<PAGE>
THE BUSINESS OF LIFE
VUL-I
Variable Universal
Life Insurance
From Connecticut General
ANNUAL REPORT
December 31, 1997
[LOGO]
<PAGE>
TABLE OF CONTENTS
SCHEDULE OF CHANGES IN UNIT VALUES
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
FUND REPORTS:
AIM VARIABLE INSURANCE FUND, 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 VP MONEY MARKET FUND
CIGNA VP S&P 500 INDEX FUND
FIDELITY INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND
EQUITY-INCOME PORTFOLIO
VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO
INVESTMENT GRADE BOND PORTFOLIO
MFS-REGISTERED TRADEMARK- VARIABLE INSURANCE TRUST-SM-
MFS EMERGING GROWTH SERIES
MFS TOTAL RETURN SERIES
MFS UTILITIES SERIES
MFS WORLD GOVERNMENTS SERIES
OCC ACCUMULATION TRUST
GLOBAL EQUITY PORTFOLIO
MANAGED PORTFOLIO
SMALL CAP PORTFOLIO
TEMPLETON VARIABLE PRODUCTS SERIES FUND
TEMPLETON ASSET ALLOCATION FUND
TEMPLETON INTERNATIONAL FUND
TEMPLETON STOCK FUND
<PAGE>
VUL-1 VARIABLE UNIVERSAL LIFE
SCHEDULE OF CHANGES IN UNIT VALUES
PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
DATE INITIALLY 12/31/96 12/31/97
FUNDED ACCUMULATION ACCUMULATION
SUB-ACCOUNT (INCEPTION DATE) UNIT VALUE UNIT VALUE % CHANGE
<S> <C> <C> <C> <C>
AIM V.I. Capital Appreciation Fund 5/6/96 $ 10.486698 $ 11.808460 12.6
AIM V.I. Diversified Income Fund 5/22/96 10.868038 11.794260 8.5
AIM V.I. Growth Fund 5/22/96 10.546548 13.274071 25.9
AIM V.I. Value Fund 5/6/96 11.316054 13.885620 22.7
CIGNA VP Money Market Fund 5/6/96 10.274144 10.722041 4.4
CIGNA VP S&P 500 Index Fund 5/23/97 10.000000* 11.516128 15.2
Fidelity VIP Equity-Income Portfolio 5/6/96 10.953184 13.920599 27.1
Fidelity VIP II Asset Manager Portfolio 7/1/96 10.747301 12.863847 19.7
Fidelity VIP II Investment Grade Bond Portfolio 5/6/96 10.615798 11.485826 8.2
MFS Emerging Growth Series 5/23/97 10.000000* 11.530548 15.3
MFS Total Return Series 5/28/96 10.818148 13.018177 20.3
MFS Utilities Series 8/19/96 11.210158 14.646554 30.7
MFS World Governments Series 5/6/96 10.546056 10.344227 (1.9)
OCC Global Equity Portfolio 5/6/96 10.865525 12.290973 13.1
OCC Managed Portfolio 5/28/96 11.116268 13.486783 21.3
OCC Small Cap Portfolio 5/21/96 10.558285 12.804133 21.3
Templeton Asset Allocation Fund 5/6/96 11.154447 12.783693 14.6
Templeton International Fund 5/21/96 11.295688 12.769802 13.1
Templeton Stock Fund 5/22/96 11.095968 12.315766 11.0
</TABLE>
* Accumulation Unit Value as of Inception Date, which was later than 12/31/96
Accumulation Unit Values are net of charges against the assets of the Variable
Account for the assumption of mortality and expense risks.
