<PAGE>
As filed with the Securities and Exchange Commission on October 2, 1998
Securities Act File No. 2-29020
Investment Company Act File No. 811-1646
================================================================================
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OMB Number: U.S. SECURITIES AND EXCHANGE COMMISSION
3235-0307 WASHINGTON, D.C. 20549
Expires: 05/31/00 _______________
Estimated average
Burden hours per FORM N-1A
response 212.80
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | |
Pre-Effective Amendment No. | |
----
Post-Effective Amendment No. 57 | X |
----
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | |
Amendment No. 57 | X |
-----
(CHECK APPROPRIATE BOX OR BOXES.)
CIGNA FUNDS GROUP
(Exact Name of Registrant as Specified in Charter)
100 FRONT STREET, SUITE 300, WORCESTER, MASSACHUSETTS 01601
(Address of Principal Executive Offices) (Zip Code)
(860) 726-3700
Registrant's Telephone Number, including Area Code
BRIAN D. WELLS, 100 FRONT STREET, SUITE 300
WORCESTER, MASSACHUSETTS 01601
(Name and Address of Agent for Service)
CONTINUOUS
(Approximate Date of Proposed Public Offering)
It is proposed that this filing will become effective (check appropriate box):
| | Immediately upon filing pursuant to paragraph (b)
| | on (date) pursuant to paragraph (b)
|X| 60 days after filing pursuant to paragraph (a)(1)
| | on (date) pursuant to paragraph (a)(1)
| | 75 days after filing pursuant to paragraph (a)(2)
| | on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
| | This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CIGNA FUNDS GROUP
- --------------------------------------------------------------------------------
PROSPECTUS
JANUARY 1, 1999 CIGNA MONEY MARKET FUND
RETAIL SERVICE CLASS
The Securities and Exchange
Commission has not approved or
disapproved these securities or
determined if this prospectus is
accurate or complete. Anyone who
tells you otherwise is committing a
crime
<PAGE>
CIGNA Money Market Fund's investment To provide as high a level of current
objective income as is consistent with the
preservation of capital and liquidity
and the maintenance of a stable $1.00
per share net asset value.
Principal investment strategy The Fund invests exclusively in high-
quality short-term money market
instruments.
Principal risks of investing in the A major change in interest rates or a
Fund default on the Fund's investments
could cause the value of your
investment in the Fund to change.
An investment in the Fund is not
insured or guaranteed by the Federal
Deposit Insurance Corporation or any
other government agency. Although
the Fund seeks to preserve the value
of your investment at $1.00 per
share, it is possible to lose money
by investing in the Fund
1
<PAGE>
BAR CHART AND PERFORMANCE TABLE
The bar chart and table shown below indicate the risks of investing in the Fund.
The bar chart shows changes in the performance of the Fund's institutional class
shares from year to year over a ten year period.
The table shows how the Fund's institutional class average annual returns for
one, five and ten years compare to those of 3 month U.S. Treasury bills.
The Fund's past performance does not necessarily indicate how the Fund will
perform in the future.
The return for the other classes of shares of the Fund will differ from the
institutional class returns shown in the bar chart, depending on the expenses of
that class.
<TABLE>
<CAPTION>
BAR CHART*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6%
6%
4% [RETURNS TO BE INCLUDED IN NEXT POST-EFFECTIVE AMENDMENT]
3%
2%
1%
0%
- -1%
1989 1990 1991 1992 1993 1994 1995 1996 1997
</TABLE>
During the ten-year period shown in the bar chart, the highest quarterly return
was __% (for the quarter ended ____) and the lowest quarterly return was ___%
(for the quarter ended ___).
AVERAGE ANNUAL TOTAL RETURNS*
FOR THE PERIODS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Past 1 years Past 5 years Past 10 years
<S> <C> <C> <C>
Money Market Fund __% __% __%
3-Month U.S. Treasury bills __% __% __%
The Fund's 7-day annualized yield as of December 31, 1997 was __%.
</TABLE>
*Returns shown are for the Fund's Institutional class, which is not
offered in this prospectus. The Retail Service class would have
substantially similar annual returns because the shares are invested in
the same portfolio of securities and the annual returns would differ
only to the extent that the classes do not have the same expenses.
Please note that the Retail Service class carries 12b-1 fees and
shareholder servicing fees while the Institutional class does not, so
the annual returns for the Retail Service class will be lower than
Institutional class returns.
2
<PAGE>
FEES AND EXPENSES OF THE FUND
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
RETAIL SERVICE CLASS SHARES OF THE FUND.
