A Message to Variable Annuity Contract Owners
We are now in the third year of significant increases in the U.S. Stock
Markets, as measured by the Dow Jones Industrial Average and the
Standard & Poor's 500 Index. Propelled by a second quarter increase of
17.1%, the Dow's increase for the six months ended June 30, 1997 was
20.1%. The S&P increased 17.5% in the first quarter, and 20.6% for the
first half of 1997. Both the Dow Jones Industrial Average and the S&P
500 are unmanaged indices.
The yield on the 30 year Treasury Bond has decreased recently, so that
at the middle of July, 1997 it was approximately 6.5%. Short term
rates, as measured by the 3 month Treasury Bill, are approximately 5%,
which is slightly lower than a year ago.
The U.S. Gross Domestic Product for the second quarter of 1997 increased
approximately 2.2% while inflation remains low with the Consumer Price
Index increasing by 2.3% year-over-year on June 30, 1997.
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 the balance of 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 7 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.
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
<PAGE>
<TABLE>
RELIASTAR BANKERS SECURITY VARIABLE ANNUITY FUNDS 121, 122, 123, 124, 125 AND 126
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1997 (Unaudited)
Oppenheimer Eaton Vance Oppenheimer
------------ ------------ -------------------------
Multiple Multiple
Strategies Income Money Market Strategies
ASSETS Fund 121 Fund 122 Fund 123 Fund 124
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investments.......................................$ 2,784,906 $ 470,839 $ 1,799,570 $ 14,068,764
Net receivable from ReliaStar Bankers.............. - - - -
------------ ------------ ------------ ------------
2,784,906 470,839 1,799,570 14,068,764
LIABILITIES
Net payable to ReliaStar Bankers................... 5,531 573 4,262 21,758
------------ ------------ ------------ ------------
Net Assets $ 2,779,375 $ 470,266 $ 1,795,308 $ 14,047,006
============ ============ ============ ============
Accumulation Units Outstanding 394,430 44,628 398,119 1,440,954
============ ============ ============ ============
Accumulation Unit Value $ 6.70 $ 7.53 $ 3.84 $ 8.22
============ ============ ============ ============
Investments basis data:
Shares Owned 184,798 56,186 1,799,570 933,561
Net Asset Value $ 15.02 $ 8.38 $ 1.00 $ 15.02
Cost $ 2,801,544 $ 429,727 $ 1,799,570 $ 10,805,537
</TABLE>
<TABLE>
Oppenheimer
-------------------------
Capital
High Yield Appreciation Combined
ASSETS Fund 125 Fund 126 Total
------------ ------------ ------------
<S> <C> <C> <C>
Investments.......................................$ 6,909,955 $ 5,873,650 $ 31,907,684
Net receivable from ReliaStar Bankers.............. 131,348 - 131,348
------------ ------------ ------------
7,041,303 5,873,650 32,039,032
LIABILITIES
Net payable to ReliaStar Bankers................... - 12,823 44,947
------------ ------------ ------------
Net Assets $ 7,041,303 $ 5,860,827 $ 31,994,085
============ ============ ============
Accumulation Units Outstanding 1,048,979 864,840 4,191,950
============ ============ ============
Accumulation Unit Value $ 5.51 $ 6.65
============ ============
Investments basis data:
Shares Owned 493,921 163,657
Net Asset Value $ 13.98 $ 35.71
Cost $ 6,303,063 $ 4,615,267
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
Six Months Ended June 30, 1997 (Unaudited)
Fund 121 Fund 122 Fund 123 Fund 124
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Income -
Reinvested dividends..........................$ 213,325 $ 23,779 $ 42,137 $ 282,637
Expenses -
Mortality and expense guarantee fees........... (11,075) (1,430) (7,933) (47,965)
------------ ------------ ------------ ------------
Net investment income (expense) ................... 202,250 22,349 34,204 234,672
Net realized gain.................................. 625,741 401 - 79,370
Net unrealized gain (loss)......................... (477,865) 8,092 - 949,627
------------ ------------ ------------ ------------
Increase in net assets resulting from operations... 350,126 30,842 34,204 1,263,669
