<PAGE>
------------------------------
CIGNA
ACCRU
ANNUAL REPORT
DECEMBER 31, 1997
------------------------------
#562157 [LOGO]
<PAGE>
TABLE OF CONTENTS
SCHEDULES OF CHANGES IN UNIT VALUES
SEPARATE ACCOUNTS FINANCIAL STATEMENTS
CG VARIABLE ANNUITY SEPARATE ACCOUNT II*
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FUND REPORTS:
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND**
EQUITY-INCOME PORTFOLIO
HIGH INCOME PORTFOLIO
MONEY MARKET PORTFOLIO
OVERSEAS PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO
INVESTMENT GRADE BOND PORTFOLIO
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST-SM-
MFS TOTAL RETURN SERIES
MFS UTILITIES SERIES
MFS WORLD GOVERNMENTS SERIES
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
BALANCED PORTFOLIO
LIMITED MATURITY BOND PORTFOLIO
PARTNERS PORTFOLIO
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
MANAGED PORTFOLIO
SMALL CAP PORTFOLIO
* THE FUNDS LISTED BELOW ARE AVAILABLE IN THE PRODUCTS COVERED BY THIS REPORT;
THE SEPARATE ACCOUNT FINANCIALS ALSO INCLUDE FUNDS AVAILABLE IN OTHER PRODUCTS.
** PLEASE NOTE THAT THE FIDELITY HIGH INCOME PORTFOLIO, MONEY MARKET PORTFOLIO
AND OVERSEAS PORTFOLIO ARE USED IN CONNECTION WITH ACCRU VARIABLE ANNUITY
CONTRACTS, BUT NOT ACCRU VARIABLE LIFE INSURANCE CONTRACTS.
<PAGE>
ACCRU VARIABLE PRODUCTS
SCHEDULE OF CHANGES IN UNIT VALUES
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONNECTICUT GENERAL ACCRU VARIABLE ANNUITY
(INCLUDING NEW YORK CONTRACTS ISSUED BEFORE MAY 1, 1996)
DATE INITIALLY 12/31/96 12/31/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 4/12/95 $13.855323 $17.196381 24.1
Alger American Leveraged AllCap Portfolio 6/2/95 15.364036 18.148668 18.1
Alger American MidCap Growth Portfolio 4/10/95 14.473761 16.429260 13.5
Alger American Small Capitalization Portfolio 4/10/95 13.460941 14.799455 9.9
- ------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 4/10/95 13.679456 17.296831 26.4
Fidelity VIP High Income Portfolio 5/3/96 10.802349 12.545574 16.1
Fidelity VIP Money Market Portfolio 6/8/95 10.658014 11.095784 4.1
Fidelity VIP Overseas Portfolio 5/9/96 10.614394 11.687000 10.1
Fidelity VIP II Asset Manager Portfolio 4/12/95 12.758423 15.193166 19.1
Fidelity VIP II Investment Grade Bond Portfolio 7/18/95 10.734479 11.554977 7.6
- ------------------------------------------------------------------------------------------------------------
MFS Total Return Series 7/7/95 12.420693 14.870405 19.7
MFS Utilities Series 7/27/95 13.292608 17.278823 30.0
MFS World Governments Series 7/7/95 10.552213 10.297427 -2.4
- ------------------------------------------------------------------------------------------------------------
AMT Balanced Portfolio 7/18/95 10.832872 12.772116 17.9
AMT Limited Maturity Bond Portfolio 5/3/95 10.857343 11.438698 5.4
AMT Partners Portfolio 4/12/95 15.500823 20.080660 29.5
- ------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 4/10/95 13.347358 15.021373 12.5
OCC Managed Portfolio 6/19/95 13.502565 16.298405 20.7
OCC Small Cap Portfolio 6/27/95 12.718827 15.345589 20.7
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
ACCRU VARIABLE UNIVERSAL LIFE
DATE INITIALLY 12/31/96 12/31/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 5/5/95 $13.738238 $17.198160 25.2
Alger American Leveraged AllCap Portfolio 5/5/95 16.468026 19.620624 19.1
Alger American MidCap Growth Portfolio 5/5/95 14.443889 16.536891 14.5
Alger American Small Capitalization Portfolio 5/5/95 13.322001 14.773135 10.9
- ------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 5/5/95 13.618095 17.367721 27.5
Fidelity VIP II Asset Manager Portfolio 11/16/95 11.971291 14.378768 20.1
Fidelity VIP II Investment Grade Bond Portfolio 11/16/95 10.493674 11.393241 8.6
- ------------------------------------------------------------------------------------------------------------
MFS Total Return Series 10/10/95 12.090502 14.599934 20.8
MFS Utilities Series 12/26/95 11.880730 15.576712 31.1
MFS World Governments Series 5/5/95 10.788580 10.618990 -1.6
- ------------------------------------------------------------------------------------------------------------
AMT Balanced Portfolio 9/12/95 10.435528 12.409789 18.9
AMT Limited Maturity Bond Portfolio 9/13/96 10.256711 10.899159 6.3
AMT Partners Portfolio 5/5/95 15.580865 20.358381 30.7
- ------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 9/12/95 11.507742 13.062780 13.5
OCC Managed Portfolio 5/5/95 14.972784 18.228938 21.7
OCC Small Cap Portfolio 9/26/95 12.096552 14.720675 21.7
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Accumulation Unit Values are net of charges against the assets of the Variable
Account for the assumption of mortality and expense risks and for administrative
expenses.
<PAGE>
ACCRU VARIABLE PRODUCTS
SCHEDULE OF CHANGES IN UNIT VALUES
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CIGNA LIFE ACCRU VARIABLE ANNUITY
DATE INITIALLY 12/31/96 12/31/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 2/23/96 $10.144346 $12.590543 24.1
Alger American Leveraged AllCap Portfolio 2/9/96 10.507089 12.411431 18.1
Alger American MidCap Growth Portfolio 1/19/96 11.319352 12.848669 13.5
Alger American Small Capitalization Portfolio 2/9/96 9.868924 10.850258 9.9
- ------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 2/20/96 11.013725 13.926178 26.4
Fidelity VIP High Income Portfolio 5/17/96 10.659332 12.379478 16.1
Fidelity VIP Money Market Portfolio 2/22/96 10.338796 10.763448 4.1
Fidelity VIP Overseas Portfolio 5/13/96 10.640099 11.715303 10.1
Fidelity VIP II Asset Manager Portfolio 3/1/96 11.112123 13.232694 19.1
Fidelity VIP II Investment Grade Bond Portfolio 3/1/96 10.277513 11.063082 7.6
- ------------------------------------------------------------------------------------------------------------
MFS Total Return Series 2/22/96 10.934889 13.091558 19.7
MFS Utilities Series 3/15/96 11.879471 15.441911 30.0
MFS World Governments Series 2/20/96 10.461237 10.208648 -2.4
- ------------------------------------------------------------------------------------------------------------
AMT Balanced Portfolio 2/22/96 10.196779 12.022153 17.9
AMT Limited Maturity Bond Portfolio 2/20/96 10.278541 10.828905 5.4
AMT Partners Portfolio 2/20/96 12.176555 15.774212 29.5
- ------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 2/9/96 11.044449 12.429635 12.5
OCC Managed Portfolio 2/20/96 11.575082 13.971818 20.7
OCC Small Cap Portfolio 3/1/96 11.375492 13.724821 20.7
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONNECTICUT GENERAL ACCRU VARIABLE ANNUITY -- NEW YORK CONTRACTS ISSUED MAY 1, 1996 AND LATER
DATE INITIALLY 12/31/96 12/31/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE* UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 5/2/96 $10.655539 $13.211614 24.0
Alger American Leveraged AllCap Portfolio 5/2/96 9.952430 11.744336 18.0
Alger American MidCap Growth Portfolio 5/2/96 10.033269 11.377289 13.4
Alger American Small Capitalization Portfolio 5/2/96 9.368431 10.289562 9.8
- ------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 5/2/96 10.851716 13.707441 26.3
Fidelity VIP High Income Portfolio 5/22/96 10.600637 12.298844 16.0
Fidelity VIP Money Market Portfolio 6/3/96 10.223104 10.632251 4.0
Fidelity VIP Overseas Portfolio 5/20/96 10.534750 11.587559 10.0
Fidelity VIP II Asset Manager Portfolio 5/28/96 10.797117 12.844560 19.0
Fidelity VIP II Investment Grade Bond Portfolio 6/3/96 10.530045 11.323436 7.5
- ------------------------------------------------------------------------------------------------------------
MFS Total Return Series 5/2/96 11.016746 13.176208 19.6
MFS Utilities Series 5/24/96 11.397495 14.800406 29.9
MFS World Governments Series 5/20/96 10.436909 10.174585 -2.5
- ------------------------------------------------------------------------------------------------------------
AMT Balanced Portfolio 5/22/96 9.983723 11.759038 17.8
AMT Limited Maturity Bond Portfolio 6/3/96 10.377931 10.922542 5.2
AMT Partners Portfolio 5/2/96 11.514426 14.901357 29.4
- ------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 5/2/96 10.785929 12.126399 12.4
OCC Managed Portfolio 5/2/96 11.432399 13.785620 20.6
OCC Small Cap Portfolio 5/20/96 10.568440 12.738185 20.5
- ------------------------------------------------------------------------------------------------------------
</TABLE>
*Variable Annuity Unit Values reflect the Company's reduction of its mortality
and expense risk charges at a rate of 1.20% per year instead of 1.25% per year
throughout the 5/1/96 through 6/30/96 period. Had these charges been imposed,
ending accumulation unit values would have been lower for those funds during
that period.
Accumulation Unit Values are net of charges against the assets of the Variable
Account for the assumption of mortality and expense risks and for
administrative expenses.
