 17,677 $ 3,612
Ratios of net investment income (loss) to average net assets (b) .. 8.11 % 20.61 % 4.43 %
<CAPTION>
GLOBAL SECTOR SUB-ACCOUNT
DECEMBER 31,
--------------------------------
1998 1997 1996 (f)
---------- ---------- ---------
<S> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 10.75 $ 10.52 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.11 0.39 (0.01)
Net realized and unrealized gain (loss) on investment ........ 0.80 (0.16) 0.53
-------- -------- --------
Net income (loss) from operations ....................... 0.91 0.23 0.52
-------- -------- --------
Accumulation unit value, end of year ................................... $ 11.66 $ 10.75 $ 10.52
======== ======== ========
Total return (a) ....................................................... 8.47 % 2.15 % 5.19 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 1,433 $ 2,361 $ 2,417
Ratios of net investment income (loss) to average net assets (b) .. 0.95 % 3.54 % (0.09)%
</TABLE>
The notes to the financial statements are an integral part of this report.
21
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY SUB-ACCOUNT
DECEMBER 31,
-------------------------------
1998 1997 1996 (f)
--------- --------- ---------
<S> <C> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 13.86 $ 11.22 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.89 0.07 0.02
Net realized and unrealized gain (loss) on investment ........ (1.71) 2.57 1.20
-------- -------- --------
Net income (loss) from operations ....................... (0.82) 2.64 1.22
-------- -------- --------
Accumulation unit value, end of year ................................... $ 13.04 $ 13.86 $ 11.22
======== ======== ========
Total return (a) ....................................................... (5.96)% 23.49 % 12.25 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $38,640 $49,376 $16,679
Ratios of net investment income (loss) to average net assets (b) .. 6.44 % 0.55 % 0.30 %
<CAPTION>
INTERNATIONAL EQUITY
SUB-ACCOUNT
DECEMBER 31,
--------------------
1998 1997 (g)
--------- ---------
<S> <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 10.62 $ 10.00
Income from operations:
Net investment income (loss) ................................. (0.14) (0.05)
Net realized and unrealized gain (loss) on investment ........ 1.35 0.67
-------- --------
Net income (loss) from operations ....................... 1.21 0.62
-------- --------
Accumulation unit value, end of year ................................... $ 11.83 $ 10.62
======== ========
Total return (a) ....................................................... 11.45 % 6.17 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 6,783 $ 6,377
Ratios of net investment income (loss) to average net assets (b) .. (1.16)% (0.52)%
U.S. EQUITY SUB-ACCOUNT
DECEMBER 31,
--------------------
1998 1997 (g)
--------- ---------
<S > <C> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 12.54 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.54 0.75
Net realized and unrealized gain (loss) on investment ........ 2.14 1.79
-------- --------
Net income (loss) from operations ....................... 2.68 2.54
-------- --------
Accumulation unit value, end of year ................................... $ 15.22 $ 12.54
======== ========
Total return (a) ....................................................... 21.35 % 25.44 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 23,419 $ 12,377
Ratios of net investment income (loss) to average net assets (b) .. 3.90 % 6.37 %
</TABLE>
The notes to the financial statements are an integral part of this report.
22
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
THIRD AVENUE VALUE
SUB-ACCOUNT
DECEMBER 31,
1998 (h)
---------
<S> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 10.00
Income from operations:
Net investment income (loss) ................................. (0.08)
Net realized and unrealized gain (loss) on investment ........ (0.72)
---------
Net income (loss) from operations ....................... (0.80)
---------
Accumulation unit value, end of year ................................... $ 9.20
=========
Total return (a) ....................................................... (7.99)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 5,921
Ratios of net investment income (loss) to average net assets (b) .. (0.89)%
<CAPTION>
REAL ESTATE SECURITIES
SUB-ACCOUNT
DECEMBER 31,
1998(i)
-------
<S> <C>
CLASS A UNITS:
Accumulation unit value, beginning of year ............................. $ 10.00
Income from operations:
Net investment income (loss) ................................. (0.07)
Net realized and unrealized gain (loss) on investment ........ (1.49)
---------
Net income (loss) from operations ....................... (1.56)
---------
Accumulation unit value, end of year ................................... $ 8.44
=========
Total return (a) ....................................................... (15.65)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 571
Ratios of net investment income (loss) to average net assets (b) .. (1.26)%
</TABLE>
The notes to the financial statements are an integral part of this report.
