Dear Variable Annuity Owner:
The U.S. stock market continued its strong performance in the first half of
1997. Total returns in the bond market were considerably lower than in the stock
market, but more in line with historical norms. Please see the managers'
discussions contained in this booklet for more information on market conditions
and outlook. Results for the first six months of 1997 in the subaccounts of the
MEMBERS(R) Variable Annuity are shown in the following table.
<TABLE>
<CAPTION>
Percent increase Percent increase
in Unit Value from in Unit Value from
Subaccount 12/31/96 through 6/30/97 Subaccount 12/31/96 through 6/30/97
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Appreciation Stock 13.92% International Stock 10.89%
Growth and Income Stock 14.91% World Governments -2.33%
Balanced 7.37% Emerging Growth 10.02%
Bond 1.91% High Income n/a - inception 5/1/97
Money Market 1.74% Developing Markets n/a - inception 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This booklet is divided into several sections. Each section contains the
semiannual report for a component of the MEMBERS(R) Variable Annuity. The first
section contains the following reports for the CUNA Mutual Life Variable Annuity
Account:
Statement of Assets and Liabilities......................... page 2
Statement of Operations .................................... page 4
Statement of Changes in Net Assets.......................... page 5
Notes to the Financial Statements........................... page 7
The subaccounts of the CUNA Mutual Life Variable Annuity Account invest in
mutual funds. The results shown in this first section reflect the deduction of
the separate account level charges. The returns at the subaccount level (shown
above) are slightly lower than the returns at the mutual fund level as a result
of these charges.
The remaining sections of this booklet contain the semiannual reports for each
of the mutual funds in which the subaccounts invest. The second section contains
the report for the Ultra Series Fund which includes the Capital Appreciation
Stock Fund, Growth and Income Stock Fund, Balanced Fund, Bond Fund, and Money
Market Fund. There are also sections for the semiannual reports for the
International Stock Portfolio of the T. Rowe Price International Series, Inc.,
the MFS(R) World Government Series and the MFS(R) Emerging Growth Series of the
MFS(R) Variable Insurance TrustSM, the Oppenheimer High Income Fund of the
Oppenheimer Variable Account Funds, and the Templeton Developing Markets Fund of
the Templeton Variable Products Series Fund.
The net assets in the CUNA Mutual Life Variable Annuity Account totaled over
$595 million on June 30, 1997. We hope you share our belief that MEMBERS(R)
Variable Annuity is a great vehicle to accumulate and distribute dollars for
your retirement planning needs. Over the last several years we have seen strong
returns in the equity markets. You should always keep in mind the fact that
strong markets are often followed by periods of slower growth or even temporary
declines. Thank you for making MEMBERS(R) Variable Annuity a part of your long
term asset accumulation plan.
Sincerely,
/s/ Michael B. Kitchen
Michael B. Kitchen
President and Chief Executive Officer
CUNA Mutual Life Insurance Company
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Assets and Liabilities
June 30, 1997
(Unaudited)
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C> <C>
Investments in Ultra Series Fund:
(note 2)
Capital Appreciation Stock Fund,
5,977,644 shares at net asset
value of $16.70 per share
(cost $80,221,184) $99,840,961 $ -- $ -- $ -- $ --
Growth and Income Stock Fund,
8,280,819 shares at net asset
value of $24.56 per share
(cost $164,858,419) -- 203,386,242 -- -- --
Balanced Fund, 8,809,489 shares
at net asset value of $16.37
per share (cost $132,041,190) -- -- 144,223,037 -- --
Bond Fund, 2,593,746 shares
at net asset value of $10.45
per share (cost $26,877,609) -- -- -- 27,107,973 --
Money Market Fund, 24,096,696
shares at net asset value of
$1.00 per share
(cost $24,096,696) -- -- -- -- 24,096,696
---------- ---------- ---------- ---------- ----------
Total assets 99,840,961 203,386,242 144,223,037 27,107,973 24,096,696
---------- ---------- ---------- ---------- ----------