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
CIGNA
VARIABLE
PRODUCTS
GROUP
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
--------------------------------------------------- -----------
LEVERAGED MIDCAP SMALL MONEY
GROWTH ALLCAP GROWTH CAPITALIZATION MARKET
----------- ---------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $30,808,248 $8,253,666 $15,398,687 $20,132,265 $6,869,616
Receivable from Connecticut
General Life Insurance
Company..................... 31,506 6,260 1,903 -- --
Receivable for fund shares
sold........................ -- -- -- 3,763 8,637
----------- ---------- ---------- -------------- -----------
Total assets................ 30,839,754 8,259,926 15,400,590 20,136,028 6,878,253
----------- ---------- ---------- -------------- -----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- -- -- 3,763 8,637
Payable for fund shares
purchased................... 31,506 6,260 1,903 -- --
----------- ---------- ---------- -------------- -----------
Total liabilities........... 31,506 6,260 1,903 3,763 8,637
----------- ---------- ---------- -------------- -----------
Net assets.................. $30,808,248 $8,253,666 $15,398,687 $20,132,265 $6,869,616
----------- ---------- ---------- -------------- -----------
----------- ---------- ---------- -------------- -----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 1,521,063 401,116 802,891 1,125,616 --
Net asset value per
accumulation unit........... $ 17.196381 $18.148668 $16.429260 $ 14.799455 $ --
----------- ---------- ---------- -------------- -----------
$26,156,787 $7,279,720 $13,190,901 $16,658,508 $ --
----------- ---------- ---------- -------------- -----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 145,446 33,901 84,399 137,954 --
Net asset value per
accumulation unit........... $ 13.211614 $11.744336 $11.377289 $ 10.289562 $ --
----------- ---------- ---------- -------------- -----------
$ 1,921,574 $ 398,139 $ 960,230 $ 1,419,485 $ --
----------- ---------- ---------- -------------- -----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY
CONTRACTS--CHOICEPLUS
Accumulation units
outstanding................. 241,255 52,402 112,152 175,551 671,479
Net asset value per
accumulation unit........... $ 11.168525 $10.988210 $11.123794 $ 11.406099 $10.230578
----------- ---------- ---------- -------------- -----------
$ 2,694,461 $ 575,807 $1,247,556 $ 2,002,348 $6,869,616
----------- ---------- ---------- -------------- -----------
Accumulation net assets....... $30,772,822 $8,253,666 $15,398,687 $20,080,341 $6,869,616
Annuity reserves.............. 35,426 -- -- 51,924 --
----------- ---------- ---------- -------------- -----------
$30,808,248 $8,253,666 $15,398,687 $20,132,265 $6,869,616
----------- ---------- ---------- -------------- -----------
----------- ---------- ---------- -------------- -----------
<CAPTION>
FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
------------------------------------------------
EQUITY- HIGH MONEY
INCOME INCOME MARKET OVERSEAS
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $52,730,899 $17,524,570 $11,575,573 $6,997,880
Receivable from Connecticut
General Life Insurance
Company..................... 30,505 33,735 -- 13,114
Receivable for fund shares
sold........................ -- -- 407 --
----------- ---------- ----------- ----------
Total assets................ 52,761,404 17,558,305 11,575,980 7,010,994
----------- ---------- ----------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- -- 407 --
Payable for fund shares
purchased................... 30,505 33,735 -- 13,114
----------- ---------- ----------- ----------
Total liabilities........... 30,505 33,735 407 13,114
----------- ---------- ----------- ----------
Net assets.................. $52,730,899 $17,524,570 $11,575,573 $6,997,880
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 2,564,387 997,952 1,017,888 417,152
Net asset value per
accumulation unit........... $ 17.296831 $12.545574 $ 11.095784 $11.687000
----------- ---------- ----------- ----------
$44,355,770 $12,519,875 $11,294,261 $4,875,251
----------- ---------- ----------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 232,844 55,953 21,161 21,670
Net asset value per
accumulation unit........... $ 13.707441 $12.298844 $ 10.632251 $11.587559
----------- ---------- ----------- ----------
$ 3,191,701 $ 688,161 $ 224,994 $ 251,102
----------- ---------- ----------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY
CONTRACTS--CHOICEPLUS
Accumulation units
outstanding................. 456,837 391,937 -- 187,414
Net asset value per
accumulation unit........... $ 11.249844 $11.013339 $ -- $ 9.986074
----------- ---------- ----------- ----------
$ 5,139,346 $4,316,534 $ -- $1,871,527
----------- ---------- ----------- ----------
Accumulation net assets....... $52,686,817 $17,524,570 $11,519,255 $6,997,880
Annuity reserves.............. 44,082 -- 56,318 --
----------- ---------- ----------- ----------
$52,730,899 $17,524,570 $11,575,573 $6,997,880
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
1
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIDELITY VIP III
FIDELITY VIP II PORTFOLIO SUB-
PORTFOLIO SUB-ACCOUNTS ACCOUNT
------------------------------------ ----------------
ASSET INVESTMENT GROWTH
MANAGER CONTRA- FUND GRADE BOND OPPORTUNITIES
----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $ 6,665,259 $ 1,711,022 $11,087,263 $3,831,488
Receivable from Connecticut
General Life Insurance
Company..................... 5,447 8,985 52,259 17,930
Receivable for fund shares
sold........................ -- -- -- --
----------- ----------- ---------- ----------------
Total assets................ 6,670,706 1,720,007 11,139,522 3,849,418
----------- ----------- ---------- ----------------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- -- -- --
Payable for fund shares
purchased................... 5,447 8,985 52,259 17,930
----------- ----------- ---------- ----------------
Total liabilities........... 5,447 8,985 52,259 17,930
----------- ----------- ---------- ----------------
Net assets.................. $ 6,665,259 $ 1,711,022 $11,087,263 $3,831,488
----------- ----------- ---------- ----------------
----------- ----------- ---------- ----------------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 403,681 -- 776,658 --
Net asset value per
accumulation unit........... $ 15.193166 $ -- $11.554977 $ --
----------- ----------- ---------- ----------------
$ 6,133,197 $ -- $8,974,264 $ --
----------- ----------- ---------- ----------------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 41,423 -- 22,191 --
Net asset value per
accumulation unit........... $ 12.844560 $ -- $11.323436 $ --
----------- ----------- ---------- ----------------
$ 532,062 $ -- $ 251,281 $ --
----------- ----------- ---------- ----------------
FLEXIBLE PAYMENT DEFERRED
ANNUITY
CONTRACTS--CHOICEPLUS
Accumulation units
outstanding................. -- 148,976 175,848 336,690
Net asset value per
accumulation unit........... $ -- $ 11.485208 $10.587068 $11.379873
----------- ----------- ---------- ----------------
$ -- $ 1,711,022 $1,861,718 $3,831,488
----------- ----------- ---------- ----------------
Accumulation net assets....... $ 6,665,259 $ 1,711,022 $11,087,263 $3,831,488
Annuity reserves.............. -- -- -- --
----------- ----------- ---------- ----------------
$ 6,665,259 $ 1,711,022 $11,087,263 $3,831,488
----------- ----------- ---------- ----------------
----------- ----------- ---------- ----------------
<CAPTION>
MFS SERIES SUB-ACCOUNTS
-------------------------------------------------------------------------
EMERGING GROWTH WITH TOTAL WORLD
GROWTH INCOME RESEARCH RETURN UTILITIES GOVERNMENTS
---------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $2,119,089 $2,764,456 $3,679,671 $19,421,227 $6,251,870 $1,413,390
Receivable from Connecticut
General Life Insurance
Company..................... 3,955 54,701 33,334 -- 14,783 --
Receivable for fund shares
sold........................ -- -- -- 706 -- 54
---------- ----------- ---------- ---------- ---------- -----------
Total assets................ 2,123,044 2,819,157 3,713,005 19,421,933 6,266,653 1,413,444
---------- ----------- ---------- ---------- ---------- -----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- -- -- 706 -- 54
Payable for fund shares
purchased................... 3,955 54,701 33,334 -- 14,783 --
---------- ----------- ---------- ---------- ---------- -----------
Total liabilities........... 3,955 54,701 33,334 706 14,783 54
---------- ----------- ---------- ---------- ---------- -----------
Net assets.................. $2,119,089 $2,764,456 $3,679,671 $19,421,227 $6,251,870 $1,413,390
---------- ----------- ---------- ---------- ---------- -----------
---------- ----------- ---------- ---------- ---------- -----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. -- -- -- 1,032,242 322,795 131,155
Net asset value per
accumulation unit........... $ -- $ -- $ -- $14.870405 $17.278823 $10.297427
---------- ----------- ---------- ---------- ---------- -----------
$ -- $ -- $ -- $15,349,858 $5,577,524 $1,350,557
---------- ----------- ---------- ---------- ---------- -----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. -- -- -- 102,664 13,784 6,175
Net asset value per
accumulation unit........... $ -- $ -- $ -- $13.176208 $14.800406 $10.174585
---------- ----------- ---------- ---------- ---------- -----------
$ -- $ -- $ -- $1,352,720 $ 204,004 $ 62,833
---------- ----------- ---------- ---------- ---------- -----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY
CONTRACTS--CHOICEPLUS
Accumulation units
outstanding................. 187,043 242,027 341,999 244,760 39,107 --
Net asset value per
accumulation unit........... $11.329433 $11.422097 $10.759295 $11.107402 $12.027164 $ --
---------- ----------- ---------- ---------- ---------- -----------
$2,119,089 $2,764,456 $3,679,671 $2,718,649 $ 470,342 $ --
---------- ----------- ---------- ---------- ---------- -----------
Accumulation net assets....... $2,119,089 $2,764,456 $3,679,671 $19,421,227 $6,251,870 $1,413,390
Annuity reserves.............. -- -- -- -- -- --
---------- ----------- ---------- ---------- ---------- -----------
$2,119,089 $2,764,456 $3,679,671 $19,421,227 $6,251,870 $1,413,390
---------- ----------- ---------- ---------- ---------- -----------
---------- ----------- ---------- ---------- ---------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
2
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
----------------------------------- OCC ACCUMULATION TRUST SUB-ACCOUNTS
LIMITED --------------------------------------
MATURITY GLOBAL
BALANCED BOND PARTNERS EQUITY MANAGED SMALL CAP
---------- ---------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $5,410,923 $6,636,808 $34,421,582 $18,864,939 $ 67,959,224 $9,066,217
Receivable from Connecticut
General Life Insurance
Company..................... -- 212 52,086 7,429 53,492 13,210
Receivable for fund shares
sold........................ 290 -- -- -- -- --
---------- ---------- ----------- ---------- ------------- ----------
Total assets................ 5,411,213 6,637,020 34,473,668 18,872,368 68,012,716 9,079,427
---------- ---------- ----------- ---------- ------------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... 290 -- -- -- -- --
Payable for fund shares
purchased................... -- 212 52,086 7,429 53,492 13,210
---------- ---------- ----------- ---------- ------------- ----------
Total liabilities........... 290 212 52,086 7,429 53,492 13,210
---------- ---------- ----------- ---------- ------------- ----------
Net assets.................. $5,410,923 $6,636,808 $34,421,582 $18,864,939 $ 67,959,224 $9,066,217
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS
Accumulation units
outstanding................. 389,760 460,111 1,242,083 1,032,703 3,343,230 448,919
Net asset value per
accumulation unit........... $12.772116 $11.438698 $ 20.080660 $15.021373 $ 16.298405 $15.345589
---------- ---------- ----------- ---------- ------------- ----------
$4,978,066 $5,263,072 $24,941,844 $15,512,619 $ 54,489,310 $6,888,934
---------- ---------- ----------- ---------- ------------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY CONTRACTS--NEW YORK
Accumulation units
outstanding................. 33,702 15,655 131,403 77,692 329,792 44,569
Net asset value per
accumulation unit........... $11.759038 $10.922542 $ 14.901357 $12.126399 $ 13.785620 $12.738185
---------- ---------- ----------- ---------- ------------- ----------
$ 396,303 $ 170,997 $ 1,958,078 $ 942,121 $ 4,546,388 $ 567,734
---------- ---------- ----------- ---------- ------------- ----------
FLEXIBLE PAYMENT DEFERRED
ANNUITY
CONTRACTS--CHOICEPLUS
Accumulation units
outstanding................. -- 116,110 637,684 226,381 792,156 145,504
Net asset value per
accumulation unit........... $ -- $10.358639 $ 11.785098 $10.384482 $ 11.210441 $10.688805
---------- ---------- ----------- ---------- ------------- ----------
$ -- $1,202,739 $ 7,515,164 $2,350,845 $ 8,880,418 $1,555,263
---------- ---------- ----------- ---------- ------------- ----------
Accumulation net assets....... $5,374,369 $6,636,808 $34,415,086 $18,805,585 $ 67,916,116 $9,011,931
Annuity reserves.............. 36,554 -- 6,496 59,354 43,108 54,286
---------- ---------- ----------- ---------- ------------- ----------
$5,410,923 $6,636,808 $34,421,582 $18,864,939 $ 67,959,224 $9,066,217
---------- ---------- ----------- ---------- ------------- ----------
---------- ---------- ----------- ---------- ------------- ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CIGNA
VARIABLE
PRODUCTS
GROUP
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
------------------------------------------------- ---------
LEVERAGED MIDCAP SMALL MONEY
GROWTH ALLCAP GROWTH CAPITALIZATION MARKET *
---------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................... $ 77,695 $ -- $ 7,282 $ -- $94,819
EXPENSES:
Mortality and expense risk and
administrative charges................ 331,270 94,488 171,622 218,002 26,486
---------- ---------- ---------- ------------- ---------
Net investment gain (loss)............ (253,575) (94,488) (164,340) (218,002 ) 68,333
---------- ---------- ---------- ------------- ---------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distribution from portfolio
sponsor............................... 140,707 -- 177,571 587,421 --
Net realized gain (loss) on share
