<PAGE>
CG VARIABLE ANNUITY ACCOUNTS I & II
DEAR INVESTOR:
We're pleased to provide you with this annual report for Connecticut General
Variable Annuity Accounts I and II for the twelve months ended December 31,
1995.
Following is a summary of key performance results:
For Qualified Contractholders
. Accumulation Unit Values for the Flexible Annuity increased 35.33% from the
December 31,1994 level, from $74.835 to $101.272.
. For all other qualified individual contracts, Accumulation Unit Values
increased 35.80%, from $78.306 to $106.339.
. Accumulation Unit Values for Group Qualified Contracts with 50 participants or
more increased 36.48% from $89.219 to $121.763 during the period from January
1, 1995 to December 31, 1995.
. Over the last five years (January 1, 1991 to December 31, 1995), the Unit
Values for Group Qualified Contracts with 50 participants or more increased
99%.
For Non-Qualified Contractholders
. Accumulation Unit Values for the Flexible Annuity increased 35.33% from the
December 31, 1994 level, from $65.997 to $89.312.
. For all other non-qualified individual contracts, Accumulation Unit Values
increased 35.80%, from $69.507 to $94.390.
. Accumulation Unit Values for Group Non-Qualified Contracts increased 36.48%
from $79.187 to $108.072 during the period from January 1, 1995 to December
31,1995.
. Over the last five years (January 1, 1991 to December 31, 1995), the Unit
Values for Group Non-Qualified Contracts increased 99%.
In addition to the financial statements for your annuity contracts, this report
includes the financial statements and a list of holdings for the CIGNA Variable
Products S&P 500 Index Fund (formerly Companion Fund), the mutual fund
supporting Variable Annuity Accounts I & II.
Thank you for letting us serve your investment needs. We look forward to our
continuing relationship in the coming years.
/s/ Thomas C Jones
THOMAS C. JONES
PRESIDENT,
CIGNA INDIVIDUAL INSURANCE
/s/ Byron Oliver
BYRON D. OLIVER
PRESIDENT,
CIGNA RETIREMENT & INVESTMENT SERVICES
1
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
STATEMENT OF
ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in CIGNA Variable Products S&P 500 Index Fund
(formerly Companion Fund) at net asset value, 5,408,521
shares at $10.75 per share (cost $54,825,600;
unrealized appreciation $3,315,938) $58,141,538
-----------
Total assets 58,141,538
-----------
LIABILITIES:
Payable to Connecticut General Life Insurance Company 126,510
-----------
Total liabilities 126,510
-----------
NET ASSETS $58,015,028
===========
NET ASSETS REPRESENTED BY:
ACCUMULATION UNIT
UNITS VALUE
------------- ------
<S> <C> <C> <C>
Group contracts:
50 participants or more 261,172 $121.76 $31,801,193
Less than 50 participants 45,992 113.772 5,232,527
Tax-deferred annuity contracts issued
after May 1, 1976 115,290 100.335 11,567,671
Individual contracts:
Variable annuity contracts 19,685 106.339 2,093,237
Flexible annuity contracts 17,502 101.272 1,772,476
Reserve for variable annuity contracts
in distribution period 5,547,924
-----------
$58,015,028
===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
2
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
STATEMENT OF
CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1994
----------- -----------
<S> <C> <C>
FROM OPERATIONS:
Investment income -- net $ 1,217,190 $ 616,835
Realized gain on investments -- net 1,611,839 4,920,721
Change in unrealized appreciation (depreciation)
on investments -- net 13,658,575 (5,449,093)
----------- -----------
Increase in net assets resulting
from operations 16,487,604 88,463
----------- -----------
FROM UNIT TRANSACTIONS:
Participant contributions - net 814,579 817,101
Amount transferred out of Account - net (786,241) (292,943)
Withdrawal of funds on terminated contracts - net (6,399,909) (5,713,887)
Annuity benefit distributions (772,981) (658,394)
Mortality guarantee adjustment 305,637 117,321
Equalization adjustment 4,075 (2,543)
----------- ------------
Decrease in net assets derived
from unit transactions (6,834,840) (5,733,345)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS 9,652,764 (5,644,882)
NET ASSETS:
Beginning of year 48,362,264 54,007,146
----------- -----------
End of year $58,015,028 $48,362,264
=========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
STATEMENT OF
OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1994
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,439,181 $ 829,994
Expenses:
Mortality and expense risk 221,991 213,159
------------ ------------
INVESTMENT INCOME -- NET 1,217,190 616,835
------------ ------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from sale of shares 7,853,234 7,152,907
Cost of shares sold 7,176,648 7,229,717
------------ ------------
Realized gain (loss) from security
transactions -- net 676,586 (76,810)
Capital gains distribution 935,253 4,997,531
------------ ------------
REALIZED GAIN ON
INVESTMENTS -- NET 1,611,839 4,920,721
------------ ------------
UNREALIZED (DEPRECIATION) APPRECIATION
ON INVESTMENTS:
Beginning of year (10,342,637) (4,893,544)
End of year 3,315,938 (10,342,637)
------------ ------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS -- NET 13,658,575 (5,449,093)
------------ ------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 16,487,604 $ 88,463
============ ============
RATIO OF EXPENSES TO AVERAGE NET ASSETS .417% .416%
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 2.288% 1.205%
NUMBER OF ACCUMULATION UNITS OUTSTANDING
AT END OF YEAR 459,641 523,214
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
NOTES TO
FINANCIAL STATEMENTS
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).
1. The following is a summary of significant accounting policies consistently
applied in the preparation of the Account's financial statements:
A. The investment in CIGNA Variable Products S&P 500 Index Fund (known as
the Companion Fund prior to January 2, 1996) (Fund) shares is valued at the
closing net asset value per share as determined by the Fund on December 31,
1995. The fund was organized by CG Life in 1968.
B. The amount of the reserve for contracts in the distribution period is
determined by actuarial assumptions which meet statutory requirements. Gains
or losses resulting from actual mortality experience, the full responsibility
for which is assumed by CG Life, are offset by transfers to or from CG Life.
C. Investment transactions are accounted for on the trade date (date the
order to buy or sell is executed), and income is recorded on the ex-dividend
date. Cost of investments sold is determined on the basis of the last-in,
first-out method.
D. The operations of the Account are included in, and taxed as part of, CG
Life's tax return, which is taxed as a life insurance company. Under Internal
Revenue Code Section 817 there is no taxable income attributable to the
Account.
2. Under the terms of the annuity contracts, the individual participant can
elect either a fixed or variable annuity benefit at retirement. The Group
participant can elect either a fixed or variable annuity benefit during the
accumulation phase and at retirement. The assets providing for the variable
annuity benefit will be invested in the Fund, and the fixed annuity contract
will be purchased from the Account's sponsor, CG Life.
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Transfers to CG Life
for purchase of fixed
annuity contracts during
accumulation phase
(included in net
amount transferred
out of Account) $831,061 $330,412
Transfers from CG Life
for purchase of variable
annuity contracts during
accumulation phase
(included in net
amount transferred
out of Account) $ 44,820 $ 37,469
Transfers from
accumulation period
to distribution period $210,235 $ 39,720
</TABLE>
3. The cost of investments represents the accumulated cost of Fund shares
purchased by the Account at net asset value with net participant contributions
received and from reinvestment of all distributions made by the Fund.
4. Participant contributions are net of mortality and expense risk charges,
which generally range from 0.25% to 0.60%, depending on contract size, premium
taxes (if any), and sales load of $22,833 and $25,254 for the years ended
December 31, 1995 and 1994, respectively. These amounts are deducted from
participant contributions and paid to CG Life in accordance with the contract.
5. Withdrawal of funds on terminated contracts is net of administrative
charges of $12,189 and $12,740 for the years ended December 31, 1995 and 1994,
respectively. These amounts are paid to CG Life in accordance with the contract.
6. Contracts are sold primarily by persons who are insurance agents of or
brokers for CG Life authorized by applicable law to sell life and other forms of
personal insurance and who are similarly authorized to sell variable annuities.
These persons are for the most part registered representatives of CIGNA
Financial Advisors, Inc.
