<PAGE>
C I G N A
CORPORATE VARIABLE UNIVERSAL LIFE
ANNUAL REPORT
[PICTURE OF TREE]
[LOGO]
CIGNA
DECEMBER 31, 1997
Corporate Insurance
<PAGE>
TABLE OF CONTENTS
PRESIDENT'S LETTER
REPORT OF INDEPENDENT ACCOUNTANTS
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
FINANCIAL STATEMENTS
SCHEDULE OF CHANGES IN UNIT VALUES
FUND REPORTS:
THE ALGER AMERICAN FUND ANNUAL REPORT
Alger American Growth Portfolio
Alger American Small Cap Portfolio
Alger American MidCap Growth Portfolio
CIGNA VARIABLE PRODUCTS GROUP ANNUAL REPORT
CIGNA Money Market Fund
S&P 500 Index Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND ANNUAL REPORT
High Income Portfolio
Equity-Income Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II ANNUAL REPORT
Investment Grade Bond Portfolio
JANUS ASPEN SERIES TRUST ANNUAL REPORT
Janus Aspen Series Worldwide Growth Portfolio
Janus Aspen Series Short-Term Bond Portfolio
MFS-Registered Trademark- VARIABLE TRUST ANNUAL REPORT
MFS Emerging Growth Series
MFS Total Return Series
OCC ACCUMULATION TRUST ANNUAL REPORT
Equity Portfolio
Small Cap Portfolio
Managed Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND ANNUAL REPORT
Templeton International Fund
[LOGO]
CIGNA RETIREMENT &
INVESTMENT SERVICES
<PAGE>
BYRON D. OLIVER
President
CIGNA Retirement & Investment Services
[PHOTO] [LOGO]-Registered Trademark-
CIGNA
Routing Code H17C
280 Trumbull Street
Hartford CT 06103
Telephone 860.534.2746
Facsimile 860.534.2614
February 17, 1998
Dear Client:
I've enclosed the 1997 Annual Report for your Corporate Variable Universal Life
account with CIGNA.
The report summarizes the results of the portfolio managers you have entrusted
with your corporate assets. While equity markets encountered some difficulty in
the fourth quarter of 1997, overall, the year was a good one for long-term
investors.
Let me take this opportunity to again thank you for your business.
If you have any questions or comments about this report, please call Susan
Franke in CIGNA Corporate Insurance at 860.726.7276. Susan is available Monday
through Friday, 8:00 a.m. to 5:00 p.m.
Regards,
/s/ Byron D. Oliver
Byron D. Oliver
President
CIGNA Retirement & Investment Services
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Connecticut General
Life Insurance Company and Participants of the
CG Corporate Insurance Variable Life Separate Account 02
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and of changes in net assets present fairly, in
all material respects, the financial position of each of the sub-accounts, Alger
American Fund - Alger American Growth Portfolio, Alger American MidCap Growth
Portfolio, Alger American Small Capitalization Portfolio; CIGNA Variable
Products Group - CIGNA Variable Products Money Market Fund, CIGNA Variable
Products S&P 500 Index Fund; Fidelity Variable Insurance Products Fund - Equity-
Income Portfolio, High Income Portfolio; Fidelity Variable Insurance Products
Fund II - Investment Grade Bond Portfolio; Janus Aspen Series - Worldwide Growth
Portfolio; MFS Variable Insurance Trust - MFS Emerging Growth Series, MFS Total
Return Series; OCC Accumulation Trust - OCC Equity Portfolio, OCC Managed
Portfolio, OCC Small Cap Portfolio; Templeton Variable Product Series Fund,
Templeton International Fund (constituting the CG Corporate Insurance Variable
Life Separate Account 02, hereafter referred to as "the Account") at December
31, 1997, the results of each of their operations and the changes in each of
their net assets for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Account's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1997 by
correspondence with the custodians, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1998
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 CIGNA VARIABLE
PRODUCTS GROUP
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNTS
------------------------------------------ -------------------------
MIDCAP SMALL MONEY