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIDELITY
CIGNA VARIABLE VIP
PRODUCTS GROUP PORTFOLIO
AIM VARIABLE INSURANCE FUNDS SUB-ACCOUNTS SUB-ACCOUNTS SUB-ACCOUNT
-------------------------------------------------- ---------------------- ----------
CAPITAL DIVERSIFIED MONEY EQUITY-
APPRECIATION INCOME GROWTH VALUE MARKET S&P 500 INCOME
------------ ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $ 1,209,097 $ 347,907 $1,634,620 $2,137,038 $ 481,020 $ 416,085 $1,467,346
Receivable from Connecticut
General Life Insurance
Company..................... 5,858 -- 5,884 11,797 -- -- 11,854
Receivable for fund shares
sold........................ -- -- -- -- 245 -- --
------------ ------------ ---------- ---------- ---------- ---------- ----------
Total assets.............. 1,214,955 347,907 1,640,504 2,148,835 481,265 416,085 1,479,200
------------ ------------ ---------- ---------- ---------- ---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- -- -- -- 245 -- --
Payable for fund shares
purchased................... 5,858 -- 5,884 11,797 -- -- 11,854
------------ ------------ ---------- ---------- ---------- ---------- ----------
Total liabilities......... 5,858 -- 5,884 11,797 245 -- 11,854
------------ ------------ ---------- ---------- ---------- ---------- ----------
Net assets................ $ 1,209,097 $ 347,907 $1,634,620 $2,137,038 $ 481,020 $ 416,085 $1,467,346
------------ ------------ ---------- ---------- ---------- ---------- ----------
------------ ------------ ---------- ---------- ---------- ---------- ----------
Accumulation units
outstanding................. 102,392 29,498 123,144 153,903 44,863 36,131 105,408
Net asset value per
accumulation unit........... $ 11.808460 $ 11.794260 $13.274071 $13.885620 $10.722041 $11.516128 $13.920599
<CAPTION>
FIDELITY VIP II
PORTFOLIO SUB-ACCOUNTS
----------------------
ASSET INVESTMENT
MANAGER GRADE BOND
---------- ----------
<S> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $ 322,430 $ 256,993
Receivable from Connecticut
General Life Insurance
Company..................... -- --
Receivable for fund shares
sold........................ -- --
---------- ----------
Total assets.............. 322,430 256,993
---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- --
Payable for fund shares
purchased................... -- --
---------- ----------
Total liabilities......... -- --
---------- ----------
Net assets................ $ 322,430 $ 256,993
---------- ----------
---------- ----------
Accumulation units
outstanding................. 25,065 22,375
Net asset value per
accumulation unit........... $12.863847 $11.485826
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
1
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
OCC ACCUMULATION
MFS SERIES SUB-ACCOUNTS TRUST SUB-ACCOUNTS
------------------------------------------------ ----------------------------------
EMERGING TOTAL WORLD GLOBAL
GROWTH RETURN UTILITIES GOVERNMENTS EQUITY MANAGED SMALL CAP
---------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $ 574,139 $ 490,942 $ 87,993 $ 48,910 $ 450,964 $ 950,435 $ 729,407
Receivable from
Connecticut General Life
Insurance Company........... -- -- -- -- -- 17,784 --
Receivable for fund shares
sold........................ 27 -- -- -- -- -- 38
---------- ---------- ----------- ---------- ---------- ---------- ----------
Total assets.............. 574,166 490,942 87,993 48,910 450,964 968,219 729,445
---------- ---------- ----------- ---------- ---------- ---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... 27 -- -- -- -- -- 38
Payable for fund shares
purchased................... -- -- -- -- -- 17,784 --
---------- ---------- ----------- ---------- ---------- ---------- ----------
Total liabilities......... 27 -- -- -- -- 17,784 38
---------- ---------- ----------- ---------- ---------- ---------- ----------
Net assets................ $ 574,139 $ 490,942 $ 87,993 $ 48,910 $ 450,964 $ 950,435 $ 729,407
---------- ---------- ----------- ---------- ---------- ---------- ----------
---------- ---------- ----------- ---------- ---------- ---------- ----------
Accumulation units