transactions.......................... 1,540 19,106 24,882 (93,004 ) --
---------- ---------- ---------- ------------- ---------
Net realized gain..................... 142,247 19,106 202,453 494,417 --
Net unrealized gain..................... 5,050,728 1,153,622 1,532,602 1,272,653 --
---------- ---------- ---------- ------------- ---------
Net realized and unrealized gain on
investments......................... 5,192,975 1,172,728 1,735,055 1,767,070 --
---------- ---------- ---------- ------------- ---------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................ $4,939,400 $1,078,240 $1,570,715 $ 1,549,068 $68,333
---------- ---------- ---------- ------------- ---------
---------- ---------- ---------- ------------- ---------
<CAPTION>
FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
----------------------------------------------
EQUITY- HIGH MONEY
INCOME INCOME MARKET OVERSEAS
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................... $ 501,651 $ 401,740 $ 762,513 $ 40,523
EXPENSES:
Mortality and expense risk and
administrative charges................ 531,764 141,971 187,646 60,775
---------- ---------- ---------- ----------
Net investment gain (loss)............ (30,113) 259,769 574,867 (20,252 )
---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distribution from portfolio
sponsor............................... 2,522,193 49,653 -- 160,863
Net realized gain (loss) on share
transactions.......................... (10,861) (12,799) -- (3,004 )
---------- ---------- ---------- ----------
Net realized gain..................... 2,511,332 36,854 -- 157,859
Net unrealized gain..................... 6,563,776 1,259,396 -- 38,849
---------- ---------- ---------- ----------
Net realized and unrealized gain on
investments......................... 9,075,108 1,296,250 -- 196,708
---------- ---------- ---------- ----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................ $9,044,995 $1,556,019 $ 574,867 $ 176,456
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
- ----------------------------------
* Period from May 20, 1997 (date deposits first received) to December 31, 1997
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIDELITY VIP III
FIDELITY VIP II PORTFOLIO SUB- MFS SERIES
PORTFOLIO SUB-ACCOUNTS ACCOUNT SUB-ACCOUNTS
------------------------------- ----------------- ----------------------
ASSET CONTRA- INVESTMENT GROWTH EMERGING GROWTH WITH
MANAGER FUND ** GRADE BOND OPPORTUNITIES *** GROWTH ** INCOME ****
---------- ------- ---------- ----------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 167,312 $ -- $ 360,990 $ -- $ -- $ 10,678
EXPENSES:
Mortality and expense risk and
administrative charges...... 76,758 5,782 104,517 12,362 6,875 8,570
---------- ------- ---------- -------- --------- -----------
Net investment gain
(loss).................... 90,554 (5,782) 256,473 (12,362) (6,875 ) 2,108
---------- ------- ---------- -------- --------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Capital distribution from
portfolio sponsor........... 419,698 -- -- -- -- 49,949
Net realized gain (loss) on
share transactions.......... 5,306 (17) 2,025 57 1,644 (98 )
---------- ------- ---------- -------- --------- -----------
Net realized gain (loss).... 425,004 (17) 2,025 57 1,644 49,851
Net unrealized gain (loss).... 492,627 41,006 368,703 165,241 24,778 43,425
---------- ------- ---------- -------- --------- -----------
Net realized and unrealized
gain (loss) on
investments............... 917,631 40,989 370,728 165,298 26,422 93,276
---------- ------- ---------- -------- --------- -----------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $1,008,185 $35,207 $ 627,201 $ 152,936 $ 19,547 $ 95,384
---------- ------- ---------- -------- --------- -----------
---------- ------- ---------- -------- --------- -----------
<CAPTION>
TOTAL WORLD
RESEARCH *** RETURN UTILITIES GOVERNMENTS
------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ -- $ -- $ -- $ 22,035
EXPENSES:
Mortality and expense risk and
administrative charges...... 11,215 190,114 57,968 18,142
------------ ---------- ---------- -----------
Net investment gain
(loss).................... (11,215 ) (190,114) (57,968) 3,893
------------ ---------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Capital distribution from
portfolio sponsor........... -- -- -- 9,988
Net realized gain (loss) on
share transactions.......... 1,277 3,460 2,162 (1,993)
------------ ---------- ---------- -----------
Net realized gain (loss).... 1,277 3,460 2,162 7,995
Net unrealized gain (loss).... 20,550 2,716,983 1,313,374 (47,665)
------------ ---------- ---------- -----------
Net realized and unrealized
gain (loss) on
investments............... 21,827 2,720,443 1,315,536 (39,670)
------------ ---------- ---------- -----------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 10,612 $2,530,329 $1,257,568 $ (35,777)
------------ ---------- ---------- -----------
------------ ---------- ---------- -----------
</TABLE>
- ------------------------------
** Period from June 2, 1997 (date deposits first received) to December 31,
1997
*** Period from June 9, 1997 (date deposits first received) to December 31,
1997
**** Period from June 5, 1997 (date deposits first received) to December 31,
1997
The Notes to Financial Statements are an integral part of these statements.
5
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
-------------------------------------- OCC ACCUMULATION TRUST SUB-ACCOUNTS
LIMITED --------------------------------------------
MATURITY GLOBAL
BALANCED BOND PARTNERS EQUITY MANAGED SMALL CAP
------------ --------- ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 62,015 $230,704 $ 35,980 $ 89,675 $ 399,586 $ 19,838
EXPENSES:
Mortality and expense risk and
administrative charges...... 57,524 65,699 287,570 200,143 684,466 74,900
------------ --------- ----------- ------------ -------------- ------------
Net investment gain
(loss).................... 4,491 165,005 (251,590) (110,468) (284,880) (55,062)
------------ --------- ----------- ------------ -------------- ------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Capital distribution from
portfolio sponsor........... 159,172 -- 554,096 863,304 1,227,260 139,904
Net realized gain (loss) on
share transactions.......... 8,894 1,260 (36,279) (3,225) 473 1,039
------------ --------- ----------- ------------ -------------- ------------
Net realized gain........... 168,066 1,260 517,817 860,079 1,227,733 140,943
Net unrealized gain........... 507,948 92,716 4,735,263 718,584 7,959,980 845,266
------------ --------- ----------- ------------ -------------- ------------
Net realized and unrealized
gain on investments....... 676,014 93,976 5,253,080 1,578,663 9,187,713 986,209
------------ --------- ----------- ------------ -------------- ------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 680,505 $258,981 $5,001,490 $1,468,195 $ 8,902,833 $931,147
------------ --------- ----------- ------------ -------------- ------------
------------ --------- ----------- ------------ -------------- ------------
</TABLE>
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 PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CIGNA
VARIABLE
PRODUCTS
GROUP
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT
--------------------------------------------------- ------------
LEVERAGED MIDCAP SMALL MONEY MARKET
GROWTH ALLCAP GROWTH CAPITALIZATION *
----------- ---------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss)......... $ (253,575) $ (94,488) $ (164,340) $ (218,002) $ 68,333
Net realized gain.................. 142,247 19,106 202,453 494,417 --
Net unrealized gain................ 5,050,728 1,153,622 1,532,602 1,272,653 --
----------- ---------- ---------- -------------- ------------
Net increase from operations..... 4,939,400 1,078,240 1,570,715 1,549,068 68,333
----------- ---------- ---------- -------------- ------------
ACCUMULATION AND ANNUITY UNIT
TRANSACTIONS:
Participant deposits............... 5,337,526 1,537,063 2,637,168 3,430,738 26,057,549
Participant transfers.............. 3,181,343 280,882 2,087,535 1,351,675 (19,218,746)
Participant withdrawals and annuity
payments......................... (824,870) (226,287) (472,429) (593,283) (37,520)
----------- ---------- ---------- -------------- ------------
Net increase from participant
transactions................... 7,693,999 1,591,658 4,252,274 4,189,130 6,801,283
----------- ---------- ---------- -------------- ------------
Total increase in net assets... 12,633,399 2,669,898 5,822,989 5,738,198 6,869,616
----------- ---------- ---------- -------------- ------------
NET ASSETS:
Beginning of period................ 18,174,849 5,583,768 9,575,698 14,394,067 --
----------- ---------- ---------- -------------- ------------
End of period...................... $30,808,248 $8,253,666 $15,398,687 $20,132,265 $ 6,869,616
----------- ---------- ---------- -------------- ------------
----------- ---------- ---------- -------------- ------------
<CAPTION>
FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
--------------------------------------------------
EQUITY- HIGH MONEY
INCOME INCOME MARKET OVERSEAS
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss)......... $ (30,113) $ 259,769 $ 574,867 $ (20,252)
Net realized gain.................. 2,511,332 36,854 -- 157,859
Net unrealized gain................ 6,563,776 1,259,396 -- 38,849
----------- ---------- ----------- -----------
Net increase from operations..... 9,044,995 1,556,019 574,867 176,456
----------- ---------- ----------- -----------
ACCUMULATION AND ANNUITY UNIT
TRANSACTIONS:
Participant deposits............... 9,877,589 7,265,778 25,555,964 2,765,425
Participant transfers.............. 7,616,249 4,195,306 (23,453,172) 2,324,012
Participant withdrawals and annuity
payments......................... (1,991,191) (375,923) (1,704,916) (162,622)
----------- ---------- ----------- -----------
Net increase from participant
transactions................... 15,502,647 11,085,161 397,876 4,926,815
----------- ---------- ----------- -----------
Total increase in net assets... 24,547,642 12,641,180 972,743 5,103,271
----------- ---------- ----------- -----------
NET ASSETS:
Beginning of period................ 28,183,257 4,883,390 10,602,830 1,894,609
----------- ---------- ----------- -----------
End of period...................... $52,730,899 $17,524,570 $11,575,573 $ 6,997,880
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
</TABLE>
- ------------------------------
* Period from May 20, 1997 (date deposits first received) to December 31, 1997
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIDELITY VIP
III
PORTFOLIO SUB-
FIDELITY VIP II ACCOUNT
PORTFOLIO SUB-ACCOUNTS --------------
----------------------------------- GROWTH
ASSET CONTRA- INVESTMENT OPPORTUNITIES
MANAGER FUND ** GRADE BOND ***
----------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss)......... $ 90,554 $ (5,782) $ 256,473 $ (12,362)
Net realized gain (loss)........... 425,004 (17) 2,025 57
Net unrealized gain (loss)......... 492,627 41,006 368,703 165,241
----------- ---------- ---------- --------------
Net increase (decrease) from
operations..................... 1,008,185 35,207 627,201 152,936
----------- ---------- ---------- --------------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits............... 999,019 1,155,144 2,794,038 2,597,161
Participant transfers.............. 810,077 547,974 2,142,175 1,101,690
Participant withdrawals............ (355,632) (27,303) (316,736) (20,299)
----------- ---------- ---------- --------------
Net increase (decrease) from
participant transactions....... 1,453,464 1,675,815 4,619,477 3,678,552
----------- ---------- ---------- --------------
Total increase (decrease) in
net assets................... 2,461,649 1,711,022 5,246,678 3,831,488
----------- ---------- ---------- --------------
NET ASSETS:
Beginning of period................ 4,203,610 -- 5,840,585 --
----------- ---------- ---------- --------------
End of period...................... $ 6,665,259 $1,711,022 $11,087,263 $ 3,831,488
----------- ---------- ---------- --------------
----------- ---------- ---------- --------------
<CAPTION>
MFS SERIES SUB-ACCOUNTS
----------------------------------------------------------------------------
EMERGING GROWTH WITH RESEARCH TOTAL WORLD
GROWTH ** INCOME **** *** RETURN UTILITIES GOVERNMENTS
------------ ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss)......... $ (6,875) $ 2,108 $ (11,215 ) $ (190,114) $ (57,968) $ 3,893
Net realized gain (loss)........... 1,644 49,851 1,277 3,460 2,162 7,995
Net unrealized gain (loss)......... 24,778 43,425 20,550 2,716,983 1,313,374 (47,665)
------------ ----------- ---------- ----------- ---------- -----------
Net increase (decrease) from
operations..................... 19,547 95,384 10,612 2,530,329 1,257,568 (35,777)
------------ ----------- ---------- ----------- ---------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits............... 1,299,509 1,387,817 2,361,107 4,951,791 697,454 205,485
Participant transfers.............. 849,791 1,287,747 1,353,004 3,826,468 1,697,348 (228,367)
Participant withdrawals............ (49,758) (6,492 ) (45,052 ) (589,750) (192,307) (35,414)
------------ ----------- ---------- ----------- ---------- -----------
Net increase (decrease) from
participant transactions....... 2,099,542 2,669,072 3,669,059 8,188,509 2,202,495 (58,296)
------------ ----------- ---------- ----------- ---------- -----------
Total increase (decrease) in
net assets................... 2,119,089 2,764,456 3,679,671 10,718,838 3,460,063 (94,073)
------------ ----------- ---------- ----------- ---------- -----------
NET ASSETS:
Beginning of period................ -- -- -- 8,702,389 2,791,807 1,507,463
------------ ----------- ---------- ----------- ---------- -----------
End of period...................... $ 2,119,089 $2,764,456 $3,679,671 $19,421,227 $6,251,870 $1,413,390
------------ ----------- ---------- ----------- ---------- -----------
------------ ----------- ---------- ----------- ---------- -----------
</TABLE>
- ------------------------------
** Period from June 2, 1997 (date deposits first received) to December 31,
1997
*** Period from June 9, 1997 (date deposits first received) to December 31,
1997
**** Period from June 5, 1997 (date deposits first received) to December 31,
1997
The Notes to Financial Statements are an integral part of these statements.