23
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 11.55 $ 11.12 $ 10.73 $ 10.32 $ 10.11
Income from operations:
Net investment income (loss) ................................. 0.44 0.43 0.39 0.41 0.21
Net realized and unrealized gain (loss) on investment ........ 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- --------- ----------
Net income (loss) from operations ....................... 0.44 0.43 0.39 0.41 0.21
---------- ---------- ---------- --------- ----------
Accumulation unit value, end of year ...................................$ 11.99 $ 11.55 $ 11.12 $ 10.73 $ 10.32
========== ========== ========= ========= ==========
Total return (a) ....................................................... 3.83 % 3.84 % 3.65 % 3.96 % 2.07 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 93,982 $ 62,152 $ 58,415 $ 28,524 $ 28,537
Ratios of net investment income (loss) to average net assets (b) .. 3.72 % 3.78 % 3.57 % 3.89 % 2.26 %
<CAPTION>
BOND SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 13.41 $ 12.46 $ 12.61 $ 10.40 $ 11.33
Income from operations:
Net investment income (loss) ................................. 0.60 0.67 0.56 0.64 0.52
Net realized and unrealized gain (loss) on investment ........ 0.44 0.28 (0.71) 1.57 (1.45)
---------- --------- ---------- ---------- ----------
Net income (loss) from operations ....................... 1.04 0.95 (0.15) 2.21 (0.93)
---------- --------- ---------- ---------- ----------
Accumulation unit value, end of year ...................................$ 14.45 $ 13.41 $ 12.46 $ 12.61 $ 10.40
========== ========= ========== ========== ==========
Total return (a) ....................................................... 7.80 % 7.64 % (1.25)% 21.28 % (8.23)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 91,784 $ 64,376 $ 38,055 $ 32,772 $ 17,614
Ratios of net investment income (loss) to average net assets (b) .. 4.31 % 5.26 % 4.60 % 5.45 % 4.91 %
<CAPTION>
GROWTH SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year ............................. $ 18.57 $ 16.02 $ 13.77 $ 9.49 $ 10.50
Income from operations:
Net investment income (loss) ................................. (0.08) 1.87 0.95 1.30 (0.03)
Net realized and unrealized gain (loss) on investment ........ 11.63 0.68 1.30 2.98 (0.98)
---------- ---------- ---------- --------- ----------
Net income (loss) from operations ....................... 11.55 2.55 2.25 4.28 (1.01)
---------- ---------- ---------- --------- ----------
Accumulation unit value, end of year ................................... $ 30.12 $ 18.57 $ 16.02 $ 13.77 $ 9.49
========== ========== ========== ========= ==========
Total return (a) ....................................................... 62.19 % 15.91 % 16.32 % 45.08 % (9.58)%
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 826,236 $ 432,125 $ 317,705 $ 198,139 $ 112,383
Ratios of net investment income (loss) to average net assets (b) .. (0.33)% 10.53 % 6.21 % 11.07 % (0.26)%
The notes to the financial statements are an integral part of this report.