Liabilities:
Accrued adverse mortality and
expense charges 279,340 563,540 410,235 79,272 71,697
Other accrued expenses 33,520 67,625 49,228 9,513 8,604
---------- ---------- ---------- ---------- ----------
Total liabilities 312,860 631,165 459,463 88,785 80,301
---------- ---------- ---------- ---------- ----------
Net assets $99,528,101 $202,755,077 $143,763,574 $27,019,188 $24,016,395
========== ========== ========== ========== ==========
Units outstanding
(note 5 and note 6) 5,654,705 11,490,043 10,275,941 2,300,699 2,164,376
========== ========== ========== ========== ==========
Net asset value per unit $17.60 $17.65 $13.99 $11.74 $11.10
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Assets and Liabilities
June 30, 1997
(Unaudited)
International World Emerging High Developing
Stock Governments Growth Income Markets
Assets: Subaccount Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C> <C>
Investments in T. Rowe Price
International Fund, Inc.:
International Stock Portfolio,
3,536,583 shares at net asset
value of $14.11 per share
(cost $41,611,247) $49,901,194 $ -- $ -- $ -- $ --
Investments in MFSAE Variable
Insurance TrustSM:
World Governments Series,
1,376,029 shares at net asset
value of $10.15 per share
(cost $14,153,717) -- 13,966,702 -- -- --
Investments in MFSAE Variable
Insurance TrustSM:
Emerging Growth Series,
2,119,871 shares at net asset
value of $14.67 per share
(cost $28,171,170) -- -- 31,098,517 -- --
Investments in Oppenheimer
Variable Account Funds:
High Income Series,
240,575 shares at net asset
value of $11.14 per share
(cost $2,694,322) -- -- -- 2,680,002 --
Investments in Templeton
Variable Products Series Fund:
Developing Markets Series,
104,700 shares at net asset
value of $9.91 per share
(cost $1,028,826) -- -- -- -- 1,037,582
---------- ---------- ---------- --------- ---------
Total assets 49,901,194 13,966,702 31,098,517 2,680,002 1,037,582
---------- ---------- ---------- --------- ---------
Liabilities
Accrued adverse mortality and
expense charges 138,817 42,338 81,333 2,050 992
Other accrued expenses 16,658 5,081 9,760 246 119
---------- ---------- ---------- --------- ---------
Total liabilities 155,475 47,419 91,093 2,296 1,111
---------- ---------- ---------- --------- ---------
Net assets $49,745,719 $13,919,283 $31,007,424 $2,677,706 $1,036,471
========== ========== ========== ========= =========
Units outstanding
(note 5 and note 6) 3,618,394 1,231,175 2,796,606 259,279 103,415
========== ========== ========== ========= =========
Net asset value per unit $13.75 $11.31 $11.09 $10.33 $10.02
========== ========== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Operations
June 30, 1997
(Unaudited)
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Investment income (loss): Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Dividend income $182,651 $633,023 $1,168,876 $354,399 $506,253
Adverse mortality and expense
charges (note 3) (515,668) (1,019,690) (752,967) (145,657) (130,281)
Administrative charges (61,880) (122,363) (90,356) (17,479) (15,634)
-------- -------- -------- -------- --------
Net investment income (loss) (394,897) (509,030) 325,553 191,263 360,338
-------- -------- -------- -------- --------
Realized and unrealized gain (loss)
on investments:
Realized gain (loss) on security
transactions:
Capital gain distributions 47,629 79,878 36,236 -- --
Proceeds from sale of securities 286,624 282,070 117,508 340,376 13,332,343
Cost of securities sold (251,833) (228,313) (109,214) (341,794) (13,332,343
--------- --------- -------- -------- --------
Net realized gain (loss) on
security transactions 82,420 133,635 44,530 (1,418) --
Net change in unrealized
appreciation or depreciation
on investments 11,321,094 23,609,319 8,483,050 315,060 --
--------- --------- -------- -------- --------
Net gain (loss) on investments 11,403,514 23,742,954 8,527,580 313,642 --
--------- --------- -------- -------- --------
Net increase (decrease) in net
assets resulting from operations $11,008,617 $23,233,924 $8,853,133 $504,905 $360,338
========= ========= ======== ======== ========
International World Emerging High Developing
Stock Governments Growth Income Markets
Investment income (loss): Subaccount Subaccount Subaccount Subaccount Subaccount
