INVESTORS
LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Herein called Investors Life)
SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
This report is submitted for the general information of owners of
Investors Life Insurance Company of North America Separate
Account I variable annuity contracts. This report is not
authorized for distribution to prospective purchasers of such
contracts unless it is accompanied by a current prospectus.
Investor Life Insurance
Company of North America
Administrative Offices: Austin, Texas
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
COMBINED BALANCE SHEET
JUNE 30, 1996
ASSETS
Investments at Market Value
(Notes 1 and 2):
Portfolios of Putnam Capital Manager Trust:
Money Market Division
1,839,664 qualified shares (cost $1,839,664) $1,839,664
2,786,170 non-qualified shares (cost $2,786,170) 2,786,170
Income Division
361,739 qualified shares (cost $4,632,712) 4,525,355
611,059 non-qualified shares (cost $7,835,044) 7,644,343
Growth and Income II Division
814,000 qualified shares (cost $16,057,625) 17,899,854
64,961 shares owned by (cost $1,281,465) 1,428,482
Investors Life
382,232 non-qualified shares (cost $7,568,712) 8,405,274
65,015 shares owned by (cost $1,287,384) 1,429,676
Investors Life
Voyager Division (formerly known as the Aggressive Equity Division)
20,775 qualified shares (cost $513,236) 669,800
38,564 shares owned by (cost $952,678) 1,243,295
Investors Life
10,299 non-qualified shares (cost $248,029) 332,028
38,496 shares owned by (cost $927,139) 1,241,125
Investors Life
Total Assets $49,445,066
CONTRACT OWNERS' EQUITY
Contract Owners' Equity (Notes 3 and 7):
Money Market Division
907,762 qualified accumulation ($2.0265927 per unit) $1,839,664
units outstanding
1,384,658 non-qualified accumulation ($2.0121722 per unit) 2,786,170
units outstanding
Income Division
1,496,691 qualified accumulation ($3.0235736 per unit) 4,525,355
units outstanding
2,559,182 non-qualified accumulation ($2.9870261 per unit) 7,644,343
units outstanding
Growth and Income II Division
3,201,300 qualified accumulation ($5.5914327 per unit) 17,899,854
units outstanding
255,477 Investors Life equity ($5.5914327 per unit) 1,428,482
1,754,537 non-qualified accumulation ($4.7905936 per unit) 8,405,274
units outstanding
298,434 Investors Life equity ($4.7905936 per unit) 1,429,676
Voyager Division (formerly known as the Aggressive Equity Division)
269,365 qualified accumulation ($2.4865902 per unit) 669,800
units outstanding
500,000 Investors Life equity ($2.4865902 per unit) 1,243,295
133,761 non-qualified accumulation ($2.4822506 per unit) 332,028
units outstanding
500,000 Investors Life equity ($2.4822506 per unit) 1,241,125
Contract Owners' Equity $49,445,066
The accompanying notes are an integral part of these financial statements.
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
INDIVIDUAL STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
Money Money
Market Market
Qualified Non-Qualified
Investment Income:
Dividends $50,670 $65,449
Expenses:
Mortality risk and expense 12,317 15,919
fees guarantees (Notes 1 and 3)
Investment income-net 38,353 49,530
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 0 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 458,169 157,818
Cost of shares sold 458,169 157,818
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net realized and unrealized gain (loss) 0 0
on investments
Net Increase (Decrease) in Net Assets $38,353 $49,530
from Investment Operations
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Income Income
Qualified Non-Qualified
Investment Income:
Dividends $284,913 $485,044
Expenses:
Mortality risk and expense 27,991 46,953
fees guarantees (Notes 1 and 3)
Investment income-net 256,922 438,091
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 0 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 292,933 444,844
Cost of shares sold 273,096 423,609
Net realized gain (loss) on investments 19,837 21,235
Net unrealized gain (loss) on investments (451,361) (756,596)
Net realized and unrealized gain (loss) (431,524) (735,361)
on investments
Net Increase (Decrease) in Net Assets ($174,602) ($297,270)
from Investment Operations
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Growth and Growth and
Income II Income II
Qualified* Non-Qualified*
(formerly Equity (formerly Equity
Division) Division)
Investment Income:
