<PAGE>
CIGNA ACCRU
ANNUAL REPORT
DECEMBER 31, 1996
[LOGO]
<PAGE>
TABLE OF CONTENTS
PRESIDENT'S LETTER
ECONOMIC REVIEW AND OUTLOOK
SCHEDULE OF CHANGES IN UNIT VALUES
SEPARATE ACCOUNTS FINANCIAL STATEMENTS
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
CG VARIABLE LIFE SEPARATE ACCOUNT I
FUND REPORTS:
THE ALGER AMERICAN FUND 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 ANNUAL REPORTS*
MONEY MARKET PORTFOLIO
HIGH INCOME PORTFOLIO
EQUITY-INCOME PORTFOLIO
OVERSEAS PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND II ANNUAL REPORTS
INVESTMENT GRADE BOND PORTFOLIO
ASSET MANAGER PORTFOLIO
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST-SM- ANNUAL
REPORTS
MFS TOTAL RETURN SERIES
MFS UTILITIES SERIES
MFS WORLD GOVERNMENTS SERIES
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
ANNUAL REPORTS
BALANCED PORTFOLIO
LIMITED MATURITY BOND PORTFOLIO
PARTNERS PORTFOLIO
OCC ACCUMULATION TRUST ANNUAL REPORT
GLOBAL EQUITY PORTFOLIO
MANAGED PORTFOLIO
SMALL CAP PORTFOLIO
* PLEASE NOTE THAT THE FIDELITY MONEY MARKET PORTFOLIO,
HIGH INCOME PORTFOLIO AND OVERSEAS PORTFOLIO ARE USED IN
CONNECTION WITH ACCRU VARIABLE ANNUITY CONTRACTS, BUT NOT
ACCRU VARIABLE LIFE INSURANCE CONTRACTS.
[LOGO]
<PAGE>
[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 your
ACCRU Variable Annuity and the ACCRU Variable Universal Life Insurance products
for the year ended December 31, 1996.
The report includes a summary of sub-account performance for the past 12 months
and financial data for each of the portfolio options available under your
product. In addition, we have included an informative interview with Edward
Guay, CIGNA's chief economist. The interview deals with significant national and
international economic trends affecting key financial markets, and I hope you
will take a few minutes to read it carefully.
As we begin a new year, the CIGNA Individual Insurance team remains committed to
providing financial solutions that meet your expectations and needs. Whether
your concerns involve family and business succession planning, income
protection, retirement savings or asset accumulation, our organization is
dedicated to offering product solutions of recognized value -- and to back those
solutions with consistently superior service, unquestioned financial security
and complete product disclosure.
As part of our service commitment -- and to keep you fully informed about your
purchase and trends that could affect your financial planning decisions -- CIGNA
Individual Insurance has recently established a home page on the Internet. If
you have a computer link to the Internet and are interested in viewing helpful
information about retirement planning, you can visit our website at
HTTP://WWW.CIGNA.COM.
In addition, of course, you can call our Annuity and Variable Life Services
Center at 1.800.522.9898, Monday through Friday, 8 a.m. to 7 p.m. Eastern time.
Our representatives will be happy to answer any questions about this report, or
to respond to any requests or concerns.
With that, please accept my thanks for your loyalty and trust in choosing CIGNA,
and allow me to assure you that we will continue to concentrate our efforts and
resources on providing superior solutions that meet your long-term financial
goals and solve your increasingly complex financial planning needs.
Sincerely,
[SIG]
Thomas C. Jones
<PAGE>
ECONOMIC REVIEW AND OUTLOOK
AN INTERVIEW WITH EDWARD GUAY, CHIEF ECONOMIST, CIGNA CORPORATION
HOW DID THE U.S. ECONOMY AND OTHER NATIONAL ECONOMIES PERFORM IN 1996?
The U.S. economy performed well during 1996, as did several other national
economies. Economic activity in the U.S. continued a broadening recovery from
the slowdown of late 1994 and early 1995 which was engineered by the Federal
Reserve. This recovery was held back to some extent by the lingering weakness
among some of the major trading partners of the U.S. However, many of the
previous restraints on U.S. growth -- such as the real estate overbuilding
during the 1980s -- became less significant restraints as the markets absorbed
past excesses. The U.S. also benefited from a flood of liquidity as central
banks in many parts of the world aggressively eased interest rates to try to
restore growth.
Some other countries also recovered strongly last year. In some cases, such as
Mexico, Venezuela, Argentina, and the Scandinavian countries, the recoveries
were rebounds from past crises. In other cases, the resumption of growth
reflected stronger and more sustainable growth of both output and final demand.
In the latter group were Canada, the United Kingdom and Australia.
There was some political background "noise" during the year in the U.S. and
elsewhere. But nowhere was it particularly disruptive of long-term economic
fundamentals. In all, 1996 was a vintage year for the U.S. and marked the
beginning of what should be several good years for the world economy.
WHAT KEY FACTORS ARE EXPECTED TO DRIVE WORLDWIDE GROWTH THIS YEAR?
The major engines of growth will include energy refining and development and
stronger demand for infrastructure products, such as power generation and
communications equipment.
DID INFLATION POSE A SERIOUS THREAT ON THE WORLD ECONOMIC SCENE IN 1996?
Although there were several inflation shocks last year, the massive liquidity
expansion did not cause inflation to rise. Excess capacity and labor in world
markets combined with technological change, continuing corporate restructuring,
and relatively free trade to help keep prices under control.
WHAT WERE THE MAJOR TRENDS IN THE U.S. BOND MARKET LAST YEAR?
When 1996 began, the U.S. bond market anticipated recession, but by late spring
the bond market was more fearful of resurging growth. Treasury bond yields rose
from 6% to more than 7% between the end of 1995 and the middle of 1996 because
of the shift in psychology and futures trading. But from August through
November, fears of growth eased and bond yields retraced more than half the
earlier rise. Although good economic news caused another setback in the bond
market in December, the bond market performed better than generally expected for
the year as a whole.
<PAGE>
WHAT ABOUT THE PERFORMANCE OF THE EQUITY MARKET?
The equity market performed extraordinarily well again in 1996, although it was
mainly the large capitalization domestic stocks that did well. Small
capitalization domestic stocks, many major international markets, most notably
the Japanese market, and some of the emerging markets, particularly in Asia,
underperformed. Profits were stronger than expected and balance sheets continued
to improve, primarily because of restructuring, share buybacks, and the
deepening and broadening impact of new technology. The financial improvement and
increased liquidity benefited both the stock market and the corporate bond
market.
IS THE U.S. EQUITY MARKET LIKELY TO SUSTAIN ITS STRONG GROWTH OF RECENT YEARS?
WHAT ABOUT FOREIGN MARKETS?
U.S. equity valuations may experience a correction because they are at the
highest levels in 30 years and there is less scope now for extraordinary profit
gains from either a reduced rate of inflation or restructuring. But in foreign
equity markets, the scope for restructuring and for unusual profits gains
remains large. A sustained bull market in international markets could run for
another two to four years.
WHAT IS THE ECONOMIC OUTLOOK FOR 1997?
The new year should bring continued growth in the U.S. and somewhat more
favorable trends in the world economy. Several U.S. economic sectors are already
operating at or above potential and are not likely to contribute greatly to
growth during 1997. Among those are autos, housing, and some key components of
business investment spending. Other U.S. economic sectors and regions are still
operating well below their normal capabilities and offer the potential for
upside surprises during the year. U.S. growth will be spurred by commercial
construction and export industries.
After growing by more than 3.0% during 1996, the U.S. economy should be able to
grow by 2.75% to 3.0% during 1997, but with somewhat different composition.
Overall, our world view is still optimistic. The next year or two should be good
for business, and for diversified investors.
<PAGE>
ACCRU VARIABLE PRODUCTS
SCHEDULE OF CHANGES IN UNIT VALUES
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
CIGNA LIFE ACCRU VARIABLE ANNUITY
<TABLE>
<CAPTION>
DATE
INITIALLY
FUNDED ACCUMULATION 12/31/96
(INCEPTION UNIT VALUE ACCUMULATION
SUB-ACCOUNT DATE) AT INCEPTION UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 2/23/96 $10.0000000 $10.144346 1.4
Alger American Leveraged AllCap Portfolio 2/9/96 10.0000000 10.507089 5.1
Alger American MidCap Growth Portfolio 1/19/96 10.0000000 11.319352 13.2
Alger American Small Capitalization Portfolio 2/9/96 10.0000000 9.868924 -1.3
- -----------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 2/20/96 10.0000000 11.013725 10.1
Fidelity VIP Money Market Portfolio 2/22/96 10.0000000 10.338796 3.4
Fidelity VIP High Income Portfolio 5/17/96 10.0000000 10.659332 6.6
Fidelity VIP Overseas Portfolio 5/13/96 10.0000000 10.640099 6.4
Fidelity VIP II: Asset Manager Portfolio 3/1/96 10.0000000 11.112123 11.1
Fidelity VIP II: Investment Grade Bond Portfolio 3/1/96 10.0000000 10.277513 2.8
- -----------------------------------------------------------------------------------------------------------------
MFS Total Return Series 2/22/96 10.0000000 10.934889 9.3
MFS Utilities Series 3/15/96 10.0000000 11.879471 18.8
MFS World Government Series 2/20/96 10.0000000 10.461237 4.6
- -----------------------------------------------------------------------------------------------------------------
AMT Balanced Portfolio 2/22/96 10.0000000 10.196779 2.0
AMT Limited Maturity Bond Portfolio 2/20/96 10.0000000 10.278541 2.8
AMT Partners Portfolio 2/20/96 10.0000000 12.176555 21.8
- -----------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 2/9/96 10.0000000 11.044449 10.4
OCC Managed Portfolio 2/20/96 10.0000000 11.575082 15.8
OCC Small Cap Portfolio 3/1/96 10.0000000 11.375492 13.8
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CONNECTICUT GENERAL ACCRU VARIABLE ANNUITY -- NEW YORK CONTRACTS ISSUED MAY 1,
1996 AND LATER
<TABLE>
<CAPTION>
DATE
INITIALLY
FUNDED ACCUMULATION 12/31/96
(INCEPTION UNIT VALUE ACCUMULATION
SUB-ACCOUNT DATE) AT INCEPTION UNIT VALUE* % CHANGE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 5/2/96 $10.000000 $10.655539 6.6
Alger American Leveraged AllCap Portfolio 5/2/96 10.000000 9.952430 -0.5
Alger American MidCap Growth Portfolio 5/2/96 10.000000 10.033269 0.3
Alger American Small Capitalization Portfolio 5/2/96 10.000000 9.368431 -6.3
- -----------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 5/2/96 10.000000 10.851716 8.5
Fidelity VIP Money Market Portfolio 6/3/96 10.000000 10.223104 2.2
Fidelity VIP High Income Portfolio 5/22/96 10.000000 10.600637 6.0
Fidelity VIP Overseas Portfolio 5/20/96 10.000000 10.534750 5.3
Fidelity VIP II: Asset Manager Portfolio 5/28/96 10.000000 10.797117 8.0
Fidelity VIP II: Investment Grade Bond Portfolio 6/3/96 10.000000 10.530045 5.3
- -----------------------------------------------------------------------------------------------------------------
MFS Total Return Series 5/2/96 10.000000 11.016746 10.2
MFS Utilities Series 5/24/96 10.000000 11.397495 14.0
MFS World Government Series 5/20/96 10.000000 10.436909 4.4
- -----------------------------------------------------------------------------------------------------------------
AMT Balanced Portfolio 5/22/96 10.000000 9.983723 -0.2
AMT Limited Maturity Bond Portfolio 6/3/96 10.000000 10.377931 3.8
AMT Partners Portfolio 5/2/96 10.000000 11.514426 15.1
- -----------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 5/2/96 10.000000 10.785929 7.9
OCC Managed Portfolio 5/2/96 10.000000 11.432399 14.3
OCC Small Cap Portfolio 5/20/96 10.000000 10.568440 5.7
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Variable Annuity unit values reflect the Company's mortality and expense risk
charge at a reduced rate of 1.20% per year instead of 1.25% per year
throughout the 5/1/96 through 6/30/96 period. Had the full charge been
imposed, ending accumulation unit values would have been lower for those
funds.
Accumulation Unit Values are net of charges against the assets of the Variable
Accounts for the assumption of mortality and expense risks and for
administrative expenses.
<PAGE>
ACCRU VARIABLE PRODUCTS
SCHEDULE OF CHANGES IN UNIT VALUES
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
CONNECTICUT GENERAL ACCRU VARIABLE ANNUITY
(INCLUDING NEW YORK CONTRACTS ISSUED BEFORE MAY 1, 1996)
<TABLE>
<CAPTION>
DATE
INITIALLY
FUNDED 1/1/96 12/31/96
(INCEPTION ACCUMULATION ACCUMULATION
SUB-ACCOUNT DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 4/12/95 $ 12.385784 $13.855323 11.9
Alger American Leveraged AllCap Portfolio 6/2/95 13.895178 15.364036 10.6
Alger American MidCap Growth Portfolio 4/10/95 13.106537 14.473761 10.4
Alger American Small Capitalization Portfolio 4/10/95 13.092181 13.460941 2.8
- -----------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 4/10/95 12.128673 13.679456 12.8
Fidelity VIP Money Market Portfolio 6/8/95 10.245402 10.658014 4.0
Fidelity VIP High Income Portfolio 5/3/96 10.000000* 10.802349 8.0
Fidelity VIP Overseas Portfolio 5/9/96 10.000000* 10.614394 6.1
Fidelity VIP II: Asset Manager Portfolio 4/12/95 11.280365 12.758423 13.1
Fidelity VIP II: Investment Grade Bond Portfolio 7/18/95 10.541110 10.734479 1.8
- -----------------------------------------------------------------------------------------------------------------
MFS Total Return Series 7/7/95 11.003903 12.420693 12.9
MFS Utilities Series 7/27/95 11.365171 13.292608 17.0
MFS World Government Series 7/7/95 10.277969 10.552213 2.7
- -----------------------------------------------------------------------------------------------------------------
AMT Balanced Portfolio 7/18/95 10.269633 10.832872 5.5
AMT Limited Maturity Bond Portfolio 5/3/95 10.547360 10.857343 2.9
AMT Partners Portfolio 4/12/95 12.122020 15.500823 27.9
- -----------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 4/10/95 11.758951 13.347358 13.5
OCC Managed Portfolio 6/19/95 11.143831 13.502565 21.2
OCC Small Cap Portfolio 6/27/95 10.855343 12.718827 17.2
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Accumulation Unit Value as of Inception Date, which was later than 1/1/96
- --------------------------------------------------------------------------------
ACCRU VARIABLE UNIVERSAL LIFE
<TABLE>
<CAPTION>
DATE
INITIALLY
FUNDED 1/1/96 12/31/96
(INCEPTION ACCUMULATION ACCUMULATION
SUB-ACCOUNT DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 5/5/95 $12.175146 $13.738238 12.8
Alger American Leveraged AllCap Portfolio 5/5/95 14.765068 16.468026 11.5
Alger American MidCap Growth Portfolio 5/5/95 12.966604 14.443889 11.4
Alger American Small Capitalization Portfolio 5/5/95 12.845183 13.322001 3.7
- -----------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity Income Portfolio 5/5/95 11.970125 13.618095 13.8
Fidelity VIP II: Asset Manager Portfolio 11/16/95 10.493126 11.971291 14.1
Fidelity VIP II: Investment Grade Bond Portfolio 11/16/95 10.215729 10.493674 2.7
- -----------------------------------------------------------------------------------------------------------------
MFS Total Return Series 10/10/95 10.618988 12.090502 13.9
MFS Utilities Series 12/26/95 10.070410 11.880730 18.0
MFS World Government Series 5/5/95 10.417540 10.788580 3.6
- -----------------------------------------------------------------------------------------------------------------
AMT Balanced Portfolio 9/12/95 9.807578 10.435528 6.4
AMT Limited Maturity Bond Portfolio 9/13/96 10.000000 * 10.256711 2.6
AMT Partners Portfolio 5/5/95 12.079554 15.580865 29.0
- -----------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 9/12/95 10.050817 11.507742 14.5
OCC Managed Portfolio 5/5/95 12.250674 14.972784 22.2
OCC Small Cap Portfolio 9/26/95 10.235194 12.096552 18.2
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Accumulation Unit Value as of Inception Date, which was later than 1/1/96
Accumulation Unit Values are net of charges against the assets of the Variable
Accounts for the assumption of mortality and expense risks and for
administrative expenses.
