<PAGE>
[LOGO]
VUL-I
Variable Universal
Life Insurance
From Connecticut General
ANNUAL REPORT
December 31, 1996
[LOGO]
CIGNA INDIVIDUAL
INSURANCE
<PAGE>
TABLE OF CONTENTS
PRESIDENT'S LETTER
ECONOMIC REVIEW AND OUTLOOK
SCHEDULE OF CHANGES IN UNIT VALUES
CONNECTICUT GENERAL VARIABLE LIFE SEPARATE ACCOUNT II FINANCIAL
STATEMENTS
FUND REPORTS:
AIM VARIABLE INSURANCE FUNDS, INC. ANNUAL REPORTS
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. DIVERSIFIED INCOME FUND
AIM V.I. GROWTH FUND
AIM V.I. VALUE FUND
CIGNA VARIABLE PRODUCTS GROUP ANNUAL REPORT
CIGNA VARIABLE PRODUCTS MONEY MARKET FUND
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUNDS ANNUAL REPORT
EQUITY-INCOME PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUNDS II
ANNUAL REPORT*
INVESTMENT GRADE BOND PORTFOLIO
ASSET MANAGER PORTFOLIO
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST-SM- ANNUAL
REPORTS
MFS TOTAL RETURN SERIES
MFS UTILITIES SERIES
MFS WORLD GOVERNMENT SERIES
OCC ACCUMULATION TRUST ANNUAL REPORT
SMALL CAP PORTFOLIO
GLOBAL EQUITY PORTFOLIO
MANAGED PORTFOLIO
TEMPLETON VARIABLE PRODUCT SERIES FUND
ANNUAL REPORTS
TEMPLETON STOCK FUND
TEMPLETON INTERNATIONAL FUND
TEMPLETON ASSET ALLOCATION FUND
[LOGO]
<PAGE>
[PHOTO] [LOGO]
THOMAS C. JONES
President
900 Cottage Grove Road
Routing S-249
Hartford, CT 06152-2249
Dear Client:
It is a pleasure to provide you with this report on the performance of your
VUL-1 Variable Universal Life Insurance product for the year ended December 31,
1996.
The report includes a summary of sub-account performance for the past 12 months
and financial data for each of the portfolio options available under your
product. In addition, we have included an informative interview with Edward
Guay, CIGNA's chief economist. The interview deals with significant national and
international economic trends affecting key financial markets, and I hope you
will take a few minutes to read it carefully.
As we begin a new year, the CIGNA Individual Insurance team remains committed to
providing financial solutions that meet your expectations and needs. Whether
your concerns involve family and business succession planning, income
protection, retirement savings or asset accumulation, our organization is
dedicated to offering product solutions of recognized value -- and to back those
solutions with consistently superior service, unquestioned financial security
and complete product disclosure.
As part of our service commitment -- and to keep you fully informed about your
purchase and trends that could affect your financial planning decisions -- CIGNA
Individual Insurance has recently established a home page on the Internet. If
you have a computer link to the Internet and are interested in viewing helpful
information about retirement planning, you can visit our website at
HTTP://WWW.CIGNA.COM.
In addition, of course, you can call our Annuity and Variable Life Services
Center at 1.800.522.9898, Monday through Friday, 8 a.m. to 7 p.m. Eastern time.
Our representatives will be happy to answer any questions about this report, or
to respond to any requests or concerns.
With that, please accept my thanks for your loyalty and trust in choosing CIGNA,
and allow me to assure you that we will continue to concentrate our efforts and
resources on providing superior solutions that meet your long-term financial
goals and solve your increasingly complex financial planning needs.
Sincerely,
[SIG]
Thomas C. Jones
<PAGE>
ECONOMIC REVIEW AND OUTLOOK
AN INTERVIEW WITH EDWARD GUAY, CHIEF ECONOMIST, CIGNA CORPORATION
HOW DID THE U.S. ECONOMY AND OTHER NATIONAL ECONOMIES PERFORM IN 1996?
The U.S. economy performed well during 1996, as did several other national
economies. Economic activity in the U.S. continued a broadening recovery from
the slowdown of late 1994 and early 1995 which was engineered by the Federal
Reserve. This recovery was held back to some extent by the lingering weakness
among some of the major trading partners of the U.S. However, many of the
previous restraints on U.S. growth -- such as the real estate overbuilding
during the 1980s -- became less significant restraints as the markets absorbed
past excesses. The U.S. also benefited from a flood of liquidity as central
banks in many parts of the world aggressively eased interest rates to try to
restore growth.
Some other countries also recovered strongly last year. In some cases, such as
Mexico, Venezuela, Argentina, and the Scandinavian countries, the recoveries
were rebounds from past crises. In other cases, the resumption of growth
reflected stronger and more sustainable growth of both output and final demand.
In the latter group were Canada, the United Kingdom and Australia.
There was some political background "noise" during the year in the U.S. and
elsewhere. But nowhere was it particularly disruptive of long-term economic
fundamentals. In all, 1996 was a vintage year for the U.S. and marked the
beginning of what should be several good years for the world economy.