5
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
NOTES TO
FINANCIAL STATEMENTS (Continued)
7. ACCUMULATION UNITS INFORMATION
SCHEDULE OF SELECTED PER-UNIT DATA
----------------------------------
<TABLE>
<CAPTION>
December 31,
------------------------------------------------
Group Contracts: 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
50 PARTICIPANTS OR MORE:
Net asset value:
- ----------------------------------------
Beginning of year $ 89.219 $ 88.848 $ 86.503 $ 83.718 $ 61.058
End of year 121.763 89.219 88.848 86.503 83.718
-------- -------- -------- -------- --------
Net increase in net asset value
resulting from operations $ 32.544 $ 0.371 $ 2.345 $ 2.785 $ 22.660
======== ======== ======== ======== ========
Accumulation units outstanding:
- ----------------------------------------
End of year 261,172 308,233 353,129 403,359 459,344
======== ======== ======== ======== ========
LESS THAN 50 PARTICIPANTS:
Net asset value:
- ----------------------------------------
Beginning of year $ 83.580 $ 83.449 $ 81.459 $ 79.044 $ 57.799
End of year 113.772 83.580 83.449 81.459 79.044
-------- -------- -------- -------- --------
Net increase in net asset value
resulting from operations $ 30.192 $ 0.131 $ 1.990 $ 2.415 $ 21.245
======== ======== ======== ======== ========
Accumulation units outstanding:
- ----------------------------------------
End of year 45,992 50,443 52,486 63,109 66,565
======== ======== ======== ======== ========
TAX-DEFERRED ANNUITY CONTRACTS
ISSUED AFTER MAY 1, 1976:
Net asset value:
- ----------------------------------------
Beginning of year $ 73.775 $ 73.725 $ 72.031 $ 69.957 $ 51.201
End of year 100.335 73.775 73.725 72.031 69.957
-------- -------- -------- -------- --------
Net increase in net asset value
resulting from operations $ 26.560 $ 0.050 $ 1.694 $ 2.074 $ 18.756
======== ======== ======== ======== ========
Accumulation units outstanding:
- ----------------------------------------
End of year 115,290 121,840 124,827 128,504 136,843
======== ======== ======== ======== ========
</TABLE>
6
<PAGE>
CG VARIABLE ANNUITY ACCOUNT I
NOTES TO
FINANCIAL STATEMENTS (Continued)
7. ACCUMULATION UNITS INFORMATION (Continued)
<TABLE>
<CAPTION>
December 31,
---------------------------------------------
Individual Contracts: 1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
VARIABLE ANNUITY CONTRACTS:
Net asset value:
- ----------------------------------------
Beginning of year $ 78.306 $78.370 $76.684 $74.589 $54.672
End of year 106.339 78.306 78.370 76.684 74.589
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value resulting from operations $ 28.033 $(0.064) $ 1.686 $ 2.095 $19.917
======== ======= ======= ======= =======
Accumulation units outstanding:
- ----------------------------------------
End of year 19,685 23,011 30,646 44,003 47,745
======== ======= ======= ======= =======
FLEXIBLE ANNUITY CONTRACTS:
Net asset value:
- ----------------------------------------
Beginning of year $ 74.835 $75.158 $73.800 $72.035 $52.985
End of year 101.272 74.835 75.158 73.800 72.035
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value resulting from operations $ 26.437 $(0.323) $ 1.358 $ 1.765 $19.050
======== ======= ======= ======= =======
Accumulation units outstanding:
- ----------------------------------------
End of year 17,502 19,687 22,970 25,148 29,545
======== ======= ======= ======= =======
</TABLE>
8. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code (Code), a
variable annuity contract, other than a contract issued in connection with
certain types of employee benefit plans, will not be treated as an annuity
contract for federal tax purposes for any period for which the investments of
the segregated asset account on which the contract 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, as set forth in regulations issued by the
Secretary of Treasury.
The Secretary of Treasury has issued regulations under Section 817(h) of the
Code. CG Life believes that the Account satisfies the current requirements of
the regulations, and it intends that the Account will continue to meet such
requirements.
7
<PAGE>
REPORT OF
INDEPENDENT ACCOUNTANTS
To the Participants of
CG Variable Annuity Account I of
Connecticut General Life
Insurance Company
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the selected
per unit data and ratios present fairly, in all material respects, the financial
position of CG Variable Annuity Account I (the "Account") of Connecticut General
Life Insurance Company at December 31, 1995, the results of its operations and
the changes in its net assets and the selected per unit data and ratios for each
of the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and selected per unit data and ratios
(hereafter referred to as "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 provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
One Financial Plaza
Hartford, Connecticut
February 13, 1996
<PAGE>
CG VARIABLE ANNUITY ACCOUNT II
STATEMENT OF
ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investment in CIGNA Variable Products S&P 500 Index Fund
(formerly Companion Fund) at net asset value, 625,863 shares
at $10.75 per share (cost $7,485,776; unrealized depreciation
$757,756) $6,728,020
Receivable from Connecticut General Life Insurance Company 89,383
----------
Total assets 6,817,403
----------
LIABILITIES:
Total liabilities --
----------
NET ASSETS $6,817,403
==========
</TABLE>
NET ASSETS REPRESENTED BY:
<TABLE>
<CAPTION>
ACCUMULATION UNIT
UNITS VALUE
------------ --------
<S> <C> <C> <C>
Group contracts: 6,864 $108.072 $ 741,845
Individual contracts:
Variable annuity contracts 8,566 94.390 808,535
Flexible annuity contracts 26,647 89.312 2,379,860
Reserve for variable annuity contracts
in distribution period 2,887,163
----------
$6,817,403
==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
9
<PAGE>
CG VARIABLE ANNUITY ACCOUNT II
STATEMENT OF
CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1995 1994
----------- ----------
<S> <C> <C>
FROM OPERATIONS:
Investment income -- net $ 113,973 $ 41,468
Realized gain on investments -- net 160,383 569,337
Change in unrealized depreciation
on investments -- net 1,563,130 (623,841)
----------- -----------
Increase (decrease) in net assets resulting
from operations 1,837,486 (13,036)
----------- -----------
FROM UNIT TRANSACTIONS:
Participant contributions - net 7,361 7,174
Withdrawal of funds on terminated contracts - net (251,483) (348,002)
Annuity benefit distributions (355,784) (390,043)
Mortality guarantee adjustment 211,878 54,622
Equalization adjustment (44) 80
----------- -----------
Decrease in net assets derived
from unit transactions (388,072) (676,169)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS 1,449,414 (689,205)
NET ASSETS:
Beginning of year 5,367,989 6,057,194
----------- -----------
End of year $6,817,403 $5,367,989
=========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
10
<PAGE>
CG VARIABLE ANNUITY ACCOUNT II
STATEMENT OF
OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1994
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 165,212 $ 91,326
Expenses:
Mortality and expense risk 51,239 49,858
------------ ------------
INVESTMENT INCOME -- NET 113,973 41,468
------------ ------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from sale of shares 720,842 828,031
Cost of shares sold 667,924 833,446
------------ ------------
Realized gain (loss) from security
transactions -- net 52,918 (5,415)
Capital gains distribution 107,465 574,752
------------ ------------
REALIZED GAIN ON
INVESTMENTS -- NET 160,383 569,337
------------ ------------
UNREALIZED DEPRECIATION
ON INVESTMENTS:
Beginning of year (2,320,886) (1,697,045)
End of year (757,756) (2,320,886)
------------ ------------
CHANGE IN UNREALIZED DEPRECIATION
ON INVESTMENTS -- NET 1,563,130 (623,841)
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,837,486 $ (13,036)
============ ============
RATIO OF EXPENSES TO AVERAGE NET ASSETS .840% .873%
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 1.870% .726%
NUMBER OF ACCUMULATION UNITS OUTSTANDING
AT END OF YEAR 42,077 43,404
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
11
<PAGE>
CG VARIABLE ANNUITY ACCOUNT II
NOTES TO
FINANCIAL STATEMENTS
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).