Dividends $836,246 $404,249
Expenses:
Mortality risk and expense 115,933 56,969
fees guarantees (Notes 1 and 3)
Investment income-net 720,313 347,280
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 379,168 183,293
Net realized gain (loss) on investments:
Proceeds from sale of shares 1,770,376 441,795
Cost of shares sold 1,405,087 347,238
Net realized gain (loss) on investments 365,289 94,557
Net unrealized gain (loss) on investments 129,713 151,303
Net realized and unrealized gain (loss) 874,170 429,153
on investments
Net Increase (Decrease) in Net Assets $1,594,483 $776,433
from Investment Operations
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Voyager Voyager
Qualified * Non-Qualified*
Investment Income:
Dividends $34,167 $28,945
Expenses:
Mortality risk and expense 10,858 9,098
fees guarantees (Notes 1 and 3)
Investment income-net 23,309 19,847
Net Realized and Unrealized
Gain (Loss) on Investments:
Net realized capital gain distributions 66,446 56,289
Net realized gain (loss) on investments:
Proceeds from sale of shares 82,982 38,852
Cost of shares sold 61,591 27,855
Net realized gain (loss) on investments 21,391 10,997
Net unrealized gain (loss) on investments 82,495 76,195
Net realized and unrealized gain (loss) 170,332 143,481
on investments
Net Increase (Decrease) in Net Assets $193,641 $163,328
from Investment Operations
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
INDIVIDUAL STATEMENTS OF CHANGES IN TOTAL ASSETS
Six Months Ended June 30, 1996
Money Money
Market Market
Qualified Non-Qualified
Investment Operations:
Investment income-net $38,353 $49,530
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net increase (decrease) in net 38,353 49,530
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 111,446 244,635
in (Note 3)
Net contract surrenders and transfers (486,515) (127,246)
out (Note 3)
Benefit payments to annuitants (4,435) (17,284)
Net Increase (Decrease) from accumulation (379,504) 100,105
unit transactions
Net Increase (Decrease) in Net Assets (341,151) 149,635
Net Assets:
Net assets at December 31, 1995 2,180,815 2,636,535
Net assets at June 30, 1996 $1,839,664 $2,786,170
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Income Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $256,922 $438,091
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 19,837 21,235
Net unrealized gain (loss) on investments (451,361) (756,596)
Net increase (decrease) in net (174,602) (297,270)
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 21,789 44,319
in (Note 3)
Net contract surrenders and transfers (270,069) (356,386)
out (Note 3)
Benefit payments to annuitants (8,448) (43,961)
Net Increase (Decrease) from accumulation (256,728) (356,028)
unit transactions
Net Increase (Decrease) in Net Assets (431,330) (653,298)
Net Assets:
Net assets at December 31, 1995 4,956,685 8,297,641
Net assets at June 30, 1996 $4,525,355 $7,644,343
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Growth and Growth and
Income II Income II
Qualified* Non-Qualified*
(formerly Equity (formerly Equity
Division) Division)
Investment Operations:
Investment income-net $720,313 $347,280
Realized capital gain distributions 379,168 183,293
Net realized gain (loss) on investments 365,289 94,557
Net unrealized gain (loss) on investments 129,713 151,303
Net increase (decrease) in net 1,594,483 776,433
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 379,225 201,318
in (Note 3)
Net contract surrenders and transfers (1,679,809) (381,103)
out (Note 3)
Benefit payments to annuitants (28,773) (53,044)
Net Increase (Decrease) from accumulation (1,329,357) (232,829)
unit transactions
Net Increase (Decrease) in Net Assets 265,126 543,604
Net Assets:
Net assets at December 31, 1995 19,063,210 9,291,346
Net assets at June 30, 1996 $19,328,336 $9,834,950
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Voyager Voyager
Qualified * Non-Qualified *
Investment Operations:
Investment income-net $23,309 $19,847
Realized capital gain distributions 66,446 56,289
Net realized gain (loss) on investments 21,391 10,997
Net unrealized gain (loss) on investments 82,495 76,195
Net increase (decrease) in net 193,641 163,328
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 30,595 310
in (Note 3)
Net contract surrenders and transfers (57,065) (30,064)
out (Note 3)
Benefit payments to annuitants 0 0
