INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
COMBINED BALANCE SHEET
Six Months Ended June 30, 1998
ASSETS
Investments at Market Value (Notes 1 and 2):
Portfolios of Putnam Variable Trust:
Putnam Variable Trust Money Market
1,469,097 qualified shares (cost $1,469,097) $1,469,097
2,500,920 non-qualified shares (cost $2,500,920) 2,500,920
Putnam Variable Trust U.S. Government and High Quality Bond
224,874 qualified shares (cost $3,012,060) 2,972,827
489,777 non-qualified shares (cost $6,416,131) 6,474,847
Putnam Variable Trust Growth and Income
726,367 qualified shares (cost $16,053,660) 19,902,451
77,561 shares owned by Investors Life (cost $1,714,206) 2,125,179
346,600 non-qualified shares (cost $7,520,857) 9,496,840
77,678 shares owned by Investors Life (cost $1,685,525) 2,128,368
Putnam Variable Trust Voyager
21,966 qualified shares (cost $597,342) 948,066
42,270 shares owned by Investors Life (cost $1,149,474) 1,824,376
12,159 non-qualified shares (cost $327,839) 524,781
42,013 shares owned by Investors Life (cost $1,132,782) 1,813,280
Total Assets $52,181,032
CONTRACT OWNERS' EQUITY
Contract Owners' Equity (Notes 3 and 6):
Putnam Variable Trust Money Market
670,568 qualified accumulation ($2.1908242 per unit) $1,469,097
units outstanding
1,149,698 non-qualified accumulation ($2.1752842 per unit) 2,500,920
units outstanding
Putnam Variable Trust U.S. Government and High Quality Bond
847,064 qualified accumulation ($3.5095662 per unit) 2,972,827
units outstanding
1,856,369 non-qualified accumulation ($3.4879093 per unit) 6,474,847
units outstanding
Putnam Variable Trust Growth and Income
2,392,560 qualified accumulation ($8.3184750 per unit) 19,902,451
units outstanding
255,477 Investors Life equity ($8.3184750 per unit) 2,125,179
1,331,621 non-qualified accumulation ($7.1317890 per unit) 9,496,840
units outstanding
298,434 Investors Life equity ($7.1317890 per unit) 2,128,368
Putnam Variable Trust Voyager
259,833 qualified accumulation ($3.6487529 per unit) 948,066
units outstanding
500,000 Investors Life equity ($3.6487529 per unit) 1,824,376
144,705 non-qualified accumulation ($3.6265602 per unit) 524,781
units outstanding
500,000 Investors Life equity ($3.6265602 per unit) 1,813,280
Contract Owners' Equity $52,181,032
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, 1998
Putnam Putnam
Variable Trust Variable Trust
Money Money
Market Market
Qualified Non-Qualified
Investment Income:
Dividends $37,395 $59,104
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 8,722 13,733
Investment income - net 28,673 45,371
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 155,621 95,867
Cost of shares sold 155,621 95,867
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net realized and unrealized gain (loss)
on invesestments 0 0
Net Increase in Net Assets
from Investment Operations $28,673 $45,371
Putnam Variable Putnam Variable
Trust U.S. Trust U.S.
