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[SBG LOGO]
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Security Benefit Life Insurance Company 700 SW Harrison St.
Security Benefit Group, Inc. Topeka, Kansas 66636-0001
Security Distributors, Inc. (785) 431-3000
Security Management Company, LLC
A MESSAGE FROM SECURITY BENEFIT
In 1999, Security Benefit Life Insurance Company had another year of outstanding
financial results. The driving forces behind our tremendous financial
performance were consumers' demand for individual retirement products and the
extension of our money management and customer service competencies.
As consumers focus on their future, they look to Security Benefit as a partner
for developing personal retirement strategies. Our core competencies--money
management and customer service--are very solid and the cornerstone of our
stronghold in the market segments.
SBG IS A CLEAR CHOICE
There are many qualities that make partnering with Security Benefit a clear
choice:
* variety of retirement products
* cutting edge service
* pool of flexible and responsive employees
* rich heritage of innovation and creativity
* a rock solid financial foundation
* a strong risk management philosophy
However, if we were asked to capture what makes partnering with Security Benefit
a clear choice in one sentence, here's what we'd say--Security Benefit knows
Wall Street and Main Street.
Wall Street and Main Street are among the most famous streets in America, but
they're known better for their characteristics rather than their location.
Everyone knows that Wall Street is in New York, but Wall Street is more of an
adjective today than it is a noun. What are the characteristics of something
that's Wall Street-like? It's fast paced, risky and high stress.
Likewise, Main Street has become an adjective. The characteristics of something
that's Main Street-like are being friendly, courteous, relaxed, and having a
real interest and concern for your neighbor.
Knowledge of both streets is one of our competitive advantages and it's why we
are positioned for strong growth in the future.
SBG KNOWS WALL STREET
Even though Security Benefit operates out of America's Heartland in Topeka,
Kansas--the exact opposite of the Wall Street-like atmosphere--we know Wall
Street because of our experience, technology and people.
EXPERIENCE. We've been in the equities business for a long time. Security
Benefit was one of the first in the industry to introduce a variable annuity and
we were on the front end of the mutual fund explosion.* We're as interested in
the return of customers' investments as we are in the return on customers'
investments.
TECHNOLOGY. In today's computer age, we receive financial news and information
at the same time as any other Wall Street professional. When that one important
announcement comes across the wire, we receive the information in real time and
our money managers can react appropriately.
PEOPLE. There's an abundance of investment talent and expertise grown in
America's breadbasket and Security Benefit attracts its fair share. Here, our
talent is moderately insulated from the steady stream of Wall Street noise, so
they can focus on what they do best--manage money.
SECURITY BENEFIT KNOWS MAIN STREET
In order to survive in the financial services industry today, you need to be
good at providing three things:
* products with good performance
* competitive product pricing
* good customer service
But, in order to thrive in the industry, you need to be great at one of those
things.
At Security Benefit, we've got good products with good performance and
competitively priced. But, we've made a conscious decision to be great at
customer service. In 1999, Dalbar, Inc. recognized Security Benefit for its
great customer service--again.
Where does our ability to provide outstanding service stem from? It stems from
everyone at Security Benefit having a deep knowledge of Main Street. Main Street
is part of Americana. Our goal is to provide customers thet high-touch,
personalized service you receive when you enter an establishment on Main Street,
USA.
In the year 2000 and beyond, we will invest in initiatives that enhance the
value we offer to customers and make partnering with Security Benefit an even
clearer choice. Thanks for choosing Security Benefit in 1999.
*Variable annuities and mutual funds distributed by Security Distributors, Inc.
