A MESSAGE TO VARIABLE ANNUITY CONTRACT OWNERS
After significant increases in the Stock
Markets in 1995, the first half of 1996
witnessed increases which were more in line
with long term historical results. As of
this writing, the Dow Jones Industrial
Average increased approximately 5% in value
from the beginning of the year, even after
contending with a correction of about 7% from
its high point. The S&P 500 has increased
since the beginning of 1996 by a smaller
amount of approximately 3%. The Dow Jones
Industrial and the S&P 500 are unmanaged indices.
While the Stock Markets increased by
relatively small amounts, and are struggling
to hold on to these gains, the yield on the
30 year Treasury Bond increased fairly
significantly from 5.9% at the beginning of
the year, to approximately 7%. Short term
rates, as measured by the 3 month Treasury
Bill, are yielding 5.1% now, which is about
the same as the beginning of the year.
The U.S. Gross Domestic Product for the
first quarter of 1996 increased 2.2% and for
the second quarter the increase is expected
to be near 4.0%. Inflation remains low with
the Consumer Price Index running at 2.8% this
year after last year's 2.5%.
David H. Roe, President
The Outlook. For the balance of 1996, we expect solid economic growth 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 expansion is slowing, business profits are expected to
continue to improve, albeit at a slower rate than in 1995.
Distributor of the Contract. ReliaStar Financial Marketing Corporation, a
Bankers Security affiliate, distributes the contract.
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,
David H. Roe
President
ReliaStar Bankers Security Life Insurance Company
<PAGE>
<TABLE>
BANKERS SECURITY VARIABLE ANNUITY FUNDS 121, 122, 123, 124, 125 AND 126
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996 (Unaudited)
Oppenheimer Eaton Vance Oppenheimer
------------ ------------ -------------------------
Income Money Market Asset Allocation
ASSETS Fund 121 Fund 122 Fund 123 Fund 124
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investments (see below)...........................$ 2,288,754 $ 752,648 $ 1,945,165 $ 12,576,814
Net receivable from Bankers Security for contract
charges and reserve transfers.................... 46,681 - - -
------------ ------------ ------------ ------------
2,335,435 752,648 1,945,165 12,576,814
LIABILITIES
Net payable to Bankers Security for contract charges
and reserve transfers............................ - 823 43,258 58,107
------------ ------------ ------------ ------------
Net Assets $ 2,335,435 $ 751,825 $ 1,901,907 $ 12,518,707
============ ============ ============ ============
Accumulation Units Outstanding 413,987 146,555 461,230 1,604,485
============ ============ ============ ============
Accumulation Unit Value $ 5.39 $ 5.13 $ 3.68 $ 6.70
============ ============ ============ ============
Investments basis data:
Shares Owned 188,530 94,792 1,945,165 917,346
Net Asset Value $ 12.14 $ 7.94 $ 1.00 $ 13.71
Cost $ 1,797,767 $ 739,747 $ 1,945,165 $ 10,460,854
Oppenheimer
-------------------------
High Yield Target Combined
ASSETS Fund 125 Fund 126 Total
------------ ------------ ------------
<S> <C> <C> <C>
Investments (see below)...........................$ 8,775,799 $ 4,869,003 $ 31,208,183
Net receivable from Bankers Security for contract
charges and reserve transfers.................... - 39,921 86,602
------------ ------------ ------------
8,775,799 4,908,924 31,294,785
LIABILITIES
Net payable to Bankers Security for contract charges
and reserve transfers............................ 309,212 - 411,400
------------ ------------ ------------
Net Assets $ 8,466,587 $ 4,908,924 $ 30,883,385
============ ============ ============
Accumulation Units Outstanding 1,545,413 937,468 5,109,138
============ ============ ============
Accumulation Unit Value $ 4.85 $ 5.18
============ ============
Investments basis data:
Shares Owned 649,578 157,471
Net Asset Value $ 13.51 $ 30.92
Cost $ 7,988,844 $ 4,388,933
</TABLE>
<TABLE>
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
Six Months Ended June 30, 1996 (Unaudited)
Fund 121 Fund 122 Fund 123 Fund 124
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends..........................$ - $ 38,988 $ 54,161 $ 254,625
Expenses -
Mortality and expense guarantee fees........... (11,170) (3,073) (11,432) (62,030)
------------ ------------ ------------ ------------
Net investment income (expense).................... (11,170) 35,915 42,729 192,595
Net realized gain (loss)........................... 166 206 - 10,268
Net unrealized gain................................ 189,984 23 - 582,782
------------ ------------ ------------ ------------
Increase in net assets resulting from operations... 178,980 36,144 42,729 785,645
Transfer among funds, net.......................... 49,666 (102,843) (30,076) 1,000
Reserve transfers from (to) Bankers Security....... 1,985 - 4,236 (20,571)
Payments to contract owners -
surrenders and other benefits................... (19,681) (11,731) (161,949) (422,802)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.............. 210,950 (78,430) (145,060) 343,272
Net assets, beginning of period.................... 2,124,485 830,255 2,046,967 12,175,435
------------ ------------ ------------ ------------
Net assets, end of period.........................$ 2,335,435 $ 751,825 $ 1,901,907 $ 12,518,707
============ ============ ============ ============
Combined
Fund 125 Fund 126 Total
------------ ------------ ------------
<S> <C> <C> <C>
Income -
Reinvested dividends..........................$ 388,205 $ - $ 735,979
Expenses -
Mortality and expense guarantee fees........... (41,254) (23,583) (152,542)
------------ ------------ ------------
Net investment income (expense).................... 346,951 (23,583) 583,437
