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CIGNA ACCRU
SEMI-ANNUAL REPORT
JUNE 30, 1997
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#562157
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TABLE OF CONTENTS
PRESIDENT'S LETTER
ECONOMIC REVIEW AND OUTLOOK
SCHEDULES OF CHANGES IN UNIT VALUES
FUND REPORTS:
THE ALGER AMERICAN FUND SEMI-ANNUAL REPORT
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND SEMI-ANNUAL REPORTS*
EQUITY-INCOME PORTFOLIO
HIGH INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
OVERSEAS PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND II SEMI-ANNUAL REPORTS
ASSET MANAGER PORTFOLIO
INVESTMENT GRADE BOND PORTFOLIO
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST-SM-
SEMI-ANNUAL REPORTS
MFS TOTAL RETURN SERIES
MFS UTILITIES SERIES
MFS WORLD GOVERNMENTS SERIES
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
SEMI-ANNUAL REPORTS
BALANCED PORTFOLIO
LIMITED MATURITY BOND PORTFOLIO
PARTNERS PORTFOLIO
OCC ACCUMULATION TRUST SEMI-ANNUAL REPORTS
GLOBAL EQUITY PORTFOLIO
MANAGED PORTFOLIO
SMALL CAP PORTFOLIO
* PLEASE NOTE THAT THE FIDELITY HIGH INCOME PORTFOLIO,
MONEY MARKET PORTFOLIO AND OVERSEAS PORTFOLIO ARE USED IN
CONNECTION WITH ACCRU VARIABLE ANNUITY CONTRACTS, BUT NOT
ACCRU VARIABLE LIFE INSURANCE CONTRACTS.
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[PHOTO] [LOGO]
THOMAS C. JONES
President
900 Cottage Grove Road
Routing S-249
Hartford, CT 06152-2249
Dear Client:
It is a pleasure to provide you with this report on the performance of the ACCRU
Variable Annuity and the ACCRU Variable Universal Life Insurance products for
the six-month period ended June 30, 1997.
The report includes a summary of sub-account performance for the past six months
and financial data for each of the portfolio options. We are also including an
informative interview with Edward Guay, CIGNA's chief economist, which discusses
the results for the first half of the year and an outlook for the remainder of
the year. I hope you will take a few minutes to read it carefully.
I would also like to inform you that Lincoln National Corporation (LNC) agreed
in late July to purchase CIGNA's individual life insurance and annuities
businesses. We expect that transaction, which is subject to regulatory approval,
to close by the end of the year.
As a current ACCRU variable product holder, we recognize that you may have
questions about this agreement and how it will affect your contract or policy
and your relationship with CIGNA. I want to assure you that this is a positive
step forward for both organizations -- and an exciting development for our
clients.
First and foremost, your ACCRU variable product will continue to be honored by
the issuing companies of Connecticut General Life or CIGNA Life in accordance
with the contract or policy terms. You will always have the right to remain a
Connecticut General or CIGNA Life contract or policy holder, and your contract
or policy will continue to be backed by the financial strength and integrity of
those companies.
In addition, you will continue to receive the same level of exceptional service.
And because the combination brings together CIGNA's premier life insurance and
financial planning expertise with Lincoln National Life Insurance Company's
leadership position in annuities and investment products, you will have access
to a broader range of product and service solutions to meet your complex estate
and financial planning needs.
I firmly believe this is an outstanding development for clients. If you have
questions about the agreement, or about your contract or policy, you may call
our Annuity and Variable Life Service Center at 1.800.552.9898, Monday through
Friday, 8 a.m. to 7 p.m. Eastern time.
As always, I want to thank you for your business, and I look forward to working
with you to develop the appropriate customized plan to meet your changing
financial planning needs.
Sincerely,
/s/ Thomas C. Jones
Thomas C. Jones
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ECONOMIC REVIEW AND OUTLOOK
AN INTERVIEW WITH EDWARD GUAY, CHIEF ECONOMIST, CIGNA CORPORATION
WHAT WERE THE MAJOR DEVELOPMENTS THAT CHARACTERIZED THE ECONOMIC SCENE IN THE
FIRST HALF OF 1997?