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
------------------------------------------------ ---------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MARKET INCOME OVERSEAS
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $18,174,849 $5,583,768 $9,575,698 $14,394,067 $28,183,257 $10,602,830 $4,883,390 $1,894,609
Receivable from Connecticut
General Life Insurance
Company..................... 18,958 -- 12,788 -- 25,905 317,787 6,415 --
Receivable for fund shares
sold........................ -- 342 -- 7,106 -- -- -- 86
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
Total assets................ 18,193,807 5,584,110 9,588,486 14,401,173 28,209,162 10,920,617 4,889,805 1,894,695
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- 342 -- 7,106 -- -- -- 86
Payable for fund shares
purchased................... 18,958 -- 12,788 -- 25,905 317,787 6,415 --
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
Total liabilities........... 18,958 342 12,788 7,106 25,905 317,787 6,415 86
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
Net assets.................. $18,174,849 $5,583,768 $9,575,698 $14,394,067 $28,183,257 $10,602,830 $4,883,390 $1,894,609
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 1,236,762 347,060 625,799 1,001,691 1,951,707 968,529 426,441 167,414
Net asset value per
accumulation unit........... $ 13.855323 $15.364036 $14.473761 $ 13.460941 $ 13.679456 $ 10.658014 $10.802349 $10.614394
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
$17,135,737 $5,332,250 $9,057,661 $13,483,704 $26,698,296 $10,322,591 $4,606,568 $1,776,998
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 94,174 25,272 51,632 97,173 133,553 10,588 26,114 11,164
Net asset value per
accumulation unit........... $ 10.655539 $ 9.952430 $10.033269 $ 9.368431 $ 10.851716 $ 10.223104 $10.600637 $10.534750
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
$ 1,003,480 $ 251,518 $ 518,037 $ 910,363 $ 1,449,274 $ 108,247 $ 276,822 $ 117,611
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
Accumulation net assets....... $18,139,217 $5,583,768 $9,575,698 $14,394,067 $28,147,570 $10,430,838 $4,883,390 $1,894,609
Annuity reserves.............. 35,632 -- -- -- 35,687 171,992 -- --
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
$18,174,849 $5,583,768 $9,575,698 $14,394,067 $28,183,257 $10,602,830 $4,883,390 $1,894,609
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
----------- ---------- ---------- -------------- ----------- ----------- ---------- ----------
<CAPTION>
FIDELITY VIP II
PORTFOLIO
SUB-ACCOUNTS
---------------------
ASSET INVESTMENT
MANAGER GRADE BOND
---------- ----------
<S> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $4,203,610 $5,840,585
Receivable from Connecticut
General Life Insurance
Company..................... 17,935 12,854
Receivable for fund shares
sold........................ -- --
---------- ----------
Total assets................ 4,221,545 5,853,439
---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- --
Payable for fund shares
purchased................... 17,935 12,854
---------- ----------
Total liabilities........... 17,935 12,854
---------- ----------
Net assets.................. $4,203,610 $5,840,585
---------- ----------
---------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 296,224 529,141
Net asset value per
accumulation unit........... $12.758423 $10.734479
---------- ----------
$3,779,356 $5,680,056
---------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 39,293 15,245
Net asset value per
accumulation unit........... $10.797117 $10.530045
---------- ----------
$ 424,254 $ 160,529
---------- ----------
Accumulation net assets....... $4,203,610 $5,840,585
Annuity reserves.............. -- --
---------- ----------
$4,203,610 $5,840,585
---------- ----------
---------- ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
1
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS AMT PORTFOLIO SUB-ACCOUNTS
----------------------------------- --------------------------------------
TOTAL WORLD LIMITED
RETURN UTILITIES GOVERNMENTS BALANCED MATURITY BOND PARTNERS
---------- ---------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $8,702,389 $2,791,807 $1,507,463 $3,365,177 $3,663,477 $9,696,541
Receivable from Connecticut
General Life Insurance
Company..................... 33,090 -- 12,939 14,831 12,953 15,097
Receivable for fund shares
sold........................ -- 195 -- -- -- --
---------- ---------- ----------- ---------- ------------- ----------
Total assets................ 8,735,479 2,792,002 1,520,402 3,380,008 3,676,430 9,711,638
---------- ---------- ----------- ---------- ------------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- 195 -- -- -- --
Payable for fund shares
purchased................... 33,090 -- 12,939 14,831 12,953 15,097
---------- ---------- ----------- ---------- ------------- ----------
Total liabilities........... 33,090 195 12,939 14,831 12,953 15,097
---------- ---------- ----------- ---------- ------------- ----------
Net assets.................. $8,702,389 $2,791,807 $1,507,463 $3,365,177 $3,663,477 $9,696,541
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 654,101 203,475 139,111 290,632 330,999 580,564
Net asset value per
accumulation unit........... $12.420693 $13.292608 $10.552213 $10.832872 $10.857343 $15.500823
---------- ---------- ----------- ---------- ------------- ----------
$8,124,391 $2,704,717 $1,467,933 $3,148,378 $3,593,774 $8,999,227
---------- ---------- ----------- ---------- ------------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 52,465 7,641 3,788 18,307 6,716 60,560
Net asset value per
accumulation unit........... $11.016746 $11.397495 $10.436909 $ 9.983723 $10.377931 $11.514426
---------- ---------- ----------- ---------- ------------- ----------
$ 577,998 $ 87,090 $ 39,530 $ 182,770 $ 69,703 $ 697,314
---------- ---------- ----------- ---------- ------------- ----------
Accumulation net assets....... $8,702,389 $2,791,807 $1,507,463 $3,331,148 $3,663,477 $9,696,541
Annuity reserves.............. -- -- -- 34,029 -- --
---------- ---------- ----------- ---------- ------------- ----------
$8,702,389 $2,791,807 $1,507,463 $3,365,177 $3,663,477 $9,696,541
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS*
------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $10,194,411 $33,126,842 $2,756,326
Receivable from Connecticut
General Life Insurance
Company..................... 34,130 47,270 --
Receivable for fund shares
sold........................ -- -- 23,333
----------- ----------- ----------
Total assets................ 10,228,541 33,174,112 2,779,659
----------- ----------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- -- 23,333
Payable for fund shares
purchased................... 34,130 47,270 --
----------- ----------- ----------
Total liabilities........... 34,130 47,270 23,333
----------- ----------- ----------
Net assets.................. $10,194,411 $33,126,842 $2,756,326
----------- ----------- ----------
----------- ----------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 732,412 2,301,440 202,106
Net asset value per
accumulation unit........... $ 13.347358 $ 13.502565 $12.718827
----------- ----------- ----------
$ 9,775,759 $31,075,345 $2,570,551
----------- ----------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 35,443 176,181 17,578
Net asset value per
accumulation unit........... $ 10.785929 $ 11.432399 $10.568440
----------- ----------- ----------
$ 382,281 $ 2,014,174 $ 185,775
----------- ----------- ----------
Accumulation net assets....... $10,158,040 $33,089,519 $2,756,326
Annuity reserves.............. 36,371 37,323 --
----------- ----------- ----------
$10,194,411 $33,126,842 $2,756,326
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
- ------------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
2
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
------------------------------------------------ -------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MARKET INCOME * OVERSEAS **
---------- --------- -------- -------------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 5,644 $ -- $ -- $ -- $ 11,853 $572,187 $ -- $--
EXPENSES:
Mortality and expense risk and
administrative charges...... 143,341 48,267 67,601 126,196 221,540 143,360 19,299 5,307
---------- --------- -------- -------------- ---------- -------- -------- -----------
Net investment gain
(loss).................... (137,697) (48,267) (67,601) (126,196) (209,687) 428,827 (19,299) (5,307)
---------- --------- -------- -------------- ---------- -------- -------- -----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Capital distribution from
portfolio sponsors.......... 238,605 30,845 87,714 34,967 339,772 -- -- --
Net realized gain (loss) on
share transactions.......... (9,498) (22,790) (6,893) (33,203) 749 -- (241) 168
---------- --------- -------- -------------- ---------- -------- -------- -----------
Net realized gain (loss).... 229,107 8,055 80,821 1,764 340,521 -- (241) 168
Net unrealized gain........... 1,131,951 218,998 345,620 109,613 2,059,625 -- 196,922 64,159
---------- --------- -------- -------------- ---------- -------- -------- -----------
Net realized and unrealized
gain on investments....... 1,361,058 227,053 426,441 111,377 2,400,146 -- 196,681 64,327
---------- --------- -------- -------------- ---------- -------- -------- -----------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $1,223,361 $ 178,786 $358,840 $ (14,819) $2,190,459 $428,827 $177,382 $59,020
---------- --------- -------- -------------- ---------- -------- -------- -----------
---------- --------- -------- -------------- ---------- -------- -------- -----------
<CAPTION>
FIDELITY VIP II
PORTFOLIO
SUB-ACCOUNTS
--------------------
ASSET INVESTMENT
MANAGER GRADE BOND
-------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 28,793 $ 90,885
EXPENSES:
Mortality and expense risk and
administrative charges...... 32,701 46,709
-------- ----------
Net investment gain
(loss).................... (3,908) 44,176
-------- ----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Capital distribution from
portfolio sponsors.......... 23,742 --
Net realized gain (loss) on
share transactions.......... (551) (39,580)
-------- ----------
Net realized gain (loss).... 23,191 (39,580)
Net unrealized gain........... 318,766 134,649
-------- ----------
Net realized and unrealized
gain on investments....... 341,957 95,069
-------- ----------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $338,049 $139,245
-------- ----------
-------- ----------
</TABLE>
- ------------------------
* Period from May 22, 1996 (date deposits first received) to December 31, 1996
** Period from May 20, 1996 (date deposits first received) to December 31, 1996
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
MFS SERIES SUB-ACCOUNTS --------------------------------------
----------------------------------- LIMITED
TOTAL WORLD MATURITY
RETURN UTILITIES GOVERNMENTS BALANCED BOND PARTNERS
---------- ---------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends......................................... $ 131,034 $ 64,106 $ -- $ 28,644 $ 112,452 $ 6,470
EXPENSES:
Mortality and expense risk and administrative
charges......................................... 60,653 20,389 12,757 29,014 29,820 64,981
---------- ---------- ----------- ---------- ------------ ------------
Net investment gain (loss)...................... 70,381 43,717 (12,757) (370) 82,632 (58,511)
---------- ---------- ----------- ---------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distribution from portfolio sponsors...... 57,008 166,334 -- 159,289 -- 80,881
Net realized gain (loss) on share transactions.... 2,967 (387) 103 (232) 110 (2,019)
---------- ---------- ----------- ---------- ------------ ------------
Net realized gain............................... 59,975 165,947 103 159,057 110 78,862
Net unrealized gain (loss)........................ 468,302 99,863 61,456 (27,931) 8,894 1,271,284
---------- ---------- ----------- ---------- ------------ ------------
Net realized and unrealized gain
on investments................................ 528,277 265,810 61,559 131,126 9,004 1,350,146
---------- ---------- ----------- ---------- ------------ ------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $ 598,658 $ 309,527 $ 48,802 $ 130,756 $ 91,636 $ 1,291,635
---------- ---------- ----------- ---------- ------------ ------------
---------- ---------- ----------- ---------- ------------ ------------
<CAPTION>
OCC ACCUMULATION
TRUST SUB-ACCOUNTS *
------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
---------- ------------ ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends......................................... $ 36,437 $ 119,991 $ 9,776
EXPENSES:
Mortality and expense risk and administrative
charges......................................... 76,755 245,571 19,273
---------- ------------ ----------
Net investment gain (loss)...................... (40,318) (125,580) (9,497)
---------- ------------ ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distribution from portfolio sponsors...... 54,017 76,525 25,134
Net realized gain (loss) on share transactions.... (2,096) 412 (217)
---------- ------------ ----------
Net realized gain............................... 51,921 76,937 24,917
Net unrealized gain (loss)........................ 767,457 3,785,792 239,507
---------- ------------ ----------
Net realized and unrealized gain