Net Increase (Decrease) from accumulation (26,470) (29,754)
unit transactions
Net Increase (Decrease) in Net Assets 167,171 133,574
Net Assets:
Net assets at December 31, 1995 1,745,924 1,439,579
Net assets at June 30, 1996 $1,913,095 $1,573,153
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Six Months Ended June 30, 1995
Money Money
Market Market
Qualified Non-Qualified
Investment Operations:
Investment income-net $56,078 $61,538
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net increase (decrease) in net 56,078 61,538
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 149,245 44,055
in (Note 3)
Net contract surrenders and transfers (376,578) (491,849)
out (Note 3)
Benefit payments to annuitants (5,522) (25,704)
Net Increase (Decrease) from accumulation (232,855) (473,498)
unit transactions
Net Increase (Decrease) in Net Assets (176,777) (411,960)
Net Assets:
Net assets at December 31, 1994 2,839,250 3,144,821
Net assets at June 30, 1995 $2,662,473 $2,732,861
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
U.S. Government U.S. Government
and High and High
Quality Bond Quality Bond
Qualified Non-Qualified
Investment Operations:
Investment income-net $71,104 $107,328
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (1,179) (25,084)
Net unrealized gain (loss) on investments 443,548 705,016
Net increase (decrease) in net 513,473 787,260
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 44,561 1,341
in (Note 3)
Net contract surrenders and transfers (807,034) (638,051)
out (Note 3)
Benefit payments to annuitants 4,224 (57,389)
Net Increase (Decrease) from accumulation (758,249) (694,100)
unit transactions
Net Increase (Decrease) in Net Assets (244,776) 93,160
Net Assets:
Net assets at December 31, 1994 5,313,396 7,936,128
Net assets at June 30, 1995 $5,068,620 $8,029,289
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Growth and Growth and
Income II Income II
Qualified* Non-Qualified*
(formerly Equity (formerly Equity
Division) Division)
Investment Operations:
Investment income-net $33,534 $10,585
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (527,545) (224,942)
Net unrealized gain (loss) on investments 6,199,057 3,716,863
Net increase (decrease) in net 5,705,046 3,502,506
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 188,403 83,648
in (Note 3)
Net contract surrenders and transfers (2,142,637) (930,137)
out (Note 3)
Benefit payments to annuitants (23,245) 12,468
Net Increase (Decrease) from accumulation (1,977,479) (834,021)
unit transactions
Net Increase (Decrease) in Net Assets 3,727,567 2,668,485
Net Assets:
Net assets at December 31, 1994 14,094,620 5,696,852
Net assets at June 30, 1995 $17,822,187 $8,365,337
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Voyager Voyager
Qualified * Non-Qualified *
Investment Operations:
Investment income-net ($4,658) ($3,434)
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (940) (4,038)
Net unrealized gain (loss) on investments 201,705 165,593
Net increase (decrease) in net 196,107 158,121
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 45,172 374
in (Note 3)
Net contract surrenders and transfers (30,067) (4,179)
out (Note 3)
Benefit payments to annuitants 0 0
Net Increase (Decrease) from accumulation 15,105 (3,805)
unit transactions
Net Increase (Decrease) in Net Assets 211,212 154,316
Net Assets:
Net assets at December 31, 1994 1,298,842 1,054,045
Net assets at June 30, 1995 $1,510,054 $1,208,361
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
Growth and Growth and
Income Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $16,096 $11,985
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (15,532) (3,466)
Net unrealized gain (loss) on investments (2,985,939) (2,241,314)
Net increase (decrease) in net (2,985,375) (2,232,845)
assets from investment operations
Accumulation Unit Transactions:
Net contract considerations and transfer 30,302 43,844
in (Note 3)
Net contract surrenders and transfers (129,567) (14,096)
out (Note 3)
Benefit payments to annuitants (3,932) (19,434)
Net Increase (Decrease) from accumulation (103,197) 10,314
unit transactions
Net Increase (Decrease) in Net Assets (3,088,572) (2,222,531)
Net Assets:
Net assets at December 31, 1994 3,088,572 2,222,531
Net assets at June 30, 1995 $0 $0
The accompanying notes are an integral part of these financial statements.
*Includes shares owned by Investors Life.