After six months of very strong growth, the economy slowed abruptly midway
through the first half. Both consumers and domestic businesses paused almost
simultaneously. Retail sales stagnated after strong gains during both the fourth
quarter of 1996 and the first quarter of this year. Housing construction also
paused in most of the country. Consumers appeared to be reacting prudently to
higher levels of debt incurred previously. The strong use of credit evident in
earlier periods was suspended during the second quarter as consumers paused for
income gains to catch up with spending, and to restore savings rates.
Business also appeared to respond quickly and effectively to the slowing
economy. After consumer sales eased in March and April, business cut consumer
goods production in April and May to maintain inventory at levels close to
recent lows relative to sales. Business equipment production continued to steam
ahead, but the production of intermediate products such as office supplies also
flattened during the spring and early summer.
WHAT IS THE EMPLOYMENT SITUATION IN THE U.S. AT THIS TIME?
Because overall production remained strong, with exports and capital goods still
pulling the economy upward, employment also remained strong. At one point during
the second quarter, employment gains slowed to rates of growth in line with
long-term potential economic growth of 2.75%. But as the first half ended,
employment gains had picked up enough to suggest an underlying rate of growth
modestly above potential moving into the second half. If, as we suspect, the
consumer pause was a pause to refresh rather than a sign of consumer burnout,
both the consumer and business sectors should re-accelerate during the second
half.
A resumption of normal sales growth in coming months should lead quickly to
rising orders and to strong demand for workers. The labor market remained
relatively tight through the second quarter and the demand for new graduates was
the strongest in almost 10 years.
YOU MENTIONED THE ROLE OF EXPORTS IN PULLING THE ECONOMY UPWARD. CAN YOU
ELABORATE ON THAT POINT?
The limited data available suggest that exports played a strong role during the
second quarter. Stronger growth in Latin America and a modest recovery in Europe
appear to have been important to that outcome. The export recovery appeared to
have been broadly based across industries and across regions, with key roles
played by technology equipment and both technology and entertainment software.
World liquidity growth and recoveries from past regional problems or from
national austerity programs aided the export expansion.
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WHAT WERE THE KEY TRENDS IN FINANCIAL MARKETS?
The financial markets, including the currency market, were somewhat volatile
during the second quarter. Stock market weakness carried over from the first
quarter in the first two weeks of April. Then, the market surged by 20% through
the remaining weeks of the first half to successive new highs. The catalyst for
the market turnaround was an interest rate decline. Rates fell from the April
peaks as slower growth and lower inflation deferred further tightening by the
Federal Reserve. At its rate-setting session in July the Fed showed continued
satisfaction with economic conditions and refrained from boosting rates, which
could help to sustain stock market growth.
The volatility in the currency market was primarily focused on the yen - dollar
rate. Comments by Japanese Ministry of Finance spokesmen tended to weaken the
dollar relative to the yen, but the dollar remained strong relative to many
other currencies, particularly those in continental Europe. The strength of the
dollar relative to most currencies reflects widespread confidence in the
underlying strength of the U.S. economy.
HOW WERE RESULTS IN INVESTMENT MARKETS OUTSIDE THE U.S.?
Results were mixed in other investment markets. European stocks generally
improved and were reasonably competitive with U.S. stocks. Japanese stocks
remained bound within a fairly narrow range, while emerging markets performance
varied from very weak to very strong. Real estate continued to improve nearly
everywhere outside of Southeast Asia. It was generally a good period for
investors in the U.S. and around the world.
WHAT IS THE ECONOMIC OUTLOOK HEADING INTO THE SECOND HALF OF 1997?
The outlook is quite positive. The economy has adjusted better than we thought
it would to stronger growth in the U.S. and in the world. Inflation has remained
low and the economy has responded fairly efficiently to temporary market
disruptions in almost any market, from grains and oil through consumer finished
goods, traditional capital goods, and technology products.