outstanding................. 49,793 37,712 6,008 4,728 36,691 70,472 56,967
Net asset value per
accumulation unit........... $11.530548 $13.018177 $ 14.646554 $10.344227 $12.290973 $13.486783 $12.804133
<CAPTION>
TEMPLETON VARIABLE PRODUCTS
SERIES FUND SUB-ACCOUNTS
--------------------------------------
ASSET
ALLOCATION INTERNATIONAL STOCK
------------- ---------- ----------
<S> <C> <C> <C>
ASSETS:
Investment in variable
insurance funds at value.... $ 676,332 $1,558,395 $ 648,424
Receivable from
Connecticut General Life
Insurance Company........... -- 5,848 11,889
Receivable for fund shares
sold........................ -- -- --
------------- ---------- ----------
Total assets.............. 676,332 1,564,243 660,313
------------- ---------- ----------
LIABILITIES:
Payable to Connecticut General
Life Insurance Company...... -- -- --
Payable for fund shares
purchased................... -- 5,848 11,889
------------- ---------- ----------
Total liabilities......... -- 5,848 11,889
------------- ---------- ----------
Net assets................ $ 676,332 $1,558,395 $ 648,424
------------- ---------- ----------
------------- ---------- ----------
Accumulation units
outstanding................. 52,906 122,038 52,650
Net asset value per
accumulation unit........... $ 12.783693 $12.769802 $12.315766
</TABLE>
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 PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CIGNA VARIABLE
PRODUCTS GROUP
AIM VARIABLE INSURANCE FUNDS SUB-ACCOUNTS SUB-ACCOUNTS
--------------------------------------------- ------------------
CAPITAL DIVERSIFIED MONEY
APPRECIATION INCOME GROWTH VALUE MARKET S&P 500*
------------ ----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 928 $ 268 $ 6,858 $ 17,630 $ 29,019 $ 7,320
EXPENSES:
Mortality and expense risk.... 5,212 1,463 6,870 8,405 4,540 402
------------ ----------- -------- -------- -------- --------
Net investment gain
(loss).................. (4,284 ) (1,195 ) (12) 9,225 24,479 6,918
------------ ----------- -------- -------- -------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Capital distributions from
portfolio sponsors.......... 11,932 -- 51,743 54,124 -- 7,320
Net realized gain (loss) on
share transactions.......... 1,490 66 375 1,561 -- (650)
------------ ----------- -------- -------- -------- --------
Net realized gain......... 13,422 66 52,118 55,685 -- 6,670
Net unrealized gain (loss).... 64,842 18,333 114,550 112,220 -- (6,932)
------------ ----------- -------- -------- -------- --------
Net realized and
unrealized gain (loss)
on investments.......... 78,264 18,399 166,668 167,905 -- (262)
------------ ----------- -------- -------- -------- --------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 73,980 $ 17,204 $166,656 $177,130 $ 24,479 $ 6,656
------------ ----------- -------- -------- -------- --------
------------ ----------- -------- -------- -------- --------
<CAPTION>
FIDELITY
VIP FIDELITY VIP II
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNTS
----------- --------------------
EQUITY- ASSET INVESTMENT
INCOME MANAGER GRADE BOND
----------- -------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 6,926 $ 3,086 $ 2,535
EXPENSES:
Mortality and expense risk.... 5,823 956 635
----------- -------- ----------
Net investment gain
(loss).................. 1,103 2,130 1,900
----------- -------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Capital distributions from
portfolio sponsors.......... 34,821 7,741 --
Net realized gain (loss) on
share transactions.......... 635 143 68
----------- -------- ----------
Net realized gain......... 35,456 7,884 68
Net unrealized gain (loss).... 126,200 12,884 5,634
----------- -------- ----------
Net realized and
unrealized gain (loss)
on investments.......... 161,656 20,768 5,702
----------- -------- ----------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $ 162,759 $ 22,898 $ 7,602
----------- -------- ----------
----------- -------- ----------
</TABLE>
- --------------------------
* Period from May 23, 1997 (date deposits first received) to December 31, 1997
The Notes to Financial Statements are an integral part of these statements.