WHAT KEY FACTORS ARE EXPECTED TO DRIVE WORLDWIDE GROWTH THIS YEAR?
The major engines of growth will include energy refining and development and
stronger demand for infrastructure products, such as power generation and
communications equipment.
DID INFLATION POSE A SERIOUS THREAT ON THE WORLD ECONOMIC SCENE IN 1996?
Although there were several inflation shocks last year, the massive liquidity
expansion did not cause inflation to rise. Excess capacity and labor in world
markets combined with technological change, continuing corporate restructuring,
and relatively free trade to help keep prices under control.
WHAT WERE THE MAJOR TRENDS IN THE U.S. BOND MARKET LAST YEAR?
When 1996 began, the U.S. bond market anticipated recession, but by late spring
the bond market was more fearful of resurging growth. Treasury bond yields rose
from 6% to more than 7% between the end of 1995 and the middle of 1996 because
of the shift in psychology and futures trading. But from August through
November, fears of growth eased and bond yields retraced more than half the
earlier rise. Although good economic news caused another setback in the bond
market in December, the bond market performed better than generally expected for
the year as a whole.
<PAGE>
WHAT ABOUT THE PERFORMANCE OF THE EQUITY MARKET?
The equity market performed extraordinarily well again in 1996, although it was
mainly the large capitalization domestic stocks that did well. Small
capitalization domestic stocks, many major international markets, most notably
the Japanese market, and some of the emerging markets, particularly in Asia,
underperformed. Profits were stronger than expected and balance sheets continued
to improve, primarily because of restructuring, share buybacks, and the
deepening and broadening impact of new technology. The financial improvement and
increased liquidity benefited both the stock market and the corporate bond
market.
IS THE U.S. EQUITY MARKET LIKELY TO SUSTAIN ITS STRONG GROWTH OF RECENT YEARS?
WHAT ABOUT FOREIGN MARKETS?
U.S. equity valuations may experience a correction because they are at the
highest levels in 30 years and there is less scope now for extraordinary profit
gains from either a reduced rate of inflation or restructuring. But in foreign
equity markets, the scope for restructuring and for unusual profits gains
remains large. A sustained bull market in international markets could run for
another two to four years.
WHAT IS THE ECONOMIC OUTLOOK FOR 1997?
The new year should bring continued growth in the U.S. and somewhat more
favorable trends in the world economy. Several U.S. economic sectors are already
operating at or above potential and are not likely to contribute greatly to
growth during 1997. Among those are autos, housing, and some key components of
business investment spending. Other U.S. economic sectors and regions are still
operating well below their normal capabilities and offer the potential for
upside surprises during the year. U.S. growth will be spurred by commercial
construction and export industries.
After growing by more than 3.0% during 1996, the U.S. economy should be able to
grow by 2.75% to 3.0% during 1997, but with somewhat different composition.
Overall, our world view is still optimistic. The next year or two should be good
for business, and for diversified investors.
<PAGE>
VUL-I VARIABLE UNIVERSAL LIFE
SCHEDULE OF CHANGES IN UNIT VALUE
PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
DATE
INITIALLY
FUNDED ACCUMULATION 12/31/96 % CHANGE
(INCEPTION UNIT VALUE ACCUMULATION SINCE
SUB-ACCOUNT DATE) AT INCEPTION UNIT VALUE INCEPTION
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund 5/6/96 $10.000000 $10.486698 4.9
AIM V.I. Diversified Income Fund 5/22/96 10.000000 10.868038 8.7
AIM V.I. Growth Fund 5/22/96 10.000000 10.546548 5.5
AIM V.I. Value Fund 5/6/96 10.000000 11.316054 13.2
CIGNA Variable Products Money Market Fund 5/6/96 10.000000 10.274144 2.7
Fidelity VIP Equity Income Portfolio 5/6/96 10.000000 10.953184 9.5
Fidelity VIP II: Asset Manager Portfolio 7/1/96 10.000000 10.747301 7.5
Fidelity VIP II: Investment Grade Bond Portfolio 5/6/96 10.000000 10.615798 6.2
MFS Total Return Series 5/28/96 10.000000 10.818148 8.2
MFS Utilities Series 8/19/96 10.000000 11.210158 12.1
MFS World Governments Series 5/6/96 10.000000 10.546056 5.5
OCC Global Equity Portfolio 5/6/96 10.000000 10.865525 8.7
OCC Managed Portfolio 5/28/96 10.000000 11.116268 11.2
OCC Small Cap Portfolio 5/21/96 10.000000 10.558285 5.6
Templeton Asset Allocation Fund 5/6/96 10.000000 11.154447 11.5
Templeton International Fund 5/21/96 10.000000 11.295688 13.0
Templeton Stock Fund 5/22/96 10.000000 11.095968 11.0
</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 LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CIGNA FIDELITY
VARIABLE VIP
PRODUCTS PORTFOLIO
AIM VARIABLE INSURANCE FUNDS SUB-ACCOUNTS GROUP SUB-ACCOUNT
-------------------------------------------------- SUB-ACCOUNT -----------
CAPITAL DIVERSIFIED ------------- EQUITY-
APPRECIATION INCOME GROWTH VALUE MONEY MARKET INCOME
----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable insurance funds at
value.......................................... $ 300,215 $ 79,943 $ 396,937 $ 400,047 $ 183,119 $ 298,186
Receivable from Connecticut General Life
Insurance Company.............................. 1,097 -- 135,631 1,645 -- 475