</TABLE>
24
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GLOBAL SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 23.92 $ 20.43 $ 16.22 $ 13.36 $ 13.52
Income from operations:
Net investment income (loss) ................................. 0.88 2.85 1.79 0.43 0.53
Net realized and unrealized gain (loss) on investment ........ 5.87 0.64 2.42 2.43 (0.69)
--------- ---------- ---------- ---------- ----------
Net income (loss) from operations ....................... 6.75 3.49 4.21 2.86 (0.16)
--------- ---------- ---------- ---------- ----------
Accumulation unit value, end of year ...................................$ 30.67 $ 23.92 $ 20.43 $ 16.22 $ 13.36
========= ========== ========== ========== ==========
Total return (a) ....................................................... 28.21 % 17.10 % 25.96 % 21.35 % (1.14)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 524,585 $ 371,512 $ 227,955 $ 111,958 $ 95,829
Ratios of net investment income (loss) to average net assets (b) .. 3.16 % 12.33 % 9.45 % 2.96 % 3.95 %
<CAPTION>
STRATEGIC TOTAL RETURN SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 18.47 $ 15.37 $ 13.56 $ 11.03 $ 11.24
Income from operations:
Net investment income (loss) ................................. 0.59 1.42 0.94 0.59 0.16
Net realized and unrealized gain (loss) on investment ........ 0.91 1.68 0.87 1.94 (0.37)
--------- ---------- ---------- --------- ---------
Net income (loss) from operations ....................... 1.50 3.10 1.81 2.53 (0.21)
--------- ---------- ---------- --------- ---------
Accumulation unit value, end of year ...................................$ 19.97 $ 18.47 $ 15.37 $ 13.56 $ 11.03
========= ========== ========== ========= =========
Total return (a) ....................................................... 8.11 % 20.16 % 13.40 % 22.93 % (1.92)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 328,728 $ 279,355 $ 196,305 $ 101,651 $ 71,733
Ratios of net investment income (loss) to average net assets (b) .. 3.11 % 8.31 % 6.55 % 4.76 % 1.49 %
<CAPTION>
EMERGING GROWTH SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 22.94 $ 19.15 $ 16.34 $ 11.29 $ 12.35
Income from operations:
Net investment income (loss) ................................. 0.72 2.00 0.73 0.54 (0.15)
Net realized and unrealized gain (loss) on investment ........ 7.40 1.79 2.08 4.51 (0.91)
--------- ---------- ---------- --------- ---------
Net income (loss) from operations ....................... 8.12 3.79 2.81 5.05 (1.06)
--------- ---------- ---------- --------- ---------
Accumulation unit value, end of year ...................................$ 31.06 $ 22.94 $ 19.15 $ 16.34 $ 11.29
========== ========== ========== ========== =========
Total return (a) ....................................................... 35.42 % 19.77 % 17.23 % 44.75 % (8.65)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 381,421 $ 258,730 $ 179,589 $ 105,115 $ 62,615
Ratios of net investment income (loss) to average net assets (b) .. 2.80 % 9.45 % 3.96 % 3.85 % (1.33)%
</TABLE>
The notes to the financial statements are an integral part of this report.
25
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AGGRESSIVE GROWTH SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 17.77 $ 14.50 $ 13.31 $ 9.78 $ 10.00
Income from operations:
Net investment income (loss) ................................. 1.17 1.60 0.31 0.40 (0.10)
Net realized and unrealized gain (loss) on investment ........ 7.11 1.67 0.88 3.13 (0.12)
---------- ---------- ---------- ---------- --------
Net income (loss) from operations ....................... 8.28 3.27 1.19 3.53 (0.22)
---------- ---------- ---------- ---------- --------
Accumulation unit value, end of year ...................................$ 26.05 $ 17.77 $ 14.50 $ 13.31 $ 9.78
========== ========== ========== ========== ========
Total return (a) ....................................................... 46.62 % 22.52 % 8.91 % 36.10 % (2.18)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 281,507 $ 162,401 $ 100,832 $ 60,420 $ 11,403
Ratios of net investment income (loss) to average net assets (b) .. 5.57 % 9.55 % 2.22 % 3.04 % (1.19)%
<CAPTION>
BALANCED SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 13.91 $ 12.05 $ 11.03 $ 9.34 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.17 1.40 0.30 0.32 0.27
Net realized and unrealized gain (loss) on investment ........ 0.59 0.46 0.72 1.37 (0.93)
--------- ---------- ---------- ---------- ---------
Net income (loss) from operations ....................... 0.76 1.86 1.02 1.69 (0.66)
--------- ---------- ---------- ---------- ---------
Accumulation unit value, end of year ...................................$ 14.67 $ 13.91 $ 12.05 $ 11.03 $ 9.34
========= ========== ========== ========== =========
Total return (a) ....................................................... 5.45 % 15.47 % 9.18 % 18.13 % (6.61)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 59,018 $ 43,902 $ 28,734 $ 16,069 $ 7,936
Ratios of net investment income (loss) to average net assets (b) .. 1.19 % 10.72 % 2.69 % 3.16 % 3.48 %
<CAPTION>
GROWTH & INCOME SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 15.80 $ 12.85 $ 11.68 $ 9.45 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.66 2.52 0.68 0.47 0.33
Net realized and unrealized gain (loss) on investment ........ (0.40) 0.43 0.49 1.76 (0.88)
--------- ---------- ---------- ---------- ----------
Net income (loss) from operations ....................... 0.26 2.95 1.17 2.23 (0.55)
--------- ---------- ---------- ---------- ----------
Accumulation unit value, end of year ...................................$ 16.06 $ 15.80 $ 12.85 $ 11.68 $ 9.45
========= ========== ========== ========== ==========
Total return (a) ....................................................... 1.62 % 22.92 % 10.08 % 23.52 % (5.47)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 52,148 $ 36,591 $ 19,972 $ 10,086 $ 3,786
Ratios of net investment income (loss) to average net assets (b) .. 4.20 % 18.15 % 5.68 % 4.50 % 4.18 %
</TABLE>
The notes to the financial statements are an integral part of this report.
