<PAGE>
PARKSTONE
================================================================================
VARIABLE ANNUITY
1999 ANNUAL REPORT
[SBL LOGO]
SECURITY BENEFIT LIFE
INSURANCE COMPANIY
A Member of The Security Benefit
Group of companies
<PAGE>
A MESSAGE FROM SECURITY BENEFIT
SECURITY BENEFIT GROUP KNOWS WALL STREET AND MAIN STREET
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 SBL 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.
SECURITY BENEFIT 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 SBL 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.
SECURITY BENEFIT KNOWS WALL STREET
Even though SBL 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. SBL 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 SBL 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 the 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.
<PAGE>
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 CHAIRMAN
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.
This report is submitted only for the general information of Security Benefit
Life Variable Annuity contractowners and participants and is not authorized for
distribution to the public.
For More Information Call
1-800-888-2461
www.securitybenefit.com
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Contract Owners of Parkstone Variable Annuity Account
and The Board of Directors of
Security Benefit Life Insurance Company
We have audited the accompanying individual and combined balance sheets of
Parkstone Variable Annuity Account (comprised of the individual subaccounts as
indicated therein) as of December 31, 1999, and the related statement of
operations and changes in net assets for the year then ended. 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 subaccounts of Parkstone Variable Annuity Account at December 31,
1999, and the individual and combined results of their operations and changes in
their net assets for the year then ended in conformity with accounting
principles generally accepted in the United States.
Ernst & Young LLP
February 4, 2000
<PAGE>
PARKSTONE VARIABLE ANNUITY ACCOUNT
================================================================================
BALANCE SHEETS DECEMBER 31, 1999
- --------------------------------------------------------------------------------
ASSETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND UNIT VALUES)
Investments:
Parkstone Advantage Fund:
Bond Fund - 614,956 shares at net asset
value of $9.72 per share (cost, $6,525) ......................... $ 5,977
Mid-Capitalization Fund - 1,079,540 shares at net
asset value of $21.27 per share (cost, $16,022) ................. 22,962
International Discovery Fund - 540,121 shares at net
asset value of $20.51 per share (cost, $7,075) .................. 11,078
Small Capitalization Fund - 641,129 shares at net
asset value of $20.77 per share (cost, $10,532) ................. 13,316
Liberty Variable Investment Trust:
Colonial U.S. Stock Fund - 248,579 shares at net
asset value of $19.85 per share (cost, $4,717) .................. 4,934
Colonial Strategic Income Fund - 291,470 shares at
net asset value of $10.44 per share (cost, $3,288) .............. 3,043
Newport Tiger Fund - 207,917 shares at net
asset value of $2.62 per share (cost, $309) ..................... 545
SBL Fund:
Money Market Series (Series C) - 153,583 shares at
net asset value of $12.04 per share (cost, $1,896) ............. 1,849
Global Strategic Income Series (Series K) - 31,574 shares
at net asset value of $9.61 per share (cost, $316) .............. 303
Equity Income Series (Series O) - 426,127 shares at
net asset value of $17.27 per share (cost, $7,621) .............. 7,359
Social Awareness Series (Series S) - 16,233 shares
at net asset value of $31.71 per share (cost, $467) ............. 515
------
Combined assets ....................................................... $71,881
======
See accompanying notes.