Receivable for fund shares sold.................. -- 52 -- -- -- --
----------- ----------- ----------- ----------- ------------- -----------
Total assets................................. 301,312 79,995 532,568 401,692 183,119 298,661
----------- ----------- ----------- ----------- ------------- -----------
LIABILITIES:
Payable to Connecticut General Life Insurance
Company........................................ -- 52 -- -- -- --
Payable for fund shares purchased................ 1,097 -- 135,631 1,645 -- 475
----------- ----------- ----------- ----------- ------------- -----------
Total liabilities............................ 1,097 52 135,631 1,645 -- 475
----------- ----------- ----------- ----------- ------------- -----------
Net assets................................... $ 300,215 $ 79,943 $ 396,937 $ 400,047 $ 183,119 $ 298,186
----------- ----------- ----------- ----------- ------------- -----------
----------- ----------- ----------- ----------- ------------- -----------
Accumulation units outstanding................... 28,628 7,356 37,637 35,352 17,823 27,224
Net asset value per accumulation unit............ $ 10.486698 $ 10.868038 $ 10.546548 $ 11.316054 $ 10.274144 $ 10.953184
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
------------------------
ASSET INVESTMENT
MANAGER GRADE BOND
----------- -----------
<S> <C> <C>
ASSETS:
Investment in variable insurance funds at
value.......................................... $ 68,048 $ 40,821
Receivable from Connecticut General Life
Insurance Company.............................. -- --
Receivable for fund shares sold.................. -- --
----------- -----------
Total assets................................. 68,048 40,821
----------- -----------
LIABILITIES:
Payable to Connecticut General Life Insurance
Company........................................ -- --
Payable for fund shares purchased................ -- --
----------- -----------
Total liabilities............................ -- --
----------- -----------
Net assets................................... $ 68,048 $ 40,821
----------- -----------
----------- -----------
Accumulation units outstanding................... 6,332 3,845
Net asset value per accumulation unit............ $ 10.747301 $ 10.615798
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
1
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
OCC ACCUMULATION TRUST
MFS SERIES SUB-ACCOUNTS SUB-ACCOUNTS *
----------------------------------- ----------------------------------
TOTAL WORLD GLOBAL
RETURN UTILITIES GOVERNMENTS EQUITY MANAGED SMALL CAP
---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable insurance
funds at value................ $ 126,098 $ 5,819 $ 10,041 $ 16,055 $ 242,604 $ 170,376
Receivable from Connecticut
General Life Insurance
Company....................... -- -- -- -- -- --
Receivable for fund shares
sold.......................... -- -- -- -- -- --
---------- ---------- ----------- ---------- ---------- ----------
Total assets................ 126,098 5,819 10,041 16,055 242,604 170,376
---------- ---------- ----------- ---------- ---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company........ -- -- -- -- -- --
Payable for fund shares
purchased..................... -- -- -- -- -- --
---------- ---------- ----------- ---------- ---------- ----------
Total liabilities........... -- -- -- -- -- --
---------- ---------- ----------- ---------- ---------- ----------
Net assets.................. $ 126,098 $ 5,819 $ 10,041 $ 16,055 $ 242,604 $ 170,376
---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ----------- ---------- ---------- ----------
Accumulation units
outstanding................... 11,656 519 952 1,478 21,824 16,137
Net asset value per accumulation
unit.......................... $10.818148 $11.210158 $ 10.546056 $10.865525 $11.116268 $10.558285
<CAPTION>
TEMPLETON VARIABLE PRODUCTS
SERIES FUND SUB-ACCOUNTS
--------------------------------------
ASSET
ALLOCATION INTERNATIONAL STOCK
---------- ------------- ----------
<S> <C> <C> <C>
ASSETS:
Investment in variable insurance
funds at value................ $ 312,377 $ 373,559 $ 91,496
Receivable from Connecticut
General Life Insurance
Company....................... -- 594 --
Receivable for fund shares
sold.......................... -- -- --
---------- ------------- ----------
Total assets................ 312,377 374,153 91,496
---------- ------------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company........ -- -- --
Payable for fund shares
purchased..................... -- 594 --
---------- ------------- ----------
Total liabilities........... -- 594 --
---------- ------------- ----------
Net assets.................. $ 312,377 $ 373,559 $ 91,496
---------- ------------- ----------
---------- ------------- ----------
Accumulation units
outstanding................... 28,005 33,071 8,246
Net asset value per accumulation
unit.......................... $11.154447 $ 11.295688 $11.095968
</TABLE>
- --------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
2
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CIGNA
VARIABLE
PRODUCTS
AIM VARIABLE INSURANCE FUNDS SUB-ACCOUNTS GROUP
-------------------------------------------------------- SUB-ACCOUNT
CAPITAL DIVERSIFIED -------------
APPRECIATION INCOME GROWTH VALUE MONEY MARKET