GROWTH GROWTH CAPITALIZATION MARKET S&P 500
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable insurance
funds at value $ 50,195 $ 38,473 $ 90,090 $ 71,633 $13,451,623
Receivable from Connecticut
General Life Insurance Company 856 - - - 521
Receivable for fund shares sold - - - 7,286 -
----------- ----------- ----------- ----------- -----------
Total assets 51,051 38,473 90,090 78,919 13,452,144
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company - - - 7,286 -
Payable for fund shares purchased 856 - - - 521
----------- ----------- ----------- ----------- -----------
Total liabilities 856 - - 7,286 521
----------- ----------- ----------- ----------- -----------
Net assets $ 50,195 $ 38,473 $ 90,090 $ 71,633 $13,451,623
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accumulation units outstanding 4,287 3,417 7,180 6,869 1,116,073
Net asset value per accumulation unit $ 11.709279 $ 11.260065 $ 12.546933 $ 10.428840 $ 12.052632
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 FIDELITY VIP II
FIDELITY VIP PORTFOLIO
PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
--------------------------- ---------------
EQUITY- HIGH INVESTMENT
INCOME INCOME GRADE BOND
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in variable insurance
funds at value $ 182,841 $ 304,891 $ 4,981,725
Receivable from Connecticut
General Life Insurance Company 1,227 - -
Receivable for fund shares sold - - 130
----------- ----------- -----------
Total assets 184,068 304,891 4,981,855
----------- ----------- -----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company - - 130
Payable for fund shares purchased 1,227 - -
----------- ----------- -----------
Total liabilities 1,227 - 130
----------- ----------- -----------
Net assets $ 182,841 $ 304,891 $ 4,981,725
----------- ----------- -----------
----------- ----------- -----------
Accumulation units outstanding 15,388 26,433 459,320
Net asset value per accumulation unit $ 11.881678 $ 11.534462 $ 10.845876
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
JANUS
ASPEN SERIES OCC ACCUMULATION TEMPLETON
SUB-ACCOUNT MFS SERIES SUB-ACCOUNTS TRUST SERIES SUB-ACCOUNTS SUB-ACCOUNT
------------ ------------------------------ ------------------------------------ ------------
WORLDWIDE EMERGING TOTAL SMALL
GROWTH GROWTH RETURN EQUITY MANAGED CAP INTERNATIONAL
------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value $ 1,660,783 $ 309,109 $ 3,655 $ 47,979 $ 334,608 $ 1,363,267 $ 577,501
Receivable from Connecticut
General Life Insurance
Company 1,921 - - - 1,438 - 843
Receivable for fund
shares sold - - - - - 36 -
----------- ----------- ----------- ----------- ----------- ------------ -----------
Total assets 1,662,704 309,109 3,655 47,979 336,046 1,363,303 578,344
----------- ----------- ----------- ----------- ----------- ------------ -----------
LIABILITIES:
Payable to Connecticut
General Life Insurance
Company - - - - - 36 -
Payable for fund shares
purchased 1,921 - - - 1,438 - 843
----------- ----------- ----------- ----------- ----------- ------------ -----------
Total liabilities 1,921 - - - 1,438 36 843
----------- ----------- ----------- ----------- ----------- ------------ -----------
Net assets $ 1,660,783 $ 309,109 $ 3,655 $ 47,979 $ 334,608 $ 1,363,267 $ 577,501
----------- ----------- ----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ----------- ----------- ------------ -----------
Accumulation units
outstanding 145,879 26,489 318 4,041 28,518 113,524 52,854
Net asset value per
accumulation unit $ 11.384653 $ 11.669186 $ 11.495360 $ 11.873582 $ 11.733393 $ 12.008588 $ 10.926369
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE PERIODS INDICATED TO DECEMBER 31, 1997 CIGNA VARIABLE
PRODUCTS GROUP
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNTS
------------------------------------------ -------------------------
MIDCAP SMALL MONEY
GROWTH GROWTH CAPITALIZATION MARKET* S&P 500