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BOARD OF DIRECTORS
HOWARD R. FRICKE
CHAIRMAN OF THE BOARD AND CEO
Security Benefit Life Insurance Company
Topeka, Kansas
KRIS A. ROBBINS
PRESIDENT AND COO
Security Benefit Life Insurance Company
Topeka, Kansas
SISTER LORETTO MARIE COLWELL
PRESIDENT AND CEO
St. Francis Hospital and Medical Center
Topeka, Kansas
JOHN C. DICUS
CHAIRMAN OF THE BOARD
Capitol Federal Savings & Loan Association
Topeka, Kansas
STEVEN J. DOUGLASS
CHAIRMAN AND CEO
Payless ShoeSource
Topeka, Kansas
WILLIAM W. HANNA
VICE CHAIRPERSON
Koch Industries
Wichita, Kansas
JOHN E. HAYES, JR.
CHAIRMAN OF THE BOARD AND CEO (Ret.)
Western Resources, Inc.
Topeka, Kansas
FRANK SABATINI
CHAIRMAN OF THE BOARD AND CEO
Capital City Bank
Topeka, Kansas
ROBERT C. WHEELER
CHAIRMAN AND CEO
Hill's Pet Nutrition, Inc.
Topeka, Kansas
NOTICE OF MEETING OF MEMBERS
The annual meeting of members of Security Benefit Mutual Holding Company (the
"Mutual Holding Company") will be held on Tuesday, June 6, 2000 at 700 SW
Harrison St., Topeka, Kansas at 1:00 p.m. Each owner of an insurance policy
issued by Security Benefit Life Insurance Company is a member of the Mutual
Holding Company and is entitled to vote, either in person or by proxy, on all
matters coming before the meeting. Proxies are available from the corporate
secretary and must be returned no later than May 31, 2000.
For More Information Call 1-800-888-2461
This report is submitted only for the general information of Varilife insurance
policyowners and is not authorized for distribution to the public.
Enclosed are December 1999 financial reports for the variable life insurance
separate account.
www.securitybenefit.com
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FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT X
PERIOD FROM APRIL 15, 1999
(INCEPTION DATE) TO DECEMBER 31, 1999
WITH REPORT OF INDEPENDENT AUDITORS
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Variable Annuity Account X
Financial Statements
Period from April 15, 1999 (inception date) to December 31, 1999
CONTENTS
Report of Independent Auditors .............................................. 1
Audited Financial Statements
Balance Sheet ............................................................... 2
Statement of Operations and Changes in Net Assets ........................... 3
Notes to Financial Statements ............................................... 4
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Report of Independent Auditors
The Contract Owners
Variable Annuity Account X
and
Board of Directors
Security Benefit Life Insurance Company
We have audited the accompanying individual and combined balance sheets of
Variable Annuity Account X (comprised of the individual series as indicated
therein) as of December 31, 1999, and the related statements of operations and
changes in net assets for the period from April 15, 1999 (inception date) to
December 31, 1999. These financial statements are the responsibility of Security
Benefit Life Insurance Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of investments owned as of December 31, 1999,
by correspondence with the transfer agent. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the individual and combined financial position of the
individual series of Variable Annuity Account X at December 31, 1999, and the
individual and combined results of their operations and changes in their net
assets for the period from April 15, 1999 to December 31, 1999, in conformity
with accounting principles generally accepted in the United States.
Ernst & Young LLP
February 4, 2000
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Variable Annuity Account X
Balance Sheets
December 31, 1999
(DOLLARS IN THOUSANDS - EXCEPT PER SHARE AND UNIT VALUES)
ASSETS
Investments:
Advisor's Fund:
PCG Growth Series - 188,860 shares at net asset
value of $9.82 per share (cost, $1,899)......................... $1,855
SIM Conservative Growth Series - 78,242 shares at
net asset value of $10.39 per share (cost, $792)................ 813
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Combined assets....................................................... $2,668
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NUMBER UNIT
NET ASSETS OF UNITS VALUE
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Net assets are represented by (NOTE 3):
PCG Growth Series:
Accumulation units....................... 189,803 $ 9.77 $1,855
SIM Conservative Growth Series:
Accumulation units....................... 78,619 10.34 813
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Combined net assets.......................... $2,668
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SEE ACCOMPANYING NOTES.