<PAGE>
PARKSTONE VARIABLE ANNUITY ACCOUNT
================================================================================
BALANCE SHEETS (CONTINUED) DECEMBER 31, 1999
- --------------------------------------------------------------------------------
NET ASSETS (DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES)
Net assets are represented by (Note 3):
NUMBER UNIT
OF UNITS VALUE AMOUNT
-----------------------------
NON-TRUST CONTRACTS
Bond Subaccount:
Accumulation units ........................ 489,524 $11.61 $ 5,684
Mid-Capitalization Subaccount:
Accumulation units ........................ 938,418 24.08 22,596
International Discovery Subaccount:
Accumulation units ........................ 544,060 19.90 10,825
Small Capitalization Subaccount:
Accumulation units ........................ 584,871 22.60 13,218
Colonial U.S. Stock Subaccount:
Accumulation units ........................ 382,831 12.89 4,934
Colonial Strategic Income Subaccount:
Accumulation units ........................ 289,310 10.52 3,043
Newport Tiger Subaccount:
Accumulation units ........................ 38,757 14.06 545
Money Market Subaccount:
Accumulation units ........................ 168,620 10.72 1,807
Global Strategic Income Subaccount:
Accumulation units ........................ 28,720 10.56 303
Equity Income Subaccount:
Accumulation units ........................ 640,641 10.97 7,025
Social Awareness Subaccount:
Accumulation units ........................ 34,749 14.81 515
TRUST CONTRACTS
Bond Subaccount:
Accumulation units ........................ 24,047 12.21 293
Mid-Capitalization Subaccount:
Accumulation units ........................ 14,521 25.21 366
International Discovery Subaccount:
Accumulation units ........................ 12,112 20.87 253
Small Capitalization Subaccount:
Accumulation units ........................ 4,134 23.75 98
Colonial U.S. Stock Fund Subaccount:
Accumulation units ........................ --- --- ---
Colonial Strategic Income Subaccount:
Accumulation units ........................ --- --- ---
Money Market Subaccount:
Accumulation units ........................ 3,874 10.84 42
Global Strategic Income Subaccount:
Accumulation units ........................ --- --- ---
Equity Income Subaccount:
Accumulation units ........................ 29,892 11.16 334
------
Combined net assets ............................ $71,881
======
See accompanying notes.
<PAGE>
<TABLE>
PARKSTONE VARIABLE ANNUITY ACCOUNT
====================================================================================================================================
STATEMENTS OF OPERATIONS AND
CHANGES IN NET ASSETS YEAR ENDED DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<CAPTION>
MID- INTERNATIONAL SMALL
BOND CAPITALIZATION DISCOVERY CAPITALIZATION
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------------------------------------------
<S> <C> <C> <C> <C>
NON-TRUST CONTRACTS
Dividend distributions .............................................. $ 482 $ --- $ --- $ ---
Expenses (NOTE 2):
Mortality and expense risk fee..................................... (88) (267) (121) (161)
Administrative fee ................................................ (11) (32) (15) (19)
------------------------------------------------------------
Net investment income (loss)......................................... 383 (299) (136) (180)
Capital gains distributions.......................................... 85 1,219 429 586
Realized gain (loss) on investments.................................. 82 1,970 1,130 (1,434)
Unrealized appreciation (depreciation) on investments................ (818) 4,483 2,655 3,358
------------------------------------------------------------
Net realized and unrealized gain (loss) on investments............... (651) 7,672 4,214 2,510
------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations...... (268) 7,373 4,078 2,330
Net assets at beginning of year...................................... 8,767 24,795 10,956 18,210
Variable annuity deposits (NOTES 2 AND 3)............................ 785 789 299 927
Terminations and withdrawals (NOTES 2 AND 3)......................... (3,600) (10,361) (4,508) (8,249)
------------------------------------------------------------
Net assets at end of year............................................ $ 5,684 $ 22,596 $10,825 $13,218
============================================================
TRUST CONTRACTS
Dividend distributions............................................... $ 27 $--- $ --- $ ---
Expenses (NOTE 2):
Mortality and expense risk fee..................................... (4) (3) (2) (1)
Administrative fee................................................. --- --- --- ---
------------------------------------------------------------
Net investment income (loss)......................................... 23 (3) (2) (1)
Capital gains distributions.......................................... 5 19 9 4
Realized gain (loss) on investments.................................. 22 94 75 (61)
Unrealized appreciation (depreciation) on investments................ (73) 35 24 52
------------------------------------------------------------
Net realized and unrealized gain (loss) on investments............... (46) 148 108 (5)
------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations...... (23) 145 106 (6)
Net assets at beginning of year...................................... 770 694 456 357
Variable annuity deposits (NOTES 2 AND 3)............................ 134 --- --- 16
Terminations and withdrawals (NOTES 2 AND 3)......................... (588) (473) (309) (269)
------------------------------------------------------------
Net assets at end of year............................................ $ 293 $ 366 $ 253 $ 98
============================================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
PARKSTONE VARIABLE ANNUITY ACCOUNT
====================================================================================================================================
STATEMENTS OF OPERATIONS AND
CHANGES IN NET ASSETS (CONTINUED) YEAR ENDED DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<CAPTION>
COLONIAL