26
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TACTICAL ASSET ALLOCATION SUB-ACCOUNT
DECEMBER 31,
------------------------------------------------------
1998 1997 1996 1995 (d)
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year ............................. $ 15.36 $ 13.36 $ 11.84 $ 10.00
Income from operations:
Net investment income (loss) ................................. 1.43 1.06 0.47 0.82
Net realized and unrealized gain (loss) on investment ........ (0.38) 0.94 1.05 1.02
---------- ---------- ---------- ----------
Net income (loss) from operations ....................... 1.05 2.00 1.52 1.84
---------- ---------- ---------- ----------
Accumulation unit value, end of year ................................... $ 16.41 $ 15.36 $ 13.36 $ 11.84
========== ========== ========== ==========
Total return (a) ....................................................... 6.82 % 14.97 % 12.83 % 18.43 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 237,896 $ 194,084 $ 125,577 $ 72,300
Ratios of net investment income (loss) to average net assets (b) .. 8.92 % 7.30 % 3.72 % 7.29 %
<CAPTION>
C.A.S.E. GROWTH SUB-ACCOUNT
DECEMBER 31,
---------------------------------------
1998 1997 1996 (f)
----------- ----------- -----------
<S> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year ............................. $ 12.22 $ 10.77 $ 10.00
Income from operations:
Net investment income (loss) ................................. 1.06 1.34 0.36
Net realized and unrealized gain (loss) on investment ........ (0.93) 0.11 0.41
---------- ---------- ----------
Net income (loss) from operations ....................... 0.13 1.45 0.77
---------- ---------- ----------
Accumulation unit value, end of year ................................... $ 12.35 $ 12.22 $ 10.77
========== ========== ==========
Total return (a) ....................................................... 1.05 % 13.43 % 7.73 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 37,580 $ 31,995 $ 12,542
Ratios of net investment income (loss) to average net assets (b) .. 8.79 % 11.31 % 5.46 %
<CAPTION>
GLOBAL SECTOR SUB-ACCOUNT
DECEMBER 31,
---------------------------------------
1998 1997 1996 (f)
----------- ----------- -----------
<S> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year ............................. $ 10.72 $ 10.51 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.17 0.69 0.04
Net realized and unrealized gain (loss) on investment ........ 0.72 (0.48) 0.47
---------- ---------- ----------
Net income (loss) from operations ....................... 0.89 0.21 0.51
---------- ---------- ----------
Accumulation unit value, end of year ...................................$ 11.61 $ 10.72 $ 10.51
=========== ========== ==========
Total return (a) ....................................................... 8.31 % 1.99 % 5.09 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 10,131 $ 10,344 $ 3,509
Ratios of net investment income (loss) to average net assets (b) .. 1.48 % 6.30 % 0.59 %
</TABLE>
The notes to the financial statements are an integral part of this report.