1. The following is a summary of significant accounting policies consistently
applied in the preparation of the Account's financial statements:
A. The investment in CIGNA Variable Products S&P 500 Index Fund (known as
the Companion Fund prior to January 2, 1996) (Fund) shares is valued at the
closing net asset value per share as determined by the Fund on December 31,
1995. The Fund was organized by CG Life in 1968.
B. The amount of the reserve for contracts in the distribution period is
determined by actuarial assumptions which meet statutory requirements. Gains
or losses resulting from actual mortality experience, the full responsibility
for which is assumed by CG Life, are offset by transfers to or from CG Life.
C. Investment transactions are accounted for on the trade date (date the
order to buy or sell is executed), and income is recorded on the ex-dividend
date. Cost of investments sold is determined on the basis of the last-in,
first-out method.
D. The operations of the Account are included in, and taxed as part of, CG
Life's tax return, which is taxed as a life insurance company. Under Internal
Revenue Code Section 817 there is no taxable income attributable to the
Account.
2. Under the terms of the annuity contracts, the individual participant can
elect either a fixed or variable annuity benefit at retirement. The Group
participant can elect either a fixed or variable annuity benefit during the
accumulation phase and at retirement. The assets providing for the variable
annuity benefit will be invested in the Fund, and the fixed annuity contract
will be purchased from the Account's sponsor, CG Life. There were no transfers
from accumulation period to distribution period during 1995 or 1994.
3. The cost of investments represents the accumulated cost of Fund shares
purchased by the Account at net asset value with net participant contributions
received and from reinvestment of all distributions made by the Fund.
4. Participant contributions are net of mortality and expense risk charges,
which generally range from 0.25% to 0.50%, depending on contract size, premium
taxes (if any), and sales load of $424 and $411 for the years ended December 31,
1995 and 1994, respectively. These amounts are deducted from participant
contributions and paid to CG Life in accordance with the contract.
5. Withdrawal of funds on terminated contracts is net of administrative
charges of $568 and $620 for the years ended December 31, 1995 and 1994,
respectively. These amounts are paid to CG Life in accordance with the contract.
6. Contracts are sold primarily by persons who are insurance agents of or
brokers for CG Life authorized by applicable law to sell life and other forms of
personal insurance and who are similarly authorized to sell variable annuities.
These persons are for the most part registered representatives of CIGNA
Financial Advisors, Inc.
12
<PAGE>
CG VARIABLE ANNUITY ACCOUNT II
NOTES TO
FINANCIAL STATEMENTS (Continued)
7. ACCUMULATION UNITS INFORMATION
SCHEDULE OF SELECTED PER-UNIT DATA
----------------------------------
<TABLE>
<CAPTION>
December 31,
----------------------------------------------
Group Contracts: 1995 1994 1993 1992 1991
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value:
-----------------------------------------
Beginning of year $ 79.187 $78.857 $76.776 $74.305 $54.193
End of year 108.072 79.187 78.857 76.776 74.305
-------- ------- ------- ------- -------
Net increase in net asset value
resulting from operations $ 28.885 $ 0.330 $ 2.081 $ 2.471 $20.112
======== ======= ======= ======= =======
Accumulation units outstanding:
-----------------------------------------
End of year 6,864 6,819 6,987 8,563 8,692
======== ======= ======= ======= =======
Individual Contracts:
VARIABLE ANNUITY CONTRACTS:
Net asset value:
-----------------------------------------
Beginning of year $ 69.507 $69.564 $68.068 $66.208 $48.529
End of year 94.390 69.507 69.564 68.068 66.208
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value resulting from operations $ 24.883 $(0.057) $ 1.496 $ 1.860 $17.679
======== ======= ======= ======= =======
Accumulation units outstanding:
-----------------------------------------
End of year 8,566 8,823 11,050 11,433 12,288
======== ======= ======= ======= =======
FLEXIBLE ANNUITY CONTRACTS:
Net asset value:
-----------------------------------------
Beginning of year $ 65.997 $66.282 $65.084 $63.528 $46.728
End of year 89.312 65.997 66.282 65.084 63.528
-------- ------- ------- ------- -------
Net increase (decrease) in net asset
value resulting from operations $ 23.315 $(0.285) $ 1.198 $ 1.556 $16.800
======== ======= ======= ======= =======
Accumulation units outstanding:
-----------------------------------------
End of year 26,647 27,762 30,391 33,228 35,732
======== ======= ======= ======= =======
</TABLE>
8. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code (Code), a
variable annuity contract, other than a contract issued in connection with
certain types of employee benefit plans, will not be treated as an annuity
contract for federal tax purposes for any period for which the investments of
the segregated asset account on which the contract 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, as set forth in regulations issued by the
Secretary of Treasury.
The Secretary of Treasury has issued regulations under Section 817(h) of the
Code. CG Life believes that the Account satisfies the current requirements of
the regulations, and it intends that the Account will continue to meet such
requirements.
13
<PAGE>
REPORT OF
INDEPENDENT ACCOUNTANTS
To the Participants Of
Cg Variable Annuity Account II of
Connecticut General Life
Insurance Company
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the selected
per unit data and ratios present fairly, in all material respects, the financial
position of CG Variable Annuity Account II (the "Account") of Connecticut
General Life Insurance Company at December 31, 1995, the results of its
operations and the changes in its net assets and the selected per unit data and
ratios for each of the periods indicated, in conformity with generally accepted
accounting principles. These financial statements and selected per unit data and
ratios (hereafter referred to as "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 provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
One Financial Plaza
Hartford, Connecticut
February 13, 1996
<PAGE>
CIGNA Variable Products S&P 500 Index Fund (formerly Companion Fund)
MANAGEMENT'S DISCUSSION AND ANALYSIS (Unaudited)
During 1995, the Federal Reserve (Fed) began to reverse the interest rate hikes
of 1994 and orchestrated what many now view as a perfect "soft landing" for the
economy. As a result the combination of robust earnings, low inflation, and
increased levels of U.S. productivity, domestic equity markets, as represented
by the S&P 500 Index, achieved their highest levels of returns in the last 35
years. For the 12-month period ending December 31,1995, the Fund's return, after
expenses, was 36.82%, compared with 37.58% for the S&P 500 Index. By contrast,
the average return for the equity funds according to Lipper Analytical Services,
Inc. was 25.05%.
A rush to participate in market advances was partly responsible for large
capitalization stock performance dominating mid-cap and small-cap segments. The
S&P MidCap and S&P SmallCap indices earned 30.95% and 29.96%, respectively for
the year. Growth stocks finally edged out value stocks with the S&P/BARRA Growth
index providing 38.13% while the S&P/BARRA Value Index returned 37.00% in 1995.
Major industry winners included electronics, defense, drugs, health care, and
banks with returns exceeding 50-60%. Specialty retailing, paper containers,
steel and trucking actually lost ground for the year.
As 1995 unfolded, index constituent changes increased due to spinoff and merger
related activities. We expect this pattern to continue into 1996.
CIGNA's view, as we enter 1996, is that common stock performance will likely
revert to levels closer to the long-term average, low double digit or perhaps
high single digit returns. Fed easing should maintain low levels of overall
growth and avert recession. Further export growth will offset continuing subdued
consumer confidence and demand. Budgetary machinations and presidential year
politics loom as wild cards in influencing equity markets in 1996.
[PERFORMANCE GRAPH APPEARS HERE]
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT (Unaudited)
1/1/86 - 12/31/95
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURN
1 Year 5 Year 10 Year
<S> <C> <C>
36.82% 15.09% 12.52%
</TABLE>
<TABLE>
<CAPTION>
CIGNA Variable S&P 500
Point of Products S&P 500 Index -
Measurement Index Fund Total Return
- ----------- ---------------- ------------
<S> <C> <C>
1/86 10000 10000
12/86 11326.89890159 11863.440527481
12/87 11769.040392493 16768.941467711
12/88 12985.342531691 14547.975530218
12/89 16779.338360054 19152.721906167
12/90 16110.393640078 18556.806550665
12/91 22144.618796395 24199.019304468
12/92 22938.581486259 26042.227035776
12/93 23619.341630991 28660.707909833
12/94 23777.190556148 29025.374306729
12/95 32531.385616032 39933.109971198
</TABLE>
CIGNA Variable Products S&P 500 Index Fund's (formerly Companion Fund)
performance figures are historical and reflect reinvestment of all dividends and
capital gains distributions, and changes in net asset value. The Fund does not
charge a sales load, but may be used with variable annuities that contain other
charges which would affect the ultimate return to an investor. The Fund's
investment return and principal value will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost. Past
performance cannot guarantee comparable future results. The Fund's performance
has been compared with the total return performance for the Standard & Poor's
Composite Index of 500 Stocks (S&P 500). This index is a group of unmanaged
securities widely regarded by investors to be representative of the stock market
in general. An investment cannot be made in the index. Index results do not
reflect brokerage charges or other investment expenses. As of November 1993, the
Fund changed its investment approach from active management to an index method
which attempts to replicate the total return performance of the S&P 500, after
Fund expenses.