3
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OCC ACCUMULATION
MFS SERIES SUB-ACCOUNTS TRUST SUB-ACCOUNTS
------------------------------------------ ----------------------------
EMERGING TOTAL WORLD GLOBAL SMALL
GROWTH* RETURN UTILITIES GOVERNMENTS EQUITY MANAGED CAP
-------- -------- --------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ -- $ -- $ -- $ 184 $ 2,055 $ 3,094 $ 1,288
EXPENSES:
Mortality and expense risk.... 481 2,021 295 264 775 4,070 3,063
-------- -------- --------- --- -------- -------- --------
Net investment gain
(loss).................. (481 ) (2,021) (295) (80) 1,280 (976 ) (1,775)
-------- -------- --------- --- -------- -------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Capital distributions from
portfolio sponsors.......... -- -- -- 83 20,597 9,501 9,078
Net realized gain (loss) on
share transactions.......... 122 (284) 263 (97) (194) 2,945 (91)
-------- -------- --------- --- -------- -------- --------
Net realized gain
(loss).................. 122 (284) 263 (14) 20,403 12,446 8,987
Net unrealized gain (loss).... (3,444 ) 47,191 11,922 389 (23,062) 66,834 61,025
-------- -------- --------- --- -------- -------- --------
Net realized and
unrealized gain (loss)
on investments.......... (3,322 ) 46,907 12,185 375 (2,659) 79,280 70,012
-------- -------- --------- --- -------- -------- --------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $(3,803 ) $ 44,886 $ 11,890 $ 295 $ (1,379) $78,304 $68,237
-------- -------- --------- --- -------- -------- --------
-------- -------- --------- --- -------- -------- --------
<CAPTION>
TEMPLETON VARIABLE PRODUCTS
SERIES FUND SUB-ACCOUNTS
-----------------------------------
ASSET
ALLOCATION INTERNATIONAL STOCK
---------- ------------- --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 11,456 $ 13,383 $ 2,593
EXPENSES:
Mortality and expense risk.... 3,943 6,215 2,545
---------- ------------- --------
Net investment gain
(loss).................. 7,513 7,168 48
---------- ------------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Capital distributions from
portfolio sponsors.......... 21,740 5,380 12,278
Net realized gain (loss) on
share transactions.......... (155 ) 577 (59)
---------- ------------- --------
Net realized gain
(loss).................. 21,585 5,957 12,219
Net unrealized gain (loss).... 21,181 52,272 1,573
---------- ------------- --------
Net realized and
unrealized gain (loss)
on investments.......... 42,766 58,229 13,792
---------- ------------- --------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS.................. $ 50,279 $ 65,397 $ 13,840
---------- ------------- --------
---------- ------------- --------
</TABLE>
- --------------------------
* Period from May 23, 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 LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CIGNA VARIABLE
PRODUCTS GROUP
AIM VARIABLE INSURANCE FUNDS SUB-ACCOUNTS SUB-ACCOUNTS
----------------------------------------------- ---------------------
CAPITAL DIVERSIFIED MONEY
APPRECIATION INCOME GROWTH VALUE MARKET S&P 500 *
----------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ (4,284) $ (1,195 ) $ (12) $ 9,225 $ 24,479 $ 6,918
Net realized gain............. 13,422 66 52,118 55,685 -- 6,670
Net unrealized gain (loss).... 64,842 18,333 114,550 112,220 -- (6,932)
----------- ---------- ---------- ---------- ---------- ---------
Net increase from
operations................ 73,980 17,204 166,656 177,130 24,479 6,656
----------- ---------- ---------- ---------- ---------- ---------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits, net of
premium loads............... 323,509 98,464 231,695 395,944 86,719 18,012
Participant transfers......... 604,094 185,371 947,946 1,300,232 251,392 401,552
Participant withdrawals....... (92,701) (33,075 ) (108,614) (136,315) (64,689) (10,135)
----------- ---------- ---------- ---------- ---------- ---------
Net increase from
participant
transactions.............. 834,902 250,760 1,071,027 1,559,861 273,422 409,429
----------- ---------- ---------- ---------- ---------- ---------
Total increase in net
assets.................. 908,882 267,964 1,237,683 1,736,991 297,901 416,085
NET ASSETS:
Beginning of period........... 300,215 79,943 396,937 400,047 183,119 --
