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1996 ANNUAL REPORT
T. ROWE PRICE VARIABLE ANNUITY
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T. ROWE PRICE
VARIABLE ANNUITY ACCOUNT
FINANCIAL STATEMENTS
Year ended December 31, 1996
CONTENTS
Report of Independent Auditors ......................................... 2
Audited Financial Statements
Balance Sheet ..................................................... 3
Statement of Operations and Changes in Net Assets ................. 4
Notes to Financial Statements .......................................... 5
NOTICE OF CONTRACT OWNERS' MEETING
The annual meeting of contract owners will be held on Tuesday, June 3, 1997, at
Security Benefit Life Insurance Company, 700 SW Harrison St., Topeka, Kansas, at
2:00 p.m. Each contract owner 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 at least 30 days prior to the annual
meeting.
This report is submitted for the information of T. Rowe Price No-Load Variable
Annuity contract owners. The T. Rowe Price No-Load Variable Annuity (V6021) is
issued by Security Benefit Life Insurance Company.
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REPORT OF INDEPENDENT AUDITORS
The Contract Owners of T. Rowe Price Variable
Annuity Account and The Board of Directors of
Security Benefit Life Insurance Company
We have audited the accompanying balance sheet of T. Rowe Price Variable Annuity
Account (the Company) as of December 31, 1996, and the related statements of
operations and changes in net assets for the year then ended December 31, 1996.
These financial statements are the responsibility of the 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 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. Our procedures included
confirmation of investments owned as of December 31, 1996, by correspondence
with the custodian. 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 T. Rowe Price Variable Annuity
Account at December 31, 1996, and the results of its operations and changes in
its net assets for the year then ended December 31, 1996 in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
February 7, 1997
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BALANCE SHEET
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT
December 31, 1996
(DOLLARS IN THOUSANDS)
ASSETS
Investments:
T. Rowe Price Portfolios:
New America Growth Portfolio -- 1,447,071 shares at net asset
value of $17.67 per share (cost, $23,715) ..................... $25,570
International Stock Portfolio -- 1,136,231 shares at net asset
value of $12.64 per share (cost, $13,554) ..................... 14,362
Equity Income Portfolio -- 1,833,719 shares at net asset value
of $15.26 per share (cost, $25,720) ........................... 27,983
Personal Strategy Balanced Portfolio -- 604,272 shares at net
asset value of $13.44 per share (cost, $7,721) ................ 8,121
Limited-Term Bond Portfolio -- 986,818 shares at net asset value
of $4.93 per share (cost, $4,840) ............................. 4,865
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Total assets ........................................................ $80,901
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NET ASSETS
Net assets are represented by (NOTE 3):
Number Unit
of Units Value Amount
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New America Growth Subaccount:
Accumulation units ............... 1,596,903 $16.00 $22,554
Annuity reserves ................. 985 16.00 16 $25,570
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International Stock Subaccount:
Accumulation units ............... 1,124,821 12.77 14,360
Annuity reserves ................. 181 12.77 2 14,362
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Equity Income Subaccount:
Accumulation units ............... 1,902,935 14.70 27,973
Annuity reserves ................. 656 14.70 10 27,983
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Personal Strategy Balanced Subaccount:
Accumulation units ............... 599,843 13.51 8,105
Annuity reserves ................. 1,153 13.51 16 8,121
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Limited-Term Bond Subaccount:
Accumulation units ............... 445,079 10.93 4,865
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Total net assets ................................................. $80,901
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See accompanying notes.