The efficient adjustment has been aided by the continuing slack in other
economies in the industrial world, by deregulation of many domestic and foreign
industries, and by the technological progress of recent years. With the
exception of economic slack, all of these factors should remain important for
the foreseeable future.
During the past year, the U.S. growth rate has been more than a percentage point
above the 2.75% that we estimate to be the long-term potential growth rate. This
has been done without increasing inflation because the U.S. has been able to
"rent" spare capacity and labor from countries operating below potential,
including Canada (our largest trading partner), Europe and Japan. During the
next 18 months we expect the industrial countries to significantly close the
gaps between actual and potential output. That should produce strong export
gains for the U.S. and offset sluggish consumer and housing performance over the
same period.
In general, it would appear that the next year or two should be good for
business and for prudent, diversified investors.
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ACCRU VARIABLE PRODUCTS
SCHEDULE OF CHANGES IN UNIT VALUES
PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
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CONNECTICUT GENERAL ACCRU VARIABLE ANNUITY
(INCLUDING NEW YORK CONTRACTS ISSUED BEFORE MAY 1, 1996)
<TABLE>
<CAPTION>
DATE INITIALLY 12/31/96 6/30/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
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Alger American Growth Portfolio 4/12/95 $13.855323 $16.002539 15.5
Alger American Leveraged AllCap Portfolio 6/2/95 15.364036 17.235837 12.2
Alger American MidCap Growth Portfolio 4/10/95 14.473761 15.395747 6.4
Alger American Small Capitalization Portfolio 4/10/95 13.460941 13.460378 0.0
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Fidelity VIP Equity-Income Portfolio 4/10/95 13.679456 15.819204 15.6
Fidelity VIP Money Market Portfolio 6/8/95 10.658014 10.869798 2.0
Fidelity VIP High Income Portfolio 5/3/96 10.802349 11.559129 7.0
Fidelity VIP Overseas Portfolio 5/9/96 10.614394 12.279047 15.7
Fidelity VIP II Asset Manager Portfolio 4/12/95 12.758423 14.096282 10.5
Fidelity VIP II Investment Grade Bond Portfolio 7/18/95 10.734479 10.964645 2.1
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MFS Total Return Series 7/7/95 12.420693 13.744578 10.7
MFS Utilities Series 7/27/95 13.292608 14.743934 10.9
MFS World Government Series 7/7/95 10.552213 10.304681 -2.3
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AMT Balanced Portfolio 7/18/95 10.832872 11.975422 10.5
AMT Limited Maturity Bond Portfolio 5/3/95 10.857343 11.106643 2.3
AMT Partners Portfolio 4/12/95 15.500823 17.828971 15.0
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OCC Global Equity Portfolio 4/10/95 13.347358 15.124209 13.3
OCC Managed Portfolio 6/19/95 13.502565 15.291289 13.2
OCC Small Cap Portfolio 6/27/95 12.718827 14.486401 13.9
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</TABLE>
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ACCRU VARIABLE UNIVERSAL LIFE
<TABLE>
<CAPTION>
DATE INITIALLY 12/31/96 6/30/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
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Alger American Growth Portfolio 5/5/95 $13.738238 $15.935048 16.0
Alger American Leveraged AllCap Portfolio 5/5/95 16.468026 18.553228 12.7
Alger American MidCap Growth Portfolio 5/5/95 14.443889 15.429634 6.8
Alger American Small Capitalization Portfolio 5/5/95 13.322001 13.378386 0.4
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Fidelity VIP Equity-Income Portfolio 5/5/95 13.618095 15.815446 16.1
Fidelity VIP II Asset Manager Portfolio 11/16/95 11.971291 13.283059 11.0
Fidelity VIP II Investment Grade Bond Portfolio 11/16/95 10.493674 10.764451 2.6
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MFS Total Return Series 10/10/95 12.090502 13.436299 11.1
MFS Utilities Series 12/26/95 11.880730 13.234149 11.4
MFS World Government Series 5/5/95 10.788580 10.580514 -1.9
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AMT Balanced Portfolio 9/12/95 10.435528 11.585412 11.0
AMT Limited Maturity Bond Portfolio 9/13/96 10.256711 10.537026 2.7
AMT Partners Portfolio 5/5/95 15.580865 17.997513 15.5
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OCC Global Equity Portfolio 9/12/95 11.507742 13.095349 13.8
OCC Managed Portfolio 5/5/95 14.972784 17.028636 13.7
OCC Small Cap Portfolio 9/26/95 12.096552 13.836431 14.4
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</TABLE>
Accumulation Unit Values are net of charges against the assets of the Variable
Account for the assumption of mortality and expense risks and for administrative
expenses.
