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[SENTRY LOGO]
Sentry Variable Account I
The Patriot
A FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY
FUNDED BY NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
SEMI-ANNUAL REPORT
JUNE 30, 1995
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
<PAGE> 2
Dear Contract Owner: August 15, 1995
The following Separate Account performance is presented for your review:
<TABLE>
<CAPTION>
Average Annual Total Returns* as of 6-30-95
Portfolio 1 Year 5 Years 10 Years
- --------- ------ ------- --------
<S> <C> <C> <C>
Growth 22.0% 7.7% 10.3%
Balanced 14.1% 7.6% 8.6%
Limited Maturity Bond (0.5%) 3.9% 5.3%
Liquid Asset (1.9%) 2.5% 4.0%
</TABLE>
The comments below on the performance of the Sentry Separate Account investment
vehicle are provided by its investment advisor, Neuberger and Berman
Management, Incorporated.
With strong economic growth, and the threat of rising interest rates,
many people predicted 1995 would be a continuation of the weak 1994 bond
market. Instead, the bond market rallied, with 2-year Treasury note yields
falling by 2% from January 1995, through June 30, 1995, and 30-year
Treasury bond yields declining by 1.35% during this same time period. By
the end of June, the bond market had anticipated the latest cut in interest
rates by the Fed. In 1995 bonds have had generous total returns,
year-to-date.
By the end of 1994, with the economy at full steam, corporate bond
spreads (the difference between the yield of a corporate bond and a
comparable maturity Treasury security) had narrowed to historically tight
levels. But with the change of sentiment to a slower economy, corporate
bond spreads actually widened. Neuberger & Berman AMT Limited Maturity Bond
Investments and the fixed income portion of Neuberger & Berman AMT Balanced
Investments took advantage of this buying opportunity (one wants to buy
corporate bonds when spreads are wide), and purchased corporate bonds. For
both, we entered 1995 at a relatively short maturity of 2.2 years. Given
the uncertainty of the environment, we felt it prudent to stay close to
neutral and kept the weighted average maturity in the 1.9 to 2.4 year
range. The net result was to keep our returns generally in-line with the
generous returns of the Merrill Lynch 1-3 year Treasury Index.
The strategy for Neuberger & Berman AMT Liquid Asset Investments during
this time was to continue to take advantage of higher yields and extend the
portfolio maturity from 32 days in January, 1995 to 49 days in June. We had
extended to 62 days in the first quarter as the additional yield afforded
by longer maturities added to our returns. In the second quarter we were
able to take advantage of the additional yield available by purchasing
assets with shorter maturities.
Fueled by lower interest rates, the first half of 1995, has been an
exciting one for Neuberger & Berman AMT Growth Investments and the equity
portion of Neuberger & Berman AMT Balanced Investments. The short-term
value of our securities was favorably affected by the decline in interest
rates. We are hopeful that the recent 1/4% reduction in the Federal Funds
rate in the beginning of the third quarter will continue this positive
trend.
Interest rates aside, the earnings growth of the companies we own
remains the most important factor influencing the appreciation of
securities. We continue to be committed to paying a reasonable price for
the stocks we believe have growth potential. Among the strongest industry
groups in the portfolio for the first half of the year were Technology,
Financial Services and Gaming.
Overall, we have been pleased with the quality and returns of our
holdings this year. Further, there is no shortage of buying opportunities,
even in this record-high equity market. By investing in fast-growing
companies with entrepreneurial managements and pristine balance sheets, we
hope to be able to continue to provide the shareholder with excellent
long-term returns.
Please feel free to contact us at any time should you have questions.
Sincerely,
Harold A. Rice
Harold A. Rice, President, Sentry Life of New York
* Total return results are net of all expenses, management fees and
contingent deferred sales charges. Results represent past performance
and are not an indication of future results. The investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original
cost. The Balanced Portfolio was established on March 1, 1989, but was
not offered to Sentry clients until September 14, 1990.
