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[SENTRY LOGO] SENTRY(R)
Sentry Variable Life Account I
SELF-DIRECTED LIFE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
FUNDED BY NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
SEMI-ANNUAL REPORT
JUNE 30, 1995
SENTRY LIFE INSURANCE COMPANY
<PAGE> 2
Dear Policy Owner: August 15, 1995
We appreciate your selection of Sentry Life to provide for your long-term
investment and insurance needs. With your Self-Directed Life policy, you are in
control of how your cash value is invested. This financial report is designed
to give you up-to-date information on your investment.
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.
Thank you for choosing Sentry for your insurance and investment needs.
Dale R. Schuh
Dale R. Schuh
President, Sentry Life Insurance Company
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SENTRY LIFE INSURANCE COMPANY
SENTRY VARIABLE LIFE ACCOUNT I
STATEMENT OF ASSETS, LIABILITIES
AND CONTRACT OWNERS' EQUITY
June 30, 1995 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
Neuberger & Berman Advisers Management Trust:
Liquid Asset Portfolio, 166,594
shares (cost $166,594) $ 166,594
Growth Portfolio, 95,745
shares (cost $2,078,695) 2,289,252
Limited Maturity Bond Portfolio, 13,168
shares (cost $185,153) 185,664
Balanced Portfolio, 45,858
shares (cost $683,618) 752,528
----------
Total investments 3,394,038
Dividends receivable 674
----------
Total assets 3,394,712
LIABILITIES:
Accrued expenses 1,309
----------
CONTRACT OWNERS' EQUITY (NET ASSETS) $3,393,403
==========
</TABLE>
The accompanying notes are an integral part of these financial statements
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SENTRY LIFE INSURANCE COMPANY
SENTRY VARIABLE LIFE ACCOUNT I
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
For the six months ended June 30, 1995, 1994 and 1993 (Unaudited)
<TABLE>
<CAPTION>
SUB-ACCOUNTS INVESTING IN:
------------------------------
LIQUID ASSET GROWTH
PORTFOLIO PORTFOLIO
------------------------------ --------------------------------
1995 1994 1993 1995 1994 1993
-------- -------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends 4,406 2,310 1,925 4,390 8,224 10,005
Expenses:
Risk charges 928 919 865 10,448 8,779 7,196
-------- ------ ------ --------- --------- ---------
Net investment income (loss) 3,478 1,391 1,060 (6,058) (555) 2,809
-------- ------ ------ --------- --------- ---------
Realized net investment gain -- -- -- 4,501 36,329 24,802
Unrealized appreciation (depreciation), net -- -- -- 328,213 (411,943) (43,245)
Capital gain distributions received -- 210 115 58,834 192,558 21,774
-------- ------ ------ --------- --------- ---------
Realized and unrealized gain (loss)
on investments and capital
gains distributions, net -- 210 115 391,548 (183,056) 3,331
-------- ------ ------ --------- --------- ---------
Net increase (decrease) in contract owners'
equity from operations 3,478 1,601 1,175 385,490 (183,611) 6,140
-------- ------ ------ --------- --------- ---------
Purchase payments 30,251 58,085 55,888 255,668 256,150 192,060
Transfers between subaccounts, net (51,452) (28,925) (73,843) 29,595 42,662 38,809
Withdrawals and surrenders (219) (607) (2,362) (70,740) (67,280) (18,251)
Monthly deductions (5,920) (6,978) (6,755) (89,211) (74,380) (61,093)
Policy loans (9) 35 (627) (33,337) (54,362) (20,880)
-------- ------ ------ --------- --------- ---------
Net increase (decrease) in contract owners'
equity derived from principal
transactions (27,349) 21,610 (27,699) 91,975 102,790 130,645
-------- ------ ------ --------- --------- ---------
Total increase (decrease) in contract
owners' equity (23,871) 23,211 (26,524) 477,465 (80,821) 136,785
Contract owners' equity at beginning of year 190,683 160,967 194,077 1,811,605 1,666,768 1,327,988
-------- ------- ------- --------- --------- ---------
Contract owners' equity at end of year 166,812 184,178 167,553 2,289,070 1,585,947 1,464,773
======== ======= ======= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
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<TABLE>
<CAPTION>
LIMITED MATURITY BALANCED
BOND PORTFOLIO PORTFOLIO TOTAL
-------------------------- --------------------------- ---------------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
------- ------- ------- ------- ------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
9,541 7,291 6,571 11,714 9,450 6,857 30,051 27,275 25,358
942 1,015 989 3,491 3,194 2,633 15,809 13,907 11,683
------- ------- ------- ------- ------- ------- --------- --------- ---------
8,599 6,276 5,582 8,223 6,256 4,224 14,242 13,368 13,675
------- ------- ------- ------- ------- ------- --------- --------- ---------
115 99 1,028 4,584 8,259 4,919 9,200 44,687 30,749
1,349 (10,849) (54) 79,075 (75,699) (8,148) 408,637 (498,491) (51,447)
-- 1,080 885 3,765 15,613 1,029 62,599 209,461 23,803
------- ------- ------- ------- ------- ------- --------- --------- ---------
1,464 (9,670) 1,859 87,424 (51,827) (2,200) 480,436 (244,343) 3,105
------- ------- ------- ------- ------- ------- --------- --------- ---------
10,063 (3,394) 7,441 95,647 (45,571) 2,024 494,678 (230,975) 16,780
------- ------- ------- ------- ------- ------- --------- --------- ---------
15,995 11,935 10,635 94,605 44,349 75,876 396,519 370,519 334,459