Govmt and High Govmt and High
Quality Bond Quality Bond
Qualified Non-Qualified
Investment Income:
Dividends $161,920 $363,023
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 17,918 38,932
Investment income - net 144,002 324,091
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 461,035 466,941
Cost of shares sold 417,126 426,752
Net realized gain (loss) on investments 43,909 40,189
Net unrealized gain (loss) on investments (81,769) (130,661)
Net realized and unrealized gain (loss)
on investments (37,860) (90,472)
Net Increase in Net Assets
from Investment Operations $106,142 $233,619
Putnam Variable Putnam Variable
Trust Growth Trust Growth
and Income and Income
Qualified Non-Qualified
Investment Income:
Dividends $822,998 $450,029
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 130,291 69,241
Investment income - net 692,707 380,788
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 1,899,116 1,038,467
Net realized gain (loss) on investments:
Proceeds from sale of shares 1,781,108 955,158
Cost of shares sold 1,079,080 592,189
Net realized gain (loss) on investments 702,028 362,969
Net unrealized gain (loss) on
investments (1,347,330) (724,221)
Net realized and unrealized gain (loss)
on investments 1,253,814 677,215
Net Increase in Net Assets
from Investment Operations $1,946,521 $1,058,003
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified *
Investment Income:
Dividends $5,815 $5,193
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 14,647 12,901
Investment income - net (8,832) (7,708)
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 141,877 126,718
Net realized gain (loss) on investments:
Proceeds from sale of shares 44,461 148,160
Cost of shares sold 24,542 83,956
Net realized gain (loss) on investments 19,919 64,204
Net unrealized gain (loss) on investments 224,411 144,282
Net realized and unrealized gain (loss)
on investments 386,207 335,204
Net Increase in Net Assets
from Investment Operations $377,375 $327,496
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, 1998
Putnam Putnam
Variable Trust Variable Trust
Money Money
Market Market
Qualified Non-Qualified
Investment Operations:
Investment income-net $28,673 $45,371
Realized capital gain distributions 0 0
Net realized gain on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net increase (decrease) in net assets
from investment operations 28,673 45,371
Accumulation Unit Transactions:
Net contract considerations and transfers
in (Note 3) 124,161 266,303
Net contract surrenders and transfers
out (Note 3) (151,841) (65,349)
Benefit payments to annuitants (3,009) (17,351)
Net increase (decrease) from accumulation
unit transactions (30,689) 183,603
Net (Decrease) Increase in Net Assets ($2,016) $228,974
Net Assets:
Net assets at December 31, 1997 1,471,113 2,271,946
Net assets at June 30, 1998 $1,469,097 $2,500,920
Putnam Variable Putnam Variable
Trust U.S. Trust U.S.
Government and Government and
High Quality Bond High Quality Bond
Qualified Non-Qualified
Investment Operations:
Investment income-net $144,002 $324,091
Realized capital gain distributions 0 0
Net realized gain on investments 43,909 40,189
Net unrealized gain (loss) on investments (81,769) (130,661)
Net increase (decrease) in net assets
from investment operations 106,142 233,619
Accumulation Unit Transactions:
Net contract considerations and transfers
in (Note 3) 189,391 15,716
Net contract surrenders and transfers
out (Note 3) (449,225) (380,400)
Benefit payments to annuitants (8,178) (63,325)
Net increase (decrease) from accumulation
unit transactions (268,012) (428,009)
Net (Decrease) Increase in Net Assets ($161,870) ($194,390)
Net Assets:
Net assets at December 31, 1997 3,134,697 6,669,237
Net assets at June 30, 1998 $2,972,827 $6,474,847
Putnam Variable Putnam Variable
Trust Growth Trust Growth
and Income and Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $692,707 $380,788
Realized capital gain distributions 1,899,116 1,038,467
Net realized gain on investments 702,028 362,969
Net unrealized gain (loss)
on investments (1,347,330) (724,221)
Net increase in net assets from
investment operations 1,946,521 1,058,003
Accumulation Unit Transactions:
Net contract considerations and transfers
in (Note 3) 511,817 13,531
Net contract surrenders and transfers
out (Note 3) (1,852,370) (821,766)
Benefit payments to annuitants (54,186) (66,013)
Net increase (decrease) from accumulation
unit transactions (1,394,739) (874,248)
Net (Decrease) Increase in Net Assets $551,782 $183,755
Net Assets:
Net assets at December 31, 1997 21,475,848 11,441,453
Net assets at June 30, 1998 $22,027,630 $11,625,208
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified *
Investment Operations:
Investment income-net ($8,832) ($7,708)
Realized capital gain distributions 141,877 126,718
Net realized gain on investments 19,919 64,204
Net unrealized gain (loss) on investments 224,411 144,282
Net increase in net assets from investment
operations 377,375 327,496
Accumulation Unit Transactions:
Net contract considerations and transfers
in (Note 3) 125,467 106,456
Net contract surrenders and transfers
out (Note 3) (36,624) (131,315)
Benefit payments to annuitants (203) 0
Net increase (decrease) from accumulation
unit transactions 88,640 (24,859)
Net (Decrease) Increase in Net Assets $466,015 $302,637
Net Assets:
Net assets at December 31, 1997 2,306,427 2,035,424
Net assets at June 30, 1998 $2,772,442 $2,338,061
* Includes shares owned by Investors Life
Year Ended December 31, 1997
Putnam Putnam
Variable Trust Variable Trust
Money Money
Market Market
Qualified Non-Qualified
Investment Operations:
Investment income-net $62,277 $95,862
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 assets
from investment operations 62,277 95,862
Accumulation Unit Transactions:
Net contract considerations and transfers
in (Note 3) 100,446 34,793
Net contract surrenders and transfers
out (Note 3) (440,229) (465,907)
Benefit payments to annuitants (2,159) (36,608)
Net increase (decrease) from accumulation
unit transactions (341,942) (467,722)
Net Increase (Decrease) in Net Assets ($279,665) ($371,860)
Net Assets:
Net assets at December 31, 1996 1,750,778 2,643,806
Net assets at December 31, 1997 $1,471,113 $2,271,946
Putnam Variable Putnam Variable
Trust U.S. Trust U.S.