COLONIAL STRATEGIC NEWPORT MONEY
U.S. STOCK INCOME TIGER MARKET
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------------------------------------
<S> <C> <C> <C> <C>
NON-TRUST CONTRACTS
Dividend distributions .............................................. $ 27 $ 223 $ 4 $ 157
Expenses (NOTE 2):
Mortality and expense risk fee..................................... (59) (42) (6) (25)
Administrative fee................................................. (7) (5) (1) (3)
-------------------------------------------------
Net investment income (loss)......................................... (39) 176 (3) 129
Capital gains distributions.......................................... 246 --- --- ---
Realized gain (loss) on investments.................................. 245 (22) 50 24
Unrealized appreciation (depreciation) on investments................ 12 (146) 208 (91)
-------------------------------------------------
Net realized and unrealized gain (loss) on investments............... 503 (168) 258 (67)
-------------------------------------------------
Net increase (decrease) in net assets resulting from operations...... 464 8 255 62
Net assets at beginning of year...................................... 3,957 3,362 449 1,955
Variable annuity deposits (NOTES 2 AND 3)............................ 2,595 761 139 1,470
Terminations and withdrawals (NOTES 2 AND 3)......................... (2,082) (1,088) (298) (1,680)
-------------------------------------------------
Net assets at end of year............................................ $ 4,934 $ 3,043 $ 545 $ 1,807
=================================================
TRUST CONTRACTS
Dividend distributions............................................... $ --- $ --- $--- $ 3
Expenses (NOTE 2):
Mortality and expense risk fee..................................... --- --- ---
Administrative fee................................................. --- --- ---
-------------------------------------------------
Net investment income (loss)......................................... --- --- (3)
Capital gains distributions.......................................... --- --- ---
Realized gain (loss) on investments.................................. 8 (2) ---
Unrealized appreciation (depreciation) on investments................ (2) 5 (1)
-------------------------------------------------
Net realized and unrealized gain (loss) on investments............... 6 3 (1)
-------------------------------------------------
Net increase (decrease) in net assets resulting from operations...... 6 3 2
Net assets at beginning of year...................................... 102 139 41
Variable annuity deposits (NOTES 2 AND 3)............................ --- 2 ---
Terminations and withdrawals (NOTES 2 AND 3)......................... (108) (144) (1)
-------------------------------------------------
Net assets at end of year............................................ $ --- $ --- $--- $ 42
=================================================
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
GLOBAL
STRATEGIC EQUITY SOCIAL
INCOME INCOME AWARENESS
SUBACCOUNT SUBACCOUNT SUBACCOUNT COMBINED
----------------------------------------------------------
<S> <C> <C> <C> <C>
NON-TRUST CONTRACTS
Dividend distributions .............................................. $--- $ 227 $ 2 $ 1,122
Expenses (NOTE 2):
Mortality and expense risk fee..................................... (4) (93) (5) (871)
Administrative fee................................................. --- (11) (1) (105)
----------------------------------------------------------
Net investment income (loss)......................................... (4) 123 (4) 146
Capital gains distributions.......................................... 2 368 16 2,951
Realized gain (loss) on investments.................................. (8) 9 43 2,089
Unrealized appreciation (depreciation) on investments................ 9 (356) 9 9,323
----------------------------------------------------------
Net realized and unrealized gain (loss) on investments............... 3 21 68 14,363
----------------------------------------------------------
Net increase (decrease) in net assets resulting from operations...... (1) 144 64 14,509
Net assets at beginning of year...................................... 356 6,361 265 79,433
Variable annuity deposits (NOTES 2 AND 3)............................ 41 3,267 532 11,605
Terminations and withdrawals (NOTES 2 AND 3)......................... (93) (2,747) (346) (35,052)
----------------------------------------------------------
Net assets at end of year............................................ $303 $ 7,025 $ 515 $ 70,495
==========================================================
TRUST CONTRACTS
Dividend distributions............................................... $ --- $ 16 $--- $ 46
Expenses (NOTE 2):
Mortality and expense risk fee..................................... --- (3) (13)
Administrative fee................................................. --- --- ---
----------------------------------------------------------
Net investment income (loss)......................................... --- 13 (33)
Capital gains distributions.......................................... --- 30 67
Realized gain (loss) on investments.................................. (12) 7 131
Unrealized appreciation (depreciation) on investments................ 12 (20) 32
----------------------------------------------------------
Net realized and unrealized gain (loss) on investments............... --- 17 230
----------------------------------------------------------
Net increase (decrease) in net assets resulting from operations...... --- 30 263
Net assets at beginning of year...................................... 140 579 3,278
Variable annuity deposits (NOTES 2 AND 3)............................ 2 8 162
Terminations and withdrawals (NOTES 2 AND 3)......................... (142) (283) (2,317)
----------------------------------------------------------
Net assets at end of year............................................ $ --- $ 334 $--- $ 1,386
==========================================================
</TABLE>
See accompanying notes.