---------- ---------- ---------- ---------- ----------
Dividend income $ -- $313,188 $ -- $40,387 $ --
Adverse mortality and expense
charges (note 3) (249,596) (80,660) (142,338) (2,050) (992)
Administrative charges (29,951) (9,679) (17,081) (246) (119)
-------- ------- --------- -------- ------
Net investment income (loss) (279,547) 222,849 (159,419) 38,091 (1,111)
-------- ------- --------- -------- ------
Realized and unrealized gain
(loss) on investments:
Realized gain (loss) on
security transactions:
Capital gain distributions -- -- -- -- --
Proceeds from sale of securities 23,666 441,913 -- -- 56,310
Cost of securities sold (20,239) (450,152) -- -- (56,712)
-------- ------- --------- -------- ------
Net realized gain (loss) on
security transactions 3,427 (8,239) -- -- (402)
Net change in unrealized
appreciation or depreciation
on investments 5,025,951 (487,048) 2,816,776 (14,319) 8,755
--------- -------- --------- ------- ------
Net gain (loss) on investments 5,029,378 (495,287) 2,816,776 (14,319) 8,353
--------- -------- --------- ------- ------
Net increase (decrease) in net assets
resulting from operations $4,749,831 $(272,438) $2,657,357 $23,772 $7,242
========= ======== ========= ======= ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Changes in Net Assets
Six Months Ended June 30, 1997 and the Year Ended December 31, 1996
(Unaudited)
CAPITAL APPRECIATION STOCK SUBACCOUNT GROWTH AND INCOME STOCK SUBACCOUNT
Operations: 1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net investment income (loss) $(347,268) $1,960,017 $(429,152) $3,503,603
Net realized gain (loss) on
security transactions 34,791 184,419 53,757 31,195
Net change in unrealized appreciation
or depreciation on investments 11,321,094 6,603,942 23,609,319 13,287,638
---------- ---------- ---------- ----------
Change in net assets from operations 11,008,617 8,748,378 23,233,924 16,822,436
---------- ---------- ---------- ----------
Capital unit transactions (note 5):
Proceeds from sales of units 48,235,210 66,511,107 88,739,119 112,789,079
Cost of units repurchased (29,157,441) (31,925,414) (40,405,329) (34,256,064)
---------- ---------- ---------- ----------
Change in net assets from capital
unit transactions 19,077,769 34,585,693 48,333,790 78,533,015
---------- ---------- ---------- ----------
Increase (decrease) in net assets 30,086,386 43,334,071 71,567,714 95,355,451
Net assets:
Beginning of period 69,441,715 26,107,644 131,187,363 35,831,912
---------- ---------- ---------- ----------
End of period $99,528,101 $69,441,715 $202,755,077 $131,187,363
========== ========== ========== ==========
BALANCED SUBACCOUNT BOND SUBACCOUNT
Operations: 1997 1996 1997 1996
---- ---- ---- ----
Net investment income (loss) $361,789 $4,085,481 $191,263 $704,571
Net realized gain (loss) on
security transactions 8,294 13,414 (1,418) (1,945)
Net change in unrealized appreciation
or depreciation on investments 8,483,050 2,775,771 315,060 (263,632)
---------- ---------- --------- ---------
Change in net assets from operations 8,853,133 6,874,666 504,905 438,994
---------- ---------- --------- ---------
Capital unit transactions (note 5):
Proceeds from sale of units 64,375,242 91,579,338 15,459,075 20,883,364
Cost of units repurchased (30,874,253) (29,216,779) (8,372,068) (8,218,653)
---------- ---------- ---------- ---------
Change in net assets from capital
unit transactions 33,500,989 62,362,559 7,087,007 12,664,711
---------- ---------- ---------- ---------
Increase (decrease) in net assets 42,354,122 69,237,225 7,591,912 13,103,705
Net assets:
Beginning of period 101,409,452 32,172,227 19,427,276 6,323,571
---------- ---------- ---------- ---------
End of period $143,763,574 $101,409,452 $27,019,188 $19,427,276
========== ========== ========== =========
MONEY MARKET SUBACCOUNT INTERNATIONAL STOCK SUBACCOUNT
Operations: 1997 1996 1997 1996
---- ---- ---- ----
Net investment income (loss) $360,338 $425,152 $(279,547) $222,112
Net realized gain (loss) on
security transactions -- -- 3,427 1,124
Net change in unrealized appreciation
or depreciation on investments -- -- 5,025,951 2,489,462
---------- ---------- ---------- ----------
Change in net assets from operations 360,338 425,152 4,749,831 2,712,698
