<TABLE>
BANKERS SECURITY VARIABLE ANNUITY FUNDS 001, 002 AND 003
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
Combined
ASSETS Fund 001 Fund 002 Fund 003 Totals
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Oppenheimer Fund
(4,197 shares at net asset value of
$11.12 per share; cost $27,642)..........................$ 46,671 $ 46,671
Eaton Vance Income Fund of Boston
(584 shares at net asset value of
$7.96 per share; cost $3,919)............................ $ 4,649 4,649
Oppenheimer Money Market Fund
(52,895 shares at net asset value of
$1.00 per share; cost $52,895)........................... $ 52,895 52,895
---------- ---------- ---------- ----------
46,671 4,649 52,895 104,215
LIABILITIES
Net payable to Bankers Security Life Insurance Society...... 27 183 40 250
---------- ---------- ---------- ----------
Net Assets $ 46,644 $ 4,466 $ 52,855 $ 103,965
========== ========== ========== ==========
Accumulation Units Outstanding 9,924 806 15,546 26,276
========== ========== ========== ==========
Accumulation Unit Value $ 4.70 $ 5.54 $ 3.40
========== ========== ==========
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
Year Ended December 31, 1995
Combined
Fund 001 Fund 002 Fund 003 Totals
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends.....................................$ 4,163 $ 455 $ 2,725 $ 7,343
Expenses -
Mortality and expense guarantee fees...................... (394) (36) (515) (945)
---------- ---------- ---------- ----------
Net investment income....................................... 3,769 419 2,210 6,398
Net realized gain (loss).................................... 48 (6) - 42
Net unrealized gain......................................... 4,931 166 - 5,097
---------- ---------- ---------- ----------
Increase in net assets resulting from operations............ 8,748 579 2,210 11,537
Net contracts purchased..................................... - - - -
Payments to contract owners - surrenders and other benefits. - - - -
---------- ---------- ---------- ----------
Net increase in net assets.................................. 8,748 579 2,210 11,537
Net assets, beginning of year............................... 37,896 3,887 50,645 92,428
---------- ---------- ---------- ----------
Net assets, end of year....................................$ 46,644 $ 4,466 $ 52,855 $ 103,965
========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
BANKERS SECURITY VARIABLE ANNUITY FUNDS 001, 002 AND 003
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
Year Ended December 31, 1994
Combined
Fund 001 Fund 002 Fund 003 Totals
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends.....................................$ 3,836 $ 420 $ 2,353 $ 6,609
Expenses -
Mortality and expense guarantee fees...................... (595) (39) (610) (1,244)
---------- ---------- ---------- ----------
Net investment income....................................... 3,241 381 1,743 5,365
Net realized gain........................................... 11,620 - - 11,620
Net unrealized loss......................................... (15,717) (473) - (16,190)
---------- ---------- ---------- ----------
Increase (decrease) in net assets resulting from operations. (856) (92) 1,743 795
Net contracts purchased..................................... 320 - - 320
Payments to contract owners - surrenders and other benefits. (39,739) - (24,971) (64,710)
---------- ---------- ---------- ----------
Net decrease in net assets.................................. (40,275) (92) (23,228) (63,595)
Net assets, beginning of year............................... 78,171 3,979 73,873 156,023
---------- ---------- ---------- ----------
Net assets, end of year....................................$ 37,896 $ 3,887 $ 50,645 $ 92,428
========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
Note 1 - Organization
In April 1975, Bankers Security Variable Annuity Funds 001, 002 and 003 (the
"Separate Accounts") were established under the provisions of New York
Insurance Law by Bankers Security Life Insurance Society ("Bankers Security").
The Separate Accounts are registered with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of 1940,
as amended (the "Act") and are used to fund certain benefits for variable
annuity policies issued by Bankers Security. The assets of the Separate
Accounts are invested in open-end diversified management investment companies
which are also registered under the Act. New sales terminated in September
1981. Only subsequent sales to existing contracts are accepted.
Note 2 - Investments
Security transactions are recorded on the trade date at the purchase cost or
sales proceeds, as applicable. Investments owned are valued at closing market
quotations (net asset value). The difference between the beginning of year
value and current market value of investments owned is recorded as an unrealized
gain (loss) on investments. Dividends received are generally recorded as
income on the record date and are reinvested to purchase additional mutual
fund shares. The aggregate cost of shares acquired and the aggregate proceeds
from shares sold for the year ended December 31, 1995, were:
Cost of Proceeds
Shares from Shares
Acquired Sold
---------- ----------
Fund 001 $ 4,163 $ 459
Fund 002 455 29
Fund 003 2,725 544
Note 3 - Taxes
Bankers Security is taxed as a life insurance company under the Internal
Revenue Code of 1986, as amended (the "Code"). Since the Separate Accounts
are not a separate entity from Bankers Security, and their operations form a
part of Bankers Security, they are not taxed separately as a "regulated
investment company" under Sub-chapter M of the Code. Under existing Federal
income tax law, investment income of the Separate Accounts, to the extent that
it is applied to increase reserves under a contract, is not taxed and may be
compounded through reinvestment without additional tax to Bankers Security.
Note 4 - Charges
Deductions not exceeding 8.5% (9.29% of the net amount invested) are made from
each purchase payment for sales and administrative charges and the minimum
death benefit. Bankers Security deducts a daily charge equal to an annual rate
of 1.0% of the daily asset value of the Separate Accounts as a charge for
mortality and expense risks assumed. Where applicable, premium taxes are
charged.
Note 5 - Supplementary Information
Accumulation unit values for a unit of the funds outstanding at December 31,
were:
Fund 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
001 $ 4.70 $ 3.89 $ 4.36 $ 3.85 $ 3.59 $ 2.80 $ 2.95 $ 2.40 $ 2.23 $ 2.32
002 5.54 5.38 6.00 5.11 4.35 3.05 2.65 3.39 2.92 2.79
003 3.40 3.27 3.18 3.13 3.05 2.91 2.72 2.53 2.38 2.26
<PAGE>
INDEPENDENT AUDITORS' REPORT
To Bankers Security Life Insurance Society and
Bankers Security Variable Annuity Funds 001, 002and 003 Contract
Owners:
We have audited the accompanying combined statement of assets and
liabilities of the Bankers Security Variable Annuity Funds 001, 002 and
003 as of December 31, 1995, and the combined statements of operations
and changes in net assets for the year ended December 31, 1995. These
financial statements are the responsibility of the Bankers Security Life
Insurance Society management. Our responsibility is to express an
opinion on these financial statements based on our audits. The
statements of operations and changes in net assets for the years ended
December 31, 1994 and the accumulation units values for each of the
years in the nine-year period ended December 31, 1994 were audited by
other auditors whose report dated February 9, 1995 expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. 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 financial position of the combined
funds constituting the Bankers Security Variable Annuity Funds 001, 002
and 003 as of December 31, 1995, and the combined results of operations
and changes in net assets for the year ended December 31, 1995, in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, MN
February 12, 1996