<PAGE>
PARKSTONE VARIABLE ANNUITY ACCOUNT
================================================================================
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Parkstone Variable Annuity Account (the Account) is a separate
account of Security Benefit Life Insurance Company (SBL). The Account is
registered as a unit investment trust under the Investment Company Act of
1940, as amended. Deposits received by the Account are invested in the
Parkstone Advantage Fund, Liberty Variable Investment Trust or SBL Fund,
mutual funds not otherwise available to the public. As directed by the
owners, amounts deposited are invested in shares of the following accounts of
the Parkstone Advantage Fund: Bond Fund - emphasis on current income as well
as preservation of capital, Mid-Capitalization Fund - emphasis on capital
appreciation, International Discovery Fund - emphasis on long-term capital
growth through investment in foreign and domestic common stocks, and the
Small Capitalization Fund - emphasis on capital appreciation through
investment in small- to medium-sized companies; the following accounts of the
Liberty Variable Investment Trust: Colonial U.S. Stock Fund - emphasis on
seeking growth over time through investment in common stock of U.S.
companies, Colonial Strategic Income Fund - emphasis on high current income
through investment in U.S. and foreign government securities and high-yield,
high-risk corporate debt securities, and the Newport Tiger Fund - emphasis on
long-term capital growth through investment in equity securities of companies
located in East Asia; and the following accounts of the SBL Fund: Money
Market Series (Series C) - emphasis on capital preservation while generating
interest income, Global Strategic Income Series (Series K) - emphasis on high
current income with secondary emphasis on capital appreciation, Equity Income
Series (Series O) - emphasis on substantial dividend income and capital
appreciation and Social Awareness Series (Series S) - emphasis on capital
appreciation. During 1999, Global Aggressive Bond Series of the SBL Fund was
renamed Global Strategic Income Series.
Two types of investment contracts are offered - one for individuals (the
Non-Trust Contracts) and one for trusts and customers of financial
institutions' trust departments (the Trust Contracts).
Under the terms of the investment advisory contracts, portfolio investments
of the Parkstone Advantage Fund are made by First of America Investment
Corporation, with Gulfstream Global Investors, Ltd. providing sub-advisory
services to the International Discovery Fund. First of America Investment
Corp., a wholly-owned subsidiary of First of America Bank, N.A., which is a
wholly-owned subsidiary of National City Corporation, holds a 72% interest in
Gulfstream Global Investors, Ltd. Portfolio investments of the Liberty
Variable Investment Trust are made by Liberty Advisory Services Corp. with
Colonial Management Associates, Inc. providing subadvisory services to the
Colonial U.S. Stock Fund and the Colonial Strategic Income Fund and Newport
Fund Management, Inc. providing subadvisory services to the Newport Tiger
Fund. Portfolio investments of the SBL Fund are made by Security Management
Company, LLC (SMC), a limited liability company controlled by its members,
SBL and Security Benefit Group, Inc., a wholly-owned subsidiary of SBL. SMC
has engaged T. Rowe Price Associates, Inc. to provide subadvisory services
for the Equity Income Series (Series O). Meridian Investment Management
Corporation (Meridian) served as subadvisor for the Global Strategic Income
Series (Series K) until May 15, 1999, when Meridian was replaced by
Wellington Management.