Retail
Service
SHAREHOLDER FEES Class
(fees paid directly from your investments) -------
Maximum sales charge (load) imposed on
purchases (as a percentage of offering price) None
Maximum deferred sales charge (load)
(as a percentage of offering price) None
Redemption fee (as a percentage
of amount redeemed) None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fees/1/ 0.35%
Distribution (12b-1) fees/2/ 0.10%
Other expenses 0.55%
Shareholder servicing fee 0.25%
Total annual Fund operating expenses/1/ 1.00%
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE FUND
WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
$ $ $ $
------- ------- ------- -------
_________________________
/1/CIGNA Investments has voluntarily agreed to waive some or all of its
management fee so that total annual Fund operating expenses do not exceed 1.00%.
If this waiver is not sufficient to keep total annual Fund operating expenses at
or below 1.00%, CIGNA Investments will pay Fund expenses to the extent necessary
to keep total Fund expenses from exceeding this percentage. These arrangements
will continue in effect until April 30, 2000 and afterwards to the extent
described in the Fund's then current prospectus.
/2/The maximum 12b-1 fees are 0.35%.
3
<PAGE>
INVESTMENT INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
The Fund's objective is to provide as high a level of current income as is
consistent with the preservation of capital and liquidity and the maintenance of
a stable $1.00 per share net asset value by investing in short-term high quality
money market instruments. The Fund invests in money market instruments such as
U.S. Government direct obligations and U.S. Government agencies' securities. In
addition, the Fund may invest in other money market instruments such as
asset-backed securities, bankers' acceptances, certificates of deposit,
commercial loan participations, repurchase agreements, time deposits and
commercial paper, all of which will be denominated in U.S. dollars. Bankers'
acceptances, certificates of deposit and time deposits may be purchased from
U.S. or foreign banks. The Fund purchases commercial paper primarily from U.S.
issuers but may purchase this type of security from foreign issuers so long as
it is denominated in U.S. dollars.
DESCRIPTION OF MONEY MARKET INSTRUMENTS
This is a description of the primary types of money market instruments the Fund
will own:
U.S. GOVERNMENT DIRECT OBLIGATIONS - Obligations issued by the U.S. Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES - The U.S. Government has established
certain Federal agencies such as the Government National Mortgage Association as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States or are guaranteed by the Treasury or supported by the issuing agencies'
right to borrow from the Treasury.
ASSET-BACKED SECURITIES - include interests in pools of mortgages, loans,
receivables, or other assets. Payment of principal and interest may be largely
dependent on the cash flows generated by the assets backing the securities.
CERTIFICATES OF DEPOSIT - A negotiable interest-bearing instrument with a
specific maturity. Certificates of deposit are issued by banks and savings and
loan institutions in exchange for the deposit of Funds and normally can be
traded in the secondary market, prior to maturity.
COMMERCIAL PAPER - The term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues vary
from a few days to nine months.
COMMERCIAL LOAN PARTICIPATIONS - Participating interests in loans made by a
bank, or a syndicate of banks represented by an agent bank, to corporate
borrowers. Loan participations may extend for the entire term of the loan or may
extend only for short "strips" that correspond to stated payments on the
underlying loan. The loans underlying such participations may be secured or
unsecured, and the Fund may invest in loans collateralized by mortgages on real
property.
REPURCHASE AGREEMENTS - A repurchase agreement is a contract where the seller of
securities (limited to U.S. Government securities, including securities issued
or guaranteed by the U.S. Treasury or the various agencies and instrumentalities
of the U.S. Government) agrees to repurchase the securities at a specified price
on a future date determined by negotiations. The repurchase agreement may be
considered a
4
<PAGE>
loan by a Fund to the issuer of the agreement, a bank or securities dealer, with
the U.S. Government securities serving as collateral for the loan.
VARIABLE AND FLOATING RATE INSTRUMENTS - Certain instruments issued, guaranteed
or sponsored by the U.S. Government or its agencies, state and local government
issuers, and certain debt instruments issued by domestic banks or corporations,
may carry variable or floating rates of interest. These instruments bear
interest at rates which are not fixed, but which vary with changes in specified
market rates or indices, such as a Federal Reserve composite index.
CONCENTRATION OF INVESTMENTS.