------------ ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Inception date................................. May 6, 1996 May 22, 1996 May 22, 1996 May 6, 1996 May 6, 1996
INVESTMENT INCOME:
Dividends...................................... $ 321 $ 3,336 $ 833 $ 1,608 $ 2,053
EXPENSES:
Mortality and expense risk and administrative
charges...................................... 385 88 282 468 315
------------ ------------- ------------- ------------ -------------
Net investment gain (loss)................. (64) 3,248 551 1,140 1,738
------------ ------------- ------------- ------------ -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Capital distributions from portfolio
sponsors..................................... -- -- 9,355 15,593 --
Net realized gain on share transactions........ 379 11 337 337 --
------------ ------------- ------------- ------------ -------------
Net realized gain.......................... 379 11 9,692 15,930 --
Net unrealized gain (loss)..................... 2,251 (1,549) (9,782) (3,822) --
------------ ------------- ------------- ------------ -------------
Net realized and unrealized gain (loss) on
investments.............................. 2,630 (1,538) (90) 12,108 --
------------ ------------- ------------- ------------ -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $ 2,566 $ 1,710 $ 461 $ 13,248 $ 1,738
------------ ------------- ------------- ------------ -------------
------------ ------------- ------------- ------------ -------------
<CAPTION>
FIDELITY VIP
PORTFOLIO FIDELITY VIP II
SUB-ACCOUNT PORTFOLIO SUB-ACCOUNTS
------------ --------------------------
EQUITY- ASSET INVESTMENT
INCOME MANAGER GRADE BOND
------------ ------------ ------------
<S> <C> <C> <C>
Inception date................................. May 6, 1996 July 1, 1996 May 6, 1996
INVESTMENT INCOME:
Dividends...................................... $ -- $ -- $ --
EXPENSES:
Mortality and expense risk and administrative
charges...................................... 322 89 32
------------ ------------ ------------
Net investment gain (loss)................. (322) (89) (32)
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Capital distributions from portfolio
sponsors..................................... -- -- --
Net realized gain on share transactions........ 350 344 4
------------ ------------ ------------
Net realized gain.......................... 350 344 4
Net unrealized gain (loss)..................... 5,635 1,319 (66)
------------ ------------ ------------
Net realized and unrealized gain (loss) on
investments.............................. 5,985 1,663 (62)
------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.............................. $ 5,663 $ 1,574 $ (94)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS OCC ACCUMULATION TRUST SUB-ACCOUNTS *
-------------------------------------------- ------------------------------------------
WORLD GLOBAL
TOTAL RETURN UTILITIES GOVERNMENTS EQUITY MANAGED SMALL CAP
------------- --------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Inception date.................. May 28, 1996 August 19, 1996 May 6, 1996 May 6, 1996 May 28, 1996 May 21, 1996
INVESTMENT INCOME:
Dividends....................... $ 1,859 $ 135 $ -- $ 56 $ -- $ --
EXPENSES:
Mortality and expense risk and
administrative charges........ 165 9 13 24 375 281
------------- --------------- ------------ ------------ ------------- -------------
Net investment gain
(loss).................... 1,694 126 (13) 32 (375) (281)
------------- --------------- ------------ ------------ ------------- -------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Capital distributions from
portfolio sponsors............ 808 350 -- 85 -- --
Net realized gain (loss) on
share transactions............ 61 (1) -- 7 174 26
------------- --------------- ------------ ------------ ------------- -------------
Net realized gain (loss).... 869 349 -- 92 174 26
Net unrealized gain............. 656 9 24 375 11,891 9,222
------------- --------------- ------------ ------------ ------------- -------------
Net realized and unrealized
gain on investments....... 1,525 358 24 467 12,065 9,248
------------- --------------- ------------ ------------ ------------- -------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS............... $ 3,219 $ 484 $ 11 $ 499 $ 11,690 $ 8,967
------------- --------------- ------------ ------------ ------------- -------------
------------- --------------- ------------ ------------ ------------- -------------
<CAPTION>
TEMPLETON VARIABLE PRODUCTS
SERIES FUND SUB-ACCOUNTS
------------------------------------------
ASSET
ALLOCATION INTERNATIONAL STOCK
------------ ------------- -------------
<S> <C> <C> <C>
Inception date.................. May 6, 1996 May 21, 1996 May 22, 1996
INVESTMENT INCOME:
Dividends....................... $ -- $ -- $ --
EXPENSES:
Mortality and expense risk and
administrative charges........ 244 473 121
------------ ------------- -------------
Net investment gain
(loss).................... (244) (473) (121)
------------ ------------- -------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Capital distributions from
portfolio sponsors............ -- -- --
Net realized gain (loss) on
share transactions............ 249 156 (25)
------------ ------------- -------------
Net realized gain (loss).... 249 156 (25)