----------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Date deposits first received 2/24/97 2/24/97 3/31/97 12/24/96 2/24/97
INVESTMENT INCOME:
Dividends $ 21 $ 20 $ - $ 84,108 $ 259,490
EXPENSES:
Mortality and expense risk and
administrative charges 110 262 512 16,075 62,607
----------- ----------- ----------- ----------- -----------
Net investment gain (loss) (89) (242) (512) 68,033 196,883
----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Capital distributions from portfolio sponsors 39 505 1,973 - 294,639
Net realized gain (loss) on share transactions 63 123 210 - (855)
----------- ----------- ----------- ----------- -----------
Net realized gain 102 628 2,183 - 293,784
Net unrealized gain 1,223 5,140 10,441 - 1,320,848
----------- ----------- ----------- ----------- -----------
Net realized and unrealized gain
on investments 1,325 5,768 12,624 - 1,614,632
----------- ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 1,236 $ 5,526 $ 12,112 $ 68,033 $ 1,811,515
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE PERIODS INDICATED TO DECEMBER 31, 1997 FIDELITY VIP II
FIDELITY VIP PORTFOLIO
PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
--------------------------- ---------------
EQUITY- HIGH INVESTMENT
INCOME INCOME GRADE BOND
----------- ----------- -----------
<S> <C> <C> <C>
Date deposits first received 2/24/97 1/29/97 1/29/97
INVESTMENT INCOME:
Dividends $ - $ 9,263 $ 7,879
EXPENSES:
Mortality and expense risk and
administrative charges 944 2,125 16,725
----------- ----------- -----------
Net investment gain (loss) (944) 7,138 (8,846)
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Capital distributions from portfolio sponsors - 1,145 -
Net realized gain (loss) on share transactions 309 240 110
----------- ----------- -----------
Net realized gain 309 1,385 110
Net unrealized gain 26,400 27,140 192,098
----------- ----------- -----------
Net realized and unrealized gain
on investments 26,709 28,525 192,208
----------- ----------- -----------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 25,765 $ 35,663 $ 183,362
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
* For the Year Ended December 31, 1997 (Deposits first received
December 24, 1996)
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE PERIODS INDICATED TO DECEMBER 31, 1997
JANUS
ASPEN SERIES OCC ACCUMULATION TEMPLETON
SUB-ACCOUNT MFS SERIES SUB-ACCOUNTS TRUST SERIES SUB-ACCOUNTS SUB-ACCOUNT
------------ ------------------------------ ------------------------------------ ------------
WORLDWIDE EMERGING TOTAL SMALL
GROWTH GROWTH RETURN EQUITY MANAGED CAP INTERNATIONAL
------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Date deposits first received 2/24/97 1/29/97 2/24/97 2/24/97 1/29/97 2/24/97 2/24/97
INVESTMENT INCOME:
Dividends $ 4,457 $ - $ - $ 43 $ 1,914 $ 48 $ -
EXPENSES:
Mortality and expense risk
and administrative charges 5,656 1,959 14 117 1,976 4,515 2,220
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment loss (1,199) (1,959) (14) (74) (62) (4,467) (2,220)
----------- ----------- ----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Capital distributions from
portfolio sponsors 561 - - 153 5,879 341 -
Net realized gain (loss)
on share transactions 154 230 8 66 236 24 (13)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized gain (loss) 715 230 8 219 6,115 365 (13)
Net unrealized gain (loss) 43,891 36,451 308 2,992 27,581 19,222 (7,247)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized and
unrealized gain (loss)
on investments 44,606 36,681 316 3,211 33,696 19,587 (7,260)
----------- ----------- ----------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 43,407 $ 34,722 $ 302 $ 3,137 $ 33,634 $ 15,120 $ (9,480)
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS INDICATED TO DECEMBER 31, 1997 CIGNA VARIABLE
PRODUCTS GROUP
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNTS
------------------------------------------ -------------------------
MIDCAP SMALL MONEY
GROWTH GROWTH CAPITALIZATION MARKET* S&P 500
----------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Date deposits first received 2/24/97 2/24/97 3/31/97 12/24/96 2/24/97
OPERATIONS:
Net investment gain (loss) $ (89) $ (242) $ (512) $ 68,033 $ 196,883
Net realized gain 102 628 2,183 - 293,784
Net unrealized gain 1,223 5,140 10,441 - 1,320,848
----------- ----------- ----------- ----------- -----------
Net increase from operations 1,236 5,526 12,112 68,033 1,811,515
----------- ----------- ----------- ----------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium loads 41,099 1,222 - 20,606,819 916,689
Participant transfers 9,624 33,892 82,004 (20,953,420) 10,900,475
Participant withdrawals (1,764) (2,167) (4,026) (260,990) (177,056)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) from participant
transactions 48,959 32,947 77,978 (607,591) 11,640,108
----------- ----------- ----------- ----------- -----------
Total increase (decrease) in net assets 50,195 38,473 90,090 (539,558) 13,451,623
NET ASSETS:
Beginning of period - - - 611,191 -
----------- ----------- ----------- ----------- -----------
End of period $ 50,195 $ 38,473 $ 90,090 $ 71,633 $13,451,623
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS INDICATED TO DECEMBER 31, 1997 FIDELITY VIP II
FIDELITY VIP PORTFOLIO
PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
-------------------------- --------------
EQUITY- HIGH INVESTMENT
INCOME INCOME GRADE BOND
----------- ----------- -----------
<S> <C> <C> <C>
Date deposits first received 2/24/97 1/29/97 1/29/97
OPERATIONS:
Net investment gain (loss) $ (944) $ 7,138 $ (8,846)
Net realized gain 309 1,385 110
Net unrealized gain 26,400 27,140 192,098
----------- ----------- -----------
Net increase from operations 25,765 35,663 183,362
----------- ----------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium loads 61,215 65,300 186,655
Participant transfers 105,195 217,909 4,637,295
Participant withdrawals (9,334) (13,981) (25,587)
----------- ----------- -----------
Net increase (decrease) from participant
transactions 157,076 269,228 4,798,363
----------- ----------- -----------
Total increase (decrease) in net assets 182,841 304,891 4,981,725
Net assets:
Beginning of period - - -
----------- ----------- -----------
End of period $ 182,841 $ 304,891 $ 4,981,725
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
* For the Year Ended December 31, 1997 (Deposits first received
December 24, 1996)
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIODS INDICATED TO DECEMBER 31, 1997
JANUS
ASPEN SERIES OCC ACCUMULATION TEMPLETON
SUB-ACCOUNT MFS SERIES SUB-ACCOUNTS TRUST SERIES SUB-ACCOUNTS SUB-ACCOUNT
------------ ------------------------------ ------------------------------------ ------------
WORLDWIDE EMERGING TOTAL SMALL
GROWTH GROWTH RETURN EQUITY MANAGED CAP INTERNATIONAL
------------ ------------ ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Date deposits first received 2/24/97 1/29/97 2/24/97 2/24/97 1/29/97 2/24/97 2/24/97
OPERATIONS:
Net investment loss $ (1,199) $ (1,959) $ (14) $ (74) $ (62) $ (4,467) $ (2,220)
Net realized gain (loss) 715 230 8 219 6,115 365 (13)
Net unrealized gain (loss) 43,891 36,451 308 2,992 27,581 19,222 (7,247)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
from operations 43,407 34,722 302 3,137 33,634 15,120 (9,480)
----------- ----------- ----------- ----------- ----------- ----------- -----------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits,
net of premium loads 177,366 83,322 2,184 25,651 131,629 53,337 273,855
Participant transfers 1,459,273 206,614 1,763 25,340 184,083 1,298,529 322,803
Participant withdrawals (19,263) (15,549) (594) (6,149) (14,738) (3,719) (9,677)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase from
participant