8
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
AMT PORTFOLIO SUB-ACCOUNTS
-----------------------------------
LIMITED OCC ACCUMULATION TRUST SUB-ACCOUNTS
MATURITY ------------------------------------------
BALANCED BOND PARTNERS GLOBAL EQUITY MANAGED SMALL CAP
----------- ---------- ---------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain
(loss)................. $ 4,491 $ 165,005 $ (251,590) $ (110,468) $ (284,880) $ (55,062)
Net realized gain........ 168,066 1,260 517,817 860,079 1,227,733 140,943
Net unrealized gain...... 507,948 92,716 4,735,263 718,584 7,959,980 845,266
----------- ---------- ---------- -------------- ------------ -----------
Net increase from
operations........... 680,505 258,981 5,001,490 1,468,195 8,902,833 931,147
----------- ---------- ---------- -------------- ------------ -----------
ACCUMULATION AND ANNUITY
UNIT TRANSACTIONS:
Participant deposits 794,039 1,839,438 10,686,060 4,406,191 16,196,357 2,555,273
Participant transfers.... 772,497 1,058,558 9,775,496 3,352,013 11,795,604 3,078,585
Participant withdrawals
and annuity payments... (201,295) (183,646 ) (738,005) (555,871) (2,062,412) (255,114)
----------- ---------- ---------- -------------- ------------ -----------
Net increase from
participant
transactions......... 1,365,241 2,714,350 19,723,551 7,202,333 25,929,549 5,378,744
----------- ---------- ---------- -------------- ------------ -----------
Total increase in net
assets.............. 2,045,746 2,973,331 24,725,041 8,670,528 34,832,382 6,309,891
----------- ---------- ---------- -------------- ------------ -----------
NET ASSETS:
Beginning of period...... 3,365,177 3,663,477 9,696,541 10,194,411 33,126,842 2,756,326
----------- ---------- ---------- -------------- ------------ -----------
End of period............ $ 5,410,923 $6,636,808 $34,421,582 $ 18,864,939 $ 67,959,224 $ 9,066,217
----------- ---------- ---------- -------------- ------------ -----------
----------- ---------- ---------- -------------- ------------ -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
9
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
--------------------------------------------------- --------------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- HIGH MONEY
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME INCOME * MARKET 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) $ (19,299) $ 428,827 $ (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) 2,190,459 177,382 428,827 59,020
----------- ---------- ---------- -------------- ----------- ---------- ------------ -----------
ACCUMULATION AND ANNUITY
UNIT TRANSACTIONS:
Participant deposits..... 10,783,257 3,476,529 4,553,845 8,786,778 15,889,145 2,685,680 30,385,963 1,005,559
Participant transfers.... 2,602,802 772,742 2,723,340 2,632,177 5,222,220 2,257,438 (26,362,351) 834,182
Participant withdrawals
and annuity payments... (294,588) (53,503) (98,852) (281,569) (1,664,909) (237,110) (825,252) (4,152)
----------- ---------- ---------- -------------- ----------- ---------- ------------ -----------
Net increase from
participant
transactions......... 13,091,471 4,195,768 7,178,333 11,137,386 19,446,456 4,706,008 3,198,360 1,835,589
----------- ---------- ---------- -------------- ----------- ---------- ------------ -----------
Total increase in net
assets............. 14,314,832 4,374,554 7,537,173 11,122,567 21,636,915 4,883,390 3,627,187 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 $4,883,390 $ 10,602,830 $1,894,609
----------- ---------- ---------- -------------- ----------- ---------- ------------ -----------
----------- ---------- ---------- -------------- ----------- ---------- ------------ -----------
<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
and annuity payments... (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
---------- -----------
---------- -----------
</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.
10
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIODS ENDED 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>
OPERATIONS:
Net investment gain (loss)......... $ 70,381 $ 43,717 $ (12,757) $ (370) $ 82,632 $ (58,511)
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 increase from operations..... 598,658 309,527 48,802 130,756 91,636 1,291,635
---------- ---------- ----------- ---------- ------------- ----------
ACCUMULATION AND ANNUITY UNIT
TRANSACTIONS:
Participant deposits............... 4,811,832 1,302,058 895,119 1,994,125 1,858,603 4,552,441
Participant transfers.............. 1,778,613 721,609 229,235 421,781 669,231 2,538,705
Participant withdrawals and annuity
payments......................... (126,130) (54,286) (8,402) (59,302) (82,873) (209,905)
---------- ---------- ----------- ---------- ------------- ----------
Net increase from participant
transactions................... 6,464,315 1,969,381 1,115,952 2,356,604 2,444,961 6,881,241
---------- ---------- ----------- ---------- ------------- ----------
Total increase in net assets... 7,062,973 2,278,908 1,164,754 2,487,360 2,536,597 8,172,876
NET ASSETS:
Beginning of period................ 1,639,416 512,899 342,709 877,817 1,126,880 1,523,665
---------- ---------- ----------- ---------- ------------- ----------
End of period...................... $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 SMALL
EQUITY MANAGED CAP
----------- ----------- ----------
<S> <C> <C> <C>
OPERATIONS:
Net investment gain (loss)......... $ (40,318) $ (125,580) $ (9,497)
Net realized gain.................. 51,921 76,937 24,917
Net unrealized gain (loss)......... 767,457 3,785,792 239,507
----------- ----------- ----------
Net increase from operations..... 779,060 3,737,149 254,927
----------- ----------- ----------
ACCUMULATION AND ANNUITY UNIT
TRANSACTIONS:
Participant deposits............... 5,606,065 17,033,548 1,053,997
Participant transfers.............. 2,295,536 7,398,554 835,481
Participant withdrawals and annuity
payments......................... (124,119) (464,195) (17,732)
----------- ----------- ----------
Net increase from participant
transactions................... 7,777,482 23,967,907 1,871,746
----------- ----------- ----------
Total increase in net assets... 8,556,542 27,705,056 2,126,673
NET ASSETS:
Beginning of period................ 1,637,869 5,421,786 629,653
----------- ----------- ----------
End of period...................... $10,194,411 $33,126,842 $2,756,326
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
11
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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. Within the account are four contract types that have different
contract terms and or different fees (See Note 4).
The assets of the Account are divided into variable sub-accounts each of
which is invested in shares of twenty-five portfolios (mutual funds) of eight
diversified open-end management investment companies, each portfolio with its
own investment objective. The variable sub-accounts are:
ALGER AMERICAN FUND:--
Alger American Growth Portfolio
Alger American Leveraged AllCap Portfolio
Alger American MidCap Growth Portfolio
Alger American Small Capitalization Portfolio
CIGNA VARIABLE PRODUCTS GROUP:--
CIGNA Variable Products Money Market Fund
FIDELITY VARIABLE INSURANCE PRODUCTS FUND:--
Equity-Income Portfolio
High Income Portfolio
Money Market Portfolio
Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II:--
Asset Manager Portfolio
Contrafund Portfolio
Investment Grade Bond Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III:--
Growth Opportunities Portfolio
MFS VARIABLE INSURANCE TRUST:--
MFS Emerging Growth Series
MFS Growth with Income Series
MFS Research Series
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
12
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION (CONTINUED)
OCC ACCUMULATION TRUST:--
OCC Global Equity Portfolio
OCC Managed Portfolio
OCC Small Cap Portfolio
Effective January 1, 1998, CG Life sold its individual variable annuity
business to Lincoln National Corporation (Lincoln). Although CG Life will remain
responsible for all policy terms and conditions, Lincoln will be servicing the
individual annuity contracts, including the payment of benefits, oversight of
investment management and contract administration.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in conformity with generally
accepted accounting principles. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed 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 value per share as determined by the
mutual funds as of December 31, 1997. The change in the difference between
cost and value is reflected as unrealized gain (loss) in the Statements of
Operations.
B. INVESTMENT TRANSACTIONS:--Investment transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and losses
on sales of investments are determined by the last-in, first-out cost basis
of the investment sold. Dividend and capital gain distributions are recorded
on the ex-dividend date. Investment transactions are settled through CG
Life.
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 the
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.
13
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
3. INVESTMENTS
Total shares held and cost of investments as of December 31, 1997 were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
SHARES COST OF
SUB-ACCOUNT HELD INVESTMENTS
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio..................................... 720,492 $24,629,937
Alger American Leveraged AllCap Portfolio........................... 356,222 6,847,244
Alger American MidCap Growth Portfolio.............................. 636,836 13,557,022
Alger American Small Capitalization Portfolio....................... 460,166 18,845,387
CIGNA Variable Products Money Market Fund........................... 6,869,616 6,869,616
Fidelity Equity-Income Portfolio.................................... 2,171,783 43,838,658
Fidelity High Income Portfolio...................................... 1,290,469 16,068,252
Fidelity Money Market Portfolio..................................... 11,575,573 11,575,573
Fidelity Overseas Portfolio......................................... 364,474 6,894,872
Fidelity Asset Manager Portfolio.................................... 370,087 5,827,525
Fidelity Contrafund Portfolio....................................... 85,809 1,670,018
Fidelity Investment Grade Bond Portfolio............................ 882,744 10,559,814
Fidelity Growth Opportunities Portfolio............................. 198,832 3,666,247
MFS Emerging Growth Series.......................................... 131,294 2,094,311
MFS Growth with Income Series....................................... 168,154 2,721,031
MFS Research Series................................................. 233,038 3,659,121
MFS Total Return Series............................................. 1,167,843 16,201,968
MFS Utilities Series................................................ 347,520 4,830,719
MFS World Governments Series........................................ 138,432 1,421,536
AMT Balanced Portfolio.............................................. 303,984 4,930,498
AMT Limited Maturity Bond Portfolio................................. 470,029 6,506,300
AMT Partners Portfolio.............................................. 1,670,951 28,361,035
OCC Global Equity Portfolio......................................... 1,317,384 17,399,927
OCC Managed Portfolio............................................... 1,603,568 55,978,469
OCC Small Cap Portfolio............................................. 343,808 7,961,523
- -------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
Total purchases and sales of shares for each mutual fund, for the periods
ended December 31, 1997, amounted to:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
SUB-ACCOUNT PURCHASES SALES
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio.................................... $8,595,764 $1,014,633
Alger American Leveraged AllCap Portfolio.......................... 2,723,167 1,225,998
Alger American MidCap Growth Portfolio............................. 5,434,002 1,168,497
Alger American Small Capitalization Portfolio...................... 8,828,840 4,270,290
CIGNA Variable Products Money Market Fund*......................... 16,585,368 9,715,752
Fidelity Equity-Income Portfolio................................... 20,031,213 2,036,485
Fidelity High Income Portfolio..................................... 14,065,473 2,670,890
Fidelity Money Market Portfolio.................................... 27,152,685 26,179,942
Fidelity Overseas Portfolio........................................ 5,656,133 588,707
Fidelity Asset Manager Portfolio................................... 2,826,840 863,124
Fidelity Contrafund Portfolio**.................................... 1,717,783 47,748
Fidelity Investment Grade Bond Portfolio........................... 6,343,028 1,467,077
Fidelity Growth Opportunities Portfolio***......................... 3,767,973 101,783
MFS Emerging Growth Series**....................................... 2,134,597 41,930
MFS Growth with Income Series****.................................. 2,729,062 7,933
MFS Research Series***............................................. 3,805,827 147,983
MFS Total Return Series............................................ 8,657,635 659,240
MFS Utilities Series............................................... 2,560,406 415,879
MFS World Governments Series....................................... 569,430 613,845
AMT Balanced Portfolio............................................. 2,296,440 767,536
AMT Limited Maturity Bond Portfolio................................ 4,359,908 1,480,553
AMT Partners Portfolio............................................. 22,831,233 2,805,176
OCC Global Equity Portfolio........................................ 8,917,830 962,662
OCC Managed Portfolio.............................................. 27,881,600 1,009,672
OCC Small Cap Portfolio............................................ 5,864,106 400,520
- -------------------------------------------------------------------------------------------
</TABLE>
* From 5/20/97, date deposits first received, to December 31, 1997.