---------- ---------- ---------- ----------
Capital unit transactions (note 5):
Proceeds from sales of units 50,209,718 71,914,632 30,261,908 37,340,833
Cost of units repurchased (42,835,808) (62,787,600) (18,538,512) (18,736,774)
---------- ---------- ---------- ----------
Change in net assets from capital
unit transactions 7,373,910 9,127,032 11,723,396 18,604,059
---------- ---------- ---------- ----------
Increase (decrease) in net assets 7,734,248 9,552,184 16,473,227 21,316,757
Net assets:
Beginning of period 16,282,147 6,729,963 33,272,492 11,955,735
---------- ---------- ---------- ----------
End of period $24,016,395 $16,282,147 $49,745,719 $33,272,492
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Statement of Changes in Net Assets
Six Months Ended June 30, 1997 and the Year Ended December 31, 1996
(Unaudited)
WORLD GOVERNMENTS SUBACCOUNT EMERGING GROWTH SUBACCOUNT
Operations: 1997 1996 1997 1996*
---- ---- ---- -----
<S> <C> <C> <C> <C>
Net investment income (loss) $222,849 $(125,656) $(159,419) $54,624
Net realized gain (loss) on
security transactions (8,239) (2,764) -- --
Net change in unrealized appreciation
or depreciation on investments (487,048) 448,184 2,816,776 110,671
---------- --------- ---------- ----------
Change in net assets from operations (272,438) 319,764 2,657,357 165,295
---------- ---------- ---------- ----------
Capital unit transactions (note 5):
Proceeds from sale of units 8,710,645 14,413,481 22,120,655 21,632,015
Cost of units repurchased (6,489,791) (8,476,180) (10,403,325) (5,164,573)
---------- ---------- ---------- ----------
Change in net assets from capital
unit transactions 2,220,854 5,937,301 11,717,330 16,467,442
---------- ---------- ---------- ----------
Increase (decrease) in net assets 1,948,416 6,257,065 14,374,687 16,632,737
Net assets:
Beginning of period 11,970,867 5,713,802 16,632,737 --
---------- ---------- ---------- ----------
End of period $13,919,283 $11,970,867 $31,007,424 $16,632,737
========== ========== ========== ==========
HIGH INCOME SUBACCOUNT DEVELOPING MARKETS SUBACCOUNT
Operations: 1997** 1997**
------ ------
<S> <C> <C>
Net investment income (loss) $38,091 $(1,111)
Net realized gain (loss) on
security transactions -- (402)
Net change in unrealized appreciation
or depreciation on investments (14,319) 8,755
--------- ---------
Change in net assets from operations 23,772 7,242
--------- ---------
Capital unit transactions (note 5):
Proceeds from sales of units 2,731,799 1,046,537
Cost of units repurchased (77,865) (17,308)
--------- ---------
Change in net assets from capital
unit transactions 2,653,934 1,029,229
--------- ---------
Increase (decrease) in net assets 2,677,706 1,036,471
Net assets:
Beginning of period -- --
--------- ---------
End of period $2,677,706 $1,036,471
========= =========
See accompanying notes to financial statements.
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
**The data is for the period beginning May 1, 1997 (date of initial activity).
</FN>
</TABLE>
<PAGE>
CUNA MUTUAL LIFE VARIABLE ANNUITY ACCOUNT
Notes to Financial Statements
(1) Organization
The CUNA Mutual Life Variable Annuity Account (the Variable Account) is a
unit investment trust registered under the Investment Company Act of 1940
with the Securities and Exchange Commission. The Variable Account was
established as a separate investment account within CUNA Mutual Life
Insurance Company (the Company) formerly known as Century Life of America,
to receive and invest net premiums paid under variable annuity contracts
(Contracts).
Although the assets in the Variable Account are the property of the
Company, the assets in the Variable Account attributable to the Contracts
are not chargeable with liabilities arising out of any other business which
the Company may conduct. The assets of the Variable Account are available
to cover the general liabilities of the Company only to the extent that the
Variable Account's assets exceed its liabilities arising under the
Contracts. The Company has the right to transfer to the general account any
assets of the Variable Account which are in excess of reserves and other
contract liabilities. All obligations arising under the Contracts are
general corporate obligations of the Company.