15
<PAGE>
CIGNA VARIABLE PRODUCTS S&P 500 INDEX FUND
INVESTMENTS IN SECURITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
<S> <C> <C>
COMMON STOCKS - 97.7%
General Electric Co. 24,100 $ 1,735,200
A T & T Corp. 22,100 1,430,975
Exxon Corp. 17,500 1,402,188
Coca-Cola Co. 18,100 1,343,925
Merck & Co., Inc. 17,700 1,163,775
Philip Morris Companies, Inc. 12,000 1,086,000
Royal Dutch Petroleum Co. 7,600 1,072,550
Procter & Gamble Co. 9,700 805,100
Johnson & Johnson 9,100 779,188
International Business Machines Corp. 8,300 761,525
Wal-Mart Stores, Inc. 32,400 724,950
Microsoft Corp.* 8,200 719,550
Intel Corp. 11,600 658,300
Mobil Corp. 5,600 627,200
PepsiCo, Inc. 11,200 625,800
Bristol-Myers Squibb Co. 7,200 618,300
BellSouth Corp. 14,000 609,000
Hewlett-Packard Co. 7,200 603,000
American International Group, Inc. 6,450 596,625
GTE Corp. 13,500 594,000
General Motors Corp. 10,600 560,475
Pfizer, Inc. 8,800 554,400
Du Pont (E.I.) De Nemours & Co. 7,800 545,025
Amoco Corp. 7,000 503,125
Chevron Corp. 9,200 483,000
SBC Communications, Inc. 8,400 483,000
Motorola, Inc. 8,300 473,100
Abbott Laboratories 11,300 471,775
Federal National Mortgage Assoc. 3,800 471,675
Ameritech Corp. 7,800 460,200
McDonald's Corp. 9,800 442,225
Lilly (Eli) & Co. 7,800 438,750
Disney ( Walt) Co. 7,300 430,700
Ford Motor Co. 14,400 417,600
American Home Products Corp. 4,300 417,100
Bell Atlantic Corp. 6,100 407,938
Minnesota Mining & Mfg. Co. 5,900 390,875
Boeing Company 4,800 376,200
Citicorp 5,500 369,875
BankAmerica Corp. 5,300 343,175
Kimberly-Clark Corp. 4,016 332,324
Pharmacia & Upjohn, Inc. 8,410 325,888
Unilever NV 2,300 $ 323,725
Gillette Co. 6,200 323,175
Eastman Kodak Co. 4,800 321,600
NYNEX Corp. 5,900 318,600
Columbia/HCA Healthcare Corp. 6,200 314,650
Home Depot, Inc. 6,400 306,400
Texaco, Inc. 3,700 290,450
American Express Company 7,000 289,625
Travelers Group, Inc. 4,547 285,893
Schering-Plough Corp. 5,200 284,700
Cisco Systems, Inc.* 3,800 283,575
Chrysler Corp. 5,000 276,875
Dow Chemical Co. 3,900 274,463
NationsBank Corp. 3,900 271,538
Allstate Corp. 6,398 263,118
Oracle Systems Corp.* 6,050 256,369
Lockheed Martin Corp. 3,230 255,170
Atlantic Richfield Co. 2,300 254,725
Emerson Electric Co. 3,100 253,425
MCI Communications Corp. 9,533 249,050
Anheuser-Busch Companies, Inc. 3,600 240,750
Kellogg Co. 3,100 239,475
Viacom, Inc., Class B* 5,000 236,875
Schlumberger Ltd. 3,400 235,400
U. S. West Communications Group 6,400 228,800
Southern Company 9,200 226,550
Amgen, Inc.* 3,800 225,625
Capital Cities/ABC, Inc. 1,800 222,075
Banc One Corp. 5,740 216,685
Morgan (J.P.) & Co. 2,700 216,675
Sears, Roebuck & Company 5,500 214,500
Sara Lee Corp. 6,700 213,562
Campbell Soup Company 3,500 210,000
Federal Home Loan Mortgage Corp. 2,500 208,750
First Data Corp. 3,100 207,313
Xerox Corp. 1,500 205,500
WMX Technologies, Inc. 6,800 203,150
Pacific Telesis Group 6,000 201,750
Time Warner, Inc. 5,300 200,737
Chemical Banking Corp. 3,400 199,750
Airtouch Communications, Inc.* 7,000 197,750
Computer Assoc. International, Inc. 3,450 196,219
Monsanto Company 1,600 196,000
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
16
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
<S> <C> <C>
Sprint Corp. 4,900 $ 195,388
Union Pacific Corp. 2,900 191,400
Allied-Signal, Inc. 4,000 190,000
General Re Corp. 1,200 186,000
Warner-Lambert Co. 1,900 184,538
First Chicago NBD Corp. 4,653 183,794
Seagram Company Ltd. 5,200 180,050
Medtronic, Inc. 3,200 178,800
Burlington Northern Santa Fe Corp. 2,289 178,542
Compaq Computer Corp.* 3,700 177,600
Tele-Communications, Inc., Class A* 8,900 176,888
Pacific Gas & Electric Co. 6,100 173,088
Heinz (H.J.) Co. 5,100 168,938
Baxter International, Inc. 4,000 167,500
Caterpillar, Inc. 2,800 164,500
- ---------------------------------------------------------------
TOTAL 100-LARGEST STOCKS 40,993,619
- ---------------------------------------------------------------
Rockwell International Corp. 3,100 163,913
United Technologies Corp. 1,700 161,288
Raytheon Co. 3,400 160,650
United Healthcare Corp. 2,400 157,200
Penney (J.C.) Co., Inc. 3,300 157,162
McDonnell Douglas Corp. 1,700 156,400
Dun & Bradstreet Corp. 2,400 155,400
PNC Bank Corp. 4,800 154,845
Northern Telecom Ltd. 3,600 154,800
Chase Manhattan Corp. 2,500 151,563
Wells Fargo & Co. 700 151,200
Norfolk Southern Corp. 1,900 150,813
First Interstate Bancorp 1,100 150,150
Automatic Data Processing, Inc. 2,000 148,500
May Department Stores Co. 3,500 147,875
ConAgra, Inc. 3,500 144,375
CPC International, Inc. 2,100 144,113
Fleet Financial Group, Inc. 3,516 143,277
Norwest Corp. 4,300 141,900
Colgate-Palmolive Co. 2,000 140,500
NIKE, Inc., Class B 2,000 139,250
First Union Corp. 2,500 139,063
Duke Power Co. 2,900 137,388
Enron Corp. 3,600 137,250
Archer-Daniels-Midland Co. 7,607 136,926
CSX Corp. 3,000 136,875
International Paper Co. 3,600 $ 136,350
Digital Equipment Corp.* 2,100 134,663
Texas Instruments, Inc. 2,600 134,550
Tenneco, Inc. 2,700 133,987
PPG Industries, Inc. 2,900 132,675
Merrill Lynch & Co., Inc. 2,600 132,600
Aluminum Co. of America 2,500 132,188
Texas Utilities Co. 3,200 131,600
Barrick Gold Corp. 4,900 129,238
General Mills, Inc. 2,200 127,050
Deere & Co. 3,600 126,900
Bank of New York, Inc. 2,600 126,750
Phillips Petroleum Co. 3,700 126,263
Weyerhaeuser Co. 2,900 125,425
Loews Corp. 1,600 125,400
Gannett Co., Inc. 2,000 122,750
U. S. West Media Group* 6,400 121,600
FPL Group, Inc. 2,600 120,575
American Brands, Inc. 2,700 120,488
AMP, Inc. 3,112 119,423
Sun Microsystems, Inc.* 2,600 118,625
Albertson's, Inc. 3,600 118,350
KeyCorp 3,258 118,103
SunTrust Banks, Inc. 1,700 116,450
Chubb Corp. 1,200 116,100
Dean Witter, Discover & Co. 2,400 112,800
Boston Scientific Corp.* 2,300 112,706
SCE Corp. 6,300 111,825
Micron Technology, Inc. 2,800 110,950
Aetna Life & Casualty Co. 1,600 110,800
Mellon Bank Corp. 2,050 110,188
Wachovia Corp. 2,400 109,800
3Com Corp.* 2,300 107,238
United States HealthCare, Inc. 2,300 106,950
Consolidated Edison Co. of N.Y., Inc. 3,300 105,600
American Electric Power Co., Inc. 2,600 105,300
Public Service Enterprises Group, Inc. 3,400 104,125
Pitney-Bowes, Inc. 2,200 103,400
CIGNA Corp. 1,000 103,250
Corning, Inc. 3,200 102,400
Walgreen Co. 3,400 101,575
American General Corp. 2,900 101,138
Alcan Aluminum Ltd. 3,200 99,600
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
17
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
<S> <C> <C>
Unocal Corp. 3,400 $ 99,025