** From 6/2/97, date deposits first received, to December 31, 1997.
*** From 6/9/97, date deposits first received, to December 31, 1997.
**** From 6/5/97, date deposits first received, to December 31, 1997.
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. For all contracts sold
after April 30, 1997, CG Life charges each variable sub-account the daily
equivalent of 1.25%, on an annual basis, of the current value of each
sub-account's assets for the assumption of these risks. All contracts sold
before May 1, 1997, with the exception of contracts sold in the state of New
York from May 1, 1996 to April 30, 1997 (1.25% annual fee), have an annual fee
of 1.20% for mortality and expense risks.
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
15
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS (CONTINUED)
account. For all contracts sold after April 30, 1997, this charge is at an
effective annual rate of .15%. All contracts sold before May 1, 1997, with the
exception of contracts sold in the state of New York from May 1, 1996 to April
30, 1997 (.15% annual fee), have an effective annual rate of .10%.
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 $71,683, were deducted for the periods ended
December 31, 1997.
For contracts sold prior to May 1, 1997 (excluding contracts sold in the
state of New York where the optional death benefit was not available), the
participant could have, for an additional charge, selected an optional death
benefit (optional death benefit fee). 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 $4,356 for the
periods ended December 31, 1997.
Under certain circumstances, CG Life reserves the right to charge a transfer
fee of up to $10 for transfers between sub-accounts. No transfer fees, for the
variable sub-accounts, were deducted for the periods ended December 31, 1997.
16
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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 periods ended December
31, 1997, amounted to:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
MORTALITY ASSET BASED
AND EXPENSE ADMINISTRATIVE
SUB-ACCOUNT RISK FEES FEES
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio...................................... $ 304,868 $ 26,402
Alger American Leveraged AllCap Portfolio............................ 86,987 7,501
Alger American MidCap Growth Portfolio............................... 157,966 13,656
Alger American Small Capitalization Portfolio........................ 200,537 17,465
CIGNA Variable Products Money Market Fund*........................... 23,648 2,838
Fidelity Equity-Income Portfolio..................................... 489,324 42,440
Fidelity High Income Portfolio....................................... 130,361 11,610
Fidelity Money Market Portfolio...................................... 173,089 14,557
Fidelity Overseas Portfolio.......................................... 55,821 4,954
Fidelity Asset Manager Portfolio..................................... 70,643 6,115
Fidelity Contrafund Portfolio**...................................... 5,162 620
Fidelity Investment Grade Bond Portfolio............................. 96,220 8,297
Fidelity Growth Opportunities Portfolio***........................... 11,037 1,325
MFS Emerging Growth Series**......................................... 6,138 737
MFS Growth with Income Series****.................................... 7,652 918
MFS Research Series***............................................... 10,013 1,202
MFS Total Return Series.............................................. 174,760 15,354
MFS Utilities Series................................................. 53,426 4,542
MFS World Governments Series......................................... 16,724 1,418
AMT Balanced Portfolio............................................... 52,966 4,558
AMT Limited Maturity Bond Portfolio.................................. 60,458 5,241
AMT Partners Portfolio............................................... 263,923 23,647
OCC Global Equity Portfolio.......................................... 184,183 15,960
OCC Managed Portfolio................................................ 629,309 55,157
OCC Small Cap Portfolio.............................................. 68,834 6,066
- -----------------------------------------------------------------------------------------------
</TABLE>
* From 5/20/97, date deposits first received, to December 31, 1997.
** From 6/2/97, date deposits first received, to December 31, 1997.
*** From 6/9/97, date deposits first received, to December 31, 1997.
**** From 6/5/97, date deposits first received, to December 31, 1997.
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 periods ended December 31, 1997,
amounted to $145,226.
17
<PAGE>
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
5. DISTRIBUTION OF NET INCOME
The Account does not expect to declare dividends to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of 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.
18
<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; CIGNA Variable Products Group--CIGNA Variable Products
Money Market Fund; Fidelity Variable Insurance Products Fund--Equity-Income
Portfolio, High Income Portfolio, Money Market Portfolio, Overseas Portfolio;
Fidelity Variable Insurance Products Fund II--Asset Manager Portfolio,
Contrafund Portfolio, Investment Grade Bond Portfolio; Fidelity Variable
Insurance Products Fund III--Growth Opportunities Portfolio; MFS Variable
Insurance Trust--MFS Emerging Growth Series, MFS Growth with Income Series, MFS
Research Series, 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
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, 1997, the results of
each of their operations and the changes in each of their net assets for the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Account's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 by correspondence with the custodians, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1998
19
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
-------------------------------------------------- ----------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- HIGH MONEY
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME INCOME MARKET OVERSEAS
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value..... $6,720,542 $2,394,619 $4,468,725 $4,929,689 $7,177,312 $3,026,228 $2,004,732 $1,309,749
Receivable from CIGNA Life
Insurance Company............ -- -- 5,895 -- 2,277 -- 5,982 --
Receivable for fund shares
sold......................... 7,193 4,270 -- 1,375 -- 1,435 -- 5,146
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
Total assets................ 6,727,735 2,398,889 4,474,620 4,931,064 7,179,589 3,027,663 2,010,714 1,314,895
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
LIABILITIES:
Payable to CIGNA Life
Insurance Company............ 7,193 4,270 -- 1,375 -- 1,435 -- 5,146
Payable for fund shares
purchased.................... -- -- 5,895 -- 2,277 -- 5,982 --
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
Total liabilities........... 7,193 4,270 5,895 1,375 2,277 1,435 5,982 5,146
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
Net assets.................. $6,720,542 $2,394,619 $4,468,725 $4,929,689 $7,177,312 $3,026,228 $2,004,732 $1,309,749
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
---------- ---------- ---------- -------------- ---------- ---------- ---------- ----------
Accumulation units
outstanding.................. 533,777 192,937 347,797 454,338 515,383 244,455 186,254 111,798
Net asset value per
accumulation unit............ $12.590543 $12.411431 $12.848669 $10.850258 $13.926178 $12.379478 $10.763448 $11.715303
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
----------------------
ASSET INVESTMENT
MANAGER GRADE BOND
---------- ----------
<S> <C> <C>
ASSETS:
Investment in variable
insurance funds at value..... $ 811,631 $1,407,763
Receivable from CIGNA Life
Insurance Company............ -- 8,022
Receivable for fund shares
sold......................... 29 --
---------- ----------
Total assets................ 811,660 1,415,785
---------- ----------
LIABILITIES:
Payable to CIGNA Life
Insurance Company............ 29 --
Payable for fund shares
purchased.................... -- 8,022
---------- ----------
Total liabilities........... 29 8,022
---------- ----------
Net assets.................. $ 811,631 $1,407,763
---------- ----------
---------- ----------
Accumulation units
outstanding.................. 61,335 127,249
Net asset value per
accumulation unit............ $13.232694 $11.063082
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
1
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<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..... $3,252,639 $ 462,293 $ 337,117 $1,073,783 $ 472,317 $5,915,933
Receivable from CIGNA Life
Insurance Company............ -- -- -- -- 8,038 --
Receivable for fund shares
sold......................... 116 33 24 4,121 -- 7,121
---------- ---------- ---------- ---------- ---------- ----------
Total assets................ 3,252,755 462,326 337,141 1,077,904 480,355 5,923,054
---------- ---------- ---------- ---------- ---------- ----------
LIABILITIES:
Payable to CIGNA Life
Insurance Company............ 116 33 24 4,121 -- 7,121
Payable for fund shares
purchased.................... -- -- -- -- 8,038 --
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities........... 116 33 24 4,121 8,038 7,121
---------- ---------- ---------- ---------- ---------- ----------
Net assets.................. $3,252,639 $ 462,293 $ 337,117 $1,073,783 $ 472,317 $5,915,933
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Accumulation units
outstanding.................. 248,453 29,938 33,023 89,317 43,616 375,038
Net asset value per
accumulation unit............ $13.091558 $15.441911 $10.208648 $12.022153 $10.828905 $15.774212
<CAPTION>
OCC ACCUMULATION TRUST
SUB-ACCOUNTS
----------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value..... $5,621,365 $11,510,878 $2,124,414
Receivable from CIGNA Life
Insurance Company............ -- -- --
Receivable for fund shares
sold......................... 201 6,758 76
---------- ---------- ----------
Total assets................ 5,621,566 11,517,636 2,124,490
---------- ---------- ----------
LIABILITIES:
Payable to CIGNA Life
Insurance Company............ 201 6,758 76
Payable for fund shares
purchased.................... -- -- --
---------- ---------- ----------
Total liabilities........... 201 6,758 76
---------- ---------- ----------
Net assets.................. $5,621,365 $11,510,878 $2,124,414
---------- ---------- ----------
---------- ---------- ----------
Accumulation units
outstanding.................. 452,255 823,864 154,786
Net asset value per
accumulation unit............ $12.429635 $13.971818 $13.724821
</TABLE>
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 YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
-------------------------------------------------- ------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- HIGH MONEY
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME INCOME MARKET OVERSEAS
---------- ---------- ---------- -------------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................... $ 19,203 $ -- $ 2,201 $ -- $ 85,115 $ 162,688 $157,804 $15,934
EXPENSES:
Mortality and expense risk and
administrative charges........... 78,389 27,519 52,169 58,763 81,384 35,105 38,896 15,820
---------- ---------- ---------- -------------- ---------- ---------- -------- --------
Net investment gain (loss)....... (59,186 ) (27,519 ) (49,968 ) (58,763) 3,731 127,583 118,908 114
---------- ---------- ---------- -------------- ---------- ---------- -------- --------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distributions from
portfolio sponsors............... 34,776 -- 53,679 164,464 427,936 20,107 -- 63,253
Net realized gain (loss) on share
transactions..................... 6,164 410 (4,949 ) (377) 1,245 (5,780 ) -- (2,737)
---------- ---------- ---------- -------------- ---------- ---------- -------- --------
Net realized gain................ 40,940 410 48,730 164,087 429,181 14,327 -- 60,516
Net unrealized gain................ 1,246,944 352,205 488,175 341,424 1,001,358 249,616 -- 35,170
---------- ---------- ---------- -------------- ---------- ---------- -------- --------
Net realized and unrealized gain
on investments................. 1,287,884 352,615 536,905 505,511 1,430,539 263,943 -- 95,686
---------- ---------- ---------- -------------- ---------- ---------- -------- --------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................. $1,228,698 $ 325,096 $ 486,937 $ 446,748 $1,434,270 $ 391,526 $118,908 $95,800
---------- ---------- ---------- -------------- ---------- ---------- -------- --------