Net unrealized gain............. 8,859 22,647 4,870
------------ ------------- -------------
Net realized and unrealized
gain on investments....... 9,108 22,803 4,845
------------ ------------- -------------
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS............... $ 8,864 $ 22,330 $ 4,724
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
- --------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CIGNA
VARIABLE
PRODUCTS
AIM VARIABLE INSURANCE FUNDS SUB-ACCOUNTS GROUP
-------------------------------------------------------- SUB-ACCOUNT
CAPITAL DIVERSIFIED -------------
APPRECIATION INCOME GROWTH VALUE MONEY MARKET
------------ ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Inception date..................................... May 6, 1996 May 22, 1996 May 22, 1996 May 6, 1996 May 6, 1996
OPERATIONS:
Net investment gain (loss)......................... $ (64) $ 3,248 $ 551 $ 1,140 $ 1,738
Net realized gain.................................. 379 11 9,692 15,930 --
Net unrealized gain (loss)......................... 2,251 (1,549) (9,782) (3,822) --
------------ ------------- ------------- ------------ -------------
Net increase (decrease) from operations.......... 2,566 1,710 461 13,248 1,738
------------ ------------- ------------- ------------ -------------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium load.......... 101,952 1,147 108,913 94,506 29,639
Participant transfers.............................. 207,039 80,113 292,966 306,773 162,260
Participant withdrawals............................ (11,342) (3,027) (5,403) (14,480) (10,518)
------------ ------------- ------------- ------------ -------------
Net increase from participant transactions....... 297,649 78,233 396,476 386,799 181,381
------------ ------------- ------------- ------------ -------------
Total increase in net assets................... 300,215 79,943 396,937 400,047 183,119
NET ASSETS:
Beginning of period................................ -- -- -- -- --
------------ ------------- ------------- ------------ -------------
End of period...................................... $ 300,215 $ 79,943 $ 396,937 $ 400,047 $ 183,119
------------ ------------- ------------- ------------ -------------
------------ ------------- ------------- ------------ -------------
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits............................... 9,708 109 10,164 8,581 2,928
Participant transfers.............................. 20,023 7,532 27,995 28,109 15,929
Participant withdrawals............................ (1,103) (285) (522) (1,338) (1,034)
------------ ------------- ------------- ------------ -------------
Net increase in units from participant
transactions................................. 28,628 7,356 37,637 35,352 17,823
------------ ------------- ------------- ------------ -------------
------------ ------------- ------------- ------------ -------------
<CAPTION>
FIDELITY VIP
PORTFOLIO FIDELITY VIP II
SUB-ACCOUNT PORTFOLIO SUB-ACCOUNTS
------------ --------------------------
EQUITY- ASSET INVESTMENT
INCOME MANAGER GRADE BOND
------------ ------------ ------------
<S> <C> <C> <C>
Inception date..................................... May 6, 1996 July 1, 1996 May 6, 1996
OPERATIONS:
Net investment gain (loss)......................... $ (322) $ (89) $ (32)
Net realized gain.................................. 350 344 4
Net unrealized gain (loss)......................... 5,635 1,319 (66)
------------ ------------ ------------
Net increase (decrease) from operations.......... 5,663 1,574 (94)
------------ ------------ ------------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of premium load.......... 40,360 25,510 668
Participant transfers.............................. 260,509 42,284 41,527
Participant withdrawals............................ (8,346) (1,320) (1,280)
------------ ------------ ------------
Net increase from participant transactions....... 292,523 66,474 40,915
------------ ------------ ------------
Total increase in net assets................... 298,186 68,048 40,821
NET ASSETS:
Beginning of period................................ -- -- --
------------ ------------ ------------
End of period...................................... $ 298,186 $ 68,048 $ 40,821
------------ ------------ ------------
------------ ------------ ------------
PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN
UNITS):
Participant deposits............................... 3,789 2,464 61
Participant transfers.............................. 24,210 3,993 3,905
Participant withdrawals............................ (775) (125) (121)
------------ ------------ ------------
Net increase in units from participant
transactions................................. 27,224 6,332 3,845
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
5
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS OCC ACCUMULATION TRUST SUB-ACCOUNTS *
-------------------------------------------- ------------------------------------------
TOTAL WORLD GLOBAL
RETURN UTILITIES GOVERNMENTS EQUITY MANAGED SMALL CAP
------------- --------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Inception date.................. May 28, 1996 August 19, 1996 May 6, 1996 May 6, 1996 May 28, 1996 May 21, 1996
OPERATIONS:
Net investment gain (loss)...... $ 1,694 $ 126 $ (13) $ 32 $ (375) $ (281)