on investments................................ 819,378 3,862,729 264,424
---------- ------------ ----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $ 779,060 $ 3,737,149 $ 254,927
---------- ------------ ----------
---------- ------------ ----------
</TABLE>
- ------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
--------------------------------------------------- --------------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MARKET INCOME * OVERSEAS **
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain
(loss)................. $ (137,697) $ (48,267) $ (67,601) $ (126,196) $ (209,687) $ 428,827 $ (19,299) $ (5,307)
Net realized gain
(loss)................. 229,107 8,055 80,821 1,764 340,521 -- (241) 168
Net unrealized gain...... 1,131,951 218,998 345,620 109,613 2,059,625 -- 196,922 64,159
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Net increase (decrease)
from operations...... 1,223,361 178,786 358,840 (14,819) 2,190,459 428,827 177,382 59,020
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
ACCUMULATION AND ANNUITY
UNIT TRANSACTIONS:
Participant deposits..... 10,783,257 3,476,529 4,553,845 8,786,778 15,889,145 30,385,963 2,685,680 1,005,559
Participant transfers.... 2,602,802 772,742 2,723,340 2,632,177 5,222,220 (26,362,351) 2,257,438 834,182
Participant
withdrawals............ (294,588) (53,503) (98,852) (281,569) (1,664,909) (825,252) (237,110) (4,152)
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Net increase from
participant
transactions......... 13,091,471 4,195,768 7,178,333 11,137,386 19,446,456 3,198,360 4,706,008 1,835,589
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Total increase in net
assets............. 14,314,832 4,374,554 7,537,173 11,122,567 21,636,915 3,627,187 4,883,390 1,894,609
NET ASSETS:
Beginning of period...... 3,860,017 1,209,214 2,038,525 3,271,500 6,546,342 6,975,643 -- --
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
End of period............ $18,174,849 $5,583,768 $9,575,698 $14,394,067 $28,183,257 $ 10,602,830 $4,883,390 $1,894,609
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
PARTICIPANT ACCUMULATION
UNIT TRANSACTIONS
(IN UNITS):
Participant deposits..... 754,789 213,846 291,599 581,020 1,139,160 2,865,808 244,193 87,926
Participant transfers.... 195,742 49,618 185,959 191,180 402,052 (2,484,424) 204,741 79,892
Participant
withdrawals............ (25,418) (3,428) (7,294) (20,391) (129,246) (93,711) (22,493) (404)
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Net increase in units
from participant
transactions......... 925,113 260,036 470,264 751,809 1,411,966 287,673 426,441 167,414
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
PARTICIPANT ACCUMULATION
UNIT TRANSACTIONS--
NEW YORK CONTRACTS (IN
UNITS):
Participant deposits..... 93,002 25,103 46,487 96,924 132,166 46,734 14,874 11,029
Participant transfers.... 1,503 354 5,303 718 2,507 (35,793) 11,453 135
Participant
withdrawals............ (331) (185) (158) (469) (1,120) (353) (213) --
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
Net increase in units
from participant
transactions......... 94,174 25,272 51,632 97,173 133,553 10,588 26,114 11,164
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
----------- ---------- ---------- -------------- ----------- ------------ ---------- -----------
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
-----------------------
ASSET INVESTMENT
MANAGER GRADE BOND
---------- -----------
<S> <C> <C>
OPERATIONS:
Net investment gain
(loss)................. $ (3,908) $ 44,176
Net realized gain
(loss)................. 23,191 (39,580)
Net unrealized gain...... 318,766 134,649
---------- -----------
Net increase (decrease)
from operations...... 338,049 139,245
---------- -----------
ACCUMULATION AND ANNUITY
UNIT TRANSACTIONS:
Participant deposits..... 2,404,033 4,267,300
Participant transfers.... 837,140 (43,936)
Participant
withdrawals............ (79,225) (43,602)
---------- -----------
Net increase from
participant
transactions......... 3,161,948 4,179,762
---------- -----------
Total increase in net
assets............. 3,499,997 4,319,007
NET ASSETS:
Beginning of period...... 703,613 1,521,578
---------- -----------
End of period............ $4,203,610 $5,840,585
---------- -----------
---------- -----------
PARTICIPANT ACCUMULATION
UNIT TRANSACTIONS
(IN UNITS):
Participant deposits..... 171,951 398,943
Participant transfers.... 69,399 (10,014)
Participant
withdrawals............ (7,501) (4,135)
---------- -----------
Net increase in units
from participant
transactions......... 233,849 384,794
---------- -----------
---------- -----------
PARTICIPANT ACCUMULATION
UNIT TRANSACTIONS--
NEW YORK CONTRACTS (IN
UNITS):
Participant deposits..... 39,182 9,623
Participant transfers.... 111 5,734
Participant
withdrawals............ -- (112)
---------- -----------
Net increase in units
from participant
transactions......... 39,293 15,245
---------- -----------
---------- -----------
</TABLE>
- ------------------------------
* Period from May 22, 1996 (date deposits first received) to December 31, 1996
** Period from May 20, 1996 (date deposits first received) to December 31, 1996
The Notes to Financial Statements are an integral part of these statements.
5
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
OCC
ACCUMULATION
TRUST
SUB-ACCOUNTS
MFS SERIES SUB-ACCOUNTS AMT PORTFOLIO SUB-ACCOUNTS *
----------------------------------- -------------------------------------- -----------
TOTAL WORLD LIMITED GLOBAL
RETURN UTILITIES GOVERNMENTS BALANCED MATURITY BOND PARTNERS EQUITY
---------- ---------- ----------- ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ 70,381 $ 43,717 $ (12,757) $ (370) $ 82,632 $ (58,511) $ (40,318)
Net realized gain............. 59,975 165,947 103 159,057 110 78,862 51,921
Net unrealized gain (loss).... 468,302 99,863 61,456 (27,931) 8,894 1,271,284 767,457
---------- ---------- ----------- ---------- ------------- ---------- -----------
Net increase from
operations................ 598,658 309,527 48,802 130,756 91,636 1,291,635 779,060
---------- ---------- ----------- ---------- ------------- ---------- -----------
ACCUMULATION AND ANNUITY UNIT
TRANSACTIONS:
Participant deposits.......... 4,811,832 1,302,058 895,119 1,994,125 1,858,603 4,552,441 5,606,065
Participant transfers......... 1,778,613 721,609 229,235 421,781 669,231 2,538,705 2,295,536
Participant withdrawals....... (126,130) (54,286) (8,402) (59,302) (82,873) (209,905) (124,119)
---------- ---------- ----------- ---------- ------------- ---------- -----------
Net increase from
participant
transactions.............. 6,464,315 1,969,381 1,115,952 2,356,604 2,444,961 6,881,241 7,777,482
---------- ---------- ----------- ---------- ------------- ---------- -----------
Total increase in net
assets.................. 7,062,973 2,278,908 1,164,754 2,487,360 2,536,597 8,172,876 8,556,542
NET ASSETS:
Beginning of period........... 1,639,416 512,899 342,709 877,817 1,126,880 1,523,665 1,637,869
---------- ---------- ----------- ---------- ------------- ---------- -----------
End of period................. $8,702,389 $2,791,807 $1,507,463 $3,365,177 $3,663,477 $9,696,541 $10,194,411
---------- ---------- ----------- ---------- ------------- ---------- -----------
---------- ---------- ----------- ---------- ------------- ---------- -----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 366,797 107,723 83,745 170,775 169,499 292,130 414,885
Participant transfers......... 150,703 56,058 22,912 43,636 62,483 177,633 191,626
Participant withdrawals....... (12,384) (5,435) (890) (9,256) (7,823) (14,893) (13,386)
---------- ---------- ----------- ---------- ------------- ---------- -----------
Net increase in units from
participant
transactions.............. 505,116 158,346 105,767 205,155 224,159 454,870 593,125
---------- ---------- ----------- ---------- ------------- ---------- -----------
---------- ---------- ----------- ---------- ------------- ---------- -----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS--NEW YORK
CONTRACTS (IN UNITS):
Participant deposits.......... 52,285 6,315 3,803 18,125 6,724 55,862 35,481
Participant transfers......... 702 1,361 -- 187 -- 5,215 (4)
Participant withdrawals....... (522) (35) (15) (5) (8) (517) (34)
---------- ---------- ----------- ---------- ------------- ---------- -----------
Net increase in units from
participant
transactions.............. 52,465 7,641 3,788 18,307 6,716 60,560 35,443
---------- ---------- ----------- ---------- ------------- ---------- -----------
---------- ---------- ----------- ---------- ------------- ---------- -----------
<CAPTION>
SMALL
MANAGED CAP
----------- ----------
<S> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ (125,580) $ (9,497)
Net realized gain............. 76,937 24,917
Net unrealized gain (loss).... 3,785,792 239,507
----------- ----------
Net increase from
operations................ 3,737,149 254,927
----------- ----------
ACCUMULATION AND ANNUITY UNIT
TRANSACTIONS:
Participant deposits.......... 17,033,548 1,053,997
Participant transfers......... 7,398,554 835,481
Participant withdrawals....... (464,195) (17,732)
----------- ----------
Net increase from
participant
transactions.............. 23,967,907 1,871,746
----------- ----------
Total increase in net
assets.................. 27,705,056 2,126,673
NET ASSETS:
Beginning of period........... 5,421,786 629,653
----------- ----------
End of period................. $33,126,842 $2,756,326
----------- ----------
----------- ----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 1,252,898 76,630
Participant transfers......... 600,178 68,956
Participant withdrawals....... (38,164) (1,484)
----------- ----------
Net increase in units from
participant
transactions.............. 1,814,912 144,102
----------- ----------
----------- ----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS--NEW YORK
CONTRACTS (IN UNITS):
Participant deposits.......... 172,222 17,377
Participant transfers......... 5,188 222
Participant withdrawals....... (1,229) (21)
----------- ----------
Net increase in units from
participant
transactions.............. 176,181 17,578
----------- ----------
----------- ----------
</TABLE>
- ------------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
6
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS
-----------------------------------------------------------------
LEVERAGED MIDCAP SMALL
GROWTH ALLCAP GROWTH CAPITALIZATION
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Inception date................ April 12, 1995 June 2, 1995 April 10, 1995 April 10, 1995
OPERATIONS:
Net investment gain (loss).... $ (9,984) $ (3,487) $ (5,589) $ (8,458)
Net realized gain............. 977 947 1,696 1,901
Net unrealized gain (loss).... (4,368) 33,801 (36,557) (95,387)
-------------- -------------- -------------- --------------
Net increase (decrease) from
operations................ (13,375) 31,261 (40,450) (101,944)
-------------- -------------- -------------- --------------
ACCUMULATION UNIT
TRANSACTIONS:...............
Participant deposits.......... 3,123,028 1,060,357 1,501,932 2,657,000
Participant transfers......... 758,535 120,303 580,520 720,359
Participant withdrawals....... (8,171) (2,707) (3,477) (3,915)
-------------- -------------- -------------- --------------
Net increase from
participant
transactions.............. 3,873,392 1,177,953 2,078,975 3,373,444
-------------- -------------- -------------- --------------
Total increase in net
assets.................. 3,860,017 1,209,214 2,038,525 3,271,500
NET ASSETS:...................
Beginning of period........... -- -- -- --
-------------- -------------- -------------- --------------
End of period................. $3,860,017 $1,209,214 $2,038,525 $3,271,500
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 251,529 78,344 119,409 197,891
Participant transfers......... 60,779 8,865 36,391 52,277
Participant withdrawals....... (659) (185) (265) (286)
-------------- -------------- -------------- --------------
Net increase in units from
participant
transactions.............. 311,649 87,024 155,535 249,882
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
<CAPTION>
FIDELITY VIP FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS PORTFOLIO SUB-ACCOUNTS
------------------------------- -------------------------------
EQUITY- MONEY ASSET INVESTMENT
INCOME MARKET MANAGER GRADE BOND
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Inception date................ April 10, 1995 June 8, 1995 April 12, 1995 July 18, 1995
OPERATIONS:
Net investment gain (loss).... $ 22,188 $ 149,438 $ (1,848) $ (1,661)
Net realized gain............. 1,932 -- 9 195
Net unrealized gain (loss).... 268,841 -- 26,341 24,098
-------------- -------------- -------------- --------------
Net increase (decrease) from
operations................ 292,961 149,438 24,502 22,632
-------------- -------------- -------------- --------------
ACCUMULATION UNIT
TRANSACTIONS:...............
Participant deposits.......... 4,631,355 18,278,638 392,841 532,583
Participant transfers......... 1,625,177 (11,136,841) 286,354 971,815
Participant withdrawals....... (3,151) (315,592) (84) (5,452)
-------------- -------------- -------------- --------------
Net increase from
participant
transactions.............. 6,253,381 6,826,205 679,111 1,498,946
-------------- -------------- -------------- --------------
Total increase in net
assets.................. 6,546,342 6,975,643 703,613 1,521,578
NET ASSETS:...................