(2) Significant Accounting Policies
Investments
The Variable Account currently is divided into ten subaccounts but may, in
the future, include additional subaccounts. Each subaccount invests
exclusively in shares of a single underlying fund. (The term fund is used
to mean an investment portfolio sometimes called a fund, i.e., Ultra Series
Fund (Class Z shares), T. Rowe Price International Fund, Inc., MFSAE
Variable Insurance TrustSM,* Oppenheimer Variable Account Funds, Templeton
Variable Products Series Fund, or any other open-end management investment
company or unit investment trust in which a subaccount invests.) The
income, gains and losses, realized or unrealized, from the assets allocated
to each subaccount are credited to or charged against that subaccount
without regard to income, gains or losses from any other subaccount.
The Variable Account invests in shares of Ultra Series Fund, T. Rowe Price
International Fund, Inc., MFSAE Variable Insurance TrustSM,* Oppenheimer
Variable Account Funds, and Templeton Variable Products Series Fund. Each
is a management investment company of the series type with one or more
funds. Each is registered with the SEC as an open-end, management
investment company. Such registration does not involve supervision of the
management or investment practices or policies of the companies or their
funds by the SEC.
The Ultra Series Fund currently has five Funds available as investment
options under the Contracts, The T. Rowe Price International Series, Inc.
Has one Fund available as an investment option under the Contracts, the MFS
Variable Insurance Trust has two Funds available as investment options
under the Contracts, the Oppenheimer Variable Account Funds has one fund
available as an investment option under the Contracts and the Templeton
Variable Products Series Fund has one fund available as an investment
option under the Contracts. The Ultra Series Fund, MFS Variable Insurance
Trust, Oppenheimer Variable Account Funds and Templeton Variable Products
Series Fund also have other Funds that are not available under the
Contracts. All five investment companies may, in the future, create
additional Funds or classes that may or may not be available as investment
options under the Contracts. Each Fund has its own investment objective and
the income, gains and losses for each Fund are determined separately for
that Fund or class.
CIMCO Inc. (CIMCO) serves as the Investment Adviser to the Ultra Series
Fund and manages its assets in accordance with general policies and
guidelines established by the board of trustees of the Ultra Series Fund.
The Company owns one half of CIMCO's outstanding stock and one half is
owned indirectly by CUNA Mutual Insurance Society.
Rowe Price-Fleming International, Inc. (RPFI) serves as the Investment
Adviser to the International Stock Portfolio and manages its assets in
accordance with general policies and guidelines established by the board of
directors of T. Rowe Price International Fund, Inc. RPFI was founded in
1979 as a joint venture between T. Rowe Price Associates, Inc. and Robert
Fleming Holdings Limited.
Massachusetts Financial Services Company (MFS) serves as the Investment
Adviser to the MFS World Governments Series and Emerging Growth Series and
manages its assets in accordance with general policies and guidelines
established by the board of trustees of MFSAE Variable Insurance TrustSM.
MFS is a subsidiary of Sun Life Assurance Company of Canada (U.S.) which,
in turn, is a subsidiary of Sun Life Assurance Company of Canada.
OppenheimerFunds, Inc. Serves as the investment adviser to the Oppenheimer
High Income Fund and manages its assets in accordance with general policies
and guideline established by the board of trustees of the Oppenheimer
Variable Account Funds. The Manager is owned by Oppenheimer Acquisition
Corp., a holding company that is owned in part by senior officers of the
Manager and controlled by Massachusetts Mutual Life Insurance Company.
Templeton Asset Management Ltd. Serves as the investment adviser to the
Templeton Developing Markets Fund: Class 2 and manages its assets and makes
its investments decisions. Templeton Asset Management Ltd. Is a Singapore
corporation wholly owned by Franklin Resources, Inc., a publicly owned
company. Resources' principal shareholders are Charles B. Johnson and
Rupert H. Johnson, Jr.
The assets of each fund are held separate from the assets of the other
funds, and each fund is offered at a price equal to its respective net
asset value per share, without sales charge. Dividends and capital gain
distributions from each fund are reinvested in that fund. Investments in
shares of the funds are stated at market value which is the net asset value
per share as determined by the funds. Realized gains and losses from
security transactions are reported on an average cost basis.
