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1997 ANNUAL REPORT
T. ROWE PRICE VARIABLE ANNUITY
ISSUED BY FIRST SECURITY BENEFIT
LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
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T. ROWE PRICE VARIABLE ANNUITY ACCOUNT
OF FIRST SECURITY BENEFIT LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
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
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REPORT OF INDEPENDENT AUDITORS
The Contract Owners of T. Rowe Price Variable
Annuity Account of First Security Benefit Life
Insurance and Annuity Company of New York and
The Board of Directors of First Security Benefit
Life Insurance and Annuity Company of New York
We have audited the accompanying balance sheet of T. Rowe Price Variable Annuity
Account of First Security Benefit Life Insurance and Annuity Company of New York
(the Account) as of December 31, 1997, and the related statement of operations
and changes in net assets for the year then ended. These financial statements
are the responsibility of the Account'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, 1997, 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 of First Security Benefit Life Insurance and Annuity Company of New York
at December 31, 1997, and the results of its operations and changes in its net
assets for the year then ended in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
February 6, 1998
2
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BALANCE SHEET
T. Rowe Price Variable Annuity Account of
First Security Benefit Life Insurance and Annuity Company of New York
December 31, 1997 (DOLLARS IN THOUSANDS - EXCEPT PER SHARE AND UNIT VALUES)
ASSETS
Investments:
T. Rowe Price Portfolios:
New America Growth Portfolio -- 154,371 shares at net asset
value of $21.35 per share (cost, $2,741)........................ $ 3,296
International Stock Portfolio -- 127,152 shares at net asset
value of $12.74 per share (cost, $1,605)........................ 1,620
Equity Income Portfolio -- 325,615 shares at net asset value
of $18.59 per share (cost, $5,192).............................. 6,053
Personal Strategy Balanced Portfolio -- 80,525 shares at net
asset value of $15.13 per share (cost, $1,104).................. 1,218
Limited-Term Bond Portfolio -- 100,929 shares at net asset
value of $4.96 per share (cost, $498)........................... 500
Mid-Cap Growth Portfolio -- 90,648 shares at net asset value
of $11.88 per share (cost, $957)................................ 1,077
Prime Reserve Portfolio -- 789,543 shares at net asset value
of $1.00 per share (cost, $790)................................. 790
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Total assets.......................................................... $14,554
======
NET ASSETS
Net assets are represented by (NOTE 3):
NUMBER UNIT
OF UNITS VALUE AMOUNT
--------------------------
New America Growth Subaccount:
Accumulation units ................... 170,990 $19.27 $ 3,296
International Stock Subaccount:
Accumulation units ................... 123,502 13.09 $1,617
Annuity reserves ..................... 265 13.09 3 1,620
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Equity Income Subaccount:
Accumulation units ................... 320,917 18.84 6,045
Annuity reserves ..................... 454 18.84 8 6,053
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Personal Strategy Balanced Subaccount:
Accumulation units ................... 76,311 15.86 1,211
Annuity reserves ..................... 494 15.86 7 1,218
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Limited-Term Bond Subaccount:
Accumulation units ................... 41,943 11.60 486
Annuity reserves ..................... 1,222 11.60 14 500
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Mid-Cap Growth Subaccount:
Accumulation units ................... 91,142 11.82 1,077
Prime Reserve Subaccount:
Accumulation units ................... 75,383 10.47 790
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Total net assets ....................... $14,554
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See accompanying notes. 3
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STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
T. Rowe Price Variable Annuity Account of
First Security Benefit Life Insurance and Annuity Company of New York
Year Ended December 31, 1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
PERSONAL
NEW AMERICA INTERNATIONAL EQUITY STRATEGY LIMITED- MID-CAP PRIME
GROWTH STOCK INCOME BALANCED TERM BOND GROWTH RESERVE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dividend distributions ................. $ --- $ 15 $ 108 $ 30 $ 22 $ --- $ 25