Dominion Resources, Inc. 2,400 99,000
Unicom Corp. 3,000 98,250
Mattell, Inc. 3,156 97,047
Hercules, Inc. 1,700 95,838
Goodyear Tire & Rubber Co. 2,100 95,288
Applied Materials, Inc.* 2,400 94,500
Illinois Tool Works, Inc. 1,600 94,400
First Bank System, Inc. 1,900 94,288
Occidental Petroleum Corp. 4,400 94,050
Entergy Corp. 3,200 93,600
UST, Inc. 2,800 93,450
PECO Energy Co. 3,100 93,388
First Fidelity Bancorporation 1,200 90,450
Georgia-Pacific Corp. 1,300 89,213
Marsh & McLennan Companies, Inc. 1,000 88,750
Morgan Stanley Group, Inc. 1,100 88,688
Honeywell, Inc. 1,800 87,525
Ralston Purina Co. 1,400 87,325
Houston Industries, Inc. 3,600 87,300
Limited, Inc. 5,000 86,875
PacifiCorp 4,000 85,000
Loral Corp. 2,400 84,900
Toys R' Us, Inc.* 3,900 84,825
Sysco Corp. 2,600 84,500
Air Products & Chemicals, Inc. 1,600 84,400
GAP (The), Inc. 2,000 84,000
Wrigley (Wm.) Jr. Company 1,600 84,000
Household International, Inc. 1,400 82,775
Donnelley (R.R.) & Sons Co. 2,100 82,688
Browning-Ferris Inds., Inc. 2,800 82,600
- ---------------------------------------------------------------
TOTAL 200-LARGEST STOCKS 52,711,981
- ---------------------------------------------------------------
Barnett Banks, Inc. 1,400 82,600
Westinghouse Electric Corp. 5,000 82,500
Placer Dome, Inc. 3,400 82,025
CUC International, Inc.* 2,400 81,900
AMR Corporation* 1,100 81,675
Freeport McMoRan Copper & Gold, Class B* 2,900 81,563
Winn-Dixie Stores, Inc. 2,200 81,125
Halliburton Co. 1,600 81,000
Textron, Inc. 1,200 81,000
ALLTEL Corp. 2,700 79,650
ITT Corp. 1,500 $ 79,500
Fluor Corp. 1,200 79,200
Union Carbide Corp. 2,100 78,750
Hershey Foods Corp. 1,200 78,000
USX Corporation-Marathon Group 4,000 78,000
MBNA Corp. 2,100 77,438
Consolidated Rail Corp. 1,100 77,000
Federated Dept. Stores, Inc.* 2,800 77,000
Grace (W.R.) & Co. 1,300 76,863
International Flavors & Fragrances, Inc. 1,600 76,800
Carolina Power & Light Co. 2,200 75,900
CoreStates Financial Corp. 2,000 75,750
Avon Products, Inc. 1,000 75,375
Morton International, Inc. 2,100 75,338
Central & Southwest Corp. 2,700 75,263
Eastman Chemical Co. 1,200 75,150
Dayton Hudson Corp. 1,000 75,000
Novell, Inc.* 5,200 74,100
Lowes Companies, Inc. 2,200 73,700
Boatmen's Bancshares, Inc. 1,800 73,575
Bankers Trust New York Corp. 1,100 73,150
Cabletron Systems, Inc.* 900 72,900
Transamerica Corp. 1,000 72,875
ITT Hartford Group, Inc. 1,500 72,563
Masco Corp. 2,300 72,163
Great Lakes Chemical Corp. 1,000 72,000
Tyco International Ltd. 2,000 71,250
Burlington Resources, Inc. 1,800 70,650
U. S. Bancorp, Inc. 2,100 70,613
Lincoln National Corp. 1,300 69,875
TRW, Inc. 900 69,750
Genuine Parts Co. 1,700 69,700
National City Corp. 2,100 69,563
Bank of Boston Corp. 1,500 69,375
Detroit Edison Co. 2,000 69,000
Amerada Hess Corp. 1,300 68,900
Nucor Corp. 1,200 68,550
Cinergy Corp. 2,220 67,988
Becton, Dickinson and Co. 900 67,500
St. Paul Companies, Inc. 1,200 66,750
Pioneer Hi-Bred International, Inc. 1,200 66,750
Quaker Oats Co. 1,900 65,550
Marriott International, Inc. 1,700 65,025
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
18
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
<S> <C> <C>
Rohn & Haas Co. 1,000 $ 64,375
Comerica, Inc. 1,600 64,200
Praxair, Inc. 1,900 63,888
Alco Standard Corporation 1,400 63,875
Dresser Industries, Inc. 2,600 63,375
Phelps Dodge Corp. 1,000 62,250
SAFECO Corp. 1,800 62,100
McGraw-Hill, Inc. 700 60,988
Block (H & R), Inc. 1,500 60,750
Humana, Inc.* 2,200 60,225
Kroger Co.* 1,600 60,000
Baltimore Gas & Electric Co. 2,100 59,850
Federal Express Corp.* 800 59,100
Dover Corp. 1,600 59,000
DSC Communications Corp.* 1,600 59,000
Consolidated Natural Gas Co. 1,300 58,988
Eaton Corp. 1,100 58,988
LSI Logic Corp.* 1,800 58,950
Cooper Industries, Inc. 1,600 58,800
Rubbermaid, Inc. 2,300 58,650
Whirlpool Corp. 1,100 58,575
Panhandle Eastern Corp. 2,100 58,538
Union Electric Co. 1,400 58,450
Tenet Healthcare Corp. 2,800 58,100
Service Corp. International 1,300 57,200
Providian Corp. 1,400 57,050
Williams (The) Companies, Inc. 1,300 57,038
Newell Company 2,200 56,925
Inco Ltd. 1,700 56,525
Computer Sciences Corp.* 800 56,200
American Stores Co. 2,100 56,175
Coastal Corp. 1,500 55,875
Dow Jones & Co., Inc. 1,400 55,825
Tribune Co. 900 55,012
Silcon Graphics, Inc.* 2,000 55,000
PP & L Resources, Inc. 2,200 55,000
UNUM Corp. 1,000 55,000
Champion International Corp. 1,300 54,600
General Public Utilities Corp. 1,600 54,400
Crown Cork & Seal Co., Inc.* 1,300 54,275
Times Mirror Co., Class A 1,600 54,200
Apple Computer, Inc. 1,700 54,188
Salomon, Inc. 1,500 53,250
General Dynamics Corp. 900 $ 53,213
Newmont Mining Corp. 1,172 53,033
Ingersol-Rand Co. (Rights) 1,500 52,688
Delta Air Lines, Inc. 700 51,713
- ---------------------------------------------------------------
TOTAL 300-LARGEST STOCKS 59,372,561
- ---------------------------------------------------------------
Reynolds Metals Co. 900 50,963
Clorox Co. 700 50,138
Knight-Ridder, Inc. 800 50,000
Golden West Financial Corp. 900 49,725
Ohio Edison Co. 2,100 49,350
Sherwin-Williams Co. 1,200 48,900
Jefferson-Pilot Corp. 1,050 48,825
Baker Hughes, Inc. 2,000 48,750
Nordstrom, Inc. 1,200 48,600
Great Western Financial Corp. 1,900 48,450
Interpublic Group of Cos., Inc. 1,100 47,713
Union Camp Corp. 1,000 47,625
VF Corp 900 47,475
Southwest Airlines Co. 2,000 46,500
Kmart Corp. 6,400 46,400
Grainger (W.W.), Inc. 700 46,375
Melville Corp. 1,500 46,125
Dillard Department Stores, Inc., Class A 1,600 45,600
Premark International, Inc. 900 45,563
Torchmark Corp. 1,000 45,250
St. Jude Medical, Inc. 1,050 45,150
Willamette Industries, Inc. 800 45,000
Northrop Grumman Corp. 700 44,800
Kerr-McGee Corp. 700 44,450
Tellabs, Inc.* 1,200 44,400
Northern States Power Co. 900 44,213
Republic New York Corp. 700 43,488
Hilton Hotels Corp. 700 43,050
Pall Corp. 1,600 43,000
Sonat, Inc. 1,200 42,750
Engelhard Corp. 1,950 42,413
Ahmanson (H. F.) & Co. 1,600 42,400
Black & Decker Corp. 1,200 42,300
Harcourt General, Inc. 1,000 41,875
Mead Corp. 800 41,800
Tandy Corp. 1,000 41,500
New York Times Co., Class A 1,400 41,475
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
19
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
<S> <C> <C>
Johnson Controls, Inc. 600 $ 41,250
Price/Costco, Inc.* 2,700 41,175
Rite Aid Corp. 1,200 41,100
Dana Corp. 1,400 40,950
Avery Dennison Corp. 800 40,100
Mallinckrodt Group, Inc. 1,100 40,013
Laidlaw, Inc., Class B 3,900 39,975