Dividend income is recorded on the ex-dividend date.
Federal Income Taxes
Currently, no charge is made against the Variable Account for any federal,
state or local taxes (other than premium taxes) that the Company incurs or
that may be attributable to the Variable Account or the Contracts. The
Company may, however, make such a charge in the future from surrender
value, death benefits or annuity payments, as appropriate. Such taxes may
include taxes (levied by any government entity) which the Company
determines to have resulted from: (1) the establishment or maintenance of
the Variable Account, (2) receipt by the Company of purchase payments, (3)
issuance of the Contracts, or (4) the payment of annuity payments.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
(3) Fees and Charges
Organization Costs
CUNA Mutual Life Insurance Company absorbed all organization expenses of
the Variable Account.
Contract Charges
Surrender Charge (Contingent Deferred Sales Charge). No charge for sales
expenses is deducted from purchase payments at the time purchase payments
are paid. However, a surrender charge is deducted upon surrender or partial
withdrawal of purchase payments within 7 years of their being paid and, in
certain circumstances, upon payment of a death benefit or the election of
certain annuity payment options.
For purchase payments withdrawn or surrendered within one year of having
been paid, the charge is 7% of the amount of the payment withdrawn or
surrendered. For each purchase payment, the surrender charge decreases by
1% for each full year that has elapsed since the payment was made. No
surrender charge is assessed upon the withdrawal or surrender of the
contract value in excess of aggregate purchase payments or on purchase
payments made more than 7 years prior to the withdrawal or surrender.
Subject to certain restrictions. for the first partial withdrawal (or
surrender) in each contract year, an amount equal to 10% of aggregate
purchase payments subject to a surrender charge (as of the time of
withdrawal or surrender) may be surrendered without a surrender charge. The
surrender charge also may be waived in certain circumstances as provided in
the Contracts.
Annual Contract Fee. On each contract anniversary (or upon surrender of the
Contract) prior to the annuity date, the Company deducts an annual contract
fee of $30 from the variable contract value. After the annuity date, the
Company deducts this fee from variable annuity payments. A pro-rated
portion of the fee is deducted upon annuitization of a Contract except on a
contract anniversary.
Transfer Fee. No charge is made for transfers, however, the Company
reserves the right to charge $10 for the 13th and each subsequent transfer
during a Contract year.
Premium Taxes. If state or other premium taxes are applicable to a
Contract, they will be deducted either: (a) from purchase payments as they
are received, (b) from contract value upon surrender or partial withdrawal,
(c) upon application of adjusted contract value to an annuity payment
option, or (d) upon payment of a death benefit. The Company, however,
reserves the right to deduct premium taxes at the time it pays such taxes.
Variable Account Charges
Mortality and Expense Risk Charge. The Company deducts a daily mortality
and expense risk charge to compensate it for assuming certain mortality and
expense risks. The charge is deducted from the assets of the Variable
Account at an annual rate of 1.25% (approximately 0.85% for mortality risk
and 0.40% for expense risks).
Asset-Based Administration Charge. The Company deducts a daily
administration charge to compensate it for certain expenses it incurs in
administration of the Contract. The charge is deducted from the assets of
the Variable Account at an annual rate of 0.15%.