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
Note 1. Organization
Investors Life Insurance Company of North America ("Investors
Life") established Investors Life Insurance Company of North
America - Separate Account I (the "Separate Account") as a unit
investment trust registered under the Investment Company Act of
1940, as amended. Operations of the Separate Account commenced
on September 15, 1982. The Separate Account currently has four
Divisions each corresponding to a portfolio of PCM Trust. Prior
to the substitution of shares of PCM Trust for shares of CIGNA
Annuity Funds Group as the underlying funding vehicle for the
Separate Account, the Separate Account contained five divisions.
In connection with the substitution, the Equity Division was
merged with the Growth and Income Division; thereafter, the
Equity Division was renamed the Growth and Income Division II.
See Note 6 for a description of the substitution. Each Division
contains two subdivisions, one for the allocation of tax
qualified and one for the allocation of non-tax qualified net
payments made under variable annuity contracts.
Net purchase payments to the Separate Account may be allocated to
one or more of the following classes of shares of the PCM Trust:
PCM Money Market Fund, PCM Income Fund, PCM Growth and Income
Fund or PCM Voyager Fund. The contract owners' equity of each
subdivision of the Separate Account is affected by the investment
results of the appropriate portfolio(s) of shares of PCM Trust
designated for the subdivision and the mortality risk and expense
fees guarantees assessed on the Separate Account assets (See Note
3), and the administrative charge deductions.
Note 2. Significant Accounting Policies
Following is a summary of the significant accounting policies of
the Separate Account:
(a) the market value of the investments is based on closing bid
prices (net asset value) at June 30, 1996; (b) investment
transactions are accounted for on the trade date and income is
recorded on the ex-dividend date; (c) the cost of investments
sold is determined on the specific identification method. See
Notes 4 and 5 with respect to income taxes.
Note 3. Contract Owner Transactions
Net contract considerations represent gross contributions under
variable annuity contracts less deductions by Investors Life for
any applicable premium taxes. Net contract considerations for
the six month period ended June 30, 1996 were $316,632 after
deductions for premium taxes of $4. Contract owners have limited
rights to transfer their contract values between Separate Account
Divisions. For the six months ended June 30, 1996, the total of
all transfers was $717,000. Contract surrender benefits amounted
to $2,671,259. Annuity benefits amounted to $155,945. Investors
Life charges a fee to each Separate Account subdivision for
assuming the mortality risk and expense fees guarantees. The
daily equivalent of the annual charge of 1.2% is made against the
average net value of the Separate Account.
Note 4. Income Taxes
Investors Life is taxed as a life insurance company under the
Internal Revenue Code. The Separate Account is taxed as a part
of Investors Life. Under the current provisions of the Code, no
federal income taxes are payable by Investors Life with respect
to the operations of the Separate Account when such operations
are used to determine the contract values of the Separate
Account. Investors Life retains the right to make adjustments
for taxes to Separate Account assets should future changes in the
Internal Revenue Code so warrant.
Note 5. Diversification Requirements
Under the provisions of Section 817(h) of the Internal Revenue
Code, (the "Code"), a variable annuity contract, other than a
contract issued in connection with certain types of employee
benefit plans, will not be treated as an annuity contract for
federal tax purposes for any period for which the investments of
the segregated asset account on which the contract is based are
not adequately diversified. The Code provides that the
"adequately diversified" requirement may be met if the underlying
investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by
the Secretary of Treasury.
The Internal Revenue Service has issued regulations under section
817(h) of the Code. Investors Life believes that the Separate
Account satisfies the current requirements of the regulations.
Note 6. Substitution of Fund Shares
Prior to November 29, 1993, CIGNA Investments, Inc. ("CII")
served as the investment adviser to each of the portfolios of the
CIGNA Fund, pursuant to an investment advisory agreement between
CII and the CIGNA Funds. In connection with its decision to
withdraw from the active management of equity-based portfolios,
CII indicated to the Board of Trustees of the CIGNA Funds and
Investors Life that CII would be unwilling to continue to serve
as investment adviser with respect to any of the portfolios of
the CIGNA Fund on a long-term basis.
