A Message to Variable Annuity Contract Owners
We are now in the third year of significant increases in the
U.S. Stock Markets, as measured by the Dow Jones Industrial
Average and the Standard & Poor's 500 Index. Propelled by a
second quarter increase of 17.1%, the Dow's increase for the
six months ended June 30, 1997 was 20.1%. The S&P increased
17.5% in the first quarter, and 20.6% for the first half of
1997. Both the Dow Jones Industrial Average and the S&P 500
are unmanaged indices.
The yield on the 30 year Treasury Bond has decreased recently,
so that at the middle of July, 1997 it was approximately 6.5%.
Short term rates, as measured by the 3 month Treasury Bill, are
approximately 5%, which is slightly lower than a year ago.
The U.S. Gross Domestic Product for the second quarter of 1997
increased approximately 2.2% while inflation remains low with
the Consumer Price Index increasing by 2.3% year-over-year on
June 30, 1997.
The Variable Annuity Contracts which are the subject of this
report are distributed by Washington Square Securities, Inc.
("WSSI"), 20 Washington Avenue South, Minneapolis, Minnesota
55401, (612) 372-5507. WSSI, a registered broker-dealer, is an
affiliated company of ReliaStar Bankers Security Life Insurance
Company, the issuer of your insurance contract.
The Outlook. For the balance of 1997, we expect economic
growth to continue near the trend rate and continuing moderate
inflation with interest rates remaining near current levels.
At the time of this report, macroeconomic indicators are
showing mixed signs. While the business expansion has been
underway for almost 7 years, it is likely to be sustained
throughout 1997. Nevertheless, profits are expected to grow
albeit at a slower rate than in the past few years.
ReliaStar Bankers Security is part of a group of companies
owned by ReliaStar Financial Corp.
Respectfully,
James G. Cochran
Executive Vice President
ReliaStar Bankers Security Life Insurance Company
<PAGE>
<TABLE>
RELIASTAR BANKERS SECURITY VARIABLE ANNUITY FUNDS 001, 002 AND 003
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1997 (Unaudited)
Oppenheimer Eaton Vance Oppenheimer
------------ ------------ ------------
Multiple Income Fund
Strategies of Boston Money Market Combined
ASSETS Fund 001 Fund 002 Fund 003 Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investments................................................$ 28,181 $ 5,355 $ 24,232 $ 57,768
Net receivable from ReliaStar Bankers....................... - 3 - 3
------------ ------------ ------------ ------------
28,181 5,358 24,232 57,771
LIABILITIES
Net payable to ReliaStar Bankers............................ 48 - 65 113
------------ ------------ ------------ ------------
Net Assets $ 28,133 $ 5,358 $ 24,167 $ 57,658
============ ============ ============ ============
Accumulation Units Outstanding 3,211 663 6,629 10,503
============ ============ ============ ============
Accumulation Unit Value $ 7.18 $ 8.05 $ 3.61
============ ============ ============
Investment basis data:
Shares Owned 1,870 639 24,232
Net Asset Value $ 15.02 $ 8.38 $ 1.00
Cost $ 28,356 $ 4,890 $ 24,232
</TABLE>
<TABLE>
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1997 (Unaudited)
Combined
Fund 001 Fund 002 Fund 003 Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends.....................................$ 2,151 $ 244 $ 539 $ 2,934
Expenses -
Mortality and expense guarantee fees...................... (85) (20) (113) (218)
------------ ------------ ------------ ------------
Net investment income....................................... 2,066 224 426 2,716
Net realized gain........................................... 14,911 542 - 15,453
Net unrealized loss......................................... (13,405) (429) - (13,834)
------------ ------------ ------------ ------------
Increase in net assets resulting from operations............ 3,572 337 426 4,335
Net contracts purchased..................................... - - - -
Payments to contract owners - surrenders and other benefits. - - - -
------------ ------------ ------------ ------------
Net increase in net assets.................................. 3,572 337 426 4,335
Net assets, beginning of period............................. 24,561 5,021 23,741 53,323
------------ ------------ ------------ ------------
Net assets, end of period..................................$ 28,133 $ 5,358 $ 24,167 $ 57,658
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
RELIASTAR BANKERS SECURITY VARIABLE ANNUITY FUNDS 001, 002 AND 003
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
For the Six Months Ended June 30, 1996 (Unaudited)
Combined
Fund 001 Fund 002 Fund 003 Totals
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends.....................................$ - $ 237 $ 1,197 $ 1,434
Expenses -
Mortality and expense guarantee fees...................... (218) (19) (265) (502)
------------ ------------ ------------ ------------
Net investment income (expense)............................. (218) 218 932 932
Net realized loss........................................... - (6) - (6)
Net unrealized gain (loss).................................. 4,286 (8) - 4,278
------------ ------------ ------------ ------------
Increase in net assets resulting from operations............ 4,068 204 932 5,204
Net contracts purchased..................................... - - - -
Payments to contract owners - surrenders and other benefits. - - - -
------------ ------------ ------------ ------------
Net increase in net assets.................................. 4,068 204 932 5,204
Net assets, beginning of period............................. 46,644 4,466 52,855 103,965
------------ ------------ ------------ ------------
Net assets, end of period..................................$ 50,712 $ 4,670 $ 53,787 $ 109,169
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
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 ReliaStar Bankers Security Life Insurance Company
("ReliaStar Bankers"), previously Bankers Security Life Insurance Society.
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.
On June 17, 1997, the Oppenheimer Fund name was changed to Oppenheimer Multiple
Strategies.
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 six months ended June 30,
1997, were:
Cost of Proceeds
Shares from Shares
Acquired Sold
------------ ------------
Fund 001 $ 28,700 $ 26,269
Fund 002 251 241
Fund 003 539 116
Note 3 - Taxes
ReliaStar Bankers 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 ReliaStar Bankers, and their operations form a
part of ReliaStar Bankers, 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 ReliaStar Bankers.
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 mininum
death benefit. ReliaStar Bankers 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
June 30, were:
Fund 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
001 $ 7.18 $ 5.11 $ 4.46 $ 4.19 $ 4.00 $ 3.60 $ 3.26 $ 2.94 $ 2.79 $ 2.49
002 8.05 5.50 5.57 5.77 5.65 4.93 3.81 3.53 3.72 3.19
003 3.61 3.45 3.34 3.22 3.15 3.10 2.99 2.82 2.63 2.45