transactions 1,617,376 274,387 3,353 44,842 300,974 1,348,147 586,981
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total increase in
net assets 1,660,783 309,109 3,655 47,979 334,608 1,363,267 577,501
NET ASSETS:
Beginning of period - - - - - - -
----------- ----------- ----------- ----------- ----------- ----------- -----------
End of period $ 1,660,783 $ 309,109 $ 3,655 $ 47,979 $ 334,608 $ 1,363,267 $ 577,501
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM DECEMBER 24, 1996* TO DECEMBER 31, 1996
CIGNA VARIABLE
PRODUCTS GROUP
SUB-ACCOUNT
--------------
MONEY
MARKET
--------------
<S> <C>
OPERATIONS:
Net investment gain $ 563
--------------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium loads 621,412
Participant withdrawals (10,784)
--------------
Net increase from participant transactions 610,628
--------------
Total increase in net assets 611,191
NET ASSETS:
Beginning of period -
--------------
End of period $ 611,191
--------------
--------------
</TABLE>
* Date deposits first received
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION
CG Corporate Insurance Variable Life Separate Account 02 (the Account)
is registered as a Unit Investment Trust under the Investment Company Act of
1940, as amended. The operations of the Account are part of the operations of
Connecticut General Life Insurance Company (CG Life). The assets and liabilities
of the Account are clearly identified and distinguished from other assets and
liabilities of CG Life. The assets of the Account are not available to meet the
general obligations of CG Life and are held for the exclusive benefit of the
participants.
The assets of the Account are divided into variable sub-accounts each of
which is invested in shares of one of sixteen portfolios (mutual funds) of eight
diversified open-end management investment companies, each portfolio with its
own investment objective. The variable sub-accounts are:
ALGER AMERICAN FUND:
Alger American Growth Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
CIGNA VARIABLE PRODUCTS GROUP:
CIGNA Variable Products Money Market Fund
CIGNA Variable Products S&P 500 Index Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:
Equity-Income Portfolio
High Income Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:
Investment Grade Bond Portfolio
JANUS ASPEN SERIES:
Short-Term Bond Portfolio*
Worldwide Growth Portfolio
MFS VARIABLE INSURANCE TRUST:
MFS Emerging Growth Series
MFS Total Return Series
OCC ACCUMULATION TRUST:
OCC Equity Portfolio
OCC Managed Portfolio
OCC Small Cap Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND:
Templeton International Fund
* Not active. As of December 31, 1997, deposits not received.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in conformity with
generally accepted accounting principles. The following is a summary of
significant accounting policies consistently followed in the preparation of the
Account's financial statements.
A. INVESTMENT VALUATION: Investments held by the sub-accounts are valued at
their respective closing net asset values per share as determined by the mutual
funds as of December 31, 1997. The change in the difference between cost and
value is reflected as unrealized gain (loss) in the Statements of Operations.
B. INVESTMENT TRANSACTIONS: Investment transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and losses on
sales of investments are determined by the last-in, first-out cost basis of the
investment sold. Dividend and capital gain distributions are recorded on the
ex-dividend date. Investment transactions are settled through CG Life.
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
C. FEDERAL INCOME TAXES: The operations of the Account form a part of, and
are taxed with, the total operations of CG Life, which is taxed as a life
insurance company. Under existing Federal income tax law, investment income
(dividends) and capital gains attributable to the Account are not taxed.