---------- ---------- ---------- -------------- ---------- ---------- -------- --------
<CAPTION>
FIDELITY VIP II
PORTFOLIO
SUB-ACCOUNTS
--------------------
ASSET INVESTMENT
MANAGER GRADE BOND
-------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.......................... $ 18,286 $ 69,813
EXPENSES:
Mortality and expense risk and
administrative charges........... 8,746 16,842
-------- ----------
Net investment gain (loss)....... 9,540 52,971
-------- ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distributions from
portfolio sponsors............... 45,871 --
Net realized gain (loss) on share
transactions..................... 128 4,463
-------- ----------
Net realized gain................ 45,999 4,463
Net unrealized gain................ 58,841 41,442
-------- ----------
Net realized and unrealized gain
on investments................. 104,840 45,905
-------- ----------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................. $114,380 $ 98,876
-------- ----------
-------- ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<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>
INVESTMENT INCOME:
Dividends.......................... $ -- $ -- $ 5,395 $ 14,624 $ 19,825 $ 11,350
EXPENSES:
Mortality and expense risk and
administrative charges........... 37,682 4,605 4,309 12,533 4,854 64,153
---------- ---------- ------------ ----------- ------------- ------------
Net investment gain (loss)....... (37,682 ) (4,605 ) 1,086 2,091 14,971 (52,803)
---------- ---------- ------------ ----------- ------------- ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Capital distributions from
portfolio sponsors............... -- -- 2,445 37,535 -- 174,803
Net realized gain (loss) on share
transactions..................... 11,805 43 191 232 441 982
---------- ---------- ------------ ----------- ------------- ------------
Net realized gain................ 11,805 43 2,636 37,767 441 175,785
Net unrealized gain (loss)......... 546,882 104,030 (10,473) 112,500 4,249 1,110,370
---------- ---------- ------------ ----------- ------------- ------------
Net realized and unrealized gain
(loss) on investments.......... 558,687 104,073 (7,837) 150,267 4,690 1,286,155
---------- ---------- ------------ ----------- ------------- ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS........ $ 521,005 $ 99,468 $ (6,751) $ 152,358 $ 19,661 $ 1,233,352
---------- ---------- ------------ ----------- ------------- ------------
---------- ---------- ------------ ----------- ------------- ------------
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS
---------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ------------ ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................... $ 27,188 $ 88,706 $ 7,191
EXPENSES:
Mortality and expense risk and
administrative charges........... 69,185 131,267 21,051
----------- ------------ ----------
Net investment gain (loss)....... (41,997) (42,561) (13,860)
----------- ------------ ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Capital distributions from
portfolio sponsors............... 257,605 272,444 50,712
Net realized gain (loss) on share
transactions..................... 2,292 5,354 (1,357)
----------- ------------ ----------
Net realized gain................ 259,897 277,798 49,355
Net unrealized gain (loss)......... 365,823 1,563,433 239,214
----------- ------------ ----------
Net realized and unrealized gain
(loss) on investments.......... 625,720 1,841,231 288,569
----------- ------------ ----------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS........ $ 583,723 $ 1,798,670 $ 274,709
----------- ------------ ----------
----------- ------------ ----------
</TABLE>
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 YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS FIDELITY VIP PORTFOLIO SUB-ACCOUNTS
------------------------------------------------ ----------------------------------------------
LEVERAGED MIDCAP SMALL EQUITY- MONEY
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME HIGH INCOME MARKET OVERSEAS
----------- --------- ----------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ (59,186) $ (27,519) $ (49,968) $ (58,763) $ 3,731 $ 127,583 $ 118,908 $ 114
Net realized gain............. 40,940 410 48,730 164,087 429,181 14,327 -- 60,516
Net unrealized gain........... 1,246,944 352,205 488,175 341,424 1,001,358 249,616 -- 35,170
----------- --------- ----------- ----------- ----------- ----------- --------- ---------
Net increase from
operations................ 1,228,698 325,096 486,937 446,748 1,434,270 391,526 118,908 95,800
----------- --------- ----------- ----------- ----------- ----------- --------- ---------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 632,495 364,982 305,946 553,717 619,654 660,410 3,351,621 187,724
Participant transfers......... 554,089 135,412 581,485 178,738 624,627 209,382 (4,817,778) 213,482
Participant withdrawals....... (91,104) (21,611) (53,293) (94,087) (169,892) (124,736) (188,209) (8,681)
----------- --------- ----------- ----------- ----------- ----------- --------- ---------
Net increase (decrease) from
participant
transactions.............. 1,095,480 478,783 834,138 638,368 1,074,389 745,056 (1,654,366) 392,525
----------- --------- ----------- ----------- ----------- ----------- --------- ---------
Total increase (decrease)
in net assets........... 2,324,178 803,879 1,321,075 1,085,116 2,508,659 1,136,582 (1,535,458) 488,325
NET ASSETS:
Beginning of period........... 4,396,364 1,590,740 3,147,650 3,844,573 4,668,653 1,889,646 3,540,190 821,424
----------- --------- ----------- ----------- ----------- ----------- --------- ---------
End of period................. $6,720,542 $2,394,619 $4,468,725 $4,929,689 $7,177,312 $3,026,228 $2,004,732 $1,309,749
----------- --------- ----------- ----------- ----------- ----------- --------- ---------
----------- --------- ----------- ----------- ----------- ----------- --------- ---------
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
------------------------
ASSET INVESTMENT
MANAGER GRADE BOND
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ 9,540 $ 52,971
Net realized gain............. 45,999 4,463
Net unrealized gain........... 58,841 41,442
----------- -----------
Net increase from
operations................ 114,380 98,876
----------- -----------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 51,260 153,852
Participant transfers......... 151,731 81,144
Participant withdrawals....... (5,051) (75,871 )
----------- -----------
Net increase (decrease) from
participant
transactions.............. 197,940 159,125
----------- -----------
Total increase (decrease)
in net assets........... 312,320 258,001
NET ASSETS:
Beginning of period........... 499,311 1,149,762
----------- -----------
End of period................. $ 811,631 $1,407,763
----------- -----------
----------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
5
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<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>
OPERATIONS:
Net investment gain (loss).... $ (37,682) $ (4,605) $ 1,086 $ 2,091 $ 14,971 $ (52,803)
Net realized gain............. 11,805 43 2,636 37,767 441 175,785
Net unrealized gain (loss).... 546,882 104,030 (10,473) 112,500 4,249 1,110,370
----------- ----------- ----------- ----------- ------------ -----------
Net increase (decrease) from
operations................ 521,005 99,468 (6,751) 152,358 19,661 1,233,352
----------- ----------- ----------- ----------- ------------ -----------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 292,867 43,369 33,996 62,974 90,047 589,901
Participant transfers......... 298,337 78,307 32,150 109,370 100,274 890,633
Participant withdrawals....... (74,238) (5,948) (831) (4,430) (26,296) (124,163)
----------- ----------- ----------- ----------- ------------ -----------
Net increase from
participant
transactions.............. 516,966 115,728 65,315 167,914 164,025 1,356,371
----------- ----------- ----------- ----------- ------------ -----------
Total increase in net
assets.................. 1,037,971 215,196 58,564 320,272 183,686 2,589,723
NET ASSETS:
Beginning of period........... 2,214,668 247,097 278,553 753,511 288,631 3,326,210
----------- ----------- ----------- ----------- ------------ -----------
End of period................. $3,252,639 $ 462,293 $ 337,117 $1,073,783 $ 472,317 $5,915,933
----------- ----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ----------- ------------ -----------
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS
-------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ (41,997) $ (42,561) $ (13,860)
Net realized gain............. 259,897 277,798 49,355
Net unrealized gain (loss).... 365,823 1,563,433 239,214
----------- ----------- -----------
Net increase (decrease) from
operations................ 583,723 1,798,670 274,709
----------- ----------- -----------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits.......... 448,478 1,390,886 192,397
Participant transfers......... 486,897 1,933,014 531,702
Participant withdrawals....... (95,846) (229,819) (13,268)
----------- ----------- -----------
Net increase from
participant
transactions.............. 839,529 3,094,081 710,831
----------- ----------- -----------
Total increase in net
assets.................. 1,423,252 4,892,751 985,540
NET ASSETS:
Beginning of period........... 4,198,113 6,618,127 1,138,874
----------- ----------- -----------
End of period................. $ 5,621,365 $11,510,878 $ 2,124,414
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
6
<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
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME HIGH INCOME MARKET OVERSEAS
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception Date......... February 23, February January 19, February 9, February 20, May 17, February May 13,
1996 9, 1996 1996 1996 1996 1996 22, 1996 1996
OPERATIONS:
Net investment gain
(loss)................ $ (21,816) $ (7,549) $ (14,877) $ (19,633) $ (23,420) $ (7,249) $ 86,432 $ (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 67,327 86,432 35,307
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits... 3,317,873 1,651,397 1,942,260 2,839,597 3,239,285 1,400,589 13,217,666 333,797
Participant
transfers............. 925,179 299,414 1,093,142 1,040,987 1,177,728 422,934 (9,729,196) 453,233
Participant
withdrawals........... (34,424) (370,291) (9,334) (9,941) (44,343) (1,204) (34,712 ) (913)
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
Net increase from
participant
transactions....... 4,208,628 1,580,520 3,026,068 3,870,643 4,372,670 1,822,319 3,453,758 786,117
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
Total increase in
net assets....... 4,396,364 1,590,740 3,147,650 3,844,573 4,668,653 1,889,646 3,540,190 821,424
NET ASSETS:
Beginning of period.... -- -- -- -- -- -- -- --
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
End of period.......... $4,396,364 $1,590,740 $3,147,650 $3,844,573 $4,668,653 $ 1,889,646 $3,540,190 $821,424
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
------------ ---------- ----------- -------------- ------------ ----------- ---------- --------
<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
-------- -----------
-------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS
FIRST RECEIVED) TO 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>
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
------------ --------- ----------- ------------ ------------- ------------
------------ --------- ----------- ------------ ------------- ------------
<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
---------- ------------ ----------
---------- ------------ ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
8
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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
High Income Portfolio
Money Market 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 ACCUMULATION TRUST:--
OCC Global Equity Portfolio
OCC Managed Portfolio
OCC Small Cap Portfolio
Effective January 1, 1998, CG Life sold its individual variable annuity
business to Lincoln National Corporation (Lincoln). Although CG Life will remain
responsible for all policy terms and conditions, Lincoln will be servicing the
individual annuity contracts, including the payment of benefits, oversight of
investment management and contract administration.
9
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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 value per share as determined by the
mutual funds as of December 31, 1997. The change in the difference between
cost and value is reflected as unrealized gain (loss) in the Statements of
Operations.