27
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
VALUE EQUITY SUB-ACCOUNT
DECEMBER 31,
--------------------------------------------------
1998 1997 1996 (f)
--------- ---------- ---------
<S> <C> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year ............................. $ 13.83 $ 11.21 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.91 0.08 0.02
Net realized and unrealized gain (loss) on investment ........ (1.76) 2.54 1.19
-------- --------- --------
Net income (loss) from operations ....................... (0.85) 2.62 1.21
-------- --------- --------
Accumulation unit value, end of year ................................... $ 12.98 $ 13.83 $ 11.21
======== ======== ========
Total return (a) ....................................................... (6.10)% 23.30 % 12.13 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 92,217 $97,272 $23,759
Ratios of net investment income (loss) to average net assets (b) .. 6.63 % 0.63 % 0.33 %
<CAPTION>
INTERNATIONAL EQUITY
SUB-ACCOUNT
DECEMBER 31,
------------------------------
1998 1997 (g)
--------- ----------
CLASS B UNITS:
Accumulation unit value, beginning of year ............................. $ 10.60 $ 10.00
Income from operations:
Net investment income (loss) ................................. (0.15) (0.06)
Net realized and unrealized gain (loss) on investment ........ 1.35 0.66
-------- --------
Net income (loss) from operations ....................... 1.20 0.60
-------- --------
Accumulation unit value, end of year ................................... $ 11.80 $ 10.60
======== ========
Total return (a) ....................................................... 11.28 % 6.01 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $ 19,376 $ 11,141
Ratios of net investment income (loss) to average net assets (b) .. (1.31)% (0.58)%
<CAPTION>
U.S. EQUITY SUB-ACCOUNT
DECEMBER 31,
------------------------------
1998 1997 (g)
--------- ----------
<S> <C> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year ............................. $ 12.53 $ 10.00
Income from operations:
Net investment income (loss) ................................. 0.62 0.95
Net realized and unrealized gain (loss) on investment ........ 2.03 1.58
-------- --------
Net income (loss) from operations ....................... 2.65 2.53
-------- --------
Accumulation unit value, end of year ................................... $ 15.18 $ 12.53
======== ========
Total return (a) ....................................................... 21.16 % 25.26 %
Ratios and supplemental data:
Net assets at end of year (in thousands) .......................... $73,456 $26,822
Ratios of net investment income (loss) to average net assets (b) .. 4.55 % 7.99 %
</TABLE>
The notes to the financial statements are an integral part of this report.
28
<PAGE>
WRL SERIES ANNUITY ACCOUNT
FINANCIAL HIGHLIGHTS*
FOR THE YEAR ENDED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
THIRD AVENUE VALUE
SUB-ACCOUNT
DECEMBER 31,
1998 (h)
-----------
<S> <C>
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 10.00
Income from operations:
Net investment income (loss) ................................. (0.09)
Net realized and unrealized gain (loss) on investment ........ (0.72)
----------
Net income (loss) from operations ....................... (0.81)
----------
Accumulation unit value, end of year ...................................$ 9.19
==========
Total return (a) ....................................................... (8.13)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 9,419
Ratios of net investment income (loss) to average net assets (b) .. (1.03)%
<CAPTION>
REAL ESTATE SECURITIES
SUB-ACCOUNT
DECEMBER 31,
1998(i)
-------
CLASS B UNITS:
Accumulation unit value, beginning of year .............................$ 10.00
Income from operations:
Net investment income (loss) ................................. (0.08)
Net realized and unrealized gain (loss) on investment ........ (1.49)
----------
Net income (loss) from operations ....................... (1.57)
----------
Accumulation unit value, end of year ...................................$ 8.43
==========
Total return (a) ....................................................... (15.73)%
Ratios and supplemental data:
Net assets at end of year (in thousands) ..........................$ 1,324
Ratios of net investment income (loss) to average net assets (b) .. (1.41)%
</TABLE>
NOTES TO FINANCIAL HIGHLIGHTS:
* Per unit information has been computed using average units outstanding
throughout each year.
(a) Not annualized for periods less than one year.
(b) Annualized for periods less than one year.
(c) The inception date of this Sub-Account was March 1, 1994.
(d) The inception date of this Sub-Account was January 3, 1995.
(e) This Sub-Account option became effective May 1, 1996.
(f) The inception date of this Sub-Account was May 1, 1996.
(g) The inception date of this Sub-Account was January 2, 1997.
(h) The inception date of this Sub-Account was January 2, 1998.
The notes to the financial statements are an integral part of this report.
29
<PAGE>
WRL SERIES ANNUITY ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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 ("Class A"); the WRL Freedom Bellwether, the WRL
Freedom Conqueror, and the WRL Freedom Wealth Creator ("Class B"). Each contract
type contains seventeen investment options referred to as sub-accounts. Each
sub-account invests in the corresponding portfolio of the WRL Series Fund, Inc.
(collectively referred to as the "Fund" and individually as a "Portfolio"), a
registered management investment company under the Investment Company Act of
1940, as amended.