10,336 2,573 8,030 11,521 (16,310) 27,004 -- -- --
(11,850) (15,940) (3,097) (21,987) (7,689) (4,239) (104,796) (91,516) (27,949)
(6,768) (6,541) (6,757) (40,022) (33,849) (30,420) (141,921) (121,748) (105,025)
23 (62) 440 4,375 (6,020) 454 (28,948) (60,409) (20,613)
------- ------- ------- ------- ------- ------- --------- --------- ---------
7,736 (8,035) 9,251 48,492 (19,519) 68,675 120,854 96,846 180,872
------- ------- ------- ------- ------- ------- --------- --------- ---------
17,799 (11,429) 16,692 144,139 (65,090) 70,699 615,532 (134,129) 197,652
167,729 195,958 181,022 607,854 637,593 456,461 2,777,871 2,661,286 2,159,548
------- ------- ------- ------- ------- ------- --------- --------- ---------
185,528 184,529 197,714 751,993 572,503 527,160 3,393,403 2,527,157 2,357,200
======= ======= ======= ======= ======= ======= ========= ========= =========
</TABLE>
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1995 and 1994
1. ORGANIZATION AND CONTRACTS
The Sentry Variable Life Account I (the Variable Life Account) is a
segregated investment account of the Sentry Life Insurance Company (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 Life Account was established by the
Company on February 12, 1985 and commenced operations on January 13,
1987. Accordingly, it is an accounting entity wherein all segregated
account transactions are reflected.
The assets of the Variable Life 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 Life 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 Life 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 and a death benefit guarantee risk
charge are deducted by the Company from the Variable Life Account on a
daily basis which is equal, on an annual basis, to 1.05% (.90% mortality
and expense risk and .15% death benefit guarantee risk charge) of the
daily net asset value of the Variable Life Account. These charges
compensate the Company for assuming these risks under the variable life
contract. The liability for accrued mortality and expense risk premium
and death benefit guarantee risk charge amounted to $1,309 at June 30,
1995.
At the beginning of each policy month, the company makes a deduction, per
contract holder, from the cash value of the policy by canceling
accumulation units. This deduction consists of the cost of insurance for
the policy and any additional benefits provided by rider, if any, for the
policy month and a $5 monthly administrative fee. The administrative fee
reimburses the Company for administrative expenses relating to the
issuance and maintenance of the contract.
The Company deducts a front-end sales expense charge of 5.0% from each
premium payment. A surrender charge may be deducted in the event of a
surrender to reimburse the Company for expenses incurred in connection
with issuing a policy. The full surrender charge will be reduced during
the first nine contract years until it reaches zero in the tenth contract
year.
The Company deducts from each premium payment the amount of premium taxes
levied by any state or government entity. Premium taxes up to 4% are
imposed by certain states.
4. INITIAL CAPITALIZATION
Initial capital of $500 was provided by the Company for the establishment
of the Variable Life Account. As an investor in the Variable Life
Account, the Company shares pro rata in the investment performance of the
Variable Life Account and is subject to the same valuation procedures as
are other contract owners in the Variable Life Account. The Company's
investment, at market value, was $710 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 Life Account.
At June 30, 1995 ownership of the Variable Life 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 11,699 $14.26 $ 166,812
Growth Portfolio 116,997 19.57 2,289,070
Limited Maturity Bond Portfolio 11,995 15.47 185,528
Balanced Portfolio 47,921 15.69 751,993
----------
Total contract owners' equity $3,393,403
==========
</TABLE>
At June 30, 1994 ownership of the Variable Life 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 13,366 $13.78 $ 184,178
Growth Portfolio 103,086 15.38 1,585,947
Limited Maturity Bond Portfolio 12,686 14.55 184,529
Balanced Portfolio 43,479 13.17 572,503
----------
Total contract owners' equity $2,527,157
==========
</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
$572,002 and $374,412, 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 $ 37,340 $360,449 $ 35,872 $138,341 $572,002
Proceeds on sales 61,199 216,249 19,594 77,370 374,412
</TABLE>
In 1994, purchases and proceeds on sales of the Trust's shares aggregated
$729,331 and $409,935, 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 $ 77,324 $536,547 $ 30,328 $ 85,132 $729,331
Proceeds on sales 54,381 241,974 30,993 82,587 409,935
</TABLE>
In 1993, purchases and proceeds on sales of the Trust's shares aggregated
$514,797 and $296,733, 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 $ 78,160 $288,059 $ 28,626 $119,952 $514,797
Proceeds on sales 104,786 132,638 12,919 46,390 296,733
---------- -------- ---------- --------- ---------
($26,626) $155,421 $ 15,707 $ 73,562 $218,064
========== ======== ========== ========= =========
</TABLE>
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[SENTRY LOGO] SENTRY LIFE
INSURANCE COMPANY
Rated A+ by A.M. Best
1800 North Point Drive
Stevens Point, WI 54481