3. INVESTMENTS
Total shares outstanding and cost of investments as of December 31, 1997 were:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
COST OF
SUB-ACCOUNT SHARES HELD INVESTMENTS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio 1,174 $ 48,972
Alger American MidCap Growth Portfolio 1,591 33,333
Alger American Small Capitalization Portfolio 2,059 79,649
CIGNA Variable Products Money Market Fund 71,634 71,634
CIGNA Variable Products S&P 500 Index Fund 850,292 12,130,775
Fidelity Equity-Income Portfolio 7,531 156,441
Fidelity High Income Portfolio 22,451 277,751
Fidelity Investment Grade Bond Portfolio 396,634 4,789,627
Janus Aspen Series Worldwide Growth Portfolio 71,004 1,616,892
MFS Emerging Growth Series 19,152 272,658
MFS Total Return Series 220 3,347
OCC Equity Portfolio 1,314 44,987
OCC Managed Portfolio 7,895 307,027
OCC Small Cap Portfolio 51,698 1,344,045
Templeton International Fund 28,617 584,748
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Total purchases and sales of shares of each mutual fund, for the periods noted,
amounted to:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PERIOD FROM
DATE INDICATED* TO
DECEMBER 31, 1997
SUB-ACCOUNT PURCHASES SALES
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alger American Growth Portfolio February 24, 1997 $ 50,826 $ 1,917
Alger American MidCap Growth Portfolio February 24, 1997 36,117 2,907
Alger American Small Capitalization Portfolio March 31, 1997 84,309 4,870
CIGNA Variable Products Money Market Fund January 1, 1997 18,468,057 19,007,614
CIGNA Variable Products S&P 500 Index Fund February 24, 1997 12,512,164 380,534
Fidelity Equity-Income Portfolio February 24, 1997 166,701 10,569
Fidelity High Income Portfolio January 29, 1997 294,464 16,953
Fidelity Investment Grade Bond Portfolio January 29, 1997 4,827,069 37,552
Janus Aspen Series Worldwide Growth Portfolio February 24, 1997 1,643,955 27,217
MFS Emerging Growth Series January 29, 1997 289,720 17,292
MFS Total Return Series February 24, 1997 3,696 357
OCC Equity Portfolio February 24, 1997 53,438 8,517
OCC Managed Portfolio January 29, 1997 322,628 15,837
OCC Small Cap Portfolio February 24, 1997 1,352,012 7,991
Templeton International Fund February 24, 1997 594,407 9,646
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Date deposits first received, with the exception of CIGNA Variable Products
Money Market Fund (deposits first received December 24, 1996).
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
4. CHARGES AND DEDUCTIONS
CG Life charges each variable sub-account for mortality and expense
risks, a daily deduction currently equivalent to .85% per year during the first
ten policy years, .45% per year during the eleventh through fifteenth policy
years and .15% thereafter.
CG Life also charges each variable sub-account for administrative costs,
a daily deduction currently equivalent to .10% per year during the first ten
policy years only.
The fees charged by CG Life for mortality and expense risks and
administrative fees, from variable sub-accounts, for the periods noted, amounted
to:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PERIOD FROM MORTALITY
DATE INDICATED* TO AND ASSET BASED
DECEMBER 31, 1997 EXPENSE ADMINISTRATIVE
SUB-ACCOUNT RISK FEES FEES
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alger American Growth Portfolio February 24, 1997 $ 98 $ 12
Alger American MidCap Growth Portfolio February 24, 1997 235 27
Alger American Small Capitalization Portfolio March 31, 1997 458 54
CIGNA Variable Products Money Market Fund January 1, 1997 14,383 1,692
CIGNA Variable Products S&P 500 Index Fund February 24, 1997 56,017 6,590
Fidelity Equity-Income Portfolio February 24, 1997 844 100
Fidelity High Income Portfolio January 29, 1997 1,902 223
Fidelity Investment Grade Bond Portfolio January 29, 1997 14,964 1,761
Janus Aspen Series Worldwide Growth Portfolio February 24, 1997 5,061 595
MFS Emerging Growth Series January 29, 1997 1,753 206
MFS Total Return Series February 24, 1997 12 2
OCC Equity Portfolio February 24, 1997 105 12
OCC Managed Portfolio January 29, 1997 1,768 208
OCC Small Cap Portfolio February 24, 1997 4,040 475
Templeton International Fund February 24, 1997 1,987 233
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Date deposits first received, with the exception of CIGNA Variable Products
Money Market Fund (deposits first received December 24, 1996).