Net realized gain (loss)........ 869 349 -- 92 174 26
Net unrealized gain............. 656 9 24 375 11,891 9,222
------------- --------------- ------------ ------------ ------------- -------------
Net increase from
operations................ 3,219 484 11 499 11,690 8,967
------------- --------------- ------------ ------------ ------------- -------------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of
premium load.................. 42,659 64 2,843 1,678 31,531 16,598
Participant transfers........... 82,784 5,527 7,813 14,816 207,398 150,455
Participant withdrawals......... (2,564) (256) (626) (938) (8,015) (5,644)
------------- --------------- ------------ ------------ ------------- -------------
Net increase from
participant
transactions.............. 122,879 5,335 10,030 15,556 230,914 161,409
------------- --------------- ------------ ------------ ------------- -------------
Total increase in net
assets.................... 126,098 5,819 10,041 16,055 242,604 170,376
NET ASSETS:
Beginning of period............. -- -- -- -- -- --
------------- --------------- ------------ ------------ ------------- -------------
End of period................... $ 126,098 $ 5,819 $ 10,041 $ 16,055 $ 242,604 $ 170,376
------------- --------------- ------------ ------------ ------------- -------------
------------- --------------- ------------ ------------ ------------- -------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits............ 4,082 6 273 159 2,911 1,614
Participant transfers........... 7,818 537 739 1,409 19,660 15,075
Participant withdrawals......... (244) (24) (60) (90) (747) (552)
------------- --------------- ------------ ------------ ------------- -------------
Net increase in units from
participant
transactions.............. 11,656 519 952 1,478 21,824 16,137
------------- --------------- ------------ ------------ ------------- -------------
------------- --------------- ------------ ------------ ------------- -------------
<CAPTION>
TEMPLETON VARIABLE PRODUCTS
SERIES FUND SUB-ACCOUNTS
------------------------------------------
ASSET
ALLOCATION INTERNATIONAL STOCK
------------ ------------- -------------
<S> <C> <C> <C>
Inception date.................. May 6, 1996 May 21, 1996 May 22, 1996
OPERATIONS:
Net investment gain (loss)...... $ (244) $ (473) $ (121)
Net realized gain (loss)........ 249 156 (25)
Net unrealized gain............. 8,859 22,647 4,870
------------ ------------- -------------
Net increase from
operations................ 8,864 22,330 4,724
------------ ------------- -------------
ACCUMULATION UNIT TRANSACTIONS:
Participant deposits, net of
premium load.................. 8,075 60,621 8,496
Participant transfers........... 297,737 302,403 81,619
Participant withdrawals......... (2,299) (11,795) (3,343)
------------ ------------- -------------
Net increase from
participant
transactions.............. 303,513 351,229 86,772
------------ ------------- -------------
Total increase in net
assets.................... 312,377 373,559 91,496
NET ASSETS:
Beginning of period............. -- -- --
------------ ------------- -------------
End of period................... $ 312,377 $ 373,559 $ 91,496
------------ ------------- -------------
------------ ------------- -------------
PARTICIPANT ACCUMULATION UNIT
TRANSACTIONS (IN UNITS):
Participant deposits............ 771 5,685 798
Participant transfers........... 27,444 28,489 7,769
Participant withdrawals......... (210) (1,103) (321)
------------ ------------- -------------
Net increase in units from
participant
transactions.............. 28,005 33,071 8,246
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
- --------------------------
* Formerly Quest for Value Accumulation Trust
The Notes to Financial Statements are an integral part of these statements.
6
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION
CG Variable Life Insurance 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.
The assets of the Account are divided into variable sub-accounts each of
which is invested in shares of one of seventeen portfolios (mutual funds) of
seven diversified open-end management investment companies, each portfolio with
its own investment objective. The variable sub-accounts are:
AIM VARIABLE INSURANCE FUNDS, INC.:--
AIM V.I. Capital Appreciation Fund
AIM V.I. Diversified Income Fund
AIM V.I. Growth Fund
AIM V.I. Value Fund
CIGNA VARIABLE PRODUCTS GROUP:--
CIGNA Variable Products Money Market Fund
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
OCC (FORMERLY QUEST FOR VALUE) ACCUMULATION TRUST:--
OCC Global Equity Portfolio
OCC Managed Portfolio
OCC Small Cap Portfolio
TEMPLETON VARIABLE PRODUCTS SERIES FUND:--
Templeton Asset Allocation Fund
Templeton International Fund
Templeton Stock Fund
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in conformity with generally
accepted accounting principles. The following is a summary of significant
accounting policies consistently followed in the preparation of the Account's
financial statements.
7
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. INVESTMENT VALUATION:--Investments held by the sub-accounts are valued
at their respective closing net asset values per share as determined by the
mutual funds as of December 31, 1996. The difference between cost and value is
reflected as unrealized gain (loss) in the Statements of Operations.