Net realized gain (loss)........................... 33,683 (12,821) 31,502
Net unrealized gain................................ 23,557 559,343 1,355,689
------------ ------------ ------------
Increase in net assets resulting from operations... 404,191 522,939 1,970,628
Transfer among funds, net.......................... (62,401) 108,821 (35,833)
Reserve transfers from (to) Bankers Security....... 33,948 (19,059) 539
Payments to contract owners -
surrenders and other benefits................... (521,923) (721,935) (1,860,021)
------------ ------------ ------------
Net increase (decrease) in net assets.............. (146,185) (109,234) 75,313
Net assets, beginning of period.................... 8,612,772 5,018,158 30,808,072
------------ ------------ ------------
Net assets, end of period.........................$ 8,466,587 $ 4,908,924 $ 30,883,385
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
BANKERS SECURITY VARIABLE ANNUITY FUNDS 121, 122, 123, 124, 125 AND 126
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
Six Months Ended June 30, 1995 (Unaudited)
Fund 121 Fund 122 Fund 123 Fund 124
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends..........................$ - $ 38,173 $ 66,076 $ 169,858
Expenses -
Mortality and expense guarantee fees........... (9,752) (3,266) (12,994) (53,757)
------------ ------------ ------------ ------------
Net investment income (expense).................... (9,752) 34,907 53,082 116,101
Net realized gain (loss)........................... (796) (5,988) - 49,387
Net unrealized gain (loss)......................... 277,101 33,797 - 1,131,461
------------ ------------ ------------ ------------
Increase in net assets resulting from operations 266,553 62,716 53,082 1,296,949
Transfer among funds, net.......................... 332,468 (86,598) (1,723,576) (101,212)
Payments to contract owners -
surrenders and other benefits................... (63,165) - (148,020) (731,771)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.............. 535,856 (23,882) (1,818,514) 463,966
Net assets, beginning of period.................... 1,711,090 736,528 4,659,132 10,368,020
------------ ------------ ------------ ------------
Net assets, end of period.........................$ 2,246,946 $ 712,646 $ 2,840,618 $ 10,831,986
============ ============ ============ ============
Combined
Fund 125 Fund 126 Total
------------ ------------ ------------
<S> <C> <C> <C>
Income -
Reinvested dividends..........................$ 431,408 $ 196,301 $ 901,816
Expenses -
Mortality and expense guarantee fees........... (43,574) (22,713) (146,056)
------------ ------------ ------------
Net investment income (expense).................... 387,834 173,588 755,760
Net realized gain (loss)........................... (34,831) 279,030 286,802
Net unrealized gain (loss)......................... 311,610 (64,161) 1,689,808
------------ ------------ ------------
Increase in net assets resulting from operations 664,613 388,457 2,732,370
Transfer among funds, net.......................... 1,649,237 (70,055) 264
Payments to contract owners -
surrenders and other benefits................... (287,584) (109,149) (1,339,689)
------------ ------------ ------------
Net increase (decrease) in net assets.............. 2,026,266 209,253 1,392,945
Net assets, beginning of period.................... 6,523,486 4,535,896 28,534,152
------------ ------------ ------------
Net assets, end of period.........................$ 8,549,752 $ 4,745,149 $ 29,927,097
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
Note 1 - Organization
Bankers Security Variable Annuity Funds 121, 122, 123, 124, 125 and 126 (the
"Separate Accounts") were established as Separate Accounts in April 1975
(Funds 121, 122, 123), July 1977 (Fund 124), July 1978 (Fund 125) and February
1981 (Fund 126), under the provisions of New York insurance laws by Bankers
Security Life Insurance Society ("Bankers Security"). 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. The Separate Accounts are closed to new contract owners and 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 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, 1996, were:
<TABLE>
Cost of Shares Proceeds from Cost of Shares Proceeds from
Fund Acquired Shares Sold Fund Acquired Shares Sold
<S> <C> <C> <S> <C> <C>
121 $ 48,813 $ 41,180 124 $ 287,974 $ 407,906
122 38,987 117,512 125 6,430,483 6,501,750
123 6,094,986 6,201,267 126 117,532 794,290
</TABLE>
Note 3 - Taxes
Bankers Security 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 Bankers Security, and their operations form a part
of Bankers Security, 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 Bankers Security.
Note 4 - Charges and Transfers
Bankers Security 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.
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 Bankers Security, are offset by transfers to, or from,
Bankers Security.
Certain reclassifications have been made to the financial statements which do
not affect the results of operations as previously reported.
Note 5 - Supplementary Information
Accumulation unit values for a unit of the funds outstanding at June 30, were:
Fund 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
121 $5.39 $4.63 $3.91 $3.73 $3.33 $3.04 $2.76 $2.62 $2.36 $2.68
122 5.13 5.21 5.39 5.28 4.65 3.64 3.36 3.55 3.22 3.00
123 3.68 3.56 3.43 3.36 3.30 3.18 3.00 2.80 2.60 2.47
124 6.70 5.94 5.19 5.06 4.49 3.87 3.81 3.68 3.40 2.97
125 4.85 4.38 4.01 3.93 3.43 2.89 2.61 2.62 2.43 2.30
126 5.18 4.20 3.70 3.87 3.24 3.00 2.95 2.80 2.37 2.47
Note 6 - Subsequent Event
The New York Insurance Department has approved a name change for Bankers
Security, effective July 1, 1996, to ReliaStar Bankers Security Life Insurance
Company. Policyowner notifications will be mailed once other states approvals
are obtained.