----------- ---------- ---------- ---------- ---------- ---------
End of period................. $ 1,209,097 $ 347,907 $1,634,620 $2,137,038 $ 481,020 $416,085
----------- ---------- ---------- ---------- ---------- ---------
----------- ---------- ---------- ---------- ---------- ---------
<CAPTION>
FIDELITY
VIP
PORTFOLIO FIDELITY VIP II
SUB-ACCOUNT PORTFOLIO SUB-ACCOUNTS
----------- ------------------------
EQUITY- ASSET INVESTMENT
INCOME MANAGER GRADE BOND
----------- ------------ ----------
<S> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ 1,103 $ 2,130 $ 1,900
Net realized gain............. 35,456 7,884 68
Net unrealized gain (loss).... 126,200 12,884 5,634
----------- ------------ ----------
Net increase from
operations................ 162,759 22,898 7,602
----------- ------------ ----------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits, net of
premium loads............... 377,160 76,781 38,011
Participant transfers......... 734,832 167,578 185,522
Participant withdrawals....... (105,591) (12,875) (14,963 )
----------- ------------ ----------
Net increase from
participant
transactions.............. 1,006,401 231,484 208,570
----------- ------------ ----------
Total increase in net
assets.................. 1,169,160 254,382 216,172
NET ASSETS:
Beginning of period........... 298,186 68,048 40,821
----------- ------------ ----------
End of period................. $ 1,467,346 $ 322,430 $ 256,993
----------- ------------ ----------
----------- ------------ ----------
</TABLE>
- --------------------------
* Period from May 23, 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 LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OCC ACCUMULATION
MFS SERIES SUB-ACCOUNTS TRUST SUB-ACCOUNTS
------------------------------------------ -----------------------------
EMERGING TOTAL WORLD GLOBAL
GROWTH * RETURN UTILITIES GOVERNMENTS EQUITY MANAGED SMALL CAP
-------- -------- --------- ----------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ (481) $ (2,021) $ (295) $ (80 ) $ 1,280 $ (976) $ (1,775)
Net realized gain (loss)...... 122 (284) 263 (14 ) 20,403 12,446 8,987
Net unrealized gain (loss).... (3,444) 47,191 11,922 389 (23,062) 66,834 61,025
-------- -------- --------- ----------- -------- -------- ---------
Net increase (decrease) from
operations................ (3,803) 44,886 11,890 295 (1,379) 78,304 68,237
-------- -------- --------- ----------- -------- -------- ---------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits, net of
premium loads............... 42,010 99,400 36,123 24,376 74,232 146,100 122,875
Participant transfers......... 542,788 247,244 41,549 18,935 376,844 561,866 414,959
Participant withdrawals....... (6,856) (26,686) (7,388) (4,737 ) (14,788) (78,439) (47,040)
-------- -------- --------- ----------- -------- -------- ---------
Net increase from
participant
transactions.............. 577,942 319,958 70,284 38,574 436,288 629,527 490,794
-------- -------- --------- ----------- -------- -------- ---------
Total increase in net
assets.................. 574,139 364,844 82,174 38,869 434,909 707,831 559,031
NET ASSETS:
Beginning of period........... -- 126,098 5,819 10,041 16,055 242,604 170,376
-------- -------- --------- ----------- -------- -------- ---------
End of period................. $574,139 $490,942 $ 87,993 $ 48,910 $450,964 $950,435 $ 729,407
-------- -------- --------- ----------- -------- -------- ---------
-------- -------- --------- ----------- -------- -------- ---------
<CAPTION>
TEMPLETON VARIABLE PRODUCTS
SERIES FUND SUB-ACCOUNTS
-----------------------------------
ASSET
ALLOCATION INTERNATIONAL STOCK
---------- ------------- --------
<S> <C> <C> <C>
OPERATIONS:
Net investment gain (loss).... $ 7,513 $ 7,168 $ 48
Net realized gain (loss)...... 21,585 5,957 12,219
Net unrealized gain (loss).... 21,181 52,272 1,573
---------- ------------- --------
Net increase (decrease) from
operations................ 50,279 65,397 13,840
---------- ------------- --------
ACCUMULATION UNIT
TRANSACTIONS:
Participant deposits, net of
premium loads............... 39,996 323,144 93,184
Participant transfers......... 300,264 908,409 488,327
Participant withdrawals....... (26,584) (112,114) (38,423)
---------- ------------- --------
Net increase from
participant