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STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT
Year ended December 31, 1996
(DOLLARS IN THOUSANDS)
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New Inter- Personal Limited-
America national Equity Strategy Term
Growth Stock Income Balanced Bond
Subaccount Subaccount Subaccount Subaccount Subaccount
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Dividend distributions $ 36 $ 132 $ 534 $ 185 $ 164
Expenses (NOTE 2):
Mortality and expense
risk fee .......... (89) (49) (88) (28) (15)
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Net investment
income (loss) ....... (53) 83 446 157 149
Capital gain
distributions ....... 319 75 130 150 -
Realized gain (loss)
on investments ...... 521 227 341 72 (37)
Unrealized appreciation
on investments ...... 1,675 731 2,087 359 18
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Net realized and
unrealized gain
(loss) on
investments ......... 2,515 1,033 2,558 581 (19)
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Net increase in net
assets resulting
from operations ..... 2,462 1,116 3,004 738 130
Net assets at beginning
of year ............. 4,474 2,444 4,522 1,765 925
Variable annuity
deposits
(NOTES 2 AND 3) ..... 22,024 12,438 22,410 6,629 5,935
Terminations
and withdrawals
(NOTES 2 AND 3) ..... (3,389) (1,636) (1,952) (1,008) (2,125)
Annuity payments
(NOTES 2 AND 3) ..... (1) - - (1) -
Net mortality guarantee
transfer ............ - - (1) (2) -
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Net assets at end
of year ............ $25,570 $14,362 $27,983 $8,121 $4,865
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See accompanying notes.
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NOTES TO FINANCIAL STATEMENTS
T. ROWE PRICE VARIABLE ANNUITY ACCOUNT
DECEMBER 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
T. Rowe Price 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. The
Account currently is divided into five subaccounts. Each subaccount invests
exclusively in shares of a single corresponding mutual fund. Purchase payments
received by the Account are invested in one of the Portfolios of either T. Rowe
Price Equity Series, Inc., T. Rowe Price Fixed Income Series, Inc. or T. Rowe
Price International Series, Inc., mutual funds not otherwise available to the
public. As directed by the Owners, purchase payments are invested in shares of
New America Growth Portfolio - emphasis on long-term capital growth through
investments in common stocks of domestic companies, International Stock
Portfolio - emphasis on long-term capital growth through investments in common
stocks of established foreign companies, Equity Income Portfolio emphasis on
substantial dividend income and capital appreciation by investing primarily in
dividend-paying common stocks, Personal Strategy Balanced Portfolio - emphasis
on both capital appreciation and income, and Limited-Term Bond Portfolio -
emphasis on income with moderate price fluctuation by investing in short- and
intermediate-term investment grade debt securities.
T. Rowe Price Associates, Inc. (T. Rowe Price) serves as the investment advisor
to each Portfolio except the International Stock Portfolio, which is managed by
Rowe Price-Fleming International, Inc., an affiliate of T. Rowe Price. The
investment advisors are responsible for managing the Portfolio's assets in
accordance with the terms of the investment advisory contracts.
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 gains and losses. Security transactions are
accounted for on the trade date.
The cost of investments purchased and proceeds from investments sold during 1996
were as follows:
COST OF PROCEEDS
PURCHASES FROM SALES
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(IN THOUSANDS)
New America Growth Portfolio $23,168 $4,268
International Stock Portfolio 13,265 2,305
Equity Income Portfolio 24,102 3,069
Personal Strategy Balanced Portfolio 7,279 1,354
Limited-Term Bond Portfolio 6,946 2,986
ANNUITY RESERVES
Annuity reserves relate to contracts which have matured and are in the payout
stage. Such reserves are computed on the basis of published mortality tables
using assumed interest rates that will 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.
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NOTES TO FINANCIAL STATEMENTS (Cont.)
REINVESTMENT OF DIVIDENDS
Dividend and capital gains distributions paid by the mutual fund to the Account
are reinvested in additional shares of each respective Portfolio. Dividend
income and capital gains distributions are recorded as income on the ex-dividend
date.
FEDERAL INCOME TAXES
Under current law, no federal income taxes are payable with respect to the
Account.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles 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 .55% of the average daily net assets of each
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
(IN THOUSANDS)
New America Growth Subaccount:
Variable annuity deposits 1,494
Terminations, withdrawals and annuity payments 230
International Stock Subaccount:
Variable annuity deposits 1,043
Terminations, withdrawals and annuity payments 137
Equity Income Subaccount:
Variable annuity deposits 1,686
Terminations, withdrawals and annuity payments 148
Personal Strategy Balanced Subaccount:
Variable annuity deposits 534
Terminations, withdrawals and annuity payments 81
Limited-Term Bond Subaccount:
Variable annuity deposits 604
Terminations, withdrawals and annuity payments 246
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