The Fund may invest 25% or more of its total assets in commercial paper issued
by finance companies. The finance companies in which the Fund intends to invest
can be divided into two categories, commercial finance companies and consumer
finance companies. Commercial finance companies are principally engaged in
lending to corporations or other businesses. Consumer finance companies are
primarily engaged in lending to individuals. The Fund classifies captive finance
companies or finance subsidiaries which exist to facilitate the marketing and
financial activities of their parent in the industry of their parent's
corporation. Concentrating investments in any one industry may subject the Fund
to more risk than if it did not concentrate investments.
In addition, the Fund may invest 25% or more of the value of its total assets in
instruments issued by a U.S. branch of a domestic bank or savings and loan
having capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment.
INVESTMENT POLICIES
The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and the Statement of Additional Information, in order to comply with
applicable laws and regulations governing money market funds, including the
provisions of and regulations under the Investment Company Act of 1940 (the 1940
Act). In particular, the Fund intends to comply with the various requirements of
Rule 2a-7 of the 1940 Act, which regulates portfolio maturity, quality and
diversification. For example, the Fund will limit its investments to securities
with effective remaining maturities of 397 days or less and will maintain a
dollar-weighted average maturity of 90 days or less. The Fund will determine the
effective remaining maturity of its investments according to Rule 2a-7.
Pursuant to procedures adopted by the Fund's Board of Trustees, the Fund may
purchase only high quality securities that CIGNA Investments, Inc., the Fund's
adviser (CIGNA Investments) believes present minimal credit risks. To be
considered high quality, a security must be a U.S. Government security or must
be rated in accordance with applicable rules in one of the two highest
categories for short-term securities by at least two nationally recognized
rating services (or by one, if only one rating service has rated the security)
or, if unrated, judged to be of equivalent quality by CIGNA Investments.
High quality securities are divided into "first tier" and "second tier"
securities. First tier securities have received the highest rating (e.g.
Standard & Poor's Corporation's ("S&P") A-1 rating) from at least two rating
services (or one, if only one has rated the security). Second tier securities
have received ratings within the two highest categories (e.g., S&P's A-1 or A-2)
from at least two rating services (or one, if only one has rated the security),
but do not qualify as first tier securities. If a security has been assigned
different ratings by
5
<PAGE>
different rating services, at least two rating services must have assigned the
highest of the ratings in order for CIGNA Investments to determine eligibility
on the basis of that highest rating. Based on procedures adopted by the Board of
Trustees, CIGNA Investments may determine that an unrated security is of
equivalent quality to a rated first or second tier security.
The Fund may not invest more than 5% of its total assets in second tier
securities. In addition, the Fund may not invest more than 1% of its total
assets or $1 million (whichever is greater) in the second tier securities of a
single issuer.
The Fund may change these operational policies to reflect changes in the laws
and regulations without the approval of shareholders.
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The investment adviser to the Fund is CIGNA Investments, an indirect,
wholly-owned subsidiary of CIGNA Corporation. CIGNA Investments also serves as
investment adviser for other investment companies, and for a number of pension,
advisory, corporate and other accounts. CIGNA Investments and other affiliates
of CIGNA Corporation manage combined assets of approximately $64 billion. CIGNA
Investments' mailing address is 900 Cottage Grove Road, Hartford, Connecticut
06152. CIGNA Investments has been an investment adviser since 19___.
Pursuant to a Master Investment Advisory Agreement, CIGNA Investments manages
the investment and reinvestment of the assets of the Fund.
Subject to the control and periodic review of the Board of Trustees, CIGNA
Investments determines what investments shall be purchased, held, sold or
exchanged by the Fund. CIGNA Investments is also responsible for overall
management of the business affairs of the Fund.
As full compensation for the investment management and all other services
rendered by CIGNA Investments, the Fund paid CIGNA Investments $_____ for
calendar year 1997. This represented 0.__% of the Fund's average daily net
assets.
PRICING OF SHARES
- --------------------------------------------------------------------------------
The price of Fund shares is based on the Fund's net asset value. The Funds'
custodian, State Street Bank and Trust Company ("State Street") calculates the
net asset value of each class of the Fund by dividing the number of outstanding
shares of each class into the net assets of the Fund attributable to that class.
Net assets are the excess of the Fund's assets over its liabilities. Net asset
value is determined as of the close of regular trading (normally, 4:00 p.m.
Eastern Time) on each day the New York Stock Exchange ("NYSE") is open for
trading. Orders for purchases and redemption will not be processed if received
when the NYSE is closed. The NYSE is closed on New Year's Day, Martin Luther
King Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.