transactions.............. 313,676 1,119,439 543,088
---------- ------------- --------
Total increase in net
assets.................. 363,955 1,184,836 556,928
NET ASSETS:
Beginning of period........... 312,377 373,559 91,496
---------- ------------- --------
End of period................. $ 676,332 $ 1,558,395 $648,424
---------- ------------- --------
---------- ------------- --------
</TABLE>
- --------------------------
* Period from May 23, 1997 (date deposits first received) to December 31, 1997
The Notes to Financial Statements are an integral part of these statements.
6
<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
GROUP
AIM VARIABLE INSURANCE FUNDS SUB-ACCOUNTS SUB-ACCOUNT
---------------------------------------------------- ------------
CAPITAL DIVERSIFIED MONEY
APPRECIATION INCOME GROWTH VALUE MARKET
------------ ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
May 22,
Inception date................ May 6, 1996 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
------------ ---------- ------------ ------------ ------------
------------ ---------- ------------ ------------ ------------
<CAPTION>
FIDELITY VIP
PORTFOLIO FIDELITY VIP II
SUB-ACCOUNT PORTFOLIO SUB-ACCOUNTS
------------ ------------------------
EQUITY- ASSET INVESTMENT
INCOME MANAGER GRADE BOND
------------ ------------ ----------
<S> <C> <C> <C>
May 6,
Inception date................ May 6, 1996 July 1, 1996 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
------------ ------------ ----------
------------ ------------ ----------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIOD FROM INCEPTION (DATE DEPOSITS FIRST RECEIVED) TO
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MFS SERIES SUB-ACCOUNTS 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
------------ --------------- ------------ ------------ ------------ ------------
------------ --------------- ------------ ------------ ------------ ------------
<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
------------ ------------- ------------
------------ ------------- ------------
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
8
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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 nineteen portfolios (mutual funds) of
seven diversified open-end management investment companies, each portfolio with
its own investment objective. The variable sub-accounts are:
ALM 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
CIGNA Variable Products S&P 500 Index 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 Emerging Growth Series
MFS Total Return Series
MFS Utilities Series
MFS World Governments Series
OCC 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
Effective January 1, 1998, CG Life sold its individual variable life
insurance business to Lincoln National Corporation (Lincoln). Although CG Life
will remain responsible for all policy terms and conditions, Lincoln will be
servicing the individual life insurance contracts, including the payment of
benefits, oversight of investment management and contract administration.
9
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in conformity with generally
accepted accounting principles. The following is a summary of significant
accounting policies consistently followed in the preparation of the Account's
financial statements.
A. INVESTMENT VALUATION:--Investments held by the sub-accounts are valued
at their respective closing net asset values per share as determined by the
mutual funds as of December 31, 1997. The change in the difference between cost
and value is reflected as unrealized gain (loss) in the Statements of
Operations.
B. INVESTMENT TRANSACTIONS:--Investment transactions are recorded on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on sales of investments are determined by the last-in, first-out cost
basis of the investment sold. Dividend and capital gain distributions are
recorded on the ex-dividend date. Investment transactions are settled through CG
Life.
C. FEDERAL INCOME TAXES:--The operations of the Account form a part of, and
are taxed with, the total operations of CG Life, which is taxed as a life
insurance company. Under existing Federal income tax law, investment income
(dividends) and capital gains attributable to the Account are not taxed.