B. INVESTMENT TRANSACTIONS:--Investment transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and losses
on sales of investments are determined by the last-in, first-out cost basis
of the investment sold. Dividend and capital gain distributions are recorded
on the ex-dividend date. Investment transactions are settled through 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 as of December 31, 1997 were:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
COST OF
SUB-ACCOUNT SHARES HELD INVESTMENTS
- ----------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio........................ 157,169 $ 5,287,588
Alger American Leveraged AllCap Portfolio.............. 103,350 2,021,116
Alger American MidCap Growth Portfolio................. 184,811 3,852,039
Alger American Small Capitalization Portfolio.......... 112,679 4,597,618
Fidelity Equity-Income Portfolio....................... 295,606 5,858,209
Fidelity High Income Portfolio......................... 222,844 2,702,027
Fidelity Money Market Portfolio........................ 2,004,732 2,004,732
Fidelity Overseas Portfolio............................ 68,216 1,236,544
Fidelity Asset Manager Portfolio....................... 45,066 716,060
Fidelity Investment Grade Bond Portfolio............... 112,083 1,331,817
MFS Total Return Series................................ 195,589 2,629,044
MFS Utilities Series................................... 25,697 350,360
MFS World Governments Series........................... 33,018 340,708
AMT Balanced Portfolio................................. 60,325 939,854
AMT Limited Maturity Bond Portfolio.................... 33,450 460,572
AMT Partners Portfolio................................. 287,181 4,419,831
OCC Global Equity Portfolio............................ 392,553 5,030,135
OCC Managed Portfolio.................................. 271,611 9,347,906
OCC Small Cap Portfolio................................ 80,562 1,796,320
- ----------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
Total purchases and sales of shares for each mutual fund, for the year ended
December 31, 1997, amounted to:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
SUB-ACCOUNT PURCHASES SALES
- ---------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio.............. $1,424,959 $ 353,889
Alger American Leveraged AllCap Portfolio.... 546,534 95,270
Alger American MidCap Growth Portfolio....... 1,168,070 330,221
Alger American Small Capitalization
Portfolio.................................. 1,319,694 575,626
Fidelity Equity-Income Portfolio............. 1,900,443 394,385
Fidelity High Income Portfolio............... 1,473,203 580,456
Fidelity Money Market Portfolio.............. 3,662,896 5,198,354
Fidelity Overseas Portfolio.................. 633,677 177,785
Fidelity Asset Manager Portfolio............. 297,527 44,176
Fidelity Investment Grade Bond Portfolio..... 464,233 252,137
MFS Total Return Series...................... 726,219 246,935
MFS Utilities Series......................... 164,417 53,294
MFS World Governments Series................. 101,617 32,770
AMT Balanced Portfolio....................... 277,567 70,027
AMT Limited Maturity Bond Portfolio.......... 322,764 143,768
AMT Partners Portfolio....................... 1,803,515 325,144
OCC Global Equity Portfolio.................. 1,347,450 292,313
OCC Managed Portfolio........................ 3,879,160 555,203
OCC Small Cap Portfolio...................... 928,032 180,342
- ---------------------------------------------------------------------
</TABLE>
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. Annuity account fees, for the variable
sub-accounts, amounting to $16,358, were deducted for the year ended December
31, 1997.
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
11
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS (CONTINUED)
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 $1,230 during the year ended
December 31, 1997.
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,
for the variable sub-accounts, were deducted for the year ended December 31,
1997.
The fees charged by CIGNA Life for mortality and expense risks and
administrative fees, from the variable sub-accounts, for the year ended December
31, 1997, amounted to:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
MORTALITY
AND
EXPENSE ASSET BASED
RISK ADMINISTRATIVE
SUB-ACCOUNT FEES FEES
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio......................................... $ 72,359 $ 6,030
Alger American Leveraged AllCap Portfolio............................... 25,402 2,117
Alger American MidCap Growth Portfolio.................................. 48,156 4,013
Alger American Small Capitalization Portfolio........................... 54,243 4,520
Fidelity Equity-Income Portfolio........................................ 75,124 6,260
Fidelity High Income Portfolio.......................................... 32,405 2,700
Fidelity Money Market Portfolio......................................... 35,904 2,992
Fidelity Overseas Portfolio............................................. 14,603 1,217
Fidelity Asset Manager Portfolio........................................ 8,073 673
Fidelity Investment Grade Bond Portfolio................................ 15,546 1,296
MFS Total Return Series................................................. 34,783 2,899
MFS Utilities Series.................................................... 4,251 354
MFS World Governments Series............................................ 3,978 331
AMT Balanced Portfolio.................................................. 11,569 964
AMT Limited Maturity Bond Portfolio..................................... 4,481 373
AMT Partners Portfolio.................................................. 59,218 4,935
OCC Global Equity Portfolio............................................. 63,863 5,322
OCC Managed Portfolio................................................... 121,170 10,097
OCC Small Cap Portfolio................................................. 19,432 1,619
- -------------------------------------------------------------------------------------------
</TABLE>
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 year ended December 31, 1997,
amounted to $18,345.
12
<PAGE>
CIGNA VARIABLE ANNUITY SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
5. DISTRIBUTION OF NET INCOME
The Account does not expect to declare dividends to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of 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.
13
<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, High Income Portfolio, Money Market 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 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, 1997, the results of each of their
operations for the year then ended and the changes in each of their net assets
for the periods indicated, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Account's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1997 by correspondence with the
custodians, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1998
14
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP II
PORTFOLIO PORTFOLIO
ALGER AMERICAN PORTFOLIO SUB-ACCOUNTS SUB-ACCOUNT SUB-ACCOUNTS
---------------------------------------------------- -------------- ----------------------
LEVERAGED MIDCAP SMALL EQUITY- ASSET INVESTMENT
GROWTH ALLCAP GROWTH CAPITALIZATION INCOME MANAGER GRADE BOND
---------- ---------- ---------- ---------------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable insurance
funds at value.................... $ 459,288 $ 399,731 $ 106,525 $ 401,973 $ 462,485 $ 93,234 $ 45,424
---------- ---------- ---------- ---------------- -------------- ---------- ----------
Total assets..................... $ 459,288 $ 399,731 $ 106,525 $ 401,973 $ 462,485 $ 93,234 $ 45,424
---------- ---------- ---------- ---------------- -------------- ---------- ----------
---------- ---------- ---------- ---------------- -------------- ---------- ----------
Accumulation units outstanding..... 26,706 20,373 6,442 27,210 26,629 6,484 3,987
Net asset value per accumulation
unit.............................. $17.198160 $19.620624 $16.536891 $14.773135 $ 17.367721 $14.378768 $11.393241
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
1
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<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......................................... $ 199,290 $ 10,431 $ 30,081 $ 272,586 $ 48,375 $ 218,807
----------- ----------- ----------- ----------- ------------ -----------
Total assets.................................. $ 199,290 $ 10,431 $ 30,081 $ 272,586 $ 48,375 $ 218,807
----------- ----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ----------- ------------ -----------
Accumulation units outstanding.................. 13,650 670 2,833 21,965 4,438 10,748
Net asset value per accumulation unit........... $ 14.599934 $ 15.576712 $ 10.618990 $ 12.409789 $10.899159 $ 20.358381
<CAPTION>
OCC ACCUMULATION TRUST SUB-ACCOUNTS
-------------------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Investment in variable insurance funds at
value......................................... $ 289,939 $ 401,243 $ 27,326
----------- ----------- -----------
Total assets.................................. $ 289,939 $ 401,243 $ 27,326
----------- ----------- -----------
----------- ----------- -----------
Accumulation units outstanding.................. 22,196 22,011 1,856
Net asset value per accumulation unit........... $ 13.062780 $ 18.228938 $ 14.720675
</TABLE>
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, 1997
<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............................... $ 1,307 $ -- $ 56 $ -- $ 6,093
EXPENSES:
Mortality and expense risk.............. 1,846 1,683 455 1,674 1,833
------- --------- ------- -------------- ----------
Net investment gain (loss)............ (539) (1,683) (399) (1,674) 4,260
------- --------- ------- -------------- ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distributions from portfolio
sponsors............................... 2,368 -- 1,373 13,658 30,633
Net realized gain (loss) on share
transactions........................... 31 119 23 (648) 8,329
------- --------- ------- -------------- ----------
Net realized gain..................... 2,399 119 1,396 13,010 38,962
Net unrealized gain..................... 85,564 65,124 12,089 27,108 53,484
------- --------- ------- -------------- ----------
Net realized and unrealized gain on
investments......................... 87,963 65,243 13,485 40,118 92,446
------- --------- ------- -------------- ----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................. $87,424 $ 63,560 $13,086 $ 38,444 $ 96,706
------- --------- ------- -------------- ----------
------- --------- ------- -------------- ----------
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
----------------------
ASSET INVESTMENT
MANAGER GRADE BOND
---------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................... $ 2,565 $ 2,465
EXPENSES:
Mortality and expense risk.............. 378 194
---------- ----------
Net investment gain (loss)............ 2,187 2,271
---------- ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Capital distributions from portfolio
sponsors............................... 6,434 --
Net realized gain (loss) on share
transactions........................... (25) 53
---------- ----------
Net realized gain..................... 6,409 53
Net unrealized gain..................... 6,531 1,274
---------- ----------
Net realized and unrealized gain on
investments......................... 12,940 1,327
---------- ----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................. $ 15,127 $ 3,598
---------- ----------
---------- ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<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>
INVESTMENT INCOME:
Dividends......................................... $ -- $ -- $ 480 $ 4,293 $ 24 $ 391
EXPENSES:
Mortality and expense risk........................ 791 26 133 1,130 48 766
----------- ----------- ----------- ----------- ------------- -----------
Net investment gain (loss)...................... (791) (26) 347 3,163 (24) (375)
----------- ----------- ----------- ----------- ------------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Capital distributions from portfolio sponsors..... -- -- 218 11,021 -- 6,008
Net realized gain (loss) on share transactions.... 231 5 7 38 (13) 73
----------- ----------- ----------- ----------- ------------- -----------
Net realized gain (loss)........................ 231 5 225 11,059 (13) 6,081
Net unrealized gain (loss)........................ 33,423 1,830 (1,036) 27,735 611 37,736
----------- ----------- ----------- ----------- ------------- -----------
Net realized and unrealized gain (loss) on
investments................................... 33,654 1,835 (811) 38,794 598 43,817
----------- ----------- ----------- ----------- ------------- -----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS...................................... $ 32,863 $ 1,809 $ (464) $ 41,957 $ 574 $ 43,442
----------- ----------- ----------- ----------- ------------- -----------
----------- ----------- ----------- ----------- ------------- -----------
<CAPTION>
OCC ACCUMULATION
TRUST SUB-ACCOUNTS
-------------------------------------
GLOBAL SMALL
EQUITY MANAGED CAP
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends......................................... $ 1,410 $ 3,512 $ 140
EXPENSES:
Mortality and expense risk........................ 1,249 1,638 117
----------- ----------- -----------
Net investment gain (loss)...................... 161 1,874 23
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Capital distributions from portfolio sponsors..... 13,290 10,787 986
Net realized gain (loss) on share transactions.... 115 243 391
----------- ----------- -----------
Net realized gain (loss)........................ 13,405 11,030 1,377
Net unrealized gain (loss)........................ 20,215 56,802 3,666
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments................................... 33,620 67,832 5,043
----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS...................................... $ 33,781 $ 69,706 $ 5,066
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
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, 1997
<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)......................................... $ (539) $ (1,683) $ (399) $ (1,674) $ 4,260
Net realized gain.................................................. 2,399 119 1,396 13,010 38,962
Net unrealized gain................................................ 85,564 65,124 12,089 27,108 53,484
---------- ---------- ---------- ----------- -----------
Net increase from operations..................................... 87,424 63,560 13,086 38,444 96,706
---------- ---------- ---------- ----------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium loads......................... 32,438 10,264 4,418 32,427 29,155
Participant transfers.............................................. 16,866 4,668 1,226 (5,039) (5,534)
Participant withdrawals............................................ (17,037) (10,211) (4,641) (12,887) (14,888)
---------- ---------- ---------- ----------- -----------
Net increase from participant transactions....................... 32,267 4,721 1,003 14,501 8,733
---------- ---------- ---------- ----------- -----------