VALUATION OF MONEY MARKET INVESTMENTS
The Fund's investments are valued at amortized cost, which approximates market
value, in accordance with rules adopted by the Securities and Exchange
Commission. Using the amortized cost valuation method allows
6
<PAGE>
the Fund to maintain its net asset value at $1.00 per share. There is no
assurance that this method will always be used, or if used, that the net asset
value under certain conditions will not deviate from $1.00 per share. If the
Board of Trustees deems it inadvisable to continue the practice of maintaining
the net asset value of $1.00 per share it may alter this procedure. The Fund
will notify shareholders prior to any change, unless the change is only
temporary, in which case the shareholders will be notified after the change. See
the Statement of Additional Information for more information on amortized cost
procedures.
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
The Fund offers its Retail Service class to customers of financial institutions
such as broker-dealers and banks.
Shares of the Fund are sold on a continuous basis without any initial sales
charge or contingent deferred charge at the Fund's net asset value per share
(see "Pricing of Shares"). The Fund does not issue share certificates.
All Retail Service class investors must purchase shares through CIGNA Financial
Services, Inc. ("CFS"). Orders placed through CFS are priced as of the close of
business on the day the order is received by CFS, provided the order is received
by 4:00 p.m. Eastern Time. A completed application is required to establish a
new brokerage account. CFS must accept all purchase orders. CFS reserves the
right to reject any purchase order. Additional information regarding
establishing a brokerage account and purchasing shares may be obtained by
calling CFS at 1-800-XXX-XXXX.
ADDITIONAL INFORMATION:
The Fund reserves the right to limit purchases of shares for any one account or
related accounts to 2% of the total net asset value of the Fund, or may refuse
to sell shares of the Fund to any person.
HOW TO REDEEM SHARES
All Retail Service class investors must redeem shares through their brokerage
account with CFS. Shares will be redeemed at the net asset value next determined
after CFS receives the redemption request. CFS may require a signature guarantee
before it makes payment on redemption orders. For additional information
regarding redeeming shares from your brokerage account, call your dealer
representative at 1-800-XXX-XXXX.
FURTHER REDEMPTION INFORMATION.
Redemptions from the Fund may not be processed if a redemption request is not
submitted in proper form. To be in proper form, you must furnish a taxpayer
identification number and address. The Fund may be required to impose "back-up"
withholding of federal income tax on dividends, distributions and redemption of
proceeds when non-corporate investors have not provided a certified taxpayer
identification number. In addition, if an investor sends a check for the
purchase of Fund shares and the Fund issues shares before the investor's check
has cleared, the Fund may not send redemption proceeds until the check has
cleared, which may take up to 15 days.
7
<PAGE>
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund declares dividends daily and distribute dividends monthly.
The Fund includes realized capital gains and losses in its daily declarations of
dividends from net investment income. The Fund does not expect to realize any
capital gains or losses.
All distributions will be automatically reinvested for you in shares of the Fund
at the net asset value determined on the record date.
TAX MATTERS
- --------------------------------------------------------------------------------
The Fund intends to make distributions that may be taxed as ordinary income and
capital gains (which may be taxable at different rates depending on the length
of time the Fund holds its assets). Distributions of net investment income and
of any net short-term capital gain are taxable as ordinary income to
shareholders. The Fund expects that its distributions will consist primarily of
ordinary income. Distributions of net capital gain, if properly designated as
capital gain dividends by the Fund, generally are taxable to shareholders as
long-term capital gain, regardless of how long the shares have been held, and
are not eligible for the corporate dividends-received deduction. Distributions
of net investment income and net capital gains will be taxable as described
above whether received in cash or reinvested in shares. Shortly after the end of
each year, the Fund will inform shareholders of the amount and federal income
tax treatment of all distributions paid during the year. Dividends declared to
shareholders of record on a date in October, November, or December will be
taxable to shareholders in the year declared, as long as the Fund pays the
dividends no later than January of the following year.
Upon a sale or redemption of Fund shares, a shareholder who is not a dealer in
securities will realize gain or loss which generally will be treated as
long-term capital gain or loss if the shares have been held for more than one
year, and otherwise as short-term capital gain or loss. However, if a
shareholder disposes of shares held for six months or less, any loss realized
will be characterized as long-term capital loss to the extent of any capital
gain dividends (or undistributed capital gain) made (or credited) to such
shareholder prior to the disposition. An exchange of the Fund's shares for
shares of another fund will be treated as a sale of the Fund's shares and any
gain on the transaction may be subject to federal income tax.
Tax-exempt shareholders will generally not be subject to federal income tax on
amounts distributed to them.