CII indicated that an orderly withdrawal of CII's investment
advisory services involved the selection of an investment adviser
to provide equity advisory services during a transition period,
as well as the capability to serve as the substitute underlying
investment vehicle for the variable annuity contracts (the
"Contracts") issued by Investors Life. Putnam Investment
Management, Inc. ("Putnam Management"), the investment adviser to
Putnam Capital Manager Trust ("PCM") indicated its willingness to
serve as investment adviser to the CIGNA Annuity Equity Fund, the
CIGNA Annuity Growth and Income Fund and the CIGNA Annuity
Aggressive Equity Fund (the "CIGNA Equity Funds") during the
transition period. PCM has also indicated to Investors Life that
its willingness to serve as the substitute underlying investment
vehicle for the Contracts (the "Substitution").
On the basis of the foregoing, the Trustees of the CIGNA Funds
terminated the appointment of CII as the investment adviser to
the CIGNA Equity Funds, effective November 29, 1993, and
appointed Putnam Management as the new investment adviser of the
CIGNA Equity Funds. CII continued to serve as the investment
adviser of the CIGNA Annuity Money Market Fund and the CIGNA
Annuity Income Fund and to provide certain administrative
services to the CIGNA Funds until the completion of the
Substitution.
Investors Life filed an application with the U.S. Securities and
Exchange Commission, requesting the issuance of an order
approving the plan of Substitution. Such order was issued on
December 21, 1994. The effectiveness of the Substitution was
subject to prior approval by the vote of a majority of the votes
to be cast by persons having their contract values determined by
each affected portfolio of the CIGNA Funds, which approval was
obtained.
As of April 18, 1995, shares of the PCM Trust were substituted
for shares of the applicable CIGNA Fund as the underlying
investment vehicle. The substitution of PCM Funds as the
underlying investment vehicle for the variable annuity contracts
was effected by Investors Life's exchange of shares of each of
the portfolios of the CIGNA Funds for shares of the corresponding
portfolio of PCM Funds.
Note 7. Accumulation Unit Transactions
The changes in the number of accumulation units (the measure of
ownership in the Separate Account) during the six months of
1996, and units outstanding at June 30, 1996 were as follows:
Money Money
Market Market
Qualified Non-Qualified
Units outstanding at December 31, 1995 1,096,192 1,334,785
Units purchased and transfers in 53,926 108,947
Benefits, surrenders and transfers out (242,356) (59,074)
Units outstanding at June 30, 1996 907,762 1,384,658
Income Income
Qualified Non-Qualified
Units outstanding at December 31, 1995 1,580,611 2,678,698
Units purchased and transfers in 7,840 437
Benefits, surrenders and transfers out (91,760) (119,953)
Units outstanding at June 30, 1996 1,496,691 2,559,182
Growth and Growth and
Income II Income II
Qualified Non-Qualified
(formerly Equity (formerly Equity
Division) * Division) *
Units outstanding at December 31, 1995 3,699,687 $2,104,990
Units purchased and transfers in 95,879 13,184
Benefits, surrenders and transfers out (338,789) (65,203)
Units outstanding at June 30, 1996 3,456,777 $2,052,971
Voyager Voyager
Qualified * Non-Qualified*
Units outstanding at December 31, 1995 $781,624 $645,524
Units purchased and transfers in 21,539 137
Benefits, surrenders and transfers out (33,798) (11,900)
Units outstanding at June 30, 1996 $769,365 $633,761
*Includes shares owned by Investors Life.
The accumulation units for six of the subdivisions include units
applicable to contract owners who are "on benefit annuitants." At
June 30, 1996 the number of accumulation units, the aggregate
value of the subdivisions' equity and the number of monthly annuity
units and value per unit of "on benefit annuitants" are as follows:
Accumulation Aggregate
Units Value
Money Market Qualified 27,227 $ 55,178
Money Market Non-Qualified 152,021 $305,892
Growth and Income II, Qualified 100,329 $560,983
Growth and Income II, Non-Qualified 140,859 $674,798
Income Fund, Qualified 59,349 $179,446
Income Fund, Non-Qualified 241,312 $720,805
Monthly Annuity Annuity
Units Unit Value
Money Market Qualified 1,084 $0.8570769
Money Market Non-Qualified 3,371 $0.8575231
Growth and Income II, Qualified 3,657 $1.4599635
Growth and Income II, Non-Qualified 5,851 $1.5644418
Income Fund, Qualified 1,091 $1.3674367
Income Fund, Non-Qualified 5,365 $1.3643314