Expenses (NOTE 2):
Mortality and expense risk fee ....... (15) (8) (25) (5) (2) (3) (3)
------- ------- ------- ------- ------ ------- -------
Net investment income (loss) ........... (15) 7 83 25 20 (3) 22
Capital gain distributions ............. 8 21 182 18 -- --- ---
Realized gain (loss) on investments .... 63 48 122 10 (1) 4 ---
Unrealized appreciation (depreciation)
on investments ....................... 452 (50) 680 90 3 120 ---
------- ------- ------- ------- ------ ------- -------
Net realized and unrealized gain on
investments .......................... 523 19 984 118 2 124 ---
------- ------- ------- ------- ------ ------- -------
Net increase in net assets resulting
from operations ...................... 508 26 1,067 143 22 121 22
Net assets at beginning of year ........ 2,301 1,101 2,664 536 365 --- ---
Variable annuity deposits
(NOTES 2 AND 3) ...................... 1,004 815 2,969 603 281 1,210 1,714
Terminations and withdrawals
(NOTES 2 AND 3) ...................... (517) (322) (647) (64) (168) (254) (946)
------- ------- ------- ------- ------ ------- -------
Net assets at end of year .............. $3,296 $1,620 $6,053 $1,218 $ 500 $1,077 $ 790
======= ======= ======= ======= ====== ======= =======
</TABLE>
4 See accompanying notes.
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NOTES TO FINANCIAL STATEMENTS
T. Rowe Price Variable Annuity Account of
First Security Benefit Life Insurance and Annuity Company of New York
December 31, 1997
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
T. Rowe Price Variable Annuity Account (the Account) is a separate account of
First Security Benefit Life Insurance and Annuity Company of New York (FSBL).
The Account is registered as a unit investment trust under the Investment
Company Act of 1940, as amended. The Account currently is divided into seven
subaccounts. Each subaccount invests exclusively in shares of a single
corresponding mutual fund or series thereof. 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, Limited-Term Bond Portfolio - emphasis
on income with moderate price fluctuation by investing in short- and
intermediate-term investment grade debt securities, Mid-Cap Growth Portfolio -
emphasis on long-term capital appreciation through investments in
5
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NOTES TO FINANCIAL STATEMENTS (cont.)
companies with proven products or services and Prime Reserve Portfolio -
emphasis on preservation of capital and liquidity while generating the highest
possible current income by investing primarily in high-quality money market
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 Portfolios' 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 were as
follows:
COST OF PROCEEDS
PURCHASES FROM SALES
--------- ----------
(IN THOUSANDS)
New America Growth Portfolio........... $1,029 $549
International Stock Portfolio.......... 861 340
Equity Income Portfolio................ 3,293 706
Personal Strategy Balanced Portfolio... 656 74
Limited-Term Bond Portfolio............ 293 160
Mid-Cap Growth Portfolio............... 1,248 295
Prime Reserve Portfolio................ 1,766 976
ANNUITY RESERVES
Annuity reserves relate to contracts that 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, FSBL periodically
recalculates the required annuity reserves, and any resulting adjustment is
either charged or credited to FSBL and not to the Account.
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 FSBL 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.
6
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3. SUMMARY OF UNIT TRANSACTIONS
(IN THOUSANDS)
New America Growth Subaccount:
Variable annuity deposits .......................... 58
Terminations, withdrawals and annuity payments ..... 31
International Stock Subaccount:
Variable annuity deposits .......................... 61
Terminations, withdrawals and annuity payments ..... 23
Equity Income Subaccount:
Variable annuity deposits .......................... 180
Terminations, withdrawals and annuity payments ..... 40
Personal Strategy Balanced Subaccount:
Variable annuity deposits .......................... 41
Terminations, withdrawals and annuity payments ..... 4
Limited-Term Bond Subaccount:
Variable annuity deposits .......................... 24
Terminations, withdrawals and annuity payments ..... 14
Mid-Cap Growth Subaccount:
Variable annuity deposits .......................... 116
Terminations, withdrawals and annuity payments ..... 25
Prime Reserve Subaccount:
Variable Annuity deposits .......................... 168
Terminations, withdrawals and annuity payments ..... 92