CG Life deducts a premium load of 6.5% of each premium payment to cover
sales loads, state taxes and Federal income tax liabilities. An additional 40%
on premium payments, up to one guideline annual premium, will be deducted in the
first policy year. In the event that the specified amount under the policy is
increased, other than a change in the death benefit option, an additional 25%
premium load on premium payments up to the increase in the guideline annual
premium will be deducted from premium payments received during the 12 months
following the increase, to the extent such premium payments are attributable to
the increase in specified amount rather than to the previously existing
specified amount.
CG Life charges a policy issue fee of $250 from the accumulation value
for a portion of CG Life's administrative expenses.
CG Life charges a monthly administrative fee of $8 per month. This
charge is for items such as premium billing and collection, policy value
calculation, confirmations and periodic reports.
CG Life charges a monthly deduction for the cost of insurance and any
charges for supplemental riders. The cost of insurance charge depends on the
attained age, years since issue, risk class (in accordance with state law) of
the insured and the current net amount at risk. On a monthly basis, the
administrative fee and the cost of insurance charge are deducted proportionately
from the value of each variable sub-account and/or the fixed account funding
option. The fixed account is part of the general account of CG Life and is not
included in these financial statements.
CG Life charges a $25 transaction fee for each transfer between funding
options in excess of four during the policy year. No transaction fee charges
were paid to CG Life for the periods ended December 31, 1997.
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
4. CHARGES AND DEDUCTIONS (CONTINUED)
Policy issue fees, which are deducted from the initial premium payment,
amounted to $106,750, all of which were deducted from the CIGNA Variable
Products Money Market Fund. The fees charged by CG Life for premium loads
(deducted from premium payments), administrative fees and the amount deducted
for the cost of insurance, all of which are included in participant withdrawals,
for variable sub-accounts for the periods noted, amounted to:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PERIOD FROM
DATE INDICATED* ADMIN- COSTS OF
TO DECEMBER 31, PREMIUM ISTRATIVE INSURANCE
SUB-ACCOUNT 1997 LOADS FEES DEDUCTION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio February 24, 1997 $ 11,863 $ 275 $ 1,493
Alger American MidCap Growth Portfolio February 24, 1997 85 247 1,920
Alger American Small Capitalization Portfolio March 31, 1997 - 100 3,926
CIGNA Variable Products Money Market Fund January 1, 1997 2,857,919 9,775 127,739
CIGNA Variable Products S&P 500 Index Fund February 24, 1997 80,299 11,989 149,185
Fidelity Equity-Income Portfolio February 24, 1997 17,838 750 8,578
Fidelity High Income Portfolio January 29, 1997 9,816 1,054 12,794
Fidelity Investment Grade Bond Portfolio January 29, 1997 18,004 1,658 23,808
Janus Aspen Series Worldwide Growth Portfolio February 24, 1997 32,574 1,518 17,719
MFS Emerging Growth Series January 29, 1997 10,643 1,375 14,170
MFS Total Return Series February 24, 1997 513 58 535
OCC Equity Portfolio February 24, 1997 3,221 429 5,655
OCC Managed Portfolio January 29, 1997 30,157 1,488 13,094
OCC Small Cap Portfolio February 24, 1997 3,768 197 3,514
Templeton International Fund February 24, 1997 27,966 737 7,586
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Date deposits first received, with the exception of CIGNA Variable Products
Money Market Fund (deposits first received December 24, 1996).