Transfer among funds, net.......................... 13 5,809 99,245 (104,677)
Payments to contract owners -
surrenders and other benefits................... (22,548) (87,784) (118,747) (527,158)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets.............. 327,591 (51,133) 14,702 631,834
Net assets, beginning of period.................... 2,451,784 521,399 1,780,606 13,415,172
------------ ------------ ------------ ------------
Net assets, end of period.........................$ 2,779,375 $ 470,266 $ 1,795,308 $ 14,047,006
============ ============ ============ ============
</TABLE>
<TABLE>
Combined
Fund 125 Fund 126 Total
------------ ------------ ------------
<S> <C> <C> <C>
Income -
Reinvested dividends..........................$ 325,736 $ - $ 887,614
Expenses -
Mortality and expense guarantee fees........... (29,166) (23,924) (121,493)
------------ ------------ ------------
Net investment income (expense).................... 296,570 (23,924) 766,121
Net realized gain.................................. 516,605 30,359 1,252,476
Net unrealized gain (loss)......................... (464,239) 721,873 737,488
------------ ------------ ------------
Increase in net assets resulting from operations... 348,936 728,308 2,756,085
Transfer among funds, net.......................... 11,318 (11,053) 655
Payments to contract owners -
surrenders and other benefits................... (1,718,469) (232,342) (2,707,048)
------------ ------------ ------------
Net increase (decrease) in net assets.............. (1,358,215) 484,913 49,692
Net assets, beginning of period.................... 8,399,518 5,375,914 31,944,393
------------ ------------ ------------
Net assets, end of period.........................$ 7,041,303 $ 5,860,827 $ 31,994,085
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
RELIASTAR 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, 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) ReliaStar Bankers...... 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
============ ============ ============ ============
</TABLE>
<TABLE>
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) ReliaStar Bankers...... 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
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
Note 1 - Organization
ReliaStar 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 and 123), July 1977 (Fund 124), July 1978 (Fund
125) and February 1981 (Fund 126), under the provisions of New York insurance
laws by ReliaStar Bankers Security Life Insurance Company ("ReliaStar
Bankers"), previously Bankers Security Life Insurance Society. 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 which are also
registered under the Act. The Separate Accounts are closed to new contract
owners and additional payments from existing contract owners.
On March 6, 1997, the Oppenheimer Asset Allocation Fund name was changed to
Oppenheimer Multiple Strategies and on June 17, 1997, the Oppenheimer Fund was
merged into Oppenheimer Multiple Strategies Fund.
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, 1997, were:
Cost of Shares Proceeds from Cost of Shares Proceeds from
Fund Acquired Shares Sold Fund Acquired Shares Sold
- ---- -------------- ------------- ---- --------------- -------------
121 $ 2,878,963 $ 2,620,018 124 $ 730,606 $ 686,594
122 32,779 92,814 125 1,110,028 2,700,329
123 938,922 998,189 126 64,317 253,491
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 a separate entity from ReliaStar Bankers, and their operations form a
part of ReliaStar Bankers, 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 ReliaStar Bankers.
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. 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 June 30, were:
Fund 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
121 $6.70 $5.39 $4.63 $3.91 $3.73 $3.33 $3.04 $2.76 $2.62 $2.36
122 7.53 5.13 5.21 5.39 5.28 4.65 3.64 3.36 3.55 3.22
123 3.84 3.68 3.56 3.43 3.36 3.30 3.18 3.00 2.80 2.60
124 8.22 6.70 5.94 5.19 5.06 4.49 3.87 3.81 3.68 3.40
125 5.51 4.85 4.38 4.01 3.93 3.43 2.89 2.61 2.62 2.43
126 6.65 5.18 4.20 3.70 3.87 3.24 3.00 2.95 2.80 2.37