B. INVESTMENT TRANSACTIONS:--Investment transactions are recorded on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on sales of investments are determined by the last-in, first-out cost
basis of the investment sold. Dividend and capital gain distributions are
recorded on the ex-dividend date. Investment transactions are settled through 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 at December 31, 1996 were:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SHARES COST OF
SUB-ACCOUNT HELD INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund......................................................... 15,451 $ 297,964
AIM V.I. Diversified Income Fund........................................................... 7,739 81,492
AIM V.I. Growth Fund....................................................................... 24,427 406,719
AIM V.I. Value Fund........................................................................ 22,886 403,869
CIGNA Variable Products Money Market Fund.................................................. 183,119 183,119
Fidelity Equity-Income Portfolio........................................................... 14,179 292,551
Fidelity Asset Manager Portfolio........................................................... 4,019 66,729
Fidelity Investment Grade Bond Portfolio................................................... 3,335 40,887
MFS Total Return Series.................................................................... 9,198 125,442
MFS Utilities Series....................................................................... 426 5,810
MFS World Governments Series............................................................... 949 10,017
OCC Global Equity Portfolio................................................................ 1,214 15,680
OCC Managed Portfolio...................................................................... 6,700 230,713
OCC Small Cap Portfolio.................................................................... 7,535 161,154
Templeton Asset Allocation Fund............................................................ 14,819 303,518
Templeton International Fund............................................................... 20,302 350,912
Templeton Stock Fund....................................................................... 3,999 86,626
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
3. INVESTMENTS (CONTINUED)
Total purchases and sales of shares for each of the mutual funds, for the
periods noted, amounted to:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT PERIOD * PURCHASES SALES
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund.............. May 6, 1996 to December 31, 1996 $ 386,550 $ 88,965
AIM V.I. Diversified Income Fund................ May 22, 1996 to December 31, 1996 83,874 2,393
AIM V.I. Growth Fund............................ May 22, 1996 to December 31, 1996 446,351 39,969
AIM V.I. Value Fund............................. May 6, 1996 to December 31, 1996 458,646 55,115
CIGNA Variable Products Money Market Fund....... May 6, 1996 to December 31, 1996 278,659 95,540
Fidelity Equity-Income Portfolio................ May 6, 1996 to December 31, 1996 333,736 41,535
Fidelity Asset Manager Portfolio................ July 1, 1996 to December 31, 1996 102,703 36,318
Fidelity Investment Grade Bond Portfolio........ May 6, 1996 to December 31, 1996 46,977 6,094
MFS Total Return Series......................... May 28, 1996 to December 31, 1996 169,286 43,905
MFS Utilities Series............................ August 19, 1996 to December 31, 1996 6,123 312
MFS World Governments Series.................... May 6, 1996 to December 31, 1996 12,460 2,443
OCC Global Equity Portfolio..................... May 6, 1996 to December 31, 1996 16,391 718
OCC Managed Portfolio........................... May 28, 1996 to December 31, 1996 289,425 58,886
OCC Small Cap Portfolio......................... May 21, 1996 to December 31, 1996 165,091 3,963
Templeton Asset Allocation Fund................. May 6, 1996 to December 31, 1996 341,220 37,951
Templeton International Fund.................... May 21, 1996 to December 31, 1996 384,420 33,664
Templeton Stock Fund............................ May 22, 1996 to December 31, 1996 98,643 11,992
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Date deposits first received.
4. CHARGES AND DEDUCTIONS
CG Life assumes the risk that policyholders may live longer than expected
and also assumes a mortality risk in connection with the death benefits of the
contract. CG Life also assumes a risk that its actual administrative expenses
may be higher than amounts deducted for such expenses. CG Life charges each
variable sub-account, for mortality and expense risks, a daily deduction,
equivalent to .80% per year during the first twelve policy years and .55% 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 5% of each premium payment to cover state
taxes and federal income tax liabilities.
CG Life charges a monthly administrative fee of $15 in the first policy year
and $5 in subsequent policy years. This charge is for items such as premium
billing and collection, policy value calculation, confirmations and periodic
reports.
CG Life charges a monthly deduction for the cost of insurance and any
charges for supplemental riders. The cost of insurance charge depends on the
attained age, risk classification, gender classification (in accordance with
state law) and the current net amount at risk. On a monthly basis, the
administrative fee and the cost of insurance charge are deducted proportionately
from the value of each variable sub-account and/or the fixed account funding
option. The fixed account is part of the general account of CG Life and is not
included in these financial statements.
Under certain circumstances, CG Life reserves the right to charge a transfer
fee of up to $25 for transfers between sub-accounts. For the periods ended
December 31, 1996, no transfer fees were deducted from the variable
sub-accounts.
9
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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 periods noted, amounted to:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
COSTS OF
PREMIUM ADMINISTRATIVE INSURANCE
SUB-ACCOUNT PERIOD * LOADS FEES DEDUCTIONS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation
Fund............................. May 6, 1996 to December 31, 1996 $ 5,303 $ 1,996 $ 9,346
AIM V.I. Diversified Income Fund... May 22, 1996 to December 31, 1996 61 239 2,788
AIM V.I. Growth Fund............... May 22, 1996 to December 31, 1996 5,698 604 4,799
AIM V.I. Value Fund................ May 6, 1996 to December 31, 1996 4,903 1,658 12,822
CIGNA Variable Products Money
Market Fund...................... May 6, 1996 to December 31, 1996 1,560 987 9,531
Fidelity Equity-Income Portfolio... May 6, 1996 to December 31, 1996 2,102 762 7,584
Fidelity Asset Manager Portfolio... July 1, 1996 to December 31, 1996 1,345 106 1,214
Fidelity Investment Grade Bond
Portfolio........................ May 6, 1996 to December 31, 1996 34 166 1,114
MFS Total Return Series............ May 28, 1996 to December 31, 1996 2,241 244 2,320
MFS Utilities Series............... August 19, 1996 to December 31, 1996 4 49 207
MFS World Governments Series....... May 6, 1996 to December 31, 1996 150 64 562
OCC Global Equity Portfolio........ May 6, 1996 to December 31, 1996 88 131 807
OCC Managed Portfolio.............. May 28, 1996 to December 31, 1996 1,618 809 5,919
OCC Small Cap Portfolio............ May 21, 1996 to December 31, 1996 872 400 3,971
Templeton Asset Allocation Fund.... May 6, 1996 to December 31, 1996 437 163 854
Templeton International Fund....... May 21, 1996 to December 31, 1996 3,162 985 9,515
Templeton Stock Fund............... May 22, 1996 to December 31, 1996 448 414 2,929
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Date deposits first received.