For policies issued before April 30, 1997, CG Life will refund 60% of
all premium loads previously deducted if a policy is fully surrendered during
the first 12 months after issue. If a policy is fully surrendered during the
months 13 through 24 after issue, the refund will equal 30% of all premium loads
previously deducted. For policies issued after April 30, 1997, if the policy is
fully surrendered during the first 12 months after issue, a credit will be paid
equal to 100% of all premium loads previously deducted in excess of 3.5% of all
premiums paid. If the policy is fully surrendered during months 13 through 24,
the credit will equal 50% of all premium loads previously deducted in excess of
3.5% of all premiums paid. For partial surrenders, a transaction charge of $25
is imposed, allocated pro-rata among the variable sub-accounts (and, where
applicable, the fixed account) from which the partial surrender proceeds are
taken, unless the policy owner and CG Life agree otherwise. No premium load
refunds or partial surrender transaction charges were paid by CG Life or to CG
Life, respectively, attributable to the variable sub-accounts, for the periods
ended December 31, 1997.
5. DISTRIBUTION OF NET INCOME
The Account does not expect to declare dividends to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of death benefits, surrenders, and transfers to other fixed
or variable sub-accounts.
<PAGE>
CG CORPORATE INSURANCE VARIABLE LIFE SEPARATE ACCOUNT 02
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
6. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code of
1986 (the Code), a variable life insurance policy will not be treated as life
insurance under Section 7702 of the Code for any period for which the
investments of the segregated asset account, on which the policy 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. CG Life believes, based on assurances from the
mutual funds, that the mutual funds satisfy the requirements of the regulations.
<PAGE>
CG CORPORATE INSURANCE VARIABLE UNIVERSAL LIFE
SCHEDULE OF CHANGES IN UNIT VALUES
PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
DATE INITIALLY ACCUMULATION 12/31/97
FUNDED UNIT VALUE ACCUMULATION %
SUB-ACCOUNT (INCEPTION DATE) AT INCEPTION UNIT VALUE CHANGE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio 2/24/97 $ 10.000000 $ 11.709279 17.1
Alger American MidCap Growth Portfolio 2/24/97 10.000000 11.260065 12.6
Alger American Small Capitalization Portfolio 3/31/97 10.000000 12.546933 25.5
- ----------------------------------------------------------------------------------------------------------------------
CIGNA VP Money Market Fund 12/24/96 10.008961* 10.428840 4.2
CIGNA VP S&P 500 Index Fund 2/24/97 10.000000 12.052632 20.5
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 2/24/97 10.000000 11.881678 18.8
Fidelity VIP High Income Portfolio 1/29/97 10.000000 11.534462 15.3
Fidelity VIP II Investment Grade Bond Portfolio 1/29/97 10.000000 10.845876 8.5
- ----------------------------------------------------------------------------------------------------------------------
Janus Aspen Series Worldwide Growth Portfolio 2/24/97 10.000000 11.384653 13.8
- ----------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series 1/29/97 10.000000 11.669186 16.7
MFS Total Return Series 2/24/97 10.000000 11.495360 15.0
- ----------------------------------------------------------------------------------------------------------------------
OCC Equity Portfolio 2/24/97 10.000000 11.873582 18.7
OCC Managed Portfolio 1/29/97 10.000000 11.733393 17.3
OCC Small Cap Portfolio 2/24/97 10.000000 12.008588 20.1
- ----------------------------------------------------------------------------------------------------------------------
Templeton International Fund 2/24/97 10.000000 10.926369 9.3
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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.
<PAGE>
THIS REPORT MAY BE DISTRIBUTED ONLY TO CURRENT CONTRACT HOLDERS OR TO PERSONS
WHO HAVE RECEIVED A CURRENT CORPORATE VARIABLE UNIVERSAL LIFE PROSPECTUS.
National Distributor:
CIGNA Financial Services
[LOGO] 900 Cottage Grove Road
CIGNA Hartford, CT 06152
CIGNA Retirement & Investment Services
is a division of CIGNA