Government and Government and
High Quality Bond High Quality Bond
Qualified Non-Qualified
Investment Operations:
Investment income-net $214,909 $390,590
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 95,026 103,799
Net unrealized gain (loss) on investments (50,657) 1,802
Net increase (decrease) in net assets
from investment operations 259,278 496,191
Accumulation Unit Transactions:
Net contract considerations and transfers
in (Note 3) 23,639 145,621
Net contract surrenders and transfers
out (Note 3) (1,310,074) (1,422,542)
Benefit payments to annuitants (5,189) (55,995)
Net increase (decrease) from accumulation
unit transactions (1,291,624) (1,332,916)
Net Increase (Decrease) in Net Assets ($1,032,346) ($836,725)
Net Assets:
Net assets at December 31, 1996 4,167,043 7,505,962
Net assets at December 31, 1997 $3,134,697 $6,669,237
Putnam Variable Putnam Variable
Trust Growth Trust Growth
and Income and Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $357,791 $189,484
Realized capital gain distributions 820,977 433,146
Net realized gain (loss) on investments 1,486,456 589,042
Net unrealized gain (loss) on investments 1,749,996 1,104,254
Net increase (decrease) in net assets
from investment operations 4,415,220 2,315,926
Accumulation Unit Transactions:
Net contract considerations and transfers
in (Note 3) 634,334 130,374
Net contract surrenders and transfers
out (Note 3) (3,900,090) (1,537,206)
Benefit payments to annuitants (14,478) (119,771)
Net increase (decrease) from accumulation
unit transactions (3,280,234) (1,526,603)
Net Increase (Decrease) in Net Assets $1,134,986 $789,323
Net Assets:
Net assets at December 31, 1996 20,340,862 10,652,130
Net assets at December 31, 1997 $21,475,848 $11,441,453
Putnam Putnam
Variable Trust Variable Trust
Voyager Voyager
Qualified * Non-Qualified *
Investment Operations:
Investment income-net ($18,840) ($16,213)
Realized capital gain distributions 87,856 71,570
Net realized gain (loss) on investments 59,862 30,400
Net unrealized gain (loss) on investments 355,156 323,702
Net increase (decrease) in net assets
from investment operations 484,034 409,459
Accumulation Unit Transactions:
Net contract considerations and transfers
in (Note 3) 87,480 105,653
Net contract surrenders and transfers
out (Note 3) (139,414) (57,462)
Benefit payments to annuitants 0 0
Net increase (decrease) from accumulation
unit transactions (51,934) 48,191
Net Increase (Decrease) in Net Assets $432,100 $457,650
Net Assets:
Net assets at December 31, 1996 1,874,327 1,577,774
Net assets at December 31, 1997 $2,306,427 $2,035,424
* Includes shares owned by Investors Life
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
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 Putnam Variable
Trust (formerly known as Putnam Capital Manager Trust). Prior to
the substitution of shares of Putnam Variable Trust for shares of
CIGNA Annuity Funds Group as the underlying funding vehicle for the
Separate Account (the "Substitution"), the Separate Account
contained five divisions. The Substitution was effective as of
April 18, 1995, following approvals of the Substitution by the U.S.