Beginning of period........... -- -- -- --
-------------- -------------- -------------- --------------
End of period................. $6,546,342 $ 6,975,643 $703,613 $1,521,578
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 397,069 2,022,159 37,964 54,214
Participant transfers......... 142,943 (1,288,028) 24,419 90,676
Participant withdrawals....... (271) (53,275) (8) (543)
-------------- -------------- -------------- --------------
Net increase in units from
participant
transactions.............. 539,741 680,856 62,375 144,347
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS AMT PORTFOLIO SUB-ACCOUNTS
------------------------------------------ ----------------------------------------------
TOTAL WORLD LIMITED
RETURN UTILITIES GOVERNMENTS BALANCED MATURITY BOND PARTNERS
------------ ------------- ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
July 7,
Inception date................ July 7, 1995 July 27, 1995 1995 July 18, 1995 May 3, 1995 April 12, 1995
OPERATIONS:
Net investment gain (loss).... $ 26,717 $ 7,004 $ 31,279 $ (2,421) $ (3,879) $ (3,539)
Net realized gain (loss)...... 29,452 19,838 (21,937) 1,133 27 (48)
Net unrealized gain (loss).... 33,974 7,914 -- 408 28,898 54,000
------------ ------------- ----------- ------------- ------------- --------------
Net increase (decrease) from
operations................ 90,143 34,756 9,342 (880) 25,046 50,413
------------ ------------- ----------- ------------- ------------- --------------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 934,440 174,285 297,436 716,989 363,173 1,246,722
Participant transfers......... 615,736 303,858 36,136 163,266 742,806 229,996
Participant withdrawals....... (903) -- (205) (1,558) (4,145) (3,466)
------------ ------------- ----------- ------------- ------------- --------------
Net increase from
participant
transactions.............. 1,549,273 478,143 333,367 878,697 1,101,834 1,473,252
------------ ------------- ----------- ------------- ------------- --------------
Total increase in net
assets.................. 1,639,416 512,899 342,709 877,817 1,126,880 1,523,665
NET ASSETS:
Beginning of period........... -- -- -- -- -- --
------------ ------------- ----------- ------------- ------------- --------------
End of period................. $1,639,416 $512,899 $342,709 $877,817 $1,126,880 $1,523,665
------------ ------------- ----------- ------------- ------------- --------------
------------ ------------- ----------- ------------- ------------- --------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 89,900 16,955 29,898 71,670 35,022 106,298
Participant transfers......... 59,168 28,174 3,466 13,957 72,221 19,681
Participant withdrawals....... (83) -- (20) (150) (403) (285)
------------ ------------- ----------- ------------- ------------- --------------
Net increase in units from
participant transactions.. 148,985 45,129 33,344 85,477 106,840 125,694
------------ ------------- ----------- ------------- ------------- --------------
------------ ------------- ----------- ------------- ------------- --------------
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS*
----------------------------------------------
GLOBAL SMALL
EQUITY MANAGED CAP
-------------- ------------- -------------
<S> <C> <C> <C>
Inception date................ April 10, 1995 June 19, 1995 June 27, 1995
OPERATIONS:
Net investment gain (loss).... $ 1,199 $ (15,465) $ (1,863)
Net realized gain (loss)...... 31,761 663 3
Net unrealized gain (loss).... (17,464) 234,982 16,355
-------------- ------------- -------------
Net increase (decrease) from
operations................ 15,496 220,180 14,495
-------------- ------------- -------------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 917,056 3,661,487 263,145
Participant transfers......... 705,765 1,553,474 353,852
Participant withdrawals....... (448) (13,355) (1,839)
-------------- ------------- -------------
Net increase from
participant
transactions.............. 1,622,373 5,201,606 615,158
-------------- ------------- -------------
Total increase in net
assets.................. 1,637,869 5,421,786 629,653
NET ASSETS:
Beginning of period........... -- -- --
-------------- ------------- -------------
End of period................. $1,637,869 $5,421,786 $629,653
-------------- ------------- -------------
-------------- ------------- -------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 79,268 344,364 25,109
Participant transfers......... 60,048 143,046 33,069
Participant withdrawals....... (29) (882) (174)
-------------- ------------- -------------
Net increase in units from
participant transactions.. 139,287 486,528 58,004
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>
- ------------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
8
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION
CG Variable Annuity Separate Account II (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. Beginning in 1996, the Account included two contract types. One
contract is used for all states with the exception of New York; the other is
used only for New York. Each contract has its own terms and fees. (See Note 4)
The assets of the Account are divided into variable sub-accounts each of
which is invested in shares of one of nineteen portfolios (mutual funds) of six
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 Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:--
Equity-Income Portfolio
Money Market Portfolio
High Income Portfolio
Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:--
Asset Manager Portfolio
Investment Grade Bond Portfolio
MFS VARIABLE INSURANCE TRUST:--
MFS Total Return Series
MFS Utilities Series
MFS World Governments Series
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:--
AMT Balanced Portfolio
AMT Limited Maturity Bond Portfolio
AMT Partners Portfolio
OCC (FORMERLY QUEST FOR VALUE) ACCUMULATION TRUST:--
OCC Global Equity Portfolio
OCC Managed Portfolio
OCC Small Cap Portfolio
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.
9
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. INVESTMENT VALUATION: -- Investments held by the sub-accounts are valued at
their respective closing net asset value per share as determined by the
mutual funds as of December 31, 1996. 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.
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.
D. ANNUITY RESERVES: -- The amount of annuity reserves is determined by
actuarial assumptions which meet statutory requirements. Gains or losses
resulting from the actual mortality experience, the responsibility of which
is assumed by CG Life, are offset by transfers to or from CG Life.
3. INVESTMENTS
Total shares held and cost of investments at December 31, 1996 were:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SHARES COST OF
SUB-ACCOUNT HELD INVESTMENTS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio...................................................... 529,416 $ 17,047,266
Alger American Leveraged AllCap Portfolio............................................ 288,418 5,330,969
Alger American MidCap Growth Portfolio............................................... 448,510 9,266,635
Alger American Small Capitalization Portfolio........................................ 351,847 14,379,841
Fidelity Equity-Income Portfolio..................................................... 1,340,145 25,854,791
Fidelity Money Market Portfolio...................................................... 10,602,830 10,602,830
Fidelity High Income Portfolio....................................................... 390,047 4,686,468
Fidelity Overseas Portfolio.......................................................... 100,563 1,830,450
Fidelity Asset Manager Portfolio..................................................... 248,294 3,858,503
Fidelity Investment Grade Bond Portfolio............................................. 477,172 5,681,838
MFS Total Return Series.............................................................. 634,748 8,200,113
MFS Utilities Series................................................................. 204,378 2,684,030
MFS World Governments Series......................................................... 142,482 1,467,944
AMT Balanced Portfolio............................................................... 211,380 3,392,700
AMT Limited Maturity Bond Portfolio.................................................. 260,746 3,625,685
AMT Partners Portfolio............................................................... 588,382 8,371,257
OCC Global Equity Portfolio.......................................................... 770,553 9,444,418
OCC Managed Portfolio................................................................ 914,853 29,106,068
OCC Small Cap Portfolio.............................................................. 121,907 2,500,464
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
Total purchases and sales of shares of the mutual funds, for the year ended
December 31, 1996, amounted to:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT PURCHASES SALES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio..................................................... $ 13,931,508 $ 739,129
Alger American Leveraged AllCap Portfolio........................................... 7,351,139 3,172,793
Alger American MidCap Growth Portfolio.............................................. 7,682,758 484,312
Alger American Small Capitalization Portfolio....................................... 14,392,699 3,346,542
Fidelity Equity-Income Portfolio.................................................... 21,715,591 2,139,050
Fidelity Money Market Portfolio..................................................... 28,429,874 24,802,687
Fidelity High Income Portfolio*..................................................... 4,876,276 189,567
Fidelity Overseas Portfolio**....................................................... 1,868,587 38,305
Fidelity Asset Manager Portfolio.................................................... 3,462,313 280,531
Fidelity Investment Grade Bond Portfolio............................................ 6,760,574 2,536,636
MFS Total Return Series............................................................. 6,790,994 199,290
MFS Utilities Series................................................................ 2,382,728 203,296
MFS World Governments Series........................................................ 1,272,231 169,036
AMT Balanced Portfolio.............................................................. 2,909,535 394,012
AMT Limited Maturity Bond Portfolio................................................. 2,728,825 201,232
AMT Partners Portfolio.............................................................. 7,173,583 269,972
OCC Global Equity Portfolio......................................................... 9,336,858 1,542,111
OCC Managed Portfolio............................................................... 24,355,269 436,417
OCC Small Cap Portfolio............................................................. 2,036,666 149,283
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Period from May 22, 1996 (date deposits first received) to December 31, 1996.
** Period from May 20, 1996 (date deposits first received) to December 31, 1996.
11
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS
CG Life assumes the risk that annuitants may live longer than expected and
also assumes a mortality risk in connection with the death benefits of the
contract. CG Life also assumes a risk that its actual administrative expenses
may be higher than amounts deducted for such expenses. CG Life charges each
variable sub-account the daily equivalent of 1.20%, on an annual basis, of the
current value of each sub-account's assets for the assumption of these risks.
For contracts sold in the state of New York, after April 30, 1996, annual fees
of 1.25% are charged for mortality and expense risks; .05% of this charge was
waived from May 1, 1996 through June 30, 1996.
CG Life also deducts a daily administrative fee from the assets of each
variable sub-account as partial reimbursement for administrative expenses
relating to the issuance and maintenance of the contract and the participant's
annuity account. This charge is currently at an effective annual rate of .10%.
For contracts sold in the state of New York, after April 30, 1996, the effective
annual rate is .15%.
As partial compensation for administrative services provided, CG Life
additionally receives a $35 ($30 on New York contracts) annuity account fee per
year from each contract. This charge is deducted from the fixed or variable sub-
account of the participant or on a pro-rata basis from two or more fixed or
variable sub-accounts in relation to their values under the contract. Fixed
sub-accounts are part of the general account of CG Life and are not included in
these financial statements. The annuity account fee will be waived for any
contract year in which the annuity account value equals or exceeds $100,000 as
of the last valuation date of the contract year. Annuity account fees, for the
variable sub-accounts, amounting to $25,726, were deducted for the year ended
December 31, 1996.
For an additional charge (optional death benefit fee), an optional death
benefit may be selected by the participant. The optional death benefit fee will
be deducted from the participant's fixed or variable sub-account or on a
pro-rata basis from two or more fixed or variable sub-accounts in relation to
their values under the contract on the date of each contract anniversary. For
contracts that are issued in the state of New York, the optional death benefit
is not available. The optional death benefit fees, for the variable
sub-accounts, amounted to $856 for the year ended December 31, 1996.
Under certain circumstances, CG Life reserves the right to charge a transfer
fee of up to $10 for transfers between sub-accounts. Transfer fees, for the
variable sub-accounts, amounted to $60 for the year ended December 31, 1996.
12
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS (CONTINUED)
The fees charged by CG Life for mortality and expense risks and
administrative fees, from variable sub-accounts, for the year ended December 31,
1996, amounted to:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
MORTALITY ASSET BASED
AND EXPENSE ADMINISTRATIVE
SUB-ACCOUNT RISK FEES FEES
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio***................................... $ 132,199 $ 11,142
Alger American Leveraged AllCap Portfolio***......................... 44,522 3,745
Alger American MidCap Growth Portfolio***............................ 62,343 5,258
Alger American Small Capitalization Portfolio***..................... 116,366 9,830
Fidelity Equity-Income Portfolio***.................................. 204,313 17,227
Fidelity Money Market Portfolio...................................... 132,303 11,057
Fidelity High Income Portfolio*...................................... 17,787 1,512
Fidelity Overseas Portfolio**........................................ 4,882 425
Fidelity Asset Manager Portfolio***.................................. 30,139 2,562
Fidelity Investment Grade Bond Portfolio............................. 43,098 3,611
MFS Total Return Series***........................................... 55,882 4,771
MFS Utilities Series................................................. 18,810 1,579
MFS World Governments Series***...................................... 11,769 988
AMT Balanced Portfolio***............................................ 26,754 2,260
AMT Limited Maturity Bond Portfolio.................................. 27,516 2,304
AMT Partners Portfolio***............................................ 59,909 5,072
OCC Global Equity Portfolio***....................................... 70,804 5,951
OCC Managed Portfolio***............................................. 226,451 19,120
OCC Small Cap Portfolio***........................................... 17,773 1,500
- -----------------------------------------------------------------------------------------------
</TABLE>
* Period from May 22, 1996 (date deposits first received) to December 31,
1996.
** Period from May 20, 1996 (date deposits first received) to December 31,
1996.
*** Mortality and expense risk fees waived, for the period from May 1, 1996 to
June 30, 1996, amounted to:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MORTALITY AND
EXPENSE RISK
SUB-ACCOUNT FEES WAIVED
- --------------------------------------------------------------------------------
<S> <C>
Alger American Growth Portfolio.................................. $ 2
Alger American Leveraged AllCap Portfolio........................ 2
Alger American MidCap Growth Portfolio........................... 3
Alger American Small Capitalization Portfolio.................... 7
Fidelity Equity-Income Portfolio................................. 13
Fidelity Asset Manager Portfolio................................. 2
MFS Total Return Series.......................................... 4
MFS World Governments Series..................................... 1
AMT Balanced Portfolio........................................... 1
AMT Partners Portfolio........................................... 4
OCC Global Equity Portfolio...................................... 3
OCC Managed Portfolio............................................ 10
OCC Small Cap Portfolio.......................................... 1
- --------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS (CONTINUED)
No deduction for sales charges is made from a premium payment. However, if a
cash withdrawal is made, a withdrawal charge (contingent deferred sales charge)
may be assessed by CG Life. The withdrawal charge, if assessed, varies from 0-7%
depending upon the duration of each contract deposit. The withdrawal charge is
deducted from withdrawal proceeds for full withdrawals and reduces the remaining
account value for partial withdrawals. These charges are paid to CG Life as
reimbursement for services provided. These services include commissions paid to
sales personnel, the costs associated with preparation of sales literature and
other promotional costs and acquisition expenses. Withdrawal charges paid to CG
Life for the variable sub-accounts, for the year ended December 31, 1996,
amounted to $39,289.
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 surrenders, death benefits, transfers to other fixed or
variable sub-accounts or annuity payments in excess of net purchase payments.
6. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code of 1986
(the 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 set forth in regulations issued
by the Secretary of the Treasury. CG Life believes, based on assurances from the
mutual fund managers, that the mutual funds satisfy the requirements of the
regulations.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Connecticut General
Life Insurance Company and Participants of the
CG Variable Annuity Separate Account II
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 Leveraged AllCap
Portfolio, Alger American MidCap Growth Portfolio, Alger American Small
Capitalization Portfolio; Fidelity Variable Insurance Products
Fund--Equity-Income Portfolio, Money Market Portfolio, High Income Portfolio,
Overseas Portfolio; Fidelity Variable Insurance Products Fund II--Asset Manager
Portfolio, Investment Grade Bond Portfolio; MFS Variable Insurance Trust--MFS
Total Return Series, MFS Utilities Series, MFS World Governments Series;
Neuberger & Berman Advisers Management Trust--AMT Balanced Portfolio, AMT
Limited Maturity Bond Portfolio, AMT Partners Portfolio; OCC (formerly Quest for
Value) Accumulation Trust--OCC Global Equity Portfolio, OCC Managed Portfolio,
OCC Small Cap Portfolio (constituting the CG Variable Annuity Separate Account
II, hereafter referred to as "the Account") at December 31, 1996, 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, 1996 by correspondence with the custodians, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1997
15
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
-------------------------------------------------- ----------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MARKET INCOME OVERSEAS
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value..... $4,396,364 $1,590,740 $3,147,650 $3,844,573 $4,668,653 $3,540,190 $1,889,646 $ 821,424
Receivable from CIGNA Life
Insurance Company............ 15,122 51 2,997 3,824 5,983 -- 2,044 3,051
Receivable for fund shares
sold......................... -- -- -- -- -- 127 -- --
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
Total assets................ 4,411,486 1,590,791 3,150,647 3,848,397 4,674,636 3,540,317 1,891,690 824,475
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
LIABILITIES:
Payable to CIGNA Life
Insurance Company............ -- -- -- -- -- 127 -- --
Payable for fund shares
purchased.................... 15,122 51 2,997 3,824 5,983 -- 2,044 3,051
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
Total liabilities........... 15,122 51 2,997 3,824 5,983 127 2,044 3,051
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
Net assets.................. $4,396,364 $1,590,740 $3,147,650 $3,844,573 $4,668,653 $3,540,190 $1,889,646 $ 821,424
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
Accumulation units
outstanding.................. 433,381 151,397 278,077 389,564 423,894 342,418 177,276 77,201
Net asset value per
accumulation unit............ $10.144346 $10.507089 $11.319352 $ 9.868924 $11.013725 $10.338796 $10.659332 $10.640099
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
----------------------
ASSET INVESTMENT
MANAGER GRADE BOND
---------- ----------
<S> <C> <C>
ASSETS:
Investment in variable
insurance funds at value..... $ 499,311 $1,149,762
Receivable from CIGNA Life
Insurance Company............ -- 29,960
Receivable for fund shares
sold......................... -- --
---------- ----------
Total assets................ 499,311 1,179,722
---------- ----------
LIABILITIES:
Payable to CIGNA Life
Insurance Company............ -- --
Payable for fund shares
purchased.................... -- 29,960
---------- ----------
Total liabilities........... -- 29,960
---------- ----------
Net assets.................. $ 499,311 $1,149,762
---------- ----------
---------- ----------
Accumulation units
outstanding.................. 44,934 111,872
Net asset value per
accumulation unit............ $11.112123 $10.277513
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
1
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
MFS SERIES SUB-ACCOUNTS ------------------------------------
----------------------------------- LIMITED
TOTAL WORLD MATURITY
RETURN UTILITIES GOVERNMENTS BALANCED BOND PARTNERS
---------- ---------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable insurance funds at value.......... $2,214,668 $ 247,097 $ 278,553 $ 753,511 $ 288,631 $3,326,210
Receivable from CIGNA Life Insurance Company............. 2,275 -- -- 798 -- 11,986
Receivable for fund shares sold.......................... -- -- -- -- -- --
---------- ---------- ----------- ---------- ------------ ----------
Total assets........................................... 2,216,943 247,097 278,553 754,309 288,631 3,338,196
---------- ---------- ----------- ---------- ------------ ----------
LIABILITIES:
Payable to CIGNA Life Insurance Company.................. -- -- -- -- -- --
Payable for fund shares purchased........................ 2,275 -- -- 798 -- 11,986
---------- ---------- ----------- ---------- ------------ ----------
Total liabilities...................................... 2,275 -- -- 798 -- 11,986
---------- ---------- ----------- ---------- ------------ ----------
Net assets............................................. $2,214,668 $ 247,097 $ 278,553 $ 753,511 $ 288,631 $3,326,210
---------- ---------- ----------- ---------- ------------ ----------
---------- ---------- ----------- ---------- ------------ ----------
Accumulation units outstanding........................... 202,532 20,800 26,627 73,897 28,081 273,165
Net asset value per accumulation unit.................... $10.934889 $11.879471 $10.461237 $10.196779 $10.278541 $12.176555
<CAPTION>
OCC ACCUMULATION TRUST SUB-
ACCOUNTS*
----------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS:
Investment in variable insurance funds at value.......... $4,198,113 $6,618,127 $1,138,874
Receivable from CIGNA Life Insurance Company............. 6,880 7,376 66
Receivable for fund shares sold.......................... -- -- --
---------- ---------- ----------
Total assets........................................... 4,204,993 6,625,503 1,138,940
---------- ---------- ----------
LIABILITIES:
Payable to CIGNA Life Insurance Company.................. -- -- --
Payable for fund shares purchased........................ 6,880 7,376 66
---------- ---------- ----------
Total liabilities...................................... 6,880 7,376 66
---------- ---------- ----------
Net assets............................................. $4,198,113 $6,618,127 $1,138,874
---------- ---------- ----------
---------- ---------- ----------
Accumulation units outstanding........................... 380,111 571,756 100,116
Net asset value per accumulation unit.................... $11.044449 $11.575082 $11.375492
</TABLE>
- ------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
2
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS
FIRST RECEIVED) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
------------------------------------------------------ ------------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MONEY MARKET INCOME OVERSEAS
------------ ----------- ----------- -------------- ------------ ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date......... February 23, February 9, January 19, February 9, February 20, February 22, May 17, May 13,
1996 1996 1996 1996 1996 1996 1996 1996
INVESTMENT INCOME:
Dividends.............. $ 559 $-- $ -- $-- $ -- $115,207 $ -- $ --
EXPENSES:
Mortality and expense
risk and
administrative
charges.............. 22,375 7,549 14,877 19,633 23,420 28,775 7,249 2,735
------------ ----------- ----------- -------------- ------------ ------------ -------- --------
Net investment gain
(loss)............. (21,816) (7,549) (14,877) (19,633) (23,420) 86,432 (7,249) (2,735)
------------ ----------- ----------- -------------- ------------ ------------ -------- --------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Capital distributions
from portfolio
sponsors............. 23,616 1,044 7,543 2,787 -- -- -- --
Net realized gain
(loss) on share
transactions......... (74) (4,573) 405 130 1,656 -- (10) 7
------------ ----------- ----------- -------------- ------------ ------------ -------- --------
Net realized gain
(loss)............. 23,542 (3,529) 7,948 2,917 1,656 -- (10) 7
Net unrealized gain
(loss)............... 186,010 21,298 128,511 (9,354) 317,747 -- 74,586 38,035
------------ ----------- ----------- -------------- ------------ ------------ -------- --------
Net realized and
unrealized gain
(loss) on
investments........ 209,552 17,769 136,459 (6,437) 319,403 -- 74,576 38,042
------------ ----------- ----------- -------------- ------------ ------------ -------- --------
INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS...... $187,736 $10,220 $121,582 $(26,070) $295,983 $ 86,432 $67,327 $35,307
------------ ----------- ----------- -------------- ------------ ------------ -------- --------
------------ ----------- ----------- -------------- ------------ ------------ -------- --------
<CAPTION>
FIDELITY VIP II
PORTFOLIO
SUB-ACCOUNTS
---------------------
ASSET INVESTMENT
MANAGER GRADE BOND
-------- ----------
<S> <C> <C>
Inception Date......... March 1, March 1,
1996 1996
INVESTMENT INCOME:
Dividends.............. $ -- $ --
EXPENSES:
Mortality and expense
risk and
administrative
charges.............. 2,834 6,076
-------- ----------
Net investment gain
(loss)............. (2,834) (6,076)
-------- ----------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS:
Capital distributions
from portfolio
sponsors............. -- --
Net realized gain
(loss) on share
transactions......... 277 568
-------- ----------
Net realized gain
(loss)............. 277 568
Net unrealized gain
(loss)............... 36,730 34,504
-------- ----------
Net realized and
unrealized gain
(loss) on
investments........ 37,007 35,072
-------- ----------
INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS...... $34,173 $28,996
-------- ----------
-------- ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS
FIRST RECEIVED) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS AMT PORTFOLIO SUB-ACCOUNTS
-------------------------------------- --------------------------------------------
WORLD LIMITED
TOTAL RETURN UTILITIES GOVERNMENTS BALANCED MATURITY BOND PARTNERS
------------ --------- ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Inception Date................ February 22, March 15, February February 22, February 20, February 20,
1996 1996 20, 1996 1996 1996 1996
INVESTMENT INCOME:
Dividends..................... $ 33,418 $ 5,713 $-- $ 471 $ 5,506 $ 218
EXPENSES:
Mortality and expense risk and
administrative charges...... 9,797 1,391 1,037 3,578 1,643 15,537
------------ --------- ----------- ------------ ------- ------------
Net investment gain
(loss).................... 23,621 4,322 (1,037) (3,107) 3,863 (15,319)
------------ --------- ----------- ------------ ------- ------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Capital distributions from
portfolio sponsors.......... 14,539 14,823 -- 2,619 -- 2,724
Net realized gain (loss) on
share transactions.......... 377 94 1 520 (5,482) 491
------------ --------- ----------- ------------ ------- ------------
Net realized gain (loss).... 14,916 14,917 1 3,139 (5,482) 3,215
Net unrealized gain........... 76,713 7,903 6,883 21,429 7,496 385,732
------------ --------- ----------- ------------ ------- ------------
Net realized and unrealized
gain on investments....... 91,629 22,820 6,884 24,568 2,014 388,947
------------ --------- ----------- ------------ ------- ------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $115,250 $27,142 $ 5,847 $21,461 $ 5,877 $373,628
------------ --------- ----------- ------------ ------- ------------
------------ --------- ----------- ------------ ------- ------------
<CAPTION>
OCC ACCUMULATION TRUST
SUB-ACCOUNTS *
--------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ------------ ---------
<S> <C> <C> <C>
Inception Date................ February 9, February 20, March 1,
1996 1996 1996
INVESTMENT INCOME:
Dividends..................... $ 14,529 $ 2,265 $ --
EXPENSES:
Mortality and expense risk and
administrative charges...... 20,926 34,377 5,334
----------- ------------ ---------
Net investment gain
(loss).................... (6,397) (32,112) (5,334)
----------- ------------ ---------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Capital distributions from
portfolio sponsors.......... 22,283 1,445 --
Net realized gain (loss) on
share transactions.......... 9,213 14,922 337
----------- ------------ ---------
Net realized gain (loss).... 31,496 16,367 337
Net unrealized gain........... 225,407 599,532 88,887
----------- ------------ ---------
Net realized and unrealized
gain on investments....... 256,903 615,899 89,224
----------- ------------ ---------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $250,506 $583,787 $83,890
----------- ------------ ---------
----------- ------------ ---------
</TABLE>
- ------------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS
FIRST RECEIVED) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
------------------------------------------------------ ------------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY HIGH
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MARKET INCOME OVERSEAS
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date......... February 23, February January 19, February 9, February 20, February May 17, May 13,
1996 9, 1996 1996 1996 1996 22, 1996 1996 1996
OPERATIONS:
Net investment gain
(loss)................ $ (21,816) $ (7,549) $ (14,877) $ (19,633) $ (23,420) $ 86,432 $ (7,249) $ (2,735)
Net realized gain
(loss)................ 23,542 (3,529) 7,948 2,917 1,656 -- (10) 7
Net unrealized gain
(loss)................ 186,010 21,298 128,511 (9,354) 317,747 -- 74,586 38,035
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
Net increase
(decrease) from
operations......... 187,736 10,220 121,582 (26,070) 295,983 86,432 67,327 35,307
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits... 3,317,873 1,651,397 1,942,260 2,839,597 3,239,285 13,217,666 1,400,589 333,797
Participant
transfers............. 925,179 299,414 1,093,142 1,040,987 1,177,728 (9,729,196) 422,934 453,233
Participant
withdrawals........... (34,424) (370,291) (9,334) (9,941) (44,343) (34,712) (1,204) (913)
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
Net increase from
participant
transactions....... 4,208,628 1,580,520 3,026,068 3,870,643 4,372,670 3,453,758 1,822,319 786,117
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
Total increase in
net assets....... 4,396,364 1,590,740 3,147,650 3,844,573 4,668,653 3,540,190 1,889,646 821,424
NET ASSETS:
Beginning of period.... -- -- -- -- -- -- -- --
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
End of period.......... $4,396,364 $1,590,740 $3,147,650 $3,844,573 $4,668,653 $ 3,540,190 $1,889,646 $821,424
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
PARTICIPANT
ACCUMULATION UNIT
TRANSACTIONS (IN
UNITS):
Participant deposits... 342,710 159,299 178,263 286,678 313,300 1,300,805 136,000 32,852
Participant
transfers............. 95,710 29,267 100,639 103,906 116,289 (955,012) 41,391 44,437
Participant
withdrawals........... (5,039) (37,169) (825) (1,020) (5,695) (3,375) (115) (88)
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
Net increase in units
from participant
transactions....... 433,381 151,397 278,077 389,564 423,894 342,418 177,276 77,201
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
<CAPTION>
FIDELITY VIP II
PORTFOLIO
SUB-ACCOUNTS
---------------------
ASSET INVESTMENT
MANAGER GRADE BOND
-------- -----------
<S> <C> <C>
Inception Date......... March 1, March 1,
1996 1996
OPERATIONS:
Net investment gain
(loss)................ $ (2,834) $ (6,076)
Net realized gain
(loss)................ 277 568
Net unrealized gain
(loss)................ 36,730 34,504
-------- -----------
Net increase
(decrease) from
operations......... 34,173 28,996
-------- -----------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits... 387,774 1,037,858
Participant
transfers............. 78,318 87,046
Participant
withdrawals........... (954) (4,138)
-------- -----------
Net increase from
participant
transactions....... 465,138 1,120,766
-------- -----------
Total increase in
net assets....... 499,311 1,149,762
NET ASSETS:
Beginning of period.... -- --
-------- -----------
End of period.......... $499,311 $1,149,762
-------- -----------
-------- -----------
PARTICIPANT
ACCUMULATION UNIT
TRANSACTIONS (IN
UNITS):
Participant deposits... 37,519 103,429
Participant
transfers............. 7,503 8,857
Participant
withdrawals........... (88) (414)
-------- -----------
Net increase in units
from participant
transactions....... 44,934 111,872
-------- -----------
-------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
5
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS
FIRST RECEIVED) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS AMT PORTFOLIO SUB-ACCOUNTS
-------------------------------------- -------------------------------------------
WORLD LIMITED
TOTAL RETURN UTILITIES GOVERNMENTS BALANCED MATURITY BOND PARTNERS
------------ --------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Inception Date................ February 22, March 15, February February 22, February 20, February 20,
1996 1996 20, 1996 1996 1996 1996
OPERATIONS:
Net investment gain (loss).... $ 23,621 $ 4,322 $ (1,037) $ (3,107) $ 3,863 $ (15,319)
Net realized gain (loss)...... 14,916 14,917 1 3,139 (5,482) 3,215
Net unrealized gain........... 76,713 7,903 6,883 21,429 7,496 385,732
------------ --------- ----------- ------------ ------------- ------------
Net increase from
operations................ 115,250 27,142 5,847 21,461 5,877 373,628
------------ --------- ----------- ------------ ------------- ------------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 1,686,151 185,211 179,597 539,940 252,711 2,214,066
Participant transfers......... 421,178 38,655 93,230 198,384 34,153 744,129
Participant withdrawals....... (7,911) (3,911) (121) (6,274) (4,110) (5,613)
------------ --------- ----------- ------------ ------------- ------------
Net increase from
participant
transactions.............. 2,099,418 219,955 272,706 732,050 282,754 2,952,582
------------ --------- ----------- ------------ ------------- ------------
Total increase in net
assets.................. 2,214,668 247,097 278,553 753,511 288,631 3,326,210
NET ASSETS:
Beginning of period........... -- -- -- -- -- --
------------ --------- ----------- ------------ ------------- ------------
End of period................. $2,214,668 $247,097 $278,553 $753,511 $288,631 $3,326,210
------------ --------- ----------- ------------ ------------- ------------
------------ --------- ----------- ------------ ------------- ------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 162,892 17,591 17,630 54,244 25,118 204,380
Participant transfers......... 40,389 3,571 9,009 20,301 3,372 69,271
Participant withdrawals....... (749) (362) (12) (648) (409) (486)
------------ --------- ----------- ------------ ------------- ------------
Net increase in units from
participant
transactions.............. 202,532 20,800 26,627 73,897 28,081 273,165
------------ --------- ----------- ------------ ------------- ------------
------------ --------- ----------- ------------ ------------- ------------
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS*
-------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
---------- ------------ ----------
<S> <C> <C> <C>
Inception Date................ February February 20, March 1,
9, 1996 1996 1996
OPERATIONS:
Net investment gain (loss).... $ (6,397) $ (32,112) $ (5,334)
Net realized gain (loss)...... 31,496 16,367 337
Net unrealized gain........... 225,407 599,532 88,887
---------- ------------ ----------
Net increase from
operations................ 250,506 583,787 83,890
---------- ------------ ----------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 3,457,047 5,309,052 762,200
Participant transfers......... 878,847 1,293,574 293,019
Participant withdrawals....... (388,287) (568,286) (235)
---------- ------------ ----------
Net increase from
participant
transactions.............. 3,947,607 6,034,340 1,054,984
---------- ------------ ----------
Total increase in net
assets.................. 4,198,113 6,618,127 1,138,874
NET ASSETS:
Beginning of period........... -- -- --
---------- ------------ ----------
End of period................. $4,198,113 $6,618,127 $1,138,874
---------- ------------ ----------
---------- ------------ ----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......... 334,130 506,338 72,303
Participant transfers......... 83,245 121,659 27,835
Participant withdrawals....... (37,264) (56,241) (22)
---------- ------------ ----------
Net increase in units from
participant
transactions.............. 380,111 571,756 100,116
---------- ------------ ----------
---------- ------------ ----------
</TABLE>
- ------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
6
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION
CIGNA Variable Annuity Separate Account I (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 CIGNA Life Insurance
Company (CIGNA Life). The assets and liabilities of the Account are clearly
identified and distinguished from other assets and liabilities of CIGNA Life.
