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CIGNA
CORPORATE VARIABLE UNIVERSAL LIFE
SEMI-ANNUAL REPORT
[PICTURE]
[LOGO]-Registered Trademark-
CIGNA
JUNE 30, 1997
CORPORATE INSURANCE
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TABLE OF CONTENTS
PRESIDENT'S LETTER
ECONOMIC REVIEW AND OUTLOOK
SCHEDULE OF CHANGES IN UNIT VALUES
FUND REPORTS:
THE ALGER AMERICAN FUND SEMI-ANNUAL REPORT
Alger American Growth Portfolio
Alger American Small Cap Portfolio
Alger American MidCap Growth Portfolio
CIGNA VARIABLE PRODUCTS GROUP SEMI-ANNUAL REPORT
CIGNA Money Market Fund
S&P 500 Index Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND SEMI-ANNUAL REPORT
High Income Portfolio
Equity-Income Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II SEMI-ANNUAL REPORT
Investment Grade Bond Portfolio
JANUS ASPEN SERIES TRUST SEMI-ANNUAL REPORT
Janus Aspen Series Worldwide Growth Portfolio
Janus Aspen Series Short-Term Bond Portfolio
MFS-Registered Trademark- VARIABLE TRUST SEMI-ANNUAL REPORT
MFS Emerging Growth Series
MFS Total Return Series
OCC ACCUMULATION TRUST SEMI-ANNUAL REPORT
Equity Portfolio
Small Cap Portfolio
Managed Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND SEMI-ANNUAL REPORT
Templeton International Fund
[LOGO]-Registered Trademark-
CIGNA
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[PHOTO] BYRON D. OLIVER [LOGO]
President CIGNA RETIREMENT &
INVESTMENT SERVICES
P.O. Box 2975
Routing H17C
Hartford, CT 06104
Dear Client:
It is a pleasure to provide you with this semi-annual report on the performance
of your Corporate Variable Life Insurance product for the period ending June 30,
1997.
The report includes financial data for each of the portfolio options available
under your product. In addition, we have included an informative interview with
Edward Guay, CIGNA's chief economist. The interview deals with significant
national and international economic trends affecting key financial markets, and
I hope you will take a few minutes to read it carefully.
You may already be aware that CIGNA has decided to sell its individual life
insurance and annuity businesses to Lincoln National Corporation. However,
this decision will have no impact on CIGNA's Corporate Insurance business,
now part of CIGNA Retirement and Investment Services. Although some things
have changed, far more remains the same -- especially the Corporate Insurance
team's commitment to meeting your executive benefit funding needs with
sophisticated financial solutions to help you attract and retain the talent
you need to grow your business in this increasingly competitive market.
Your Corporate Variable Universal Life Product is designed specifically for the
corporate marketplace to meet your needs, and CIGNA remains dedicated to
supporting this product with consistently superior service, unquestioned
financial security and complete product disclosure. We're extremely proud to
have you as a client and look forward to an enduring partnership built on
understanding, trust, and our ability to provide financial solutions of
recognized value for your organization.
If you have any questions or comments about this report please feel free to call
Susan Franke in our CIGNA Corporate Insurance Department at 860.726.7276. Susan
is available Monday through Friday, 8 a.m. to 5 p.m.
Sincerely,
/s/ Byron Oliver
Byron D. Oliver
President, CIGNA Retirement & Investment Services
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ECONOMIC REVIEW AND OUTLOOK
AN INTERVIEW WITH EDWARD GUAY, CHIEF ECONOMIST, CIGNA CORPORATION
WHAT WERE THE MAJOR DEVELOPMENTS THAT CHARACTERIZED THE ECONOMIC SCENE IN THE
FIRST HALF OF 1997?
After six months of very strong growth, the economy slowed abruptly midway
through the first half. Both consumers and domestic businesses paused almost
simultaneously. Retail sales stagnated after strong gains during both the
fourth quarter of 1996 and the first quarter of this year. Housing
construction also paused in most of the country. Consumers appeared to be
reacting prudently to higher levels of debt incurred previously. The strong
use of credit evident in earlier periods was suspended during the second
quarter as consumers paused for income gains to catch up with spending, and
to restore savings rates.
Business also appeared to respond quickly and effectively to the slowing
economy. After consumer sales eased in March and April, business cut consumer
goods production in April and May to maintain inventory at levels close to
recent lows relative to sales. Business equipment production continued to steam
ahead, but the production of intermediate products such as office supplies also
flattened during the spring and early summer.
WHAT IS THE EMPLOYMENT SITUATION IN THE U.S. AT THIS TIME?
Because overall production remained strong, with exports and capital goods
still pulling the economy upward, employment also remained strong. At one
point during the second quarter, employment gains slowed to rates of growth
in line with long-term potential economic growth of 2.75%. But as the first
half ended, employment gains had picked up enough to suggest an underlying
rate of growth modestly above potential moving into the second half. If, as
we suspect, the consumer pause was a pause to refresh rather than a sign of
consumer burnout, both the consumer and business sectors should re-accelerate
during the second half.
A resumption of normal sales growth in coming months should lead quickly to
rising orders and to strong demand for workers. The labor market remained
relatively tight through the second quarter and the demand for new graduates was
the strongest in almost 10 years.
YOU MENTIONED THE ROLE OF EXPORTS IN PULLING THE ECONOMY UPWARD. CAN YOU
ELABORATE ON THAT POINT?