CG Life, upon full surrender of a policy, may charge a surrender charge.
This charge is in part a deferred sales charge and in part a recovery of certain
first year administrative costs. The amount of the surrender charge, if any,
will depend on the amount of the death benefit, the amount of premium payments
made during the first two policy years and the age of the policy. In no event
will the surrender charge exceed the maximum allowed by state or Federal law. No
surrender charge is imposed on a partial surrender, but an administrative fee of
$25 is imposed, allocated pro-rata among the variable sub-accounts (and, where
applicable, the fixed account) from which the partial surrender proceeds are
taken. No full surrender or partial surrender administrative charges were paid
to CG Life, attributable to the variable sub-accounts, for the periods ended
December 31, 1996.
5. DISTRIBUTION OF NET INCOME
The Account does not expect to declare dividends to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of death benefits, surrenders, and transfers to other fixed
or variable sub-accounts.
10
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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.
11
<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 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, AIM
Variable Insurance Funds, Inc.--AIM V.I. Capital Appreciation Fund, AIM V.I.
Diversified Income Fund, AIM V.I. Growth Fund, AIM V.I. Value Fund; CIGNA
Variable Products Group--CIGNA Variable Products Money Market Fund; 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; OCC (formerly Quest for Value)
Accumulation Trust--OCC Global Equity Portfolio, OCC Managed Portfolio, OCC
Small Cap Portfolio; Templeton Variable Products Series Fund--Templeton Asset
Allocation Fund, Templeton International Fund, Templeton Stock Fund
(constituting the CG Variable Life Insurance Separate Account II, hereafter
referred to as "the Account") at December 31, 1996, the results of each of their
operations and the changes in each of their net assets for the periods since
inception (as indicated in the financial statements) through December 31, 1996,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit, which included confirmation of securities at December
31, 1996 by correspondence with the custodians, provides a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Hartford, Connecticut
February 20, 1997
12
<PAGE>
The mutual funds' annual reports are incorporated herein by reference. Each of
them has been electronically filed with the Securities and Exchange Commission
in connection with the named entity's status as a registered investment company
under the Investment Company Act of 1940:
1. AIM Variable Insurance Funds, Inc.
Annual Report, December 31, 1996, consisting of 97 partially numbered pages.
Filed: March 5, 1997, Form Type N-30-D, Registration Statement 811-7452.
2. CIGNA Variable Products Group
Money Market Fund Annual Report, December 31, 1996, consisting of 18
partially numbered pages. Filed: March 6, 1997, Form Type N-30D,
Registration Statement 811-05480.
3. Variable Insurance Products Fund
Annual Report, December 31, 1996, consisting of 92 partially numbered pages.
Filed: February 24, 1997, Form Type N-30D, Registration Statement 811-3329
4. Variable Insurance Products Fund II
Annual Report, December 31, 1996, consisting of 112 partially numbered pages.
Filed February 24, 1997, Form Type N-30D, Registration Statement 811-5511
5. MFS - Registered Trademark - Variable Insurance Trust
(a) MFS - Registered Trademark - Total Return Series Annual Report,
December 31, 1996, consisting of 18 partially numbered pages,
Filed March 5, 1997
(b) MFS - Registered Trademark - Utilities Series Annual Report,
December 31, 1996, consisting of 18 partially numbered pages,
Filed March 4, 1997
(c) MFS - Registered Trademark - World Governments Series Annual Report,
December 31, 1996, consisting of 19 partially numbered pages,
Filed March 5, 1997
Form Type N-30D, Registration Statement 811-8326
6. OCC Accumulation Trust
Annual Report, December 31, 1996, consisting of 90 unnumbered pages.
Filed March 6, 1997, Form Type N-30D, Registration Statement 811-8512
7. Templeton Variable Product Series Fund
Annual Report, December 31, 1996, consisting of 57 partially numbered pages.
Filed March 10, 1997, Form Type N-30D, Registration Statement 811-5479.
<PAGE>
This report may be distributed only to current contract holders or to persons
who have received a current VUL-I Variable Life Prospectus.
[LOGO] National Distributor:
CIGNA Financial Advisors
900 Cottage Grove Road
Hartford, CT 06152
CIGNA Individual Insurance is a
division of CIGNA.
#557821 2/97