3. INVESTMENTS
Total shares held and cost of investments as of December 31, 1997 were:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
SHARES COST OF
SUB-ACCOUNT HELD INVESTMENTS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund....................................................... 55,591 $ 1,142,005
AIM V.I. Diversified Income Fund......................................................... 30,816 331,123
AIM V.I. Growth Fund..................................................................... 82,432 1,529,852
AIM V.I. Value Fund...................................................................... 102,594 2,028,640
CIGNA Variable Products Money Market Fund................................................ 481,020 481,020
CIGNA Variable Products S&P 500 Index Fund............................................... 26,301 423,017
Fidelity Equity-Income Portfolio......................................................... 60,434 1,335,510
Fidelity Asset Manager Portfolio......................................................... 17,903 308,227
Fidelity Investment Grade Bond Portfolio................................................. 20,461 251,426
MFS Emerging Growth Series............................................................... 35,572 577,583
MFS Total Return Series.................................................................. 29,521 443,095
MFS Utilities Series..................................................................... 4,891 76,062
MFS World Governments Series............................................................. 4,790 48,497
OCC Global Equity Portfolio.............................................................. 31,492 473,651
OCC Managed Portfolio.................................................................... 22,426 871,710
OCC Small Cap Portfolio.................................................................. 27,660 659,160
Templeton Asset Allocation Fund.......................................................... 30,261 646,291
Templeton International Fund............................................................. 77,225 1,483,476
Templeton Stock Fund..................................................................... 27,961 641,980
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
CG VARIABLE LIFE INSURANCE 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>
AIM V.I. Capital Appreciation Fund.................................................... $ 938,353 $ 95,802
AIM V.I. Diversified Income Fund...................................................... 296,045 46,480
AIM V.I. Growth Fund.................................................................. 1,178,641 55,883
AIM V.I. Value Fund................................................................... 1,823,079 199,869
CIGNA Variable Products Money Market Fund............................................. 1,681,342 1,383,441
CIGNA Variable Products S&P 500 Index Fund*........................................... 436,708 13,041
Fidelity Equity-Income Portfolio...................................................... 1,188,392 146,068
Fidelity Asset Manager Portfolio...................................................... 260,651 19,296
Fidelity Investment Grade Bond Portfolio.............................................. 226,198 15,727
MFS Emerging Growth Series*........................................................... 594,744 17,283
MFS Total Return Series............................................................... 409,082 91,145
MFS Utilities Series.................................................................. 95,458 25,469
MFS World Governments Series.......................................................... 52,425 13,848
OCC Global Equity Portfolio........................................................... 469,641 11,476
OCC Managed Portfolio................................................................. 764,273 126,221
OCC Small Cap Portfolio............................................................... 530,690 32,593
Templeton Asset Allocation Fund....................................................... 392,799 49,871
Templeton International Fund.......................................................... 1,241,071 109,084
Templeton Stock Fund.................................................................. 622,976 67,563
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Period from May 23, 1997 (date deposits first received) to December 31, 1997.
4. CHARGES AND DEDUCTIONS
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, 1997, no transfer fees were deducted from the variable
sub-accounts.