The limited data available suggest that exports played a strong role during
the second quarter. Stronger growth in Latin America and a modest recovery
in Europe appear to have been important to that outcome. The export recovery
appeared to have been broadly based across industries and across regions,
with key roles played by technology equipment and both technology and
entertainment software. World liquidity growth and recoveries from past
regional problems or from national austerity programs aided the export
expansion.
WHAT WERE THE KEY TRENDS IN FINANCIAL MARKETS?
The financial markets, including the currency market, were somewhat volatile
during the second quarter. Stock market weakness carried over from the first
quarter in the first two
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weeks of April. Then, the market surged by 20% through the remaining weeks of
the first half to successive new highs. The catalyst for the market turnaround
was an interest rate decline. Rates fell from the April peaks as slower growth
and lower inflation deferred further tightening by the Federal Reserve. At its
rate-setting session in July the Fed showed continued satisfaction with economic
conditions and refrained from boosting rates, which could help to sustain stock
market growth.
The volatility in the currency market was primarily focused on the yen-dollar
rate. Comments by Japanese Ministry of Finance spokesmen tended to weaken
the dollar relative to the yen, but the dollar remained strong relative to
many other currencies, particularly those in continental Europe. The
strength of the dollar relative to most currencies reflects widespread
confidence in the underlying strength of the U.S. economy.
HOW WERE RESULTS IN INVESTMENT MARKETS OUTSIDE THE U.S.?
Results were mixed in other investment markets. European stocks generally
improved and were reasonably competitive with U.S. stocks. Japanese stocks
remained bound within a fairly narrow range, while emerging markets
performance varied from very weak to very strong. Real estate continued to
improve nearly everywhere outside of Southeast Asia. It was generally a good
period for investors in the U.S. and around the world.
WHAT IS THE ECONOMIC OUTLOOK HEADING INTO THE SECOND HALF OF 1997?
The outlook is quite positive. The economy has adjusted better than we thought
it would to stronger growth in the U.S. and in the world. Inflation has
remained low and the economy has responded fairly efficiently to temporary
market disruptions in almost any market, from grains and oil through consumer
finished goods, traditional capital goods, and technology products.
The efficient adjustment has been aided by the continuing slack in other
economies in the industrial world, by deregulation of many domestic and foreign
industries, and by the technological progress of recent years. With the
exception of economic slack, all of these factors should remain important for
the foreseeable future.
During the past year, the U.S. growth rate has been more than a percentage
point above the 2.75% that we estimate to be the long-term potential growth
rate. This has been done without increasing inflation because the U.S. has
been able to "rent" spare capacity and labor from countries operating below
potential, including Canada (our largest trading partner), Europe and Japan.
During the next 18 months we expect the industrial countries to significantly
close the gaps between actual and potential output. That should produce
strong export gains for the U.S. and offset sluggish consumer and housing
performance over the same period.
In general, it would appear that the next year or two should be good for
business and for prudent, diversified investors.
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CG CORPORATE INSURANCE VARIABLE UNIVERSAL LIFE
SCHEDULE OF CHANGES IN UNIT VALUES
PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
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DATA INITIALLY ACCUMULATION 6/30/97
FUNDED UNIT VALUE ACCUMULATION %
SUB-ACCOUNT (INCEPTION DATE) AT INCEPTION UNIT VALUE CHANGE
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<S> <C> <C> <C> <C>
Alger American Growth Portfolio 2/24/97 $ 10.000000 $ 10.876960 8.8
Alger American MidCap Growth Portfolio 2/24/97 10.000000 10.532925 5.3
Alger American Small Capitalization Portfolio 3/31/97 10.000000 11.391336 13.9
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CIGNA VP Money Market Fund 12/24/96 10.008961* 10.212187 2.0
CIGNA VP S&P 500 Index Fund 2/24/97 10.000000 10.949199 9.5
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Fidelity VIP Equity Income Portfolio 2/24/97 10.000000 10.847305 8.5
Fidelity VIP High Income Portfolio 1/29/97 10.000000 10.608582 6.1
Fidelity VIP II: Investment Grade Bond Portfolio 1/29/97 10.000000 10.273431 2.7
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MFS Total Return Series 2/24/97 10.000000 10.606132 6.1
MFS Emerging Growth Series 1/29/97 10.000000 10.657490 6.6
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Janus Aspen Series Worldwide Growth Portfolio 2/24/97 10.000000 11.136998 11.4
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OCC Managed Portfolio 1/29/97 10.000000 10.988746 9.9
OCC Small Cap Portfolio 2/24/97 10.000000 11.316038 13.2
OCC Equity Portfolio 2/24/97 10.000000 10.708964 7.1
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Templeton International Fund 2/24/97 10.000000 11.022599 10.2
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* Accumulation unit value as of 12/31/96.
Accumulation Unit Values are net of charges against the assets of the Variable
Account for the assumption of mortality and expense risks and for administrative
expenses.
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THIS REPORT MAY BE DISTRIBUTED ONLY TO CURRENT CONTRACT HOLDERS OR TO PERSONS
WHO HAVE RECEIVED A CURRENT CORPORATE VARIABLE UNIVERSAL LIFE PROSPECTUS.
[LOGO]-Registered Trademark- National Distributor
CIGNA CIGNA Financial Advisors
900 Cottage Grove Road
Hartford, CT 06152