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ACCRU VARIABLE PRODUCTS
SCHEDULE OF CHANGES IN UNIT VALUES
PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
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CIGNA LIFE ACCRU VARIABLE ANNUITY
<TABLE>
<CAPTION>
DATE INITIALLY 12/31/96 6/30/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
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Alger American Growth Portfolio 2/23/96 $10.144346 $11.716457 15.5
Alger American Leveraged AllCap Portfolio 2/9/96 10.507089 11.787168 12.2
Alger American MidCap Growth Portfolio 1/19/96 11.319352 12.040400 6.4
Alger American Small Capitalization Portfolio 2/9/96 9.868924 9.868511 0.0
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Fidelity VIP Equity-Income Portfolio 2/20/96 11.013725 12.736498 15.6
Fidelity VIP Money Market Portfolio 2/22/96 10.338796 10.544236 2.0
Fidelity VIP High Income Portfolio 5/17/96 10.659332 11.406092 7.0
Fidelity VIP Overseas Portfolio 5/13/96 10.640099 12.308783 15.7
Fidelity VIP II Asset Manager Portfolio 3/1/96 11.112123 12.277349 10.5
Fidelity VIP II Investment Grade Bond Portfolio 3/1/96 10.277513 10.497881 2.1
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MFS Total Return Series 2/22/96 10.934889 12.100407 10.7
MFS Utilities Series 3/15/96 11.879471 13.176506 10.9
MFS World Government Series 2/20/96 10.461237 10.215840 -2.3
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AMT Balanced Portfolio 2/22/96 10.196779 11.272240 10.5
AMT Limited Maturity Bond Portfolio 2/20/96 10.278541 10.514552 2.3
AMT Partners Portfolio 2/20/96 12.176555 14.005414 15.0
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OCC Global Equity Portfolio 2/9/96 11.044449 12.514728 13.3
OCC Managed Portfolio 2/20/96 11.575082 13.108467 13.2
OCC Small Cap Portfolio 3/1/96 11.375492 12.956379 13.9
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</TABLE>
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CONNECTICUT GENERAL ACCRU VARIABLE ANNUITY -- NEW YORK
(CONTRACTS ISSUED MAY 1, 1996 AND LATER)
<TABLE>
<CAPTION>
DATE INITIALLY 12/31/96 6/30/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE* UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
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Alger American Growth Portfolio 5/2/96 $10.655539 $12.300690 15.4
Alger American Leveraged AllCap Portfolio 5/2/96 9.952430 11.159325 12.1
Alger American MidCap Growth Portfolio 5/2/96 10.033269 10.667027 6.3
Alger American Small Capitalization Portfolio 5/2/96 9.368431 9.363328 -0.1
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Fidelity VIP Equity-Income Portfolio 5/2/96 10.851716 12.542848 15.6
Fidelity VIP Money Market Portfolio 6/3/96 10.223104 10.421037 1.9
Fidelity VIP High Income Portfolio 5/22/96 10.600637 11.337587 7.0
Fidelity VIP Overseas Portfolio 5/20/96 10.534750 12.180793 15.6
Fidelity VIP II Asset Manager Portfolio 5/28/96 10.797117 11.923322 10.4
Fidelity VIP II Investment Grade Bond Portfolio 6/3/96 10.530045 10.750423 2.1
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MFS Total Return Series 5/2/96 11.016746 12.184867 10.6
MFS Utilities Series 5/24/96 11.397495 12.635559 10.9
MFS World Government Series 5/20/96 10.436909 10.186959 -2.4
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AMT Balanced Portfolio 5/22/96 9.983723 11.031170 10.5
AMT Limited Maturity Bond Portfolio 6/3/96 10.377931 10.610890 2.2
AMT Partners Portfolio 5/2/96 11.514426 13.237187 15.0
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OCC Global Equity Portfolio 5/2/96 10.785929 12.215656 13.3
OCC Managed Portfolio 5/2/96 11.432399 12.940382 13.2
OCC Small Cap Portfolio 5/20/96 10.568440 12.031126 13.8
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</TABLE>
* Variable Annuity unit values reflect the Company's reduction of its mortality
and expense risk charges at a rate of 1.20% per year instead of 1.25% per year
throughout the 5/1/96 through 6/30/96 period. Had these charges been imposed,
ending accumulation unit values would have been lower for those funds during
that period.