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SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY VARIABLE ACCOUNT I
STATEMENT OF ASSETS, LIABILITIES
AND CONTRACT OWNERS' EQUITY
June 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Neuberger & Berman Advisers Management Trust:
Liquid Asset Portfolio, 268,349
shares (cost $268,349) $ 268,349
Growth Portfolio, 58,610
shares (cost $1,259,078) 1,401,372
Limited Maturity Bond Portfolio, 22,320
shares (cost $315,750) 314,711
Balanced Portfolio, 14,354
shares (cost $216,354) 235,554
----------
Total investments 2,219,986
Dividends receivable 1,099
----------
Total assets 2,221,085
LIABILITIES:
Accrued expenses 1,945
----------
CONTRACT OWNERS' EQUITY (NET ASSETS) $2,219,140
==========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 4
SENTRY LIFE INSURANCE COMPANY OF NEW YORK
SENTRY VARIABLE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
For the six months ended June 30, 1995 and 1994 (Unaudited)
<TABLE>
<CAPTION>
SUB-ACCOUNTS INVESTING IN:
-------------------------
LIQUID ASSET GROWTH
PORTFOLIO PORTFOLIO
---------------- -------------------
1995 1994 1995 1994
------- ------- -------- -------
<S> <C> <C> <C> <C>
Income:
Dividends 8,045 2,993 2,715 6,883
Expenses:
Mortality and expense risk 1,941 1,359 7,450 7,486
------- ------- --------- ---------
Net investment income (loss) 6,104 1,634 (4,735) (603)
------- ------- --------- ---------
Realized net investment gain -- -- 23,691 41,934
Unrealized appreciation (depreciation), net -- -- 181,086 (335,840)
Capital gain distributions received -- 235 36,370 161,162
------- ------- --------- ---------
Realized and unrealized gain (loss)
on investments and capital
gains distributions, net -- 235 241,147 (132,744)
------- ------- --------- ---------
Net increase (decrease) in contract owners'
equity from operations 6,104 1,869 236,412 (133,347)
------- ------- --------- ---------
Purchase payments 15,604 2,385 59,773 15,413
Transfers between subaccounts, net (47,990) 37,643 23,979 107,482
Withdrawals (48,585) (10,438) (45,893) (129,605)
Contract maintenance fees (492) (192) (1,547) (1,775)
Surrender charges (855) (80) (431) (752)
------- ------- --------- ---------
Net increase (decrease) in contract owners'
equity derived from principal transactions (82,318) 29,318 35,881 (9,237)
------- ------- --------- ---------
Total increase (decrease) in contract
owners' equity (76,214) 31,187 272,293 (142,584)
Contract owners' equity at beginning of period 345,028 264,199 1,128,695 1,236,884
------- ------- --------- ---------
Contract owners' equity at end of period 268,814 295,386 1,400,988 1,094,300
======= ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 5
<TABLE>
<CAPTION>
LIMITED MATURITY BALANCED
BOND PORTFOLIO PORTFOLIO TOTAL
------------------- ----------------- -------------------
1995 1994 1995 1994 1995 1994
------ ------- ------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
15,713 14,827 3,731 7,020 30,204 31,723
1,794 2,445 1,480 2,802 12,665 14,092
------- ------- -------- ------- --------- ---------
13,919 12,382 2,251 4,218 17,539 17,631
------- ------- -------- ------- --------- ---------
336 7,988 7,992 8,132 32,019 58,054
1,918 (29,367) 19,394 (59,655) 202,398 (424,862)
-- 2,197 1,199 11,597 37,569 175,191
------- ------- -------- ------- --------- ---------
2,254 (19,182) 28,585 (39,926) 271,986 (191,617)
------- ------- -------- ------- --------- ---------
16,173 (6,800) 30,836 (35,708) 289,525 (173,986)
------- ------- -------- ------- --------- ---------
228 771 7,566 31,591 83,171 50,160
17,696 (89,196) 6,315 (55,929) -- --
(3,934) -- (217,070) -- (315,482) (140,043)
(262) (441) (339) (502) (2,640) (2,910)
(21) -- (3,348) -- (4,655) (832)
------- ------- -------- ------- --------- ---------
13,707 (88,866) (206,876) (24,840) (239,606) (93,625)
------- ------- -------- ------- --------- ---------
29,880 (95,666) (176,040) (60,548) 49,919 (267,611)
284,405 471,057 411,093 488,690 2,169,221 2,460,830
------- ------- -------- ------- --------- ---------
314,285 375,391 235,053 428,142 2,219,140 2,193,219
======= ======= ======== ======= ========= =========
</TABLE>
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1995 and 1994
1. ORGANIZATION AND CONTRACTS
The Sentry Variable Account I (the Variable Account) is a segregated
investment account of the Sentry Life Insurance Company of New York (the
Company) and is registered with the Securities and Exchange Commission
as a unit investment trust pursuant to the provisions of the Investment
Company Act of 1940. The Variable Account was established by the Company
on August 24, 1983 and commenced operations on May 3, 1984. Accordingly,
it is an accounting entity wherein all segregated account transactions
are reflected.
The assets of the Variable Account are invested in one or more of the
portfolios of Neuberger & Berman Advisers Management Trust (the Trust)
at the portfolio's net asset value in accordance with the selection made
by the contract owners.
A copy of the Neuberger & Berman Advisers Management Trust Annual Report
is included in the Variable Account's Annual Report.
2. SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
Investments in the Trust are valued by using net asset values which are
based on the daily closing prices of the underlying securities in the
Trust's portfolios.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on the trade date (the date the
order to buy and sell is executed). Dividend income is recorded on the
ex-dividend date. The cost of investments sold and the corresponding
capital gains and losses are determined on a specific identification
basis.
FEDERAL INCOME TAXES
The Company is taxed as a life insurance company under the provisions of
the Internal Revenue Code. The operations of the Variable Account are
part of the total operations of the Company and are not taxed as a
separate entity.
Under Federal income tax law, net investment income and net realized
capital gains of the Variable Account which are applied to increase
contract owners' equity are not taxed.