The Fund has entered into annually renewable investment advisory agreements
for each Portfolio with WRL Investment Management, Inc. ("WRL Management") as
investment adviser. Costs incurred in connection with the advisory services
rendered by WRL Management are paid by each Portfolio. WRL Management has
entered into sub-advisory agreements with various managment companies, some of
which are affilites of WRL. Each sub-adviser is compensated directly by WRL
Management.
On January 2, 1998 and May 1, 1998, WRL made initial contributions totaling
$900,000 to the Annuity Account. The respective amounts of the contributions and
units received are as follows:
SUB-ACCOUNT CONTRIBUTION UNITS
- ----------- ------------ -----
Third Avenue Value - Class A ........... $ 150,000 15,000
Third Avenue Value - Class B ........... $ 150,000 15,000
Real Estate Securities - Class A ....... $ 300,000 30,000
Real Estate Securities - Class B ....... $ 300,000 30,000
The Annuity Account sub-accounts hold assets to 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 following significant accounting policies, which are in conformity with
generally accepted accounting principles, have been consistently applied in the
preparation of the Trust's financial statements. The preparation of financial
statements required management to make estimates and assumptions that affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
A. VALUATION OF INVESTMENTS AND SECURITIES TRANSACTIONS
Investments in the Fund's shares are stated at the closing net asset value
("NAV") per share as determined by the Fund. Investment transactions are
accounted for on the trade date at the Fund NAV next determined after receipt of
sale or redemption orders without sales charges. Dividend income and capital
gains distributions are recorded on the ex-dividend date. The cost of
investments sold is determined on a first-in, first-out basis.
B. FEDERAL INCOME TAXES
The operations of the 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 the current Internal Revenue Code, 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 the issuance and
administration of the Contracts.
A. CONTRACT CHARGES
No deduction for sales expenses is 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. SUB-ACCOUNT CHARGES
A daily charge 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. The charge is 1.25% and 1.40% of average daily net assets for Class A and
Class B respectively.
30
<PAGE>
WRL SERIES ANNUITY ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
NOTE 3. DIVIDENDS AND DISTRIBUTIONS
Dividends are not declared by the Annuity Account, since the increase in
the value of the underlying investment in the Fund is reflected daily in the
unit price used to calculate the equity value within the Annuity Account.
Consequently, a dividend distribution by the underlying Fund does not change
either the unit price or equity values within the Annuity Account.
NOTE 4. SECURITIES TRANSACTIONS
Securities transactions for the year ended December 31, 1998 are as follows (in
thousands):
PURCHASE PROCEEDS
SUB-ACCOUNT OF SECURITIES OF SECURITIES
- ----------- ------------- -------------
Money Market ........................... $ 367,408 $ 325,384
Bond ................................... 73,953 44,732
Growth ................................. 211,889 191,220
Global ................................. 147,870 113,198
Strategic Total Return ................. 67,667 42,974
Emerging Growth ........................ 99,470 75,879
Aggressive Growth ...................... 106,771 55,391
Balanced ............................... 24,859 10,654
Growth & Income ........................ 36,832 16,008
Tactical Asset Allocation .............. 85,336 26,271
C.A.S.E. Growth ........................ 24,942 17,980
Global Sector .......................... 3,410 5,344
Value Equity ........................... 61,347 54,729
International Equity ................... 20,250 13,547
U.S. Equity ............................ 73,939 27,750
Third Avenue Value Equity (a) .......... 21,084 4,758
Real Estate Securities (b) ............. 3,063 1,192
(a) The inception date of this Sub-Account was January 2, 1998.
(b) The inception date of this Sub-Account was May 1, 1998.
NOTE 5. OTHER MATTERS
At December 31, 1998 net unrealized appreciation (depreciation) on
investments was as follows (in thousands):
SUB-ACCOUNT
- -----------
Money Market ........................... $ 0
Bond ................................... 1,463
Growth ................................. 706,637
Global ................................. 172,009
Strategic Total Return ................. 80,249
Emerging Growth ........................ 171,421
Aggressive Growth ...................... 106,388
Balanced ............................... 5,588
Growth & Income ........................ (603)
Tactical Asset Allocation .............. 9,010
C.A.S.E. Growth ........................ (4,379)
Global Sector .......................... 84
Value Equity ........................... (12,843)
International Equity ................... 675
U.S. Equity ............................ 7,688
Third Avenue Value Equity .............. (624)
Real Estate Securities ................. (68)
31