Accumulation Unit Values are net of charges against the assets of the Variable
Account for the assumption of mortality and expense risks and for administrative
expenses.
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The mutual fund semiannual reports are incorporated herein by reference. Each
of them has been electronically filed with the Securities and Exchange
Commission in connection with the named entity's status as a registered
investment company under the Investment Company Act of 1940:
1. The Alger American Fund SemiAnnual Report, June 30, 1997, consisting of 26
partially numbered pages. Filed: September 3, 1997, Form Type N-30D,
Registration Statement 811-5550
2. Variable Insurance Products Fund
2(a) Equity-Income Portfolio SemiAnnual Report, June 30, 1997, consisting
of 14 partially numbered pages.
2(b) High Income Portfolio SemiAnnual Report, June 30, 1997, consisting
of 18 partially numbered pages.
2(c) Money Market Portfolio SemiAnnual Report, June 30, 1997, consisting
of 12 partially numbered pages.
2(d) Overseas Portfolio SemiAnnual Report, June 30, 1997, consisting
of 16 partially numbered pages.
Filed: August 21, 1997, Form Type N-30D, Registration Statement 811-3329
3. Variable Insurance Products Fund II
3(a) Asset Manager Portfolio SemiAnnual Report, June 30, 1997, consisting
of 24 partially numbered pages.
3(b) Investment Grade Bond Portfolio SemiAnnual Report, June 30, 1997,
consisting of 14 partially numbered pages.
Filed: August 21, 1997, Form Type N-30D, Registration Statement 811-5511
4. MFS - Registered Trademark - Variable Insurance Trust
4(a) MFS - Registered Trademark - Total Return Series SemiAnnual Report,
June 30, 1997, consisting of 22 partially numbered pages.
4(b) MFS - Registered Trademark - Utilities Series SemiAnnual Report,
June 30, 1997, consisting of 18 partially numbered pages.
4(c) MFS - Registered Trademark - World Governments Series SemiAnnual
Report, June 30, 1997, consisting of 18 partially numbered pages.
Filed: August 28, 1997, Form Type N-30D, Registration Statement 811-8326
5. Neuberger&Berman Advisers Management Trust
5(a) Balanced Portfolio SemiAnnual Report, June 30, 1997, consisting of
23 partially numbered pages.
5(b) Limited Maturity Bond Portfolio SemiAnnual Report, June 30, 1997,
consisting of 21 partially numbered pages.
5(c) Partners Portfolio SemiAnnual Report, June 30, 1997, consisting of
19 partially numbered pages.
Filed: August 27, 1997, Form Type N-30D, Registration Statement 811-4255
6. OCC Accumulation Trust SemiAnnual Report, June 30, 1997, consisting of 46
unnumbered pages. Filed August 27, 1997, Form Type N-30D. Registration
Statement 811-8512
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-copyright- 1997 CIGNA Individual Insurance
#562157 7/97