Total increase in net assets................................... 119,691 68,281 14,089 52,945 105,439
NET ASSETS:
Beginning of period................................................ 339,597 331,450 92,436 349,028 357,046
---------- ---------- ---------- ----------- -----------
End of period...................................................... $ 459,288 $ 399,731 $ 106,525 $ 401,973 $ 462,485
---------- ---------- ---------- ----------- -----------
---------- ---------- ---------- ----------- -----------
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
----------------------
ASSET INVESTMENT
MANAGER GRADE BOND
--------- -----------
<S> <C> <C>
OPERATIONS:
Net investment gain (loss)......................................... $ 2,187 $ 2,271
Net realized gain.................................................. 6,409 53
Net unrealized gain................................................ 6,531 1,274
--------- -----------
Net increase from operations..................................... 15,127 3,598
--------- -----------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium loads......................... 2,732 1,327
Participant transfers.............................................. 4,897 60
Participant withdrawals............................................ (2,678) (380)
--------- -----------
Net increase from participant transactions....................... 4,951 1,007
--------- -----------
Total increase in net assets................................... 20,078 4,605
NET ASSETS:
Beginning of period................................................ 73,156 40,819
--------- -----------
End of period...................................................... $ 93,234 $ 45,424
--------- -----------
--------- -----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
5
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<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>
OPERATIONS:
Net investment gain (loss).............. $ (791) $ (26) $ 347 $ 3,163 $ (24 ) $ (375)
Net realized gain (loss)................ 231 5 225 11,059 (13 ) 6,081
Net unrealized gain (loss).............. 33,423 1,830 (1,036 ) 27,735 611 37,736
-------- --------- ----------- -------- ------------ --------
Net increase (decrease) from
operations.......................... 32,863 1,809 (464 ) 41,957 574 43,442
-------- --------- ----------- -------- ------------ --------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium
loads................................. 12,387 1,672 1,148 35,353 48,443 23,944
Participant transfers................... 8,088 4,044 (27 ) 4,273 (423 ) 34,331
Participant withdrawals................. (8,078) (610) (611 ) (6,914) (479 ) (7,857)
-------- --------- ----------- -------- ------------ --------
Net increase (decrease) from
participant transactions............ 12,397 5,106 510 32,712 47,541 50,418
-------- --------- ----------- -------- ------------ --------
Total increase in net assets........ 45,260 6,915 46 74,669 48,115 93,860
NET ASSETS:
Beginning of period..................... 154,030 3,516 30,035 197,917 260 124,947
-------- --------- ----------- -------- ------------ --------
End of period........................... $199,290 $ 10,431 $ 30,081 $272,586 $ 48,375 $218,807
-------- --------- ----------- -------- ------------ --------
-------- --------- ----------- -------- ------------ --------
<CAPTION>
OCC ACCUMULATION
TRUST SUB-ACCOUNTS
-----------------------------
GLOBAL
EQUITY MANAGED SMALL CAP
-------- -------- ---------
<S> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).............. $ 161 $ 1,874 $ 23
Net realized gain (loss)................ 13,405 11,030 1,377
Net unrealized gain (loss).............. 20,215 56,802 3,666
-------- -------- ---------
Net increase (decrease) from
operations.......................... 33,781 69,706 5,066
-------- -------- ---------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium
loads................................. 35,537 16,245 1,799
Participant transfers................... (523) 20,955 (1,892 )
Participant withdrawals................. (10,366) (15,458) (3,244 )
-------- -------- ---------
Net increase (decrease) from
participant transactions............ 24,648 21,742 (3,337 )
-------- -------- ---------
Total increase in net assets........ 58,429 91,448 1,729
NET ASSETS:
Beginning of period..................... 231,510 309,795 25,597
-------- -------- ---------
End of period........................... $289,939 $401,243 $ 27,326
-------- -------- ---------
-------- -------- ---------
</TABLE>
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 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
---------- ---------- ---------- -------------- -----------
---------- ---------- ---------- -------------- -----------
<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
---------- ----------
---------- ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
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
----------- ----------- ----------- ----------- ------------- -----------
----------- ----------- ----------- ----------- ------------- -----------
<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
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- --------------------------
* Period from September 13, 1996 (date deposits first received) to December
31, 1996
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, 1997
- --------------------------------------------------------------------------------
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 ACCUMULATION TRUST:--
OCC Global Equity Portfolio
OCC Managed Portfolio
OCC Small Cap Portfolio
Effective January 1, 1998, CG Life sold its individual variable life
insurance business to Lincoln National Corporation (Lincoln). Although CG Life
will remain responsible for all policy terms and conditions, Lincoln will be
servicing the individual life insurance contracts, including the payment of
benefits, oversight of investment management and contract administration.
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 LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. INVESTMENT VALUATION:--Investments held by the variable sub-accounts are
valued at their respective closing net asset values per share as determined
by the mutual funds as of December 31, 1997. The change in the difference
between cost and value is reflected as unrealized gain (loss) in the
Statements of Operations.
B. INVESTMENT TRANSACTIONS:--Investment transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and losses
on sales of investments are determined by the last-in, first-out cost basis
of the investment sold. Dividend and capital gain distributions are recorded
on the ex-dividend date. Investment transactions are settled through CG
Life.
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, 1997 were:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
SHARES COST OF
SUB-ACCOUNT HELD INVESTMENTS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio......................................... 10,741 $ 357,892
Alger American Leveraged AllCap Portfolio............................... 17,252 319,751
Alger American MidCap Growth Portfolio.................................. 4,406 90,243
Alger American Small Capitalization Portfolio........................... 9,188 382,971
Fidelity Equity-Income Portfolio........................................ 19,048 381,265
Fidelity Asset Manager Portfolio........................................ 5,177 79,785
Fidelity Investment Grade Bond Portfolio................................ 3,617 44,113
MFS Total Return Series................................................. 11,984 162,388
MFS Utilities Series.................................................... 580 8,551
MFS World Governments Series............................................ 2,946 31,491
AMT Balanced Portfolio.................................................. 15,314 250,419
AMT Limited Maturity Bond Portfolio..................................... 3,426 47,758
AMT Partners Portfolio.................................................. 10,622 160,599
OCC Global Equity Portfolio............................................. 20,247 251,267
OCC Managed Portfolio................................................... 9,468 310,769
OCC Small Cap Portfolio................................................. 1,036 20,732
- -------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
Total purchases and sales of shares for each mutual fund, for the year ended
December 31, 1997, amounted to:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
SUB-ACCOUNT PURCHASES SALES
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Alger American Growth Portfolio......................................... $ 63,170 $ 29,074
Alger American Leveraged AllCap Portfolio............................... 13,148 10,110
Alger American MidCap Growth Portfolio.................................. 20,101 18,125
Alger American Small Capitalization Portfolio........................... 61,616 35,130
Fidelity Equity-Income Portfolio........................................ 164,562 120,936
Fidelity Asset Manager Portfolio........................................ 18,323 4,752
Fidelity Investment Grade Bond Portfolio................................ 6,956 3,678
MFS Total Return Series................................................. 29,095 17,489
MFS Utilities Series.................................................... 5,650 570
MFS World Governments Series............................................ 1,789 714
AMT Balanced Portfolio.................................................. 56,874 9,977
AMT Limited Maturity Bond Portfolio..................................... 48,456 939
AMT Partners Portfolio.................................................. 68,519 12,468
OCC Global Equity Portfolio............................................. 63,207 25,108
OCC Managed Portfolio................................................... 50,059 15,656
OCC Small Cap Portfolio................................................. 7,043 9,370
- -------------------------------------------------------------------------------------------
</TABLE>
4. CHARGES AND DEDUCTIONS
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. Transfer fees, for the
variable sub-accounts, amounted to $25 for the year ended December 31, 1997.
11
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT I
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS (CONTINUED)
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, 1997, amounted to:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
COST OF
PREMIUM ADMINISTRATIVE INSURANCE
SUB-ACCOUNT LOADS FEES DEDUCTIONS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alger American Growth Portfolio................................ $ 1,179 $ 1,021 $ 12,259
Alger American Leveraged AllCap Portfolio...................... 372 570 8,417
Alger American MidCap Growth Portfolio......................... 160 338 3,117
Alger American Small Capitalization Portfolio.................. 1,188 767 9,448
Fidelity Equity-Income Portfolio............................... 1,056 1,094 12,054
Fidelity Asset Manager Portfolio............................... 100 163 1,807
Fidelity Investment Grade Bond Portfolio....................... 48 67 345
MFS Total Return Series........................................ 474 498 6,839
MFS Utilities Series........................................... 61 75 535
MFS World Governments Series................................... 41 40 571
AMT Balanced Portfolio......................................... 1,287 341 6,541
AMT Limited Maturity Bond Portfolio............................ 1,757 37 442
AMT Partners Portfolio......................................... 865 662 7,079
OCC Global Equity Portfolio.................................... 1,295 659 8,981
OCC Managed Portfolio.......................................... 586 1,097 11,126
OCC Small Cap Portfolio........................................ 72 103 674
- -------------------------------------------------------------------------------------------
</TABLE>
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 charges or partial surrender administrative charges
were paid to CG Life, attributable to the variable sub-accounts, for the year
ended December 31, 1997.
5. DISTRIBUTION OF NET INCOME
The Account does not expect to declare dividends to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of death benefits, surrenders, and transfers to other fixed
or variable sub-accounts.
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
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, 1997, the
results of each of their operations for the year then ended and the changes in
each of their net assets for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Account's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1997 by
correspondence with the custodians, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1998
13
<PAGE>
The mutual fund 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, 1997, consisting of 30
partially numbered pages. Filed February 23, 1998, Form Type N-30D,
Registration Statement 811-5550
2. Variable Insurance Products Fund:
2(a) Equity-Income Portfolio Annual Report, December 31, 1997,
consisting of 20 partially numbered pages.
2(b) High Income Portfolio Annual Report, December 31, 1997,
consisting of 22 partially numbered pages.
2(c) Money Market Portfolio Annual Report, December 31, 1997,
consisting of 14 partially numbered pages.
2(d) Overseas Portfolio Annual Report, December 31, 1997, consisting
of 20 partially numbered pages.
Filed February 23, 1998, Form Type N-30D, Registration Statement 811-3329
3. Variable Insurance Products Fund II
3(a) Asset Manager Portfolio Annual Report, December 31, 1997,
consisting of 28 partially numbered pages.
3(b) Investment Grade Bond Portfolio Annual Report, December 31, 1997,
consisting of 18 partially numbered pages.
Filed February 23, 1998, Form Type N-30D, Registration Statement 811-5511
4. MFS - Registered Trademark - Variable Insurance Trust
4(a) MFS - Registered Trademark - Total Return Series Annual Report,
December 31, 1997, consisting of 22 partially numbered pages
4(b) MFS - Registered Trademark - Utilities Series Annual Report,
December 31, 1997, consisting of 20 partially numbered pages
4(c) MFS - Registered Trademark - World Governments Series Annual
Report, December 31, 1997, consisting of 18 partially numbered pages
Filed March 5, 1998, Form Type N-30D, Registration Statement 811-8326
5. Neuberger&Berman Advisers Management Trust
5(a) Balanced Portfolio Annual Report, December 31, 1997, consisting
of 30 partially numbered pages
5(b) Limited Maturity Bond Portfolio Annual Report, December 31, 1997,
consisting of 25 partially numbered pages
<PAGE>
5(c) Partners Portfolio Annual Report, December 31, 1997, consisting
of 23 partially numbered pages
Filed February 25, 1997, Form Type N-30D, Registration Statement 811-4255
6. OCC Accumulation Trust
8(a) Global Equity Portfolio Annual Report, December 31, 1997,
consisting of 21 unnumbered pages.
8(b) Managed Portfolio Annual Report, December 31, 1997, consisting of
14 unnumbered pages.
8(c) Small Cap Portfolio Annual Report, December 31, 1997, consisting
of 15 unnumbered pages.
Filed February 26, 1998, Form Type N-30D, Registration Statement 811-8512
<PAGE>
This report may be distributed only to current shareholders or to persons who
have received a current ACCRU Variable Annuity or ACCRU Variable Life Prospectus
National Distributor:
CIGNA Financial Advisors
900 Cottage Grove Road
Hartford, CT 06152
#562157 2/98