Louisiana-Pacific Corp. 1,600 38,800
Circuit City Stores, Inc. 1,400 38,675
Dial Corp. 1,300 38,513
National Semiconductor Corp.* 1,700 37,825
Westvaco Corp. 1,350 37,463
Hasbro, Inc. 1,200 37,200
Brown-Forman Corp., Class B 1,000 36,500
ITT Industries, Inc. 1,500 36,000
Parker-Hannifin Corp. 1,050 35,963
Western Atlas, Inc.* 700 35,350
Temple-Inland, Inc. 800 35,300
Harrah's Entertainment, Inc.* 1,450 35,163
Whitman Corp. 1,500 34,875
Deluxe Corp. 1,200 34,800
Sigma-Aldrich Corp. 700 34,650
Raychem Corp. 600 34,125
Cyprus Amax Minerals Co. 1,300 33,963
Pacific Enterprises 1,200 33,900
USX Corporation-U.S. Steel Group 1,100 33,825
FMC Corp.* 500 33,813
Polaroid Corp. 700 33,163
Harris Corp. 600 32,775
Beneficial Corp. 700 32,638
Bausch & Lomb, Inc. 800 31,700
Ashland, Inc. 900 31,613
SuperValu, Inc. 1,000 31,500
Manor Care, Inc. 900 31,500
Brunswick Corp. 1,300 31,200
Federal Paper Board Co., Inc. 600 31,125
Reebok International Ltd. 1,100 31,075
Armstrong World Ind., Inc. 500 31,000
Stanley Works 600 30,900
Columbia Gas Systems, Inc. 700 30,713
Liz Claiborne, Inc. 1,100 30,525
Maytag Corp. 1,500 30,375
Nalco Chemical Co. 1,000 30,125
Sun Company, Inc. 1,100 $ 30,113
Ecolab, Inc. 1,000 30,000
Wendy's International, Inc. 1,400 29,750
ALZA Corp., Class A* 1,200 29,700
Homestake Mining Co. 1,900 29,688
Cooper Tire & Rubber Co. 1,200 29,550
Roadway Services, Inc. 600 29,325
Allergan, Inc. 900 29,250
Echlin, Inc. 800 29,200
James River Corp. 1,200 28,950
Biomet, Inc.* 1,600 28,600
American Greetings Corp., Class A 1,000 27,625
Goodrich (B.F.) Co. 400 27,250
Ryder System, Inc. 1,100 27,225
Snap-On Tools Corp. 600 27,150
Worthington Industries, Inc. 1,300 27,056
Owens-Corning Fiberglas Corp.* 600 26,925
Fruit of the Loom, Inc., Class A* 1,100 26,813
Comcast Corp., Class A 1,500 26,438
Darden Restaurants, Inc.* 2,200 26,125
- ---------------------------------------------------------------
TOTAL 400-LARGEST STOCKS 63,134,878
- ---------------------------------------------------------------
Moore Corporation Ltd. 1,400 26,075
Pennzoil Co. 600 25,350
Giant Foods, Inc., Class A 800 25,200
Ceridian Corp.* 600 24,750
Woolworth Corp. 1,900 24,700
Millipore Corp. 600 24,675
PACCAR, Inc. 575 24,222
Autodesk, Inc. 700 23,975
Cox Communications, Inc., Class A* 1,229 23,966
Mercantile Stores Co., Inc. 500 23,125
Advanced Micro Devices, Inc.* 1,400 23,100
Pep Boys-Manny, Moe & Jack 900 23,063
National Service Industries, Inc. 700 22,663
General Signal Corp. 700 22,663
Perkin-Elmer Corp. 600 22,650
Bard (C. R.), Inc. 700 22,575
Santa Fe Pacific Gold Corp. 1,840 22,310
Varity Corp.* 600 22,275
Cummins Engine Co., Inc. 600 22,200
Thomas & Betts Corp. 300 22,125
Andrew Corp.* 575 21,994
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
20
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
<S> <C> <C>
USF&G Corp. 1,300 $ 21,938
Louisiana Land & Exploration Co. 500 21,438
Foster Wheeler Corp. 500 21,250
Bethlehem Steel Corp. (Rights) 1,500 21,000
Boise Cascade Corp. 600 20,775
Teledyne, Inc. 800 20,500
Lehman Brothers Holdings, Inc. 940 19,975
Harnischfeger Industries, Inc. 600 19,950
Tektronix, Inc. 400 19,650
King World Productions, Inc.* 500 19,438
EG & G, Inc. 800 19,400
Niagara Mohawk Power Co. 2,000 19,250
NICOR, Inc. 700 19,250
Asarco, Inc. 600 19,200
TJX Companies, Inc. 1,000 18,875
Pittston Services Group 600 18,825
Oryx Energy Co. 1,400 18,725
Bemis Company, Inc. 700 17,938
McDermott International, Inc. 800 17,600
Briggs & Stratton Corp. 400 17,350
United States Surgical Corp. 800 17,100
Tandem Computers, Inc.* 1,600 17,000
Meredith Corp. 400 16,750
Russell Corp. 600 16,650
Echo Bay Mines Ltd. 1,600 16,600
Scientific-Atlanta, Inc. 1,100 16,500
Shared Medical Systems Corp. 300 16,313
Potlatch Corp. 400 16,000
Consolidated Freightways, Inc. 600 15,900
Peoples Energy Corp. 500 15,875
Stone Container Corp.* 1,100 15,813
Fleetwood Enterprises, Inc. 600 15,450
Timken Co. 400 15,300
NorAm Energy Corp. 1,700 15,088
Inland Steel Industries, Inc. 600 15,075
Ogden Corp. 700 14,963
Crane Co. 400 14,750
ENSERCH Corp. 900 14,625
Jostens, Inc. 600 14,550
Longs Drug Stores Corp. 300 14,363
Centex Corp. 400 13,900
Alberto-Culver Co., Class B 400 13,750
Amdahl Corp. 1,600 13,600
Unisys Corp.* 2,400 $ 13,500
Pulte Corp. 400 13,450
USLIFE Corp. 450 13,444
Cincinnati Milacron, Inc. 500 13,125
Beverly Enterprises, Inc.* 1,200 12,750
Santa Fe Energy Resources, Inc. 1,300 12,513
Safety-Kleen Corp. 800 12,500
USAir Group, Inc.* 900 11,925
Rowan Companies, Inc.* 1,200 11,850
Navistar International Corp.* 1,100 11,550
Great Atlantic & Pacific Tea Co., Inc. 500 11,500
TRINOVA Corp. 400 11,450
Alexander & Alexander Services, Inc. 600 11,400
Coors (Adolph) Co., Class B 500 11,063
Ball Corp. 400 11,000
Eastern Enterprises 300 10,575
Fleming Companies, Inc. 500 10,313
Cray Research, Inc.* 400 9,900
Bally Entertainment Corp.* 700 9,800
Intergraph Corp.* 600 9,450
ONEOK, Inc. 400 9,150
Helmerich & Payne, Inc. 300 8,925
Armco, Inc. 1,500 8,813
Harland (J.H.) Co. 400 8,350
Springs Industries, Inc., Class A 200 8,275
Giddings & Lewis, Inc. 500 8,250
Kaufman & Broad Home Corp. 500 7,438
Community Psychiatric Centers 600 7,350
Data General Corp.* 500 6,875
Luby's Cafeterias, Inc. 300 6,675
Shoney's, Inc.* 600 6,150
Outboard Marine Corp. 300 6,113
Ryans Family Steak Houses, Inc.* 800 5,600
NACCO Industries, Inc., Class A 100 5,550
Schweitzer-Mauduit International, Inc.* 230 5,319
Stride Rite Corp. 700 5,250
Yellow Corp. 400 4,950
First Mississippi Gold, Inc. 213 4,729
Bassett Furniture Industries, Inc. 200 4,650
Brown Group, Inc. 300 4,275
Zurn Industries, Inc. 200 4,275
Charming Shoppes, Inc. 1,400 4,025
GC Companies, Inc.* 120 4,020
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
21
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number of Market
Shares Value
<S> <C> <C>
Strattec Security Corp.* 180 $3,195
Handleman Co. 500 2,875
Aviall, Inc. 300 2,813
Morrison Knudsen Corp. 500 2,125
Crown Vantage, Inc.* 120 1,710
Gardner Denver Machinery, Inc. 72 1,368
Transport Holdings, Inc., Class A* 22 897
Harris Computer Systems, Inc.* 30 405
Brunos, Inc. 31 326
----------
TOTAL COMMON STOCKS - 97.7%
(Cost $48,921,285) 64,770,555
----------
PREFERRED STOCK
(Cost $257)
Teledyne, Inc., Class E* 34 489
----------
WARRANTS
(Cost $111)
Fleet Financial Group, Inc.* 5 204
----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
22
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Par Market
(000) Value
<S> <C> <C>
