A Message to Variable Annuity Contract Owners
There were significant increases in the Stock Markets in both 1995 and 1996.
In 1996, the Dow Jones Industrial Average increased 26.0% in value and the
Standard & Poor's 500 Index increased by 20.3%. Both the Dow Jones Industrial
Average and the S&P 500 are unmanaged indices.
The yield on the 30 year Treasury Bond has increased recently, so that at the
end of January, 1997 it was approximately 7%. Short term rates, as measured
by the 3 month Treasury Bill, are yielding 5.4% now, which is slightly ahead
of a year ago.
The U.S. Gross Domestic Product for 1996 increased approximately 3% while
inflation remains low with the Consumer Price Index increasing by 3.3% in
1996.
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 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 six 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.
Name Change. Please note that on July 1, 1996, Bankers Security Life
Insurance Society changed its name to ReliaStar Bankers Security Life
Insurance Company. 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
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<TABLE>
RELIASTAR BANKERS SECURITY VARIABLE ANNUITY FUNDS P AND Q FOR THE CENTENNIAL
ANNUITY PLAN
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1996
Non-Qualified (P)
---------------------------------------------------
Oppenheimer
---------------------------------------------------
Daily Cash Capital High
Accumulation Money Appreciation Income
ASSETS Fund 134 Fund 130 Fund 132 Fund 133
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investments.......................................$ 10,672 $ 2,459,577 $ 2,864,492 $ 710,584
Net receivable from ReliaStar Bankers.............. 399 - 14,125 -
------------ ------------ ------------ ------------
11,071 2,459,577 2,878,617 710,584
LIABILITIES
Net payable to ReliaStar Bankers................... - 64,184 - 58,189
------------ ------------ ------------ ------------
Net Assets $ 11,071 $ 2,395,393 $ 2,878,617 $ 652,395
============ ============ ============ ============
Accumulation Units Outstanding 4,472 1,006,777 444,679 136,687
============ ============ ============ ============
Accumulation Unit Value $ 2.48 $ 2.35 $ 6.38 $ 4.21
============ ============ ============ ============
Investments basis data:
Shares Owned 10,672 2,459,577 74,037 63,844
Net Asset Value $ 1.00 $ 1.00 $ 38.69 $ 11.13
Cost $ 10,672 $ 2,459,577 $ 868,850 $ 575,322
</TABLE>
<TABLE>
Qualified (Q)
--------------------------------------
Oppenheimer
--------------------------------------
Capital High
Money Appreciation Income Combined
ASSETS Fund 030 Fund 032 Fund 033 P and Q
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investments.......................................$ 252,188 $ 3,445,925 $ 286,965 $ 10,030,403
Net receivable from ReliaStar Bankers.............. 7,819 17,126 - 39,469
------------ ------------ ------------ ------------
260,007 3,463,051 286,965 10,069,872
LIABILITIES
Net payable to ReliaStar Bankers................... - - 225 122,598
------------ ------------ ------------ ------------
Net Assets $ 260,007 $ 3,463,051 $ 286,740 $ 9,947,274
============ ============ ============ ============
Accumulation Units Outstanding 123,131 604,941 74,409 2,395,096
============ ============ ============ ============
Accumulation Unit Value $ 2.09 $ 5.72 $ 3.85
============ ============ ============
Investments basis data:
Shares Owned 252,188 89,065 25,783
Net Asset Value $ 1.00 $ 38.69 $ 11.13
Cost $ 282,188 $ 1,147,978 $ 234,644
</TABLE>
<TABLE>
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
Year Ended December 31, 1996
Non-Qualified (P)
---------------------------------------------------
Fund 134 Fund 130 Fund 132 Fund 133
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends..........................$ 504 $ 137,541 $ 162,012 $ 68,231
Expenses -
Mortality and expense guarantee fees........... (198) (26,564) (29,282) (7,527)
------------ ------------ ------------ ------------
Net investment income.............................. 306 110,977 132,730 60,704
Net realized gain.................................. - - 151,254 4,573
Net unrealized gain................................ - - 210,289 28,978
------------ ------------ ------------ ------------
Increase in net assets resulting from operations... 306 110,977 494,273 94,255
Net contracts purchased............................ - - - -
Transfer among funds, net.......................... - - 24,714 (24,504)
Reserve transfers from (to) ReliaStar Bankers...... 574 (4,276) 13,345 (54,997)
Payments to contract owners -
surrenders and other benefits................... (30) (458,813) (437,050) (95,915)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.............. 850 (352,112) 95,282 (81,161)
Net assets, beginning of year...................... 10,221 2,747,505 2,783,335 733,556
------------ ------------ ------------ ------------
Net assets, end of year...........................$ 11,071 $ 2,395,393 $ 2,878,617 $ 652,395
============ ============ ============ ============
</TABLE>
<TABLE>
Qualified (Q)
--------------------------------------
Combined
Fund 030 Fund 032 Fund 033 P and Q