11
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
4. CHARGES AND DEDUCTIONS (CONTINUED)
The fees charged by CG Life for premium loads (deducted from premium
payments), administrative fees and the amount deducted for the cost of
insurance, both of which are included in participant withdrawals, for variable
sub-accounts for the periods ended December 31, 1997, amounted to:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
COSTS OF
PREMIUM ADMINISTRATIVE INSURANCE
SUB-ACCOUNT LOADS FEES DEDUCTION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund........................................... $ 17,018 $ 9,839 $ 82,848
AIM V.I. Diversified Income Fund............................................. 5,184 2,222 28,719
AIM V.I. Growth Fund......................................................... 12,199 7,817 100,399
AIM V.I. Value Fund.......................................................... 20,825 11,605 124,747
CIGNA Variable Products Money Market Fund.................................... 4,568 3,142 60,840
CIGNA Variable Products S&P 500 Index Fund*.................................. 948 325 9,795
Fidelity Equity-Income Portfolio............................................. 19,471 6,960 98,609
Fidelity Asset Manager Portfolio............................................. 4,050 761 9,842
Fidelity Investment Grade Bond Portfolio..................................... 2,001 1,246 13,717
MFS Emerging Growth Series*.................................................. 2,211 294 6,561
MFS Total Return Series...................................................... 5,224 2,634 24,045
MFS Utilities Series......................................................... 1,510 865 6,529
MFS World Governments Series................................................. 1,285 753 3,978
OCC Global Equity Portfolio.................................................. 3,910 1,376 13,390
OCC Managed Portfolio........................................................ 7,287 5,049 69,262
OCC Small Cap Portfolio...................................................... 6,469 3,184 42,648
Templeton Asset Allocation Fund.............................................. 2,103 1,492 23,789
Templeton International Fund................................................. 16,998 8,442 101,638
Templeton Stock Fund......................................................... 4,535 3,933 34,482
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Period from May 23, 1997 (date deposits first received) to December 31, 1997.
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. Full surrender charges and partial surrender administrative charges paid
to CG Life, attributable to the variable sub-accounts, for the periods ended
December 31, 1997, amounted to $6,980.
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.
12
<PAGE>
CG VARIABLE LIFE INSURANCE SEPARATE ACCOUNT II
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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.
13
<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, CIGNA
Variable Products S&P 500 Index 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 Emerging Growth Series, MFS Total Return Series, MFS
Utilities Series, MFS World Governments Series; OCC 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, 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
14
<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. AIM Variable Insurance Funds, Inc. Annual Report, December 31, 1997,
consisting of 55 unnumbered pages. Filed: March 3, 1998, Form Type N-30-D,
Registration Statement 811-7452.
2. CIGNA Variable Products Group
2(a) Money Market Fund Annual Report, December 31, 1997, consisting of 10
partially numbered pages.
2(b) S&P 500 Index Fund Annual Report, December 31, 1997, consisting of 17
partially numbered pages.
Filed: March 6, 1998, Form Type N-30B-2, Registration Statement 811-5480.
3. Variable Insurance Products Fund: Equity-Income 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) Asset Manager Portfolio Annual Report, December 31, 1997, consisting of
28 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. MFS-Registered Trademark- Variable Insurance Trust
5(a) MFS-Registered Trademark- Emerging Growth Series Annual Report,
December 31, 1997, consisting of 20 partially numbered pages.
5(b) MFS-Registered Trademark- Total Return Series Annual Report, December
31, 1997, consisting of 22 partially numbered pages.
5(c) MFS-Registered Trademark- Utilities Series Annual Report, December 31,
1997, consisting of 20 partially numbered pages.
5(d) MFS-Registered Trademark- World Governments Series Annual Report,
December 31, 1997, consisting of 18 partially numbered pages.
Filed March 5, 1998, Form Type N-30D, Registration Statement 811-8326
6. OCC Accumulation Trust
6(a) Global Equity Portfolio Annual Report, December 31, 1997, consisting of
21 unnumbered pages.
6(b) Managed Portfolio Annual Report, December 31, 1997, consisting of 14
unnumbered pages.
6(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.
7. Templeton Variable Product Series Fund Annual Report, December 31, 1997,
consisting of 62 partially numbered pages. Filed March 5, 1998, Form Type N-30D,
Registration Statement 811-5479.
15
<PAGE>
THIS REPORT MAY BE DISTRIBUTED ONLY TO CURRENT CONTRACT HOLDERS OR TO PERSONS
WHO HAVE RECEIVED A CURRENT VUL-I VARIABLE LIFE PROSPECTUS.
National Distributor:
CIGNA Financial Advisors
900 Cottage Grove Road
[LOGO] Hartford, CT 06152
557821 2/98