SHORT-TERM OBLIGATIONS - 2.5%
Commercial Paper - 2.5%
Household Finance Corp., 5.65%, 1/2/96 $ 1,503,000 $ 1,503,000
U.S. Treasury Bills,
5.34%, 1/8/96** 150,000 149,622
-----------
TOTAL SHORT-TERM OBLIGATIONS 1,652,622
-----------
(Cost - $1,652,622)
TOTAL INVESTMENT IN SECURITIES - 100.2%
(Total Cost - $50,574,275) 66,423,870
Liabilities, Less Cash and Other Assets - .2% (140,759)
-----------
NET ASSETS - 100.0%
(equivalent to $10.75 per share based
on 6,164,150 shares outstanding) $66,283,111
===========
</TABLE>
* Non-income producing securities.
** Pledged as initial margin for Stock
Index Futures Contracts. At December
31, 1995, the Fund was long 6 S&P 500
Futures Contracts expiring in Mar.
1996. Unrealized loss amounted
to $29,550.
The Notes to Financial Statements are an integral part of these statements.
23
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
STATEMENT OF
ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at market value
(Cost -- $50,574,275) $66,423,870
Cash on deposit with custodian 570
Receivable for fund shares sold 3,877
Dividends and interest receivable 130,985
Variation margin receivable 2,100
Investment for deferred compensation plan
(Cost -- $45,442) 51,659
Other 828
-----------
Total assets 66,613,889
-----------
LIABILITIES:
Payable for investments purchased 198,392
Payable for fund shares repurchased 6,632
Accrued advisory fees payable 20,450
Payable for deferred compensation plan 51,659
Other accrued expenses (including $6,482
due to affiliate) 53,645
-----------
Total liabilities 330,778
-----------
NET ASSETS:
(Equivalent to $10.75 per share based on
6,164,150 shares outstanding) $66,283,111
===========
COMPONENT OF NET ASSETS:
Capital paid in $50,441,483
Distributions in excess of net
investment income (46,038)
Accumulated net realized gains 61,404
Unrealized appreciation of investments 15,826,262
-----------
NET ASSETS $66,283,111
===========
</TABLE>
STATEMENT OF
OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $1,471,083
Interest 225,414 $ 1,696,497
----------
Expenses:
Investment advisory fees 213,557
Custodian fees and expenses 112,480
Administrative services 48,801
Auditing and legal fees 30,266
Other 25,175
Trustees' fees 14,222 444,501
---------- -----------
NET INVESTMENT INCOME 1,251,996
-----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from securities
transactions 841,069
Net realized gain from futures
transactions 836,257
Unrealized appreciation of
investments 16,116,399
Unrealized depreciation of futures
contracts (29,550)
-----------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS 17,764,175
-----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $19,016,171
===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
24
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
STATEMENT OF
CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,251,996 $ 1,281,213
Net realized gain from securities transactions 841,069 110,651
Net realized gain/(loss) from futures transactions 836,257 (155,097)
Unrealized appreciation/(depreciation)
of investments 16,116,399 (955,176)
Unrealized appreciation/(depreciation)
of futures contracts (29,550) 17,050
------------ ------------
Net increase in net assets from operations 19,016,171 298,641
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ($.27 and $.14
per share, respectively) (1,592,502) (938,698)
In excess of net investment income (46,038) --
(less than $.01 per share)
From net realized gain ($.18 and $.85
per share, respectively) (1,065,000) (5,214,268)
Required for tax purposes in excess of
realized gains ($.08 per share) -- (460,493)
------------ ------------
Total distributions to shareholders (2,703,540) (6,613,459)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net decrease from capital share transactions (4,757,930) (434,866)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS 11,554,701 (6,749,684)
NET ASSETS:
Beginning of year 54,728,410 61,478,094
------------ ------------
End of year (including overdistributed net
investment income of $46,038 and
underdistributed net investment
income of $340,506) $66,283,111 $54,728,410
============ ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
25
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
NOTES TO
FINANCIAL STATEMENTS
1. UTILIZATION OF INDEXATION APPROACH. The CIGNA Variable PRoducts S&p 500 Index
Fund (the "Fund"), known as the Companion Fund prior to January 2, 1996, seeks
to achieve its long term growth objective by attempting to replicate the total
return performance, reduced by Fund expenses, of The Standard & Poor's 500
Composite Stock Price Index.
2. SIGNIFICANT ACCOUNTING POLICIES. The Fund is a separate series of CIGNA
Variable Products Group, a Massachusetts business trust (the "TRust"). The Trust
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements.
A. SECURITY VALUATION - Equity securities, including warrants, that are listed
on a national securities exchange or part of the NASDAQ National Market System
are valued at the last sale price or, if there has been no sale that day, at the
last bid price. Debt and other equity securities traded in the over-the-counter
market, including listed securities whose primary markets are believed to be
over-the-counter, are valued at the most recent bid price. Short-term
investments with remaining maturities of up to and including 60 days are valued
at amortized cost, which approximates market. Short-term investments that mature
in more than 60 days are valued at current market quotations. Other securities
and assets of the Fund are appraised at fair value as determined in good faith
by, or under the authority of, the Trust's Board of Trustees.
FUTURES CONTRACTS - The Fund may purchase Standard & Poor's 500 futures
contracts with the objective of earning returns on its short-term investments
equivalent to returns on the Standard & Poor's 500 Composite Stock Price Index.
As a result, the purchase of futures contracts simulates a fully invested
position in the underlying index while maintaining liquidity. Upon entering into
a futures contract, the Fund is required to pledge to the broker an amount of
cash and/or securities equal to the initial margin requirements. During the
period a futures contract is open, changes in the value of a contract are
recognized as unrealized gains or losses by "marking to market" on a daily basis
to reflect the market value of the contract at the end of each day's trading.