Securities and Exchange Commission and the contractholders having
their contract values determined by the affected portfolios of the
CIGNA Annuity Funds Group. 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. 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 Putnam
Variable Trust: Putnam Variable Trust Money Market Fund, Putnam
Variable Trust U.S. Government and High Quality Bond Fund, Putnam
Variable Trust Growth and Income Fund or Putnam Variable Trust
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 Putnam Variable 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.
Under the current provisions of the Internal Revenue Code (the
"Code"), transfers of contract values from one division of the
Separate Account to another division are not subject to current
taxation. There can be no assurance that future changes in the
Code will subject such transfers to current taxation.
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, 1998; (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-months ended June 30, 1998, were $111,538 after deductions for
premium taxes of $0. Contract owners have limited rights to
transfer their contract values between Separate Account Divisions.
For the six-months ended June 30, 1998, the total of all transfers
was $0. Contract surrender benefits amounted to $3,258,614.
Annuity benefits amounted to $212,264. 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
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 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. Accumulation Unit Transactions
The changes in the number of accumulation units
(the measure of ownership in the Separate Account)
during the six months of 1998 and units
outstanding at June 30, 1998 were as follows:
Putnam Putnam
Variable Variable
Trust Trust
Money Money
Market Market
Qualified Non-Qualified
Units outstanding at December 31, 1997........... 684,786 1,065,062
Units purchased and transfers in................. 37,658 123,169
Benefits, surrenders and transfers out........... (51,876) (38,533)
Units outstanding at June 30, 1998............... 670,568 1,149,698
Putnam Putnam
Variable Variable
Trust U.S. Trust U.S.
Government Government
and High and High
Quality Bond Quality Bond
Qualified Non-Qualified
Units outstanding at December 31, 1997........... 920,186 1,981,587
Units purchased and transfers in................. 24,143 4,573
Benefits, surrenders and transfers out........... (97,265) (129,791)
Units outstanding at June 30, 1998............... 847,064 1,856,369
Putnam Putnam
Variable Variable
Trust Growth Trust Growth
and Income and Income
Qualified Non-Qualified
Units outstanding at December 31, 1997........... 2,818,975 1,753,068
Units purchased and transfers in................. 103,259 1,915
Benefits, surrenders and transfers out........... (274,197) (124,928)
Units outstanding at June 30, 1998............... 2,648,037 1,630,055
Putnam Putnam
Variable Variable
Trust Trust
Voyager Voyager
Qualified * Non-Qualified *
Units outstanding at December 31, 1997........... 738,882 653,214
Units purchased and transfers in................. 36,361 30,586
Benefits, surrenders and transfers out........... (15,410) (39,095)
Units outstanding at June 30, 1998............... 759,833 644,705
* 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, 1998 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
Putnam Variable Trust Money Market, Qualified.... 43,050 $94,315
Putnam Variable Trust Money Market, Non-Qualified 158,740 $345,305
Putnam Variable Trust Growth and Income II, Quali 130,379 $1,084,554
Putnam Variable Trust Growth and Income II, Non-Q 97,404 $694,665
Putnam Variable Trust U.S. Government and High Qu 82,608 $289,918
Putnam Variable Trust U.S. Government and High Qu 187,523 $654,063
Putnam Variable Trust Voyager, Qualified......... 31,481 $114,866
Monthly Annuity
Annuity Units Unit Value
Putnam Variable Trust Money Market, Qualified.... 774 $0.8243701
Putnam Variable Trust Money Market, Non-Qualified 3,958 $0.8248195
Putnam Variable Trust Growth and Income II, Quali 4,883 $1.9300020
Putnam Variable Trust Growth and Income II, Non-Q 5,706 $2.0711915
Putnam Variable Trust U.S. Government and High Qu 1,466 $1.4122127
Putnam Variable Trust U.S. Government and High Qu 4,707 $1.4174415
Putnam Variable Trust Voyager, Qualified......... 462 $1.0563484