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NOTES TO FINANCIAL STATEMENTS
(UNAUDITED - CONTINUED)
June 30, 1995 and 1994
3. Expenses
A mortality and expense risk premium is deducted by the Company from the
Variable Account on a daily basis which is equal, on an annual basis, to
1.20% (.80% mortality and .40% expense risk) of the daily net asset
value of the Variable Account. This mortality and expense risk premium
compensates the Company for assuming these risks under the variable
annuity contract. The liability for accrued mortality and expense risk
premium amounted to $1,945 at June 30, 1995.
The Company deducts, on the contract anniversary date, an annual
contract maintenance charge of $30, per contract holder, from the
contract value by canceling accumulation units. If the contract is
surrendered for its full surrender value, on other than the contract
anniversary, the contract maintenance charge will be deducted at the
time of such surrender. This charge reimburses the Company for
administrative expenses relating to maintenance of the contract.
There are no deductions made from purchase payments for sales charges at
the time of purchase. However, a contingent deferred sales charge may be
deducted in the event of a surrender to reimburse the Company for
expenses incurred which are related to contract sales. Contingent
deferred sales charges apply to each purchase payment and are graded
from 6% during the first contract year to 0% in the seventh contract
year.
Any premium tax payable to a governmental entity as a result of the
existence of the contracts or the Variable Account will be charged
against the contract value. Premium taxes up to 4% are currently imposed
by certain states. Some states assess their premium taxes at the time
purchase payments are made; others assess their premium taxes at the
time of annuitization. In the event contracts would be issued in states
assessing their premium taxes at the time purchase payments are made,
the Company currently intends to advance such premium taxes and to
deduct the premium taxes from a contract owner's contract value at the
time of annuitization or surrender.
4. Initial Capitalization
Initial capital of $100,000 was provided by the Company for the
establishment of the Variable Account. As an investor in the Variable
Account, the Company shares pro rata in the investment performance of
the Variable Account and is subject to the same valuation procedures and
the same periodic charges as are other contract owners in the Variable
Account. The Company's investment, at market value, was $242,181 at June
30, 1995.
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED--CONTINUED)
June 30, 1995 and 1994
5. CONTRACT OWNERS' EQUITY
Contract owners' equity is represented by accumulation units in the
related Variable Account.
At June 30, 1995 ownership of the Variable Account was represented by
the following accumulation units and accumulation unit values:
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION
UNITS UNIT VALUE VALUE
----------- ------------ -----------
<S> <C> <C> <C>
Neuberger & Berman
Advisers Management Trust:
Liquid Asset Portfolio 16,853 $15.95 $ 268,814
Growth Portfolio 40,950 34.21 1,400,988
Limited Maturity Bond Portfolio 14,589 21.54 314,285
Balanced Portfolio 15,242 15.42 235,053
----------
Total contract owners' equity $2,219,140
==========
</TABLE>
At June 30, 1994 ownership of the Variable Account was represented by the
following accumulation units and accumulation unit values:
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION
UNITS UNIT VALUE VALUE
----------- ------------ -----------
<S> <C> <C> <C>
Neuberger & Berman
Advisers Management Trust:
Liquid Asset Portfolio 19,133 $15.44 $ 295,386
Growth Portfolio 40,615 26.94 1,094,300
Limited Maturity Bond Portfolio 18,499 20.29 375,391
Balanced Portfolio 33,037 12.96 428,142
----------
Total contract owners' equity $2,193,219
==========
</TABLE>
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED--CONTINUED)
June 30, 1995 and 1994
6. PURCHASES AND SALES OF SECURITIES
In 1995, purchases and proceeds on sales of the Trust's shares aggregated
$322,835 and $507,378, respectively, and were as follows:
<TABLE>
<CAPTION>
LIQUID ASSET GROWTH LIMITED MATURITY BALANCED
PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO TOTAL
------------ --------- -------------- --------- --------
<S> <C> <C> <C> <C> <C>
Purchases $ 80,768 $169,542 $43,637 $28,888 $322,835
Proceeds on sales 156,751 102,577 16,217 231,833 507,378
</TABLE>
In 1994, purchases and proceeds on sales of the Trust's shares aggregated
$703,110 and $604,011, respectively, and were as follows:
<TABLE>
<CAPTION>
LIQUID ASSET GROWTH LIMITED MATURITY BALANCED
PORTFOLIO PORTFOLIO BOND PORTFOLIO PORTFOLIO TOTAL
------------ ---------- -------------- --------- --------
<S> <C> <C> <C> <C> <C>
Purchases $161,568 $413,889 $ 76,102 $51,551 $703,110
Proceeds on sales 130,212 263,081 149,944 60,774 604,011
</TABLE>
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[LOGO][SENTRY LIFE INSURANCE
COMPANY OF NEW YORK]
A Member of the Sentry Family of Insurance Companies
251 Satina Meadows Parkway, Suite 100
P.O. Box 4944
Syracuse, NY 13221
(315) 453-6301
32-95A 8-95