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 first-in, first-out cost method is used to determine realized
gains and losses. Security transactions are accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold for the
year ended December 31 were as follows:
NON-TRUST CONTRACTS TRUST CONTRACTS
--------------------- ---------------------
COST OF PROCEEDS COST OF PROCEEDS
PURCHASES FROM SALES PURCHASES FROM SALES
--------- ---------- --------- ----------
(IN THOUSANDS) (IN THOUSANDS)
Bond Fund ..................... $1,519 $ 3,866 $236 $662
Mid-Capitalization Fund ....... 2,770 11,423 120 576
International Discovery Fund .. 945 4,850 86 399
Small Capitalization Fund ..... 2,043 8,959 90 340
Colonial U.S. Stock Fund ...... 3,303 2,587 54 158
Colonial Strategic Income Fund. 1,110 1,260 73 216
Newport Tiger Fund ............ 151 313 --- ---
Money Market Series ........... 1,836 1,917 189 187
Global Strategic Income Series. 44 97 74 215
Equity Income Series .......... 4,196 3,184 105 338
Social Awareness Series ....... 583 385 --- ---
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.
REINVESTMENT OF DIVIDENDS - Dividend and capital gains distributions paid by
the mutual fund to the Account are reinvested in additional shares of each
respective fund. Dividend income and capital gains distributions are recorded
as income on the ex-dividend date.
FEDERAL INCOME TAXES - The operations of the Account are 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
SBL deducts a maintenance fee of $30 per year for each individual contract.
An administrative fee is deducted equal to an annual rate of 0.15% and 0.05%
of each subaccount's average daily net assets which funds the Non-Trust and
Trust Contracts, respectively. Mortality and expense risks assumed by SBL are
compensated for by a fee equivalent to an annual rate of 1.25% and 0.65% of
the net asset value of each Non-Trust and Trust Contract, respectively, of
which 0.6% is for assuming mortality risks and the remainder is for assuming
expense risks.
A contingent deferred sales charge is assessed against certain withdrawals
during the first seven years of the contract from the date a purchase payment
is made. For contracts issued prior to December 1, 1997, the charge began at
5%, declining to 2% in the seventh year. For contracts issued on or after
that date, the charge began at 7%, declining to 1% in the seventh year.
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 (IN THOUSANDS)
NON-TRUST TRUST
CONTRACTS CONTRACTS
--------- ---------
Bond Subaccount:
Variable annuity deposits.......................... 67 11
Terminations, withdrawals and expense charges ..... 303 48
Mid-Capitalization Subaccount:
Variable annuity deposits.......................... 44 ---
Terminations, withdrawals and expense charges ..... 571 25
International Discovery Subaccount:
Variable annuity deposits.......................... 22 ---
Terminations, withdrawals and expense charges ..... 324 22
Small Capitalization Subaccount:
Variable annuity deposits.......................... 60 1
Terminations, withdrawals and expense charges ..... 516 17
Colonial U.S. Stock Subaccount:
Variable annuity deposits.......................... 213 ---
Terminations, withdrawals and expense charges ..... 169 8
Colonial Strategic Income Subaccount:
Variable annuity deposits.......................... 72 ---
Terminations, withdrawals and expense charges ..... 103 13
Newport Tiger Subaccount:
Variable annuity deposits.......................... 14 ---
Terminations, withdrawals and expense charges ..... 28 ---
Money Market Subaccount:
Variable annuity deposits.......................... 140 ---
Terminations, withdrawals and expense charges ..... 160 ---
Global Strategic Income Subaccount:
Variable annuity deposits.......................... 4 ---
Terminations, withdrawals and expense charges ..... 9 13
Equity Income Subaccount:
Variable annuity deposits.......................... 291 1
Terminations, withdrawals and expense charges ..... 241 24
Social Awareness Subaccount:
Variable annuity deposits.......................... 40 ---
Terminations, withdrawals and expense charges ..... 26 ---
