<PAGE>
CIGNA
ACCRU
CHOICEPLUS
ANNUAL REPORT
DECEMBER 31, 1997
[LOGO]
#562158
<PAGE>
TABLE OF CONTENTS
SCHEDULE OF CHANGES IN UNIT VALUES
CG VARIABLE ANNUITY SEPARATE ACCOUNT II
FINANCIAL STATEMENTS*
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
CIGNA VARIABLE PRODUCTS GROUP
CIGNA VP MONEY MARKET FUND
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND
EQUITY-INCOME PORTFOLIO
HIGH INCOME PORTFOLIO
OVERSEAS PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND II
CONTRAFUND PORTFOLIO
INVESTMENT GRADE BOND PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND III
GROWTH OPPORTUNITIES PORTFOLIO
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST-SM-
MFS EMERGING GROWTH SERIES
MFS GROWTH WITH INCOME SERIES
MFS RESEARCH SERIES
MFS TOTAL RETURN SERIES
MFS UTILITIES SERIES
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
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 PRODUCT COVERED BY THIS REPORT;
THE SEPARATE ACCOUNT FINANCIALS ALSO
INCLUDE FUNDS AVAILABLE IN OTHER
PRODUCTS.
<PAGE>
ACCRU VARIABLE PRODUCTS
SCHEDULE OF CHANGES IN UNIT VALUES
PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CONNECTICUT GENERAL ACCRU CHOICEPLUS VARIABLE ANNUITY
DATE INITIALLY ACCUMULATION 12/31/97
FUNDED UNIT VALUE ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) AT INCEPTION UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 6/6/97 $10.000000 $11.168525 11.7
Alger American Leveraged AllCap Portfolio 6/9/97 10.000000 10.988210 9.9
Alger American MidCap Growth Portfolio 6/2/97 10.000000 11.123794 11.2
Alger American Small Capitalization Portfolio 6/6/97 10.000000 11.406099 14.1
- ------------------------------------------------------------------------------------------------------------
CIGNA VP Money Market Fund 5/20/97 10.000000 10.230578 2.3
- ------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 6/6/97 10.000000 11.249844 12.5
Fidelity VIP High Income Portfolio 6/2/97 10.000000 11.013339 10.1
Fidelity VIP Overseas Portfolio 6/2/97 10.000000 9.986074 -0.1
Fidelity VIP II Contrafund Portfolio 6/2/97 10.000000 11.485208 14.9
Fidelity VIP II Investment Grade Bond Portfolio 6/9/97 10.000000 10.587068 5.9
Fidelity VIP III Growth Opportunities Portfolio 6/9/97 10.000000 11.379873 13.8
- ------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series 6/2/97 10.000000 11.329433 13.3
MFS Growth with Income Series 6/5/97 10.000000 11.422097 14.2
MFS Research Series 6/9/97 10.000000 10.759295 7.6
MFS Total Return Series 6/2/97 10.000000 11.107402 11.1
MFS Utilities Series 6/9/97 10.000000 12.027164 20.3
- ------------------------------------------------------------------------------------------------------------
AMT Limited Maturity Bond Portfolio 6/2/97 10.000000 10.358639 3.6
AMT Partners Portfolio 5/22/97 10.000000 11.785098 17.9
- ------------------------------------------------------------------------------------------------------------
OCC Global Equity Portfolio 6/2/97 10.000000 10.384482 3.8
OCC Managed Portfolio 5/22/97 10.000000 11.210441 12.1
OCC Small Cap Portfolio 6/13/97 10.000000 10.688805 6.9
- ------------------------------------------------------------------------------------------------------------
</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>
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>
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. CIGNA Variable Products Money Market Fund Annual Report, December 31,
1997, consisting of 11 partially numbered pages. Filed March 6, 1998, Form
Type N-30D, Registration Statement 811-5480
3. Variable Insurance Products Fund
3(a) Equity-Income Portfolio Annual Report, December 31, 1997,
consisting of 20 partially numbered pages.
3(b) High Income Portfolio Annual Report, December 31, 1997, consisting
of 22 partially numbered pages
3(c) 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
4. Variable Insurance Products Fund II
4(a) Contrafund Portfolio Annual Report, December 31, 1997, consisting
of 24 partially numbered pages.
4(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
5. Variable Insurance Products Fund III
5(a) Growth Opportunities Portfolio Annual Report, December 31, 1997,
consisting of 18 partially numbered pages
Filed February 23, 1998, Form Type N-30D, Registration Statement 811-7205
6. MFS - Registered Trademark - Variable Insurance Trust
6(a) MFS - Registered Trademark - Emerging Growth Series Annual Report,
December 31, 1997, consisting of 20 partially numbered pages
6(b) MFS - Registered Trademark - Growth With Income Series Annual
Report, December 31, 1997, consisting of 20 partially numbered pages
6(c) MFS - Registered Trademark - Research Series Annual Report,
December 31, 1997, consisting of 18 partially numbered pages
<PAGE>
6(d) MFS - Registered Trademark - Total Return Series Annual Report,
December 31, 1997, consisting of 22 partially numbered pages
6(e) MFS - Registered Trademark - Utilities Series Annual Report,
December 31, 1997, consisting of 20 partially numbered pages
Filed March 5, 1998, Form Type N-30D, Registration Statement 811-8326
7. Neuberger&Berman Advisers Management Trust
7(a) Limited Maturity Bond Portfolio Annual Report, December 31, 1997,
consisting of 25 partially numbered pages
7(b) Partners Portfolio Annual Report, December 31, 1997, consisting of
23 partially numbered pages
Filed February 25, 1998, Form Type N-30D, Registration Statement 811-4255
8. 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 recieved a current ACCRU Choice Plus Variable Annuity Prospectus
National Distributor:
CIGNA Financial Advisors
900 Cottage Grove Road
Hartford, CT 06152
#562158 2/98