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Variable Annuity Account X
Statements of Operations and Changes in Net Assets
Period from April 15, 1999 (inception date) to December 31, 1999
(IN THOUSANDS)
PCG SIM CONSERVATIVE
GROWTH SERIES GROWTH SERIES COMBINED
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Dividend distributions $ --- $--- $ ---
Expenses (NOTE 2):
Mortality and expense risk fee.. (7) (2) (9)
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Net investment loss............... (7) (2) (9)
Capital gains distributions....... --- --- ---
Realized gain on investments...... 10 4 14
Unrealized appreciation
(depreciation) on investments... (44) 21 (23)
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Net realized and unrealized gain
(loss) on investments........... (34) 25 (9)
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Net increase (decrease) in net
assets resulting from operations (41) 23 (18)
Variable annuity deposits
(NOTES 2 AND 3)................. 1,972 806 2,778
Terminations and withdrawals
(NOTES 2 AND 3)................. (76) (16) (92)
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Net assets at end of period....... $1,855 $813 $2,668
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SEE ACCOMPANYING NOTES.
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Variable Annuity Account X
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Variable Annuity Account X (the Account) is a separate account of Security
Benefit Life Insurance Company (SBL). The Account is registered as an unit
investment trust under the Investment Company Act of 1940, as amended.
Deposits received by the Account are invested in the Advisor's Fund, a
mutual fund not otherwise available to the public. As directed by the
owners, amounts deposited may be invested in shares of PCG Growth Series
(emphasis on long-term growth of capital through investment in a diversified
portfolio of equity securities) and SIM Conservative Growth Series (emphasis
on total return through investment in a portfolio of publicly traded mutual
funds.
Under the terms of the investment advisory contracts, portfolio investments
of the Advisor's Fund are made by The Private Consulting Group, Inc.
INVESTMENT VALUATION
Investments in mutual fund shares are carried in the balance sheet at market
value (net asset value of the underlying mutual fund). The average cost
method is used to determine gains and losses. Security transactions are
accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold for the
period from April 15, 1999 (inception date) to December 31, 1999 were as
follows:
COST OF PURCHASES PROCEEDS FROM SALES
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(IN THOUSANDS)
PCG Growth Series.................. $2,407 $518
SIM Conservative Growth Series..... 947 159
ANNUITY RESERVES
As of December 31, 1999, annuity reserves have not been established because
there are no contracts that have matured and are in the payout stage. Such
reserves would be computed on the basis of published mortality tables using
assumed interest rates that would provide reserves as prescribed by law. In
cases where the payout option selected is life contingent, SBL periodically
recalculates the required annuity reserves, and any resulting adjustment is
either charged or credited to SBL and not to the Account.
REINVESTMENT OF DIVIDENDS
Dividend and capital gains distributions paid by the mutual fund to the
Account are reinvested in additional shares of each respective series.
Dividend income and capital gains distributions are recorded as income on
the ex-dividend date.
FEDERAL INCOME TAXES
The operations of the Account are a part of the operations of SBL. Under
current law, no federal income taxes are allocated by SBL to the operations
of the Account.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those estimates.
2. VARIABLE ANNUITY CONTRACT CHARGES
Mortality and expense risks assumed by SBL are compensated for by a fee
equivalent to an annual rate of 0.65% and 0.80% of the net asset value of
each contract for individual and group contracts, respectively. SBL assumes
the operating expenses for the Account.
When applicable, an amount for state premium taxes is deducted as provided
by pertinent state law either from the purchase payments or from the amount
applied to effect an annuity at the time annuity payments commence.
3. SUMMARY OF UNIT TRANSACTIONS
PERIOD FROM
APRIL 15, 1999
(INCEPTION DATE) TO
DECEMBER 31, 1999
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(UNITS IN THOUSANDS)
PCG Growth Series:
Variable annuity deposits......................... 197
Terminations, withdrawals and expense charges..... 8
SIM Conservative Growth Series:
Variable annuity deposits......................... 80
Terminations, withdrawals and expense charges..... 2