Pursuant to the Internal Revenue Code and IRS regulations, the Fund will
withhold Federal income tax at a rate of 31% from ordinary income dividends and
capital gain distributions, and from redemption payments made to any shareholder
who fails to furnish a correct taxpayer identification number, or, in certain
cases, fails to properly report income for federal income tax purposes.
Distributions may also be subject to state and local taxes depending on each
shareholder's tax situation. Shareholders should consult their tax advisers
regarding the particular tax consequences of investing in the Fund.
DISTRIBUTION ARRANGEMENTS
- -------------------------
CFS acts as the principal underwriter and distributor of the Fund's shares.
8
<PAGE>
DISTRIBUTION PLAN AND SHAREHOLDER SERVICES
The Fund has adopted a plan under rule 12b-1 of the 1940 Act that allows the
Fund to pay distribution fees for the sale and distribution of its shares.
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges. Under the 12b-1 plan, the Fund will
pay CFS out of the assets of the Retail Service class up to 0.35% of the average
daily net assets to pay distribution fees. The current annual rate is 0.10% of
the average daily net assets of the Retail Service class. The Fund's Board of
Trustees must approve any increase of the current rate.
In addition, the Fund will pay CFS out of assets of the Retail Service class
0.25% of the average daily net assets of this class for providing shareholder
services to shareholders of this class of the Fund. Shareholder services
include, but are not limited to, receiving, aggregating, and processing
shareholder or beneficial owner orders; providing and maintaining retirement
account records; communicating periodically with shareholders; acting as the
sole shareholder of record and nominee for shareholders; answering questions and
handling correspondence from shareholders about their accounts; and performing
similar account administrative services.
MULTIPLE CLASSES
The Fund presently offers three methods of purchasing shares (Institutional
class, Retail class, and Retail Service class), enabling the Fund to respond to
service needs of different classes of investors. This structure has been
developed to attract large institutions, retirement plans and individual
investors as Fund shareholders so that certain expenses (such as custodian fees,
administrative services, audit fees, legal fees, fees of trustees unaffiliated
with the Funds, regulatory fees and certain printing expenses) can be shared
rather than duplicated, in an effort to achieve economies of scale. This
prospectus offers the Retail Service class only. The Fund provides shareholder
services to holders of the Retail class and Retail Service class, and imposes a
fee on these classes for these services. The Retail Service class also pays a
12b-1 fee, as described above.
The Institutional class does not pay a shareholder service fee or a 12b-1 fee.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 years. Certain information
reflects financial results for a single Fund share. The total returns
in the table represent the rate that an investor would have earned on
an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund's
financial statements, are included in the annual report which is
available upon request.
[TO BE INSERTED]
9
<PAGE>
For investors who want more information about the Fund, the following documents
are available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Fund's investments
is available in the Fund's annual and semi-annual reports to shareholders. In
the Fund's annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Fund and is incorporated into this prospectus by
reference.
You can get free copies of reports and SAIs, request other information and
discuss your questions about the Fund by contacting the Fund at:
CIGNA Financial Services
Hartford, CT [CHECK ADDRESS]
Telephone: 1-800-528-6718
You can review and copy the Fund's reports and SAIs at the Public Reference Room
of the Securities and Exchange Commission. You can get text-only copies:
For a fee, by writing to or calling the Public Reference Room of the Commission,
Washington, DC 20549-6009.
Free from the Commission's Internet website
at http://www.sec.gov.
Information on the operation of the public reference room may be obtained by
calling the Commission at:
1-800-SEC-0330.
CIGNA Funds Group
CIGNA Money Market Fund
Retail Services Class
(Investment
Company Act
file no. 811-1646)
<PAGE>
C I G N A F U N D S G R O U P
---------------------------------
C I G N A M O N E Y M A R K E T F U N D
S T A T E M E N T O F A D D I T I O N A L I N F O R M A T I O N
J A N U A R Y 1, 1 9 9 9
This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the prospectus for CIGNA Money Market Fund (the "Fund"), a
series of CIGNA Funds Group ("CFG" or the "Trust") having the same date as the
date of this Statement of Additional Information. Much of the information
contained in this document expands upon subjects discussed in the prospectus. No
investment in shares of the Fund should be made without first reading the
prospectus. A copy of the prospectus of the Fund may be obtained by writing to
CIGNA Funds Shareholder Services, Hartford, Connecticut 06152-2210.
The financial statements for CIGNA Funds Group, for the year ended December 31,
1997, as contained in the Annual Reports to Shareholders, are hereby
incorporated by reference into this Statement of Additional Information. The
financial statements for the year ended December 31, 1997 have been examined by
Price