Daily variation margin payments are received or made, depending on whether there
were unrealized gains or losses. When a contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. Futures
contracts include the risk that a change in the value of the contract may not
correlate with the value of the underlying securities.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the trade date (date the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis. Securities gains and losses are determined on the
basis of identified cost. The cost for federal income tax purposes is
substantially the same.
26
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
NOTES TO
FINANCIAL STATEMENTS (Continued)
C. FEDERAL TAXES - It is the Fund's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and capital gains, if any, to its
shareholders. Therefore, no Federal income or excise taxes on realized income
have been accrued.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Dividends and distributions are
recorded by the Fund on the ex-dividend date. The timing and characterization of
certain income and capital gains distributions are determined in accordance with
federal tax regulations which may differ from generally accepted accounting
principles. To the extent that such differences are permanent, a re-class to
paid in capital may be required.
3. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES. Investment
advisory fees were paid or accrued to CIGNA investments, Inc. ("CII"), certain
officers and directors of which are affiliated with the Fund. Such advisory fees
are based on an annual rate of 0.35% applied to the average daily net assets of
the Fund.
The Fund reimburses CII for a portion of the compensation and related expenses
of the Fund's Treasurer and Secretary and certain persons who assist in carrying
out the responsibilities of those offices. For the year ended December 31, 1995,
the Fund paid $48,801.
CII is an indirect, wholly-owned subsidiary of CIGNA Corporation.
4. TRUSTEES' FEES. Trustees' fees represent remuneration paid or accrued to
trustees who are not employees of CIGNA Corporation or any of its affiliates.
Trustees may elect to defer receipt of all or a portion of their fees which are
invested in mutual fund shares in accordance with a deferred compensation plan.
5. PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities,
excluding short-term obligations, aggregated $2,392,250 and $7,065,362,
respectively, for the year ended December 31, 1995. As of December 31, 1995, the
cost of securities for Federal income tax purposes was $51,016,081. At December
31, 1995, unrealized appreciation for Federal income tax purposes aggregated
$15,407,789, of which $17,187,880 related to appreciated securities and
$1,780,091 related to depreciated securities.
6. CAPITAL STOCK. The fund offers an unlimited number of shares of beneficial
interest without par value. Of the 6,164,150 shares outstanding at December 31,
1995, 6,034,384 shares were held by State Street Bank and Trust Company as
custodian under agreement with CG Life relating to variable annuity contracts
issued by that company. The remainder, representing 2.1% of the shares
outstanding, was held by an employee benefit plan established by CG Life for
certain of its employees.
27
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
NOTES TO
FINANCIAL STATEMENTS (Continued)
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 161,710 $ 1,578,966 140,151 $ 1,241,778
Shares issued to shareholders
in reinvestment of dividends
and distributions 252,673 2,703,540 794,689 6,613,459
--------- ------------ --------- ------------
414,383 4,282,506 934,840 7,855,237
Shares redeemed (935,565) (9,040,436) (929,467) (8,290,103)
--------- ------------ --------- ------------
Net increase (decrease) (521,182) $(4,757,930) 5,373 $ (434,866)
========= ============ ========= ============
</TABLE>
28
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
NOTES TO
FINANCIAL STATEMENTS (Continued)
7. FINANCIAL HIGHLIGHTS. The following selected per share data, ratios and
supplemental data is computed on the basis of a share outstanding throughout the
period.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 8.19 $ 9.20 $ 11.94 $ 12.83 $ 10.75
-------- -------- -------- -------- --------
Income from investment operations
Net investment income * 0.21 0.19 0.16 0.12 0.19
Net realized and unrealized gains (losses) 2.80 (0.13) 0.22 0.34 3.79
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 3.01 0.06 0.38 0.46 3.98
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment income (0.27) (0.14) (0.17) (0.12) (0.20)
Distributions from capital gains (0.18) (0.85) (2.95) (1.23) (1.70)
Required for tax purposes in excess
of realized gains -- (0.08) -- -- --
-------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS (0.45) (1.07) (3.12) (1.35) (1.90)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR $ 10.75 $ 8.19 $ 9.20 $ 11.94 $ 12.83
======== ======== ======== ======== ========
Total return 36.82% 0.67% 2.97% 3.59% 37.46%
Ratios and Supplemental Data:
Net assets, end of period (000) $66,283 $54,728 $61,478 $68,287 $73,446
Ratio of expenses to
average net assets 0.73% 0.78% 0.66% 0.59% 0.56%
Ratio of net investment income
to average net assets 2.05% 2.23% 1.30% 0.94% 1.38%
Portfolio Turnover 4% 4% 185%** 82% 77%
</TABLE>
* Net investment income per share has been calculated in accordance with SEC
requirements, with the exception that end of year accumulated
undistributed/(overdistributed) net investment income has not been adjusted to
reflect current year permanent differences between financial and tax accounting.
** During November 1993, the portfolio was indexed to the S&P 500, resulting in
a complete turnover of the portfolio at that time.
29
<PAGE>
CIGNA Variable Products S&P 500 Index Fund
REPORT OF
INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES
AND SHAREHOLDERS OF
CIGNA VARIABLE PRODUCTS S&P 500 INDEX FUND
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of CIGNA Variable Products S&P 500
Index Fund, formerly the Companion Fund, (the "Fund") at December 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
and the financial highlights for each of the years indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements" ) are the
responsibility of the Fund'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, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
160 Federal Street
Boston, Massachusetts
February 15, 1996
<PAGE>
TRUSTEES AND OFFICERS
CIGNA VARIABLE PRODUCTS S&P 500 INDEX FUND
Trustees:
R. Bruce Albro, Chairman;
Senior Managing Director
CIGNA Investments, Inc.
Hugh R. Beath
Managing Director,
AdMedia Corporate Advisors, Inc.
Russell H. Jones
Vice President,
Kaman Corporation
Paul J. McDonald
Executive Vice President, Finance
and Chief Financial Officer,
Friendly Ice Cream Corporation
Arthur C. Reeds III
President, CIGNA Investment
Management and CIGNA
Investments, Inc.
Officers:
R. Bruce Albro
Chairman of the Board and President
Alfred A. Bingham III
Vice President and Treasurer
Jeffrey S. Winer
Vice President and Secretary
CUSTODIAN AND TRANSFER AGENT:
State Street Bank and Trust Company
P.O. Box 2351
Boston, Massachusetts 02107
INVESTMENT ADVISER:
CIGNA Investments, Inc.
Hartford, Connecticut 06152
ADDRESS OF THE FUND:
1380 Main Street
Springfield, Massachusetts 01103
_______________________________________________________________________________
"Standard & Poor's(R)," "S&P(R)," " S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of the Standard & Poor's Corporation (S&P) and have been
licensed for use by CG Life. The S&P 500 Index Fund is not sponsored, endorsed,
sold or promoted by S&P, and S&P makes no representation regarding the
advisability of investing in the Fund.
31
<PAGE>
This report has been prepared for the information of participants of CG Variable
Annuity Accounts I & II pursuant to variable annuity contracts issued by
Connecticut General Life Insurance Company and is not authorized for
distribution to prospective investors unless preceded or accompanied by
current prospectuses of both the annuity account under discussion and the CIGNA
Variable Products S&P Index Fund.
________________________________________________________________________________
CIGNA Variable Products S&P 500 Index Fund (formerly Companion Fund) was
organized by Connecticut General Life Insurance Company in 1968. The name of the
Fund was changed in January 1996 from Companion Fund to CIGNA Variable Products
S&P Index Fund to better reflect the Fund's investment strategy. Both CIGNA
Investments, Inc. and CIGNA Financial Advisors, Inc. are affiliates of
Connecticut General Life Insurance Company.
[LOGO OF CIGNA]
CG VARIABLE ANNUITY
ACCOUNTS I & II
CIGNA VARIABLE PRODUCTS
S&P 500 INDEX FUND
____________________
ANNUAL REPORT
____________________
DECEMBER 31, 1995
CG FLEXIBLE ANNUITY
CG GROUP VARIABLE ANNUITY