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends..........................$ 19,248 $ 197,383 $ 27,379 $ 612,298
Expenses -
Mortality and expense guarantee fees........... (3,952) (34,820) (2,811) (105,154)
------------ ------------ ------------ ------------
Net investment income.............................. 15,296 162,563 24,568 507,144
Net realized gain.................................. - 62,816 2,324 220,967
Net unrealized gain................................ - 362,288 10,165 611,720
------------ ------------ ------------ ------------
Increase in net assets resulting from operations... 15,296 587,667 37,057 1,339,831
Net contracts purchased............................ 26,007 27,718 10,516 64,241
Transfer among funds, net.......................... 10,884 (12,191) 1,311 214
Reserve transfers from (to) ReliaStar Bankers...... 1,846 17,947 580 (24,981)
Payments to contract owners -
surrenders and other benefits................... (180,270) (264,945) (42,952) (1,479,975)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.............. (126,237) 356,196 6,512 (100,670)
Net assets, beginning of year...................... 386,244 3,106,855 280,228 10,047,944
------------ ------------ ------------ ------------
Net assets, end of year...........................$ 260,007 $ 3,463,051 $ 286,740 $ 9,947,274
============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
RELIASTAR BANKERS SECURITY VARIABLE ANNUITY FUNDS P AND Q FOR THE CENTENNIAL
ANNUITY PLAN
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
Year Ended December 31, 1995
Non-Qualified (P)
---------------------------------------------------
Fund 134 Fund 130 Fund 132 Fund 133
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends..........................$ 2,066 $ 158,068 $ 11,872 $ 70,655
Expenses -
Mortality and expense guarantee fees........... (393) (28,249) (24,063) (6,787)
------------ ------------ ------------ ------------
Net investment income.............................. 1,673 129,819 (12,191) 63,868
Net realized gain.................................. - - 16,672 4,306
Net unrealized gain................................ - - 660,444 52,910
------------ ------------ ------------ ------------
Increase in net assets resulting from operations 1,673 129,819 664,925 121,084
Net contracts purchased............................ - 2,351 8,597 150
Transfer among funds, net.......................... (79,842) (144,368) 198,864 25,308
Reserve transfers from ReliaStar Bankers........... - 59,042 6,805 -
Payments to contract owners -
surrenders and other benefits................... (41) (325,592) (230,019) (76,523)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.............. (78,210) (278,748) 649,172 70,019
Net assets, beginning of year...................... 88,431 3,026,253 2,134,163 663,537
------------ ------------ ------------ ------------
Net assets, end of year...........................$ 10,221 $ 2,747,505 $ 2,783,335 $ 733,556
============ ============ ============ ============
</TABLE>
<TABLE>
Qualified (Q)
-------------------------------------- Combined
Fund 030 Fund 032 Fund 033 P and Q
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends..........................$ 28,164 $ 15,643 $ 29,728 $ 316,196
Expenses -
Mortality and expense guarantee fees........... (5,079) (30,429) (2,971) (97,971)
------------ ------------ ------------ ------------
Net investment income.............................. 23,085 (14,786) 26,757 218,225
Net realized gain.................................. - 367,032 2,425 390,435
Net unrealized gain................................ - 495,509 21,371 1,230,234
------------ ------------ ------------ ------------
Increase in net assets resulting from operations 23,085 847,755 50,553 1,838,894
Net contracts purchased............................ 11,832 86,358 22,031 131,319
Transfer among funds, net.......................... (11,924) 13,786 (1,862) (38)
Reserve transfers from ReliaStar Bankers........... - - - 65,847
Payments to contract owners -
surrenders and other benefits................... (188,093) (768,689) (48,289) (1,637,246)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.............. (165,100) 179,210 22,433 398,776
Net assets, beginning of year...................... 551,344 2,927,645 257,795 9,649,168
------------ ------------ ------------ ------------
Net assets, end of year...........................$ 386,244 $ 3,106,855 $ 280,228 $ 10,047,944
============ ============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
RELIASTAR BANKERS SECURITY VARIABLE ANNUITY FUNDS P AND Q FOR THE CENTENNIAL
ANNUITY PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
Note 1 - Organization
ReliaStar Bankers Security Variable Annuity Funds P and Q for The Centennial
Annuity Plan (the "Separate Accounts") were established under the provisions
of New York insurance laws by ReliaStar Bankers Security Life Insurance
Company ("ReliaStar Bankers"), previously Bankers Security Life Insurance
Society, in July 1980 (Fund 134), December 1981 (Fund 130) and December 1982
(Funds 132, 133, 030, 032 and 033). 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 ReliaStar Bankers.