(4) Investment Transactions
The cost of shares purchased, including reinvestment of dividend
distributions, during the six months ended June 30, 1997, was as follows:
Capital Appreciation Stock Fund............................ $19,316,645
Growth and Income Stock Fund............................... 48,792,586
Balanced Fund.............................................. 34,420,257
Bond Fund.................................................. 7,703,739
Money Market Fund.......................................... 21,143,727
International Stock Portfolio.............................. 11,616,672
World Governments Series................................... 2,930,763
Emerging Growth............................................ 11,645,877
High Income Fund........................................... 2,694,322
Developing Markets Fund.................................... 1,085,539
-----------
$161,350,127
===========
(5) Unit Activity from Contract Transactions
Transactions in units of each subaccount of the Variable Account for the
year ended December 31, 1996 and for the six-month period ended June 30,
1997 were as follows:
<TABLE>
<CAPTION>
Capital
Appreciation Growth and Money
Stock Income Stock Balanced Bond Market
Subaccount Subaccount Subaccount Subaccount Subaccount
<S> <C> <C> <C> <C> <C>
Units outstanding at December 31, 1995 2,024,589 2,807,876 2,698,049 556,749 637,911
Units sold 4,725,115 8,201,765 7,449,013 1,861,200 6,697,714
Units repurchased (2,253,984) (2,468,258) (2,363,229) (731,410) (5,842,921)
-------- -------- -------- -------- --------
Units outstanding at December 31, 1996 4,495,720 8,541,383 7,783,833 1,686,539 1,492,704
Units sold 2,933,548 5,407,070 4,788,428 1,339,054 4,564,466
Units repurchased (1,774,563) (2,458,410) (2,296,320) (724,894) (3,892,794)
-------- -------- -------- -------- --------
Units outstanding at June 30, 1997 5,654,705 11,490,043 10,275,941 2,300,699 2,164,376
======== ======== ======== ======== ========
International World Emerging High Developing
Stock Governments Growth Income Markets
Subaccount Subaccount Subaccount* Subaccount Subaccount
Units outstanding at December 31, 1995 1,090,681 505,990 -- -- --
Units sold 3,189,527 1,277,826 2,162,251 -- --
Units repurchased (1,596,931) (750,333) (511,624) -- --
-------- -------- -------- ------- -------
Units outstanding at December 31, 1996 2,683,277 1,033,483 1,650,627 -- --
Units sold 2,402,805 775,152 2,158,376 266,866 105,152
Units repurchased (1,467,688) (577,460) (1,012,397) (7,587) (1,737)
-------- -------- -------- ------- -------
Units outstanding at June 30, 1997 3,618,394 1,231,175 2,796,606 259,279 103,415
======== ======== ======== ======= =======
<FN>
*The data is for the period beginning May 1, 1996 (date of initial activity).
</FN>
</TABLE>
<PAGE>
(6) Annuitization
As of June 30, 1997, there were no annuitized contracts.
(7) Condensed Financial Information
The table below gives per unit information about the financial history of
each subaccount for each period.
<TABLE>
<CAPTION>
Capital Appreciation Growth and Income Balanced Bond
Stock Subaccount Stock Subaccount Subaccount Subaccount
Net asset value: 1997 1996* 1997 1996* 1997 1996* 1997 1996*
---- ----- ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning of period $15.45 $12.90 $15.36 $12.76 $13.03 $11.92 $11.52 $11.36
End of period 17.60 15.45 17.65 15.36 13.99 13.03 11.74 11.52
Percentage increase in unit
value during period 13.92% 19.77% 14.91% 20.38% 7.37% 9.31% 1.91% 1.41%
Number of units outstanding
at end of period 5,654,705 4,495,720 11,490,043 8,541,383 10,275,941 7,783,833 2,300,699 1,686,539
Money Market International World Governments Emerging Growth
Subaccount Stock Subaccount Subaccount Subaccount
Net asset value: 1997 1996* 1997 1996* 1997 1996* 1997 1996**
---- ----- ---- ----- ---- ----- ---- ------
Beginning of period $10.91 $10.55 $12.40 $10.96 $11.58 $11.29 $10.08 $10.00
End of period 11.10 10.91 13.75 12.40 11.31 11.58 11.09 10.08
Percentage increase in unit
value during period 1.74% 3.41% 10.89% 13.14% -2.33% 2.57% 10.02% 0.80%
Number of units outstanding
at end of period 2,164,376 1,492,704 3,614,394 2,683,277 1,231,175 1,033,483 2,796,606 1,650,627
High Income Developing Markets
Subaccount Stock Subaccount
Net asset value: 1997*** 1997***
------- -------
<S> <C> <C>
Beginning of period $10.00 $10.00
End of period 10.33 10.02
Percentage increase in unit
value during period 3.30% 0.20%
Number of units outstanding
at end of period 259,279 103,415
For the Money Market Subaccount, the "seven-day average yield" for the seven
days ended June 30, 1997, was 3.7% and the "effective yield" for that period was
3.8%.
*1996 data is for the year ended December 31, 1996.
**1996 data is for the eight-month period ended December 31, 1996.
***1997 data is for the two-month period ended June 30, 1997.
</TABLE>