The assets of the Account are not available to meet the general obligations of
CIGNA 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 nineteen portfolios (mutual funds) of six
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 Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:--
Equity-Income Portfolio
Money Market Portfolio
High Income Portfolio
Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:--
Asset Manager Portfolio
Investment Grade Bond Portfolio
MFS VARIABLE INSURANCE TRUST:--
MFS Total Return Series
MFS Utilities Series
MFS World Governments Series
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:--
AMT Balanced Portfolio
AMT Limited Maturity Bond Portfolio
AMT Partners Portfolio
OCC (FORMERLY QUEST FOR VALUE) ACCUMULATION TRUST:--
OCC Global Equity Portfolio
OCC Managed Portfolio
OCC Small Cap Portfolio
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.
7
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. INVESTMENT VALUATION: -- Investments held by the sub-accounts are valued at
their respective closing net asset value per share as determined by the
mutual funds as of December 31, 1996. 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 CIGNA Life.
C. FEDERAL INCOME TAXES: -- The operations of the Account form a part of, and
are taxed with, the total operations of CIGNA 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 held and cost of investments at December 31, 1996 were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
COST OF
SUB-ACCOUNT SHARES HELD INVESTMENTS
- ----------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio........................ 128,062 $ 4,210,354
Alger American Leveraged AllCap Portfolio.............. 82,166 1,569,442
Alger American MidCap Growth Portfolio................. 147,431 3,019,139
Alger American Small Capitalization Portfolio.......... 93,976 3,853,927
Fidelity Equity-Income Portfolio....................... 222,000 4,350,906
Fidelity Money Market Portfolio........................ 3,540,190 3,540,190
Fidelity High Income Portfolio......................... 150,930 1,815,060
Fidelity Overseas Portfolio............................ 43,600 783,389
Fidelity Asset Manager Portfolio....................... 29,493 462,581
Fidelity Investment Grade Bond Portfolio............... 93,935 1,115,258
MFS Total Return Series................................ 161,537 2,137,955
MFS Utilities Series................................... 18,089 239,194
MFS World Governments Series........................... 26,328 271,670
AMT Balanced Portfolio................................. 47,331 732,082
AMT Limited Maturity Bond Portfolio.................... 20,543 281,135
AMT Partners Portfolio................................. 201,833 2,940,478
OCC Global Equity Portfolio............................ 317,318 3,972,706
OCC Managed Portfolio.................................. 182,771 6,018,595
OCC Small Cap Portfolio................................ 50,370 1,049,987
- ----------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
Total purchases and sales of shares of the mutual funds, for the periods
noted, amounted to:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
SUB-ACCOUNT PERIOD* PURCHASES SALES
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alger American Growth Portfolio........................ February 23, 1996 to December 31, 1996 $4,372,497 $ 162,069
Alger American Leveraged AllCap Portfolio.............. February 9, 1996 to December 31, 1996 1,950,966 376,951
Alger American MidCap Growth Portfolio................. January 19, 1996 to December 31, 1996 3,110,857 92,123
Alger American Small Capitalization Portfolio.......... February 9, 1996 to December 31, 1996 3,950,228 96,431
Fidelity Equity-Income Portfolio....................... February 20, 1996 to December 31, 1996 4,641,771 292,521
Fidelity Money Market Portfolio........................ February 22, 1996 to December 31, 1996 11,706,487 8,166,297
Fidelity High Income Portfolio......................... May 17, 1996 to December 31, 1996 1,829,085 14,015
Fidelity Overseas Portfolio............................ May 13, 1996 to December 31, 1996 784,827 1,445
Fidelity Asset Manager Portfolio....................... March 1, 1996 to December 31, 1996 525,873 63,569
Fidelity Investment Grade Bond Portfolio............... March 1, 1996 to December 31, 1996 1,203,427 88,737
MFS Total Return Series................................ February 22, 1996 to December 31, 1996 2,227,540 89,962
MFS Utilities Series................................... March 15, 1996 to December 31, 1996 263,138 24,038
MFS World Governments Series........................... February 20, 1996 to December 31, 1996 272,685 1,016
AMT Balanced Portfolio................................. February 22, 1996 to December 31, 1996 804,895 73,333
AMT Limited Maturity Bond Portfolio.................... February 20, 1996 to December 31, 1996 359,140 72,523
AMT Partners Portfolio................................. February 20, 1996 to December 31, 1996 3,020,765 80,778
OCC Global Equity Portfolio............................ February 9, 1996 to December 31, 1996 4,490,141 526,648
OCC Managed Portfolio.................................. February 20, 1996 to December 31, 1996 6,670,361 666,688
OCC Small Cap Portfolio................................ March 1, 1996 to December 31, 1996 1,109,826 60,176
- -------------------------------------------------------------------------------------------
</TABLE>
* Date deposits first received.
4. CHARGES AND DEDUCTIONS
CIGNA Life assumes the risk that annuitants may live longer than expected
and also assumes a mortality risk in connection with the death benefits of the
contract. CIGNA Life also assumes a risk that its actual administrative expenses
may be higher than amounts deducted for such expenses. CIGNA Life charges each
variable sub-account the daily equivalent of 1.20%, on an annual basis, of the
current value of each sub-account's assets for the assumption of these risks.
CIGNA Life also deducts a daily administrative fee from the assets of each
variable sub-account as partial reimbursement for administrative expenses
relating to the issuance and maintenance of the contract and the participant's
annuity account. This charge is currently at an effective annual rate of .10%.
As partial compensation for administrative services provided, CIGNA Life
additionally receives a $35 annuity account fee per year from each contract.
This charge is deducted from the fixed or variable sub-account of the
participant or on a pro-rata basis from two or more fixed or variable
sub-accounts in relation to their values under the contract. Fixed sub-accounts
are part of the general account of CIGNA Life and are not included in these
financial statements. The annuity account fee will be waived for any contract
year in which the annuity account value equals or exceeds $100,000 as of the
last valuation date of the contract year. There were no annuity account fees
deducted during the periods covered by these financial statements.
9
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS (CONTINUED)
For an additional charge (optional death benefit fee), an optional death
benefit may be selected by the participant. The optional death benefit fee will
be deducted from the participant's fixed or variable sub-account or on a
pro-rata basis from two or more fixed or variable sub-accounts in relation to
their values under the contract on the date of each contract anniversary. The
optional death benefit fees, for the variable sub-accounts, amounted to $78
during the periods covered by these financial statements.
Under certain circumstances, CIGNA Life reserves the right to charge a
transfer fee of up to $10 for transfers between sub-accounts. No transfer fees
were deducted during the periods covered by these financial statements.
The fees charged by CIGNA Life for mortality and expense risks and
administrative fees, from the variable sub-accounts, for the periods noted,
amounted to:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
MORTALITY AND ASSET BASED
EXPENSE RISK ADMINISTRATIVE
SUB-ACCOUNT PERIOD* FEES FEES
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alger American Growth Portfolio........................ February 23, 1996 to December 31, 1996 $20,654 $1,721
Alger American Leveraged AllCap Portfolio.............. February 9, 1996 to December 31, 1996 6,968 581
Alger American MidCap Growth Portfolio................. January 19, 1996 to December 31, 1996 13,733 1,144
Alger American Small Capitalization Portfolio.......... February 9, 1996 to December 31, 1996 18,123 1,510
Fidelity Equity-Income Portfolio....................... February 20, 1996 to December 31, 1996 21,618 1,802
Fidelity Money Market Portfolio........................ February 22, 1996 to December 31, 1996 26,562 2,213
Fidelity High Income Portfolio......................... May 17, 1996 to December 31, 1996 6,691 558
Fidelity Overseas Portfolio............................ May 13, 1996 to December 31, 1996 2,525 210
Fidelity Asset Manager Portfolio....................... March 1, 1996 to December 31, 1996 2,616 218
Fidelity Investment Grade Bond Portfolio............... March 1, 1996 to December 31, 1996 5,609 467
MFS Total Return Series................................ February 22, 1996 to December 31, 1996 9,043 754
MFS Utilities Series................................... March 15, 1996 to December 31, 1996 1,284 107
MFS World Governments Series........................... February 20, 1996 to December 31, 1996 957 80
AMT Balanced Portfolio................................. February 22, 1996 to December 31, 1996 3,303 275
AMT Limited Maturity Bond Portfolio.................... February 20, 1996 to December 31, 1996 1,517 126
AMT Partners Portfolio................................. February 20, 1996 to December 31, 1996 14,342 1,195
OCC Global Equity Portfolio............................ February 9, 1996 to December 31, 1996 19,316 1,610
OCC Managed Portfolio.................................. February 20, 1996 to December 31, 1996 31,733 2,644
OCC Small Cap Portfolio................................ March 1, 1996 to December 31, 1996 4,924 410
- -------------------------------------------------------------------------------------------
</TABLE>
* Date deposits first received.
No deduction for sales charges is made from a premium payment. However, if a
cash withdrawal is made, a withdrawal charge (contingent deferred sales charge)
may be assessed by CIGNA Life. The withdrawal charge, if assessed, varies from
0-7% depending upon the duration of each contract deposit. The withdrawal charge
is deducted from withdrawal proceeds for full withdrawals and reduces the
remaining account value for partial withdrawals. These charges are paid to CIGNA
Life as reimbursement for services provided. These services include commissions
paid to sales personnel, the costs of preparation of sales literature and other
promotional costs and acquisition expenses. Withdrawal charges paid to CIGNA
Life for the variable sub-accounts, for the periods ended December 31, 1996,
amounted to $143.
10
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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 surrenders, death benefits, transfers to other fixed or
variable sub-accounts or annuity payments in excess of net purchase payments.
6. DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code of 1986
(the 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 set forth in regulations issued
by the Secretary of the Treasury. CIGNA Life believes, based on assurances from
the mutual fund managers, that the mutual funds satisfy the requirements of the
regulations.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of CIGNA
Life Insurance Company and Participants of the
CIGNA Variable Annuity Separate Account I
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 Leveraged AllCap
Portfolio, Alger American MidCap Growth Portfolio, Alger American Small
Capitalization Portfolio; Fidelity Variable Insurance Products
Fund--Equity-Income Portfolio, Money Market Portfolio, High Income Portfolio,
Overseas Portfolio; Fidelity Variable Insurance Products Fund II--Asset Manager
Portfolio, Investment Grade Bond Portfolio; MFS Variable Insurance Trust--MFS
Total Return Series, MFS Utilities Series, MFS World Governments Series;
Neuberger & Berman Advisers Management Trust--AMT Balanced Portfolio, AMT
Limited Maturity Bond Portfolio, AMT Partners Portfolio; OCC (formerly Quest for
Value) Accumulation Trust--OCC Global Equity Portfolio, OCC Managed Portfolio,
OCC Small Cap Portfolio (constituting the CIGNA Variable Annuity Separate
Account I, hereafter referred to as "the Account") at December 31, 1996, the
results of each of their operations and the changes in each of their net assets
for the periods since inception (as indicated in the financial statements)
through December 31, 1996, 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 audit. We conducted our audit 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 audit, which included
confirmation of securities at December 31, 1996 by correspondence with the
custodians, provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1997
12
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
FIDELITY
VIP
PORTFOLIO
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
-------------------------------------------------- -----------
LEVERAGED MIDCAP SMALL EQUITY-
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable insurance funds at value............ $ 339,597 $ 331,450 $ 92,436 $ 349,028 $ 357,046
Receivable from Connecticut General Life Insurance
Company................................................... -- -- -- -- 2,503
Receivable for fund shares sold............................ 5 5 -- -- --
----------- ----------- ----------- ----------- -----------
Total assets............................................. 339,602 331,455 92,436 349,028 359,549
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Payable to Connecticut General Life Insurance Company...... 5 5 -- -- --
Payable for fund shares purchased.......................... -- -- -- -- 2,503
----------- ----------- ----------- ----------- -----------
Total liabilities........................................ 5 5 -- -- 2,503
----------- ----------- ----------- ----------- -----------
Net assets............................................... $ 339,597 $ 331,450 $ 92,436 $ 349,028 $ 357,046
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Accumulation units outstanding............................. 24,719 20,127 6,400 26,199 26,218
Net asset value per accumulation unit...................... $ 13.738238 $ 16.468026 $ 14.443889 $13.322001 $ 13.618095
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
------------------------
ASSET INVESTMENT
MANAGER GRADE BOND
----------- -----------
<S> <C> <C>
ASSETS:
Investment in variable insurance funds at value............ $ 73,156 $ 40,819
Receivable from Connecticut General Life Insurance
Company................................................... -- --
Receivable for fund shares sold............................ -- --
----------- -----------
Total assets............................................. 73,156 40,819
----------- -----------
LIABILITIES:
Payable to Connecticut General Life Insurance Company...... -- --
Payable for fund shares purchased.......................... -- --
----------- -----------
Total liabilities........................................ -- --
----------- -----------
Net assets............................................... $ 73,156 $ 40,819
----------- -----------
----------- -----------
Accumulation units outstanding............................. 6,111 3,890
Net asset value per accumulation unit...................... $ 11.971291 $ 10.493674
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
1
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
MFS SERIES SUB-ACCOUNTS --------------------------------------
------------------------------------- LIMITED
TOTAL WORLD MATURITY
RETURN UTILITIES GOVERNMENTS BALANCED BOND PARTNERS
----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable insurance funds at
value......................................... $ 154,030 $ 3,516 $ 30,035 $ 197,917 $ 260 $ 124,947
Receivable from Connecticut General Life
Insurance Company............................. -- -- -- -- -- --
Receivable for fund shares sold................. 5,091 5,227 -- -- -- 2
----------- ----------- ----------- ----------- ------------ -----------
Total assets.................................. 159,121 8,743 30,035 197,917 260 124,949
----------- ----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ----------- ------------ -----------
LIABILITIES:
Payable to Connecticut General Life Insurance
Company....................................... 5,091 5,227 -- -- -- 2
Payable for fund shares purchased............... -- -- -- -- -- --
----------- ----------- ----------- ----------- ------------ -----------
Total liabilities............................. 5,091 5,227 -- -- -- 2
----------- ----------- ----------- ----------- ------------ -----------
Net assets.................................... $ 154,030 $ 3,516 $ 30,035 $ 197,917 $ 260 $ 124,947
----------- ----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ----------- ------------ -----------
Accumulation units outstanding.................. 12,740 296 2,784 18,966 25 8,019
Net asset value per accumulation unit........... $ 12.090502 $ 11.880730 $ 10.788580 $ 10.435528 $10.256711 $ 15.580865
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS *
-------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in variable insurance funds at
value......................................... $ 231,510 $ 309,795 $ 25,597
Receivable from Connecticut General Life
Insurance Company............................. 2,490 5,086 --
Receivable for fund shares sold................. -- -- --
----------- ----------- -----------
Total assets.................................. 234,000 314,881 25,597
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES:
Payable to Connecticut General Life Insurance
Company....................................... -- -- --
Payable for fund shares purchased............... 2,490 5,086 --
----------- ----------- -----------
Total liabilities............................. 2,490 5,086 --
----------- ----------- -----------
Net assets.................................... $ 231,510 $ 309,795 $ 25,597
----------- ----------- -----------
----------- ----------- -----------
Accumulation units outstanding.................. 20,118 20,691 2,116
Net asset value per accumulation unit........... $ 11.507742 $ 14.972784 $ 12.096552
</TABLE>
- --------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
2
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
FIDELITY
VIP
PORTFOLIO
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
-------------------------------------------------- -----------
LEVERAGED MIDCAP SMALL EQUITY-
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................................. $ 163 $ -- $ -- $ -- $ 137
EXPENSES:
Mortality and expense risk and administrative charges...... 1,038 1,121 293 1,286 840
----------- ----------- ----------- ----------- -----------
Net investment gain (loss)............................... (875) (1,121) (293) (1,286) (703)
----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Capital distributions from portfolio sponsors.............. 6,806 2,823 1,079 1,247 3,936
Net realized gain on share transactions.................... 1,244 307 870 4,249 789
----------- ----------- ----------- ----------- -----------
Net realized gain........................................ 8,050 3,130 1,949 5,496 4,725
Net unrealized gain (loss)................................. 15,418 14,027 3,694 (3,892) 24,879
----------- ----------- ----------- ----------- -----------
Net realized and unrealized gain (loss) on investments... 23,468 17,157 5,643 1,604 29,604
----------- ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... $ 22,593 $ 16,036 $ 5,350 $ 318 $ 28,901
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
------------------------
ASSET INVESTMENT
MANAGER GRADE BOND
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................. $ 887 $ 1,857
EXPENSES:
Mortality and expense risk and administrative charges...... 239 179
----------- -----------
Net investment gain (loss)............................... 648 1,678
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Capital distributions from portfolio sponsors.............. 731 --
Net realized gain on share transactions.................... 6 26
----------- -----------
Net realized gain........................................ 737 26
Net unrealized gain (loss)................................. 6,123 (569)
----------- -----------
Net realized and unrealized gain (loss) on investments... 6,860 (543)
----------- -----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... $ 7,508 $ 1,135
----------- -----------
----------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
MFS SERIES SUB-ACCOUNTS ---------------------------------------
------------------------------------- LIMITED
TOTAL WORLD MATURITY BOND
RETURN UTILITIES GOVERNMENTS BALANCED * PARTNERS
----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................................... $ 2,327 $ 81 $ -- $ 3,401 $ -- $ 120
EXPENSES:
Mortality and expense risk and administrative
charges..................................... 243 14 118 658 1 344
----------- ----------- ----------- ----------- ------------- -----------
Net investment gain (loss).................. 2,084 67 (118) 2,743 (1) (224)
----------- ----------- ----------- ----------- ------------- -----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distributions from portfolio
sponsors.................................... 1,012 211 -- 18,913 -- 1,502
Net realized gain (loss) on share
transactions................................ 1,484 (55) 7 (8,925) 1 1,028
----------- ----------- ----------- ----------- ------------- -----------
Net realized gain........................... 2,496 156 7 9,988 1 2,530
Net unrealized gain (loss).................... 3,315 126 1,294 (4,946) 6 19,615
----------- ----------- ----------- ----------- ------------- -----------
Net realized and unrealized gain on
investments............................... 5,811 282 1,301 5,042 7 22,145
----------- ----------- ----------- ----------- ------------- -----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $ 7,895 $ 349 $ 1,183 $ 7,785 $ 6 $ 21,921
----------- ----------- ----------- ----------- ------------- -----------
----------- ----------- ----------- ----------- ------------- -----------
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS
**
-------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................................... $ 853 $ 420 $ 249
EXPENSES:
Mortality and expense risk and administrative
charges..................................... 753 732 90
----------- ----------- -----------
Net investment gain (loss).................. 100 (312) 159
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distributions from portfolio
sponsors.................................... 1,218 268 640
Net realized gain (loss) on share
transactions................................ 2,064 1,805 312
----------- ----------- -----------
Net realized gain........................... 3,282 2,073 952
Net unrealized gain (loss).................... 19,438 33,259 2,743
----------- ----------- -----------
Net realized and unrealized gain on
investments............................... 22,720 35,332 3,695
----------- ----------- -----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $ 22,820 $ 35,020 $ 3,854
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- --------------------------
* Period from September 13, 1996 (date deposits first received) to December
31, 1996
** Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
FIDELITY
VIP
PORTFOLIO
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
-------------------------------------------------- -----------
LEVERAGED MIDCAP SMALL EQUITY-
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss)................................. $ (875) $ (1,121) $ (293) $ (1,286) $ (703)
Net realized gain.......................................... 8,050 3,130 1,949 5,496 4,725
Net unrealized gain (loss)................................. 15,418 14,027 3,694 (3,892) 24,879
----------- ----------- ----------- ----------- -----------
Net increase from operations............................. 22,593 16,036 5,350 318 28,901
----------- ----------- ----------- ----------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium load.................. 15,142 7,761 8,317 11,813 27,075
Participant transfers...................................... 278,167 309,607 69,138 288,681 253,480
Participant withdrawals.................................... (10,736) (7,624) (3,232) (11,026) (8,466)
----------- ----------- ----------- ----------- -----------
Net increase from participant transactions............... 282,573 309,744 74,223 289,468 272,089
----------- ----------- ----------- ----------- -----------
Total increase in net assets........................... 305,166 325,780 79,573 289,786 300,990
NET ASSETS:
Beginning of period........................................ 34,431 5,670 12,863 59,242 56,056
----------- ----------- ----------- ----------- -----------
End of period.............................................. $ 339,597 $ 331,450 $ 92,436 $ 349,028 $ 357,046
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits....................................... 3,090 492 602 2,156 1,170
Participant transfers...................................... 19,615 19,725 5,046 20,255 21,039
Participant withdrawals.................................... (814) (474) (240) (824) (674)
----------- ----------- ----------- ----------- -----------
Net increase in units from participant transactions...... 21,891 19,743 5,408 21,587 21,535
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
------------------------
ASSET INVESTMENT
MANAGER GRADE BOND
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment gain (loss)................................. $ 648 $ 1,678
Net realized gain.......................................... 737 26
Net unrealized gain (loss)................................. 6,123 (569)
----------- -----------
Net increase from operations............................. 7,508 1,135
----------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium load.................. 2,107 85
Participant transfers...................................... 40,593 3,967
Participant withdrawals.................................... (1,711) (1,829)
----------- -----------
Net increase from participant transactions............... 40,989 2,223
----------- -----------
Total increase in net assets........................... 48,497 3,358
NET ASSETS:
Beginning of period........................................ 24,659 37,461
----------- -----------
End of period.............................................. $ 73,156 $ 40,819
----------- -----------
----------- -----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits....................................... 195 9
Participant transfers...................................... 3,719 395
Participant withdrawals.................................... (153) (181)
----------- -----------
Net increase in units from participant transactions...... 3,761 223
----------- -----------
----------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
5
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
MFS SERIES SUB-ACCOUNTS ---------------------------------------
------------------------------------- LIMITED
TOTAL WORLD MATURITY BOND
RETURN UTILITIES GOVERNMENTS BALANCED * PARTNERS
----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).................... $ 2,084 $ 67 $ (118) $ 2,743 $ (1) $ (224)
Net realized gain............................. 2,496 156 7 9,988 1 2,530
Net unrealized gain (loss).................... 3,315 126 1,294 (4,946) 6 19,615
----------- ----------- ----------- ----------- ------------- -----------
Net increase from operations................ 7,895 349 1,183 7,785 6 21,921
----------- ----------- ----------- ----------- ------------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium load..... 26,898 772 4,010 8,958 194 10,029
Participant transfers......................... 113,853 1,355 5,048 137,877 148 73,338
Participant withdrawals....................... (3,122) (360) (666) (5,113) (88) (3,582)
----------- ----------- ----------- ----------- ------------- -----------
Net increase from participant
transactions.............................. 137,629 1,767 8,392 141,722 254 79,785
----------- ----------- ----------- ----------- ------------- -----------
Total increase in net assets.............. 145,524 2,116 9,575 149,507 260 101,706
NET ASSETS:
Beginning of period........................... 8,506 1,400 20,460 48,410 -- 23,241
----------- ----------- ----------- ----------- ------------- -----------
End of period................................. $ 154,030 $ 3,516 $ 30,035 $ 197,917 $ 260 $ 124,947
----------- ----------- ----------- ----------- ------------- -----------
----------- ----------- ----------- ----------- ------------- -----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......................... 2,769 528 388 1,190 19 703
Participant transfers......................... 9,440 (338) 495 13,349 15 5,649
Participant withdrawals....................... (270) (33) (63) (509) (9) (257)
----------- ----------- ----------- ----------- ------------- -----------
Net increase in units from participant
transactions.............................. 11,939 157 820 14,030 25 6,095
----------- ----------- ----------- ----------- ------------- -----------
----------- ----------- ----------- ----------- ------------- -----------
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS
**
-------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).................... $ 100 $ (312) $ 159
Net realized gain............................. 3,282 2,073 952
Net unrealized gain (loss).................... 19,438 33,259 2,743
----------- ----------- -----------
Net increase from operations................ 22,820 35,020 3,854
----------- ----------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium load..... 30,836 12,038 1,946
Participant transfers......................... 123,949 266,908 16,958
Participant withdrawals....................... (8,380) (7,491) (1,306)
----------- ----------- -----------
Net increase from participant
transactions.............................. 146,405 271,455 17,598
----------- ----------- -----------
Total increase in net assets.............. 169,225 306,475 21,452
NET ASSETS:
Beginning of period........................... 62,285 3,320 4,145
----------- ----------- -----------
End of period................................. $ 231,510 $ 309,795 $ 25,597
----------- ----------- -----------
----------- ----------- -----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits.......................... 3,565 860 1,637
Participant transfers......................... 11,134 20,102 191
Participant withdrawals....................... (778) (542) (117)
----------- ----------- -----------