The assets of the Separate Accounts are invested in open-end diversified
management investment companies registered under the Act. ReliaStar Bankers
ceased offering the Separate Account 134 contracts for sale in September 1981,
the date that Revenue Ruling 81-225 was announced by the Internal Revenue
Service. Contract owners of Separate Account 134 are subject to current
taxation on income from fund shares. ReliaStar Bankers encourages contract
owners to transfer their balances in this separate account to Separate
Accounts 130, 132 or 133, which are closed to new contract owners but which
continue to accept additional payments from existing contract owners.
Similarly, Separate Accounts 030, 032 and 033 are closed to new contract
owners but continue to accept additional payments from existing contract
owners.
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. The difference between the beginning of year value and current
market value of investments owned is recorded as 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, 1996, were:
Cost of Shares Proceeds from Cost of Shares Proceeds from
Fund Acquired Shares Sold Fund Acquired Shares Sold
134 $ 504 $ 84 030 $ 54,536 $ 182,432
130 145,507 436,423 032 215,184 302,581
132 188,266 464,708 033 38,568 43,502
133 70,950 127,802
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 separate entities from ReliaStar Bankers, and their operations form a
part of ReliaStar Bankers, they will not be 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.
Beginning in January 1982, contract owners of ReliaStar Bankers Security
Variable Annuity Funds 121, 122, 123, 124, 125, 126 and 134 who were adversely
affected by Internal Revenue Service Revenue Ruling 81-225 were able to
exchange their contracts for ReliaStar Bankers Security Variable Annuity
Separate Account 130, 132 or 133 contracts. These contract owners may make
such transfers without incurring a charge or fee for transferring.
Note 4 - Charges and Transfers
ReliaStar Bankers deducts a daily charge equal to an annual rate of 1.0% of
the daily asset value of the Separate Accounts for mortality and expense risks
assumed by ReliaStar Bankers. Where applicable, premium taxes are charged.
The amount of the reserves for contracts in the distribution period is
determined by actuarial assumptions which meet statutory requirements. Gains
or losses resulting from actual mortality experience, the full responsibility
for which is assumed by ReliaStar Bankers, are offset by transfers to, or
from, ReliaStar Bankers. Included in Net receivable from (payable to)
ReliaStar Bankers are policy transactions which are unsettled as of the
reporting date.
Note 5 - Supplementary Information
Accumulation unit values for a unit of the funds outstanding at December 31,
were:
Fund 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
134 $2.48 $2.37 $2.28 $2.22 $2.18 $2.13 $2.03 $1.90 $1.76 $1.66
130 2.35 2.24 2.15 2.09 2.04 1.98 1.89 1.76 1.63 1.53
132 6.38 5.36 4.09 4.46 3.54 3.10 2.03 2.46 1.95 1.74
133 4.21 3.69 3.09 3.23 2.58 2.21 1.67 1.61 1.55 1.35
030 2.09 1.99 1.91 1.86 1.82 1.77 1.68 1.57 1.45 1.36
032 5.72 4.81 3.66 4.00 3.18 2.78 1.82 2.21 1.75 1.56
033 3.85 3.38 2.83 2.96 2.36 2.02 1.52 1.47 1.41 1.24
<PAGE>
INDEPENDENT AUDITORS' REPORT
To ReliaStar Bankers Security Life Insurance Company and
ReliaStar Bankers Security Variable Annuity Funds P and Q for the
Centennial Annuity Plan Contract Owners:
We have audited the accompanying combined statement of assets and liabilities
of the ReliaStar Bankers Security Variable Annuity Funds P and Q for the
Centennial Annuity Plan as of December 31, 1996, and the related combined
statements of operations and changes in net assets for the years ended
December 31, 1996 and 1995. These financial statements are the responsibility
of ReliaStar Bankers Security Life Insurance Company management. Our
responsibility is to express an opinion on these financial statements
based on our audits. The accumulation unit values for each of the years in the
eight-year period ended December 31, 1994, were audited by other auditors whose
report dated February 9, 1995, expressed an unqualified opinion on those
values.
We conducted our audits 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 audits provide 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 ReliaStar Bankers Security Variable Annuity Funds P and Q for
the Centennial Annuity Plan as of December 31, 1996, and the combined results
of operations and the changes in net assets for the years ended December 31,
1996 and 1995, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Minneapolis, MN
February 14, 1997