Net increase in units from participant
transactions.............................. 13,921 20,420 1,711
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- --------------------------
* Period from September 13, 1996 (date deposits first received) to December
31, 1996
** Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
6
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS FROM INCEPTION (DATE DEPOSITS
FIRST RECEIVED) TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
FIDLELITY
VIP
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS PORTFOLIO
-------------------------------------------------------- SUB-ACCOUNT
SMALL -----------
LEVERAGED MIDCAP CAPITALIZATION EQUITY-
GROWTH ** ALLCAP ** GROWTH ** ** INCOME **
----------- ------------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Inception Date................................. May 5, 1995 May 5, 1995 May 5, 1995 May 5, 1995 May 5, 1995
OPERATIONS:
Net investment gain (loss)..................... $ (23) $ (8) $ (13) $ (52) $ 439
Net realized gain (loss)....................... (3) 12 1 (15) (2)
Net unrealized gain (loss)..................... 424 839 498 (4,213) 2,857
----------- ------ ----------- ------- -----------
Net increase (decrease) from operations...... 398 843 486 (4,280) 3,294
----------- ------ ----------- ------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium load...... 3,930 3,178 3,910 2,938 2,731
Participant transfers.......................... 30,447 1,857 8,745 61,383 50,773
Participant withdrawals........................ (344) (208) (278) (799) (742)
----------- ------ ----------- ------- -----------
Net increase from participant transactions... 34,033 4,827 12,377 63,522 52,762
----------- ------ ----------- ------- -----------
Total increase in net assets............... 34,431 5,670 12,863 59,242 56,056
NET ASSETS:
Beginning of period............................ -- -- -- -- --
----------- ------ ----------- ------- -----------
End of period.................................. $ 34,431 $ 5,670 $ 12,863 $ 59,242 $ 56,056
----------- ------ ----------- ------- -----------
----------- ------ ----------- ------- -----------
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... 349 268 336 266 256
Participant transfers.......................... 2,508 131 678 4,408 4,492
Participant withdrawals........................ (29) (15) (22) (62) (65)
----------- ------ ----------- ------- -----------
Net increase in units from participant
transactions............................... 2,828 384 992 4,612 4,683
----------- ------ ----------- ------- -----------
----------- ------ ----------- ------- -----------
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
------------------------------------
ASSET INVESTMENT
MANAGER GRADE BOND
----------------- -----------------
<S> <C> <C>
Inception Date................................. November 16, 1995 November 16, 1995
OPERATIONS:
Net investment gain (loss)..................... $ (9) $ (14)
Net realized gain (loss)....................... -- --
Net unrealized gain (loss)..................... 794 606
------- -------
Net increase (decrease) from operations...... 785 592
------- -------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium load...... -- --
Participant transfers.......................... 23,939 36,925
Participant withdrawals........................ (65) (56)
------- -------
Net increase from participant transactions... 23,874 36,869
------- -------
Total increase in net assets............... 24,659 37,461
NET ASSETS:
Beginning of period............................ -- --
------- -------
End of period.................................. $ 24,659 $ 37,461
------- -------
------- -------
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits........................... -- --
Participant transfers.......................... 2,356 3,672
Participant withdrawals........................ (6) (5)
------- -------
Net increase in units from participant
transactions............................... 2,350 3,667
------- -------
------- -------
</TABLE>
- ------------------------------
** Premium load reduced by $22 due to waiver of 1.15% of premium load from May
5, 1995 to August 1, 1995
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS FROM INCEPTION (DATE DEPOSITS
FIRST RECEIVED) TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS
------------------------------------------------------- AMT PORTFOLIO SUB-ACCOUNTS
TOTAL WORLD --------------------------------
RETURN UTILITIES GOVERNMENTS ** BALANCED PARTNERS **
----------------- ------------------- --------------- ------------------- -----------
<S> <C> <C> <C> <C> <C>
Inception Date................... October 10, 1995 December 26, 1995 May 5, 1995 September 12, 1995 May 5, 1995
OPERATIONS:
Net investment gain (loss)....... $ 159 $ 25 $ 1,919 $ (55) $ (15)
Net realized gain................ 157 61 -- -- 8
Net unrealized gain (loss)....... 164 (76) (1,668) (621) 857
------ ------ ------- ------- -----------
Net increase (decrease) from
operations................... 480 10 251 (676) 850
------ ------ ------- ------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of
premium load................... 2,123 -- 1,861 -- 2,943
Participant transfers............ 5,933 1,390 18,466 49,657 19,642
Participant withdrawals.......... (30) -- (118) (571) (194)
------ ------ ------- ------- -----------
Net increase from participant
transactions................. 8,026 1,390 20,209 49,086 22,391
------ ------ ------- ------- -----------
Total increase in net
assets..................... 8,506 1,400 20,460 48,410 23,241
NET ASSETS:
Beginning of period.............. -- -- -- -- --
------ ------ ------- ------- -----------
End of period.................... $ 8,506 $ 1,400 $ 20,460 $ 48,410 $ 23,241
------ ------ ------- ------- -----------
------ ------ ------- ------- -----------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits............. 213 -- 185 -- 273
Participant transfers............ 591 139 1,791 4,994 1,668
Participant withdrawals.......... (3) -- (12) (58) (17)
------ ------ ------- ------- -----------
Net increase in units from
participant transactions..... 801 139 1,964 4,936 1,924
------ ------ ------- ------- -----------
------ ------ ------- ------- -----------
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS *
-------------------------------------------------------
GLOBAL
EQUITY MANAGED ** SMALL CAP
------------------- ------------- -------------------
<S> <C> <C> <C>
Inception Date................... September 12, 1995 May 5, 1995 September 26, 1995
OPERATIONS:
Net investment gain (loss)....... $ 123 $ (7) $ (3)
Net realized gain................ 1,262 3 1
Net unrealized gain (loss)....... (981) 413 186
------- ------ ------
Net increase (decrease) from
operations................... 404 409 184
------- ------ ------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of
premium load................... -- 1,867 --
Participant transfers............ 62,563 1,268 4,095
Participant withdrawals.......... (682) (224) (134)
------- ------ ------
Net increase from participant
transactions................. 61,881 2,911 3,961
------- ------ ------
Total increase in net
assets..................... 62,285 3,320 4,145
NET ASSETS:
Beginning of period.............. -- -- --
------- ------ ------
End of period.................... $ 62,285 $ 3,320 $ 4,145
------- ------ ------
------- ------ ------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits............. -- 182 --
Participant transfers............ 6,245 108 419
Participant withdrawals.......... (48) (19) (14)
------- ------ ------
Net increase in units from
participant transactions..... 6,197 271 405
------- ------ ------
------- ------ ------
</TABLE>
- ------------------------------
* Formerly Quest for Value Accumulation Trust
** Premium load reduced by $22 due to waiver of 1.15% of premium load from May
5, 1995 to August 1, 1995
The Notes to Financial Statements are an integral part of these statements.
8
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION
CG Variable Life Insurance Separate Account I (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 six
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 Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:--
Equity-Income Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:--
Asset Manager Portfolio
Investment Grade Bond Portfolio
MFS VARIABLE INSURANCE TRUST:--
MFS Total Return Series
MFS Utilities Series
MFS World Governments Series
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST:--
AMT Balanced Portfolio
AMT Limited Maturity Bond Portfolio
AMT Partners Portfolio
OCC (FORMERLY QUEST FOR VALUE) ACCUMULATION TRUST:--
OCC Global Equity Portfolio
OCC Managed Portfolio
OCC Small Cap Portfolio
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, 1996. 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.
9
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 held and cost of investments as of December 31, 1996 were:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
SHARES COST OF
SUB-ACCOUNT HELD INVESTMENTS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio......................................... 9,892 $ 323,755
Alger American Leveraged AllCap Portfolio............................... 17,120 316,584
Alger American MidCap Growth Portfolio.................................. 4,330 88,244
Alger American Small Capitalization Portfolio........................... 8,532 357,133
Fidelity Equity-Income Portfolio........................................ 16,978 329,310
Fidelity Asset Manager Portfolio........................................ 4,321 66,239
Fidelity Investment Grade Bond Portfolio................................ 3,335 40,782
MFS Total Return Series................................................. 11,235 150,551
MFS Utilities Series.................................................... 257 3,466
MFS World Governments Series............................................ 2,839 30,409
AMT Balanced Portfolio.................................................. 12,432 203,484
AMT Limited Maturity Bond Portfolio..................................... 19 254
AMT Partners Portfolio.................................................. 7,582 104,475
OCC Global Equity Portfolio............................................. 17,499 213,053
OCC Managed Portfolio................................................... 8,556 276,123
OCC Small Cap Portfolio................................................. 1,132 22,668
- -------------------------------------------------------------------------------------------
Total purchases and sales of shares for each mutual fund, for the year ended December 31,
1996, amounted to:
<CAPTION>
-------------------------------------------------------------------------------------------
SUB-ACCOUNT PURCHASES SALES
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio......................................... $ 399,891 $ 111,387
Alger American Leveraged AllCap Portfolio............................... 336,431 24,985
Alger American MidCap Growth Portfolio.................................. 158,606 83,597
Alger American Small Capitalization Portfolio........................... 392,149 102,720
Fidelity Equity-Income Portfolio........................................ 409,649 134,327
Fidelity Asset Manager Portfolio........................................ 44,235 1,867
Fidelity Investment Grade Bond Portfolio................................ 5,923 2,022
MFS Total Return Series................................................. 247,690 106,965
MFS Utilities Series.................................................... 20,495 18,450
MFS World Governments Series............................................ 9,039 765
AMT Balanced Portfolio.................................................. 281,549 118,171
AMT Limited Maturity Bond Portfolio*.................................... 48,118 47,865
AMT Partners Portfolio.................................................. 115,118 34,055
OCC Global Equity Portfolio............................................. 239,204 91,481
OCC Managed Portfolio................................................... 348,149 76,738
OCC Small Cap Portfolio................................................. 33,392 14,995
- -------------------------------------------------------------------------------------------
</TABLE>
* For the period from September 13, 1996 (date deposits first received) to
December 31, 1996.
10
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS
CG Life assumes the risk that policyholders may live longer than expected
and also assumes a mortality risk in connection with the death benefits of the
contract. CG Life also assumes a risk that its actual administrative expenses
may be higher than amounts deducted for such expenses. CG Life charges each
variable sub-account, for mortality and expense risks, a daily deduction,
equivalent to .45% per year during the first ten policy years and .25% per year
thereafter. The mortality and expense risk charges, for each sub-account, are
reported on the Statements of Operations.
CG Life deducts a premium load of 3.5% of each premium payment to cover
state taxes and federal income tax liabilities.
CG Life charges a monthly administrative fee of $15 in the first policy year
and $5 in subsequent policy years. 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, risk classification, gender classification (in accordance with
state law) 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.
Under certain circumstances, CG Life reserves the right to charge a transfer
fee of up to $25 for transfers between sub-accounts. For the year ended December
31, 1996, no transfer fees were deducted from the variable sub-accounts.
The fees charged by CG Life for premium loads (deducted from premium
payments), administrative fees and the amount deducted for the cost of
insurance, both of which are included in participant withdrawals, for variable
sub-accounts for the year ended December 31, 1996, amounted to:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
COST OF
PREMIUM ADMINISTRATIVE INSURANCE
SUB-ACCOUNT LOADS FEES DEDUCTIONS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alger American Growth Portfolio................................ $ 578 $ 1,380 $ 9,297
Alger American Leveraged AllCap Portfolio...................... 282 857 6,744
Alger American MidCap Growth Portfolio......................... 306 525 2,690
Alger American Small Capitalization Portfolio.................. 478 1,281 9,725
Fidelity Equity-Income Portfolio............................... 1,003 816 7,645
Fidelity Asset Manager Portfolio............................... 81 300 1,412
Fidelity Investment Grade Bond Portfolio....................... 3 159 1,605
MFS Total Return Series........................................ 978 420 2,690
MFS Utilities Series........................................... 29 83 275
MFS World Governments Series................................... 145 82 584
AMT Balanced Portfolio......................................... 372 527 4,592
AMT Limited Maturity Bond Portfolio*........................... 7 60 28
AMT Partners Portfolio......................................... 356 558 2,999
OCC Global Equity Portfolio.................................... 1,124 1,163 7,214
OCC Managed Portfolio.......................................... 444 1,045 6,437
OCC Small Cap Portfolio........................................ 71 192 1,114
- -------------------------------------------------------------------------------------------
</TABLE>
* For the period from September 13, 1996 (date deposits first received) to
December 31, 1996.
11
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS (CONTINUED)
CG Life, upon full surrender of a policy, may charge a surrender charge.
This charge is in part a deferred sales charge and in part a recovery of certain
first year administrative costs. The amount of the surrender charge, if any,
will depend on the amount of the death benefit, the amount of premium payments
made during the first two policy years and the age of the policy. In no event
will the surrender charge exceed the maximum allowed by state or Federal law. No
surrender charge is imposed on a partial surrender, but an administrative fee 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. No full surrender or partial surrender administrative charges were paid
to CG Life, attributable to the variable sub-accounts, for the year ended
December 31, 1996.
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.
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 fund managers, that the mutual funds satisfy the requirements of the
regulations.
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Connecticut General
Life Insurance Company and Participants of the
CG Variable Life Insurance Separate Account I
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 Leveraged AllCap
Portfolio, Alger American MidCap Growth Portfolio, Alger American Small
Capitalization Portfolio; Fidelity Variable Insurance Products
Fund--Equity-Income Portfolio; Fidelity Variable Insurance Products Fund
II--Asset Manager Portfolio, Investment Grade Bond Portfolio; MFS Variable
Insurance Trust--MFS Total Return Series, MFS Utilities Series, MFS World
Governments Series; Neuberger & Berman Advisers Management Trust--AMT Balanced
Portfolio, AMT Limited Maturity Bond Portfolio, AMT Partners Portfolio; OCC
(formerly Quest for Value) Accumulation Trust--OCC Global Equity Portfolio, OCC
Managed Portfolio, OCC Small Cap Portfolio (constituting the CG Variable Life
Insurance Separate Account I, hereafter referred to as "the Account") at
December 31, 1996, 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, 1996 by
correspondence with the custodians, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1997
13
<PAGE>
The mutual funds' annual 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
Annual Report, December 31, 1996, consisting of 40 partially numbered pages.
Filed: February 24, 1997, Form Type N-30D, Registration Statement 811-05550
2. Variable Insurance Products Fund
Annual Report, December 31, 1996, consisting of 92 partially numbered pages.
Filed: February 24, 1997, Form Type N-30D, Registration Statement 811-3329
3. Variable Insurance Products Fund II
Annual Report, December 31, 1996, consisting of 112 partially numbered pages.
Filed February 24, 1997, Form Type N-30D, Registration Statement 811-5511
4. MFS - Registered Trademark - Variable Insurance Trust
(a) MFS - Registered Trademark - Total Return Series Annual Report,
December 31, 1996, consisting of 18 partially numbered pages,
Filed March 5, 1997
(b) MFS - Registered Trademark - Utilities Series Annual Report,
December 31, 1996, consisting of 18 partially numbered pages,
Filed March 4, 1997
(c) MFS - Registered Trademark - World Governments Series Annual Report,
December 31, 1996, consisting of 19 partially numbered pages,
Filed March 5, 1997
Form Type N-30D, Registration Statement 811-8326
5. Neuberger&Berman Advisers Management Trust
(a) Balanced Portfolio Annual Report, December 31, 1996, consisting of
37 partially numbered pages
(b) Maturity Bond Portfolio Annual Report, December 31, 1996, consisting
of 35 partially numbered pages
(c) Partners Portfolio Annual Report, December 31, 1996, consisting of
33 partially numbered pages
Filed February 27, 1997, Form Type N-30D, Registration Statement 811-04255
6. OCC Accumulation Trust
Annual Report, December 31, 1996, consisting of 90 unnumbered pages
Filed March 6, 1997, Form Type N-30D, Registration Statement 811-8512
<PAGE>
This report may be distributed only to current contract holders or to persons
who have received a current ACCRU Variable Annuity or Variable Life Prospectus.
[LOGO] National Distributor:
CIGNA Financial Advisors
900 Cottage Grove Road
Hartford, CT 06152
CIGNA Individual Insurance is a
division of CIGNA.
#557819 2/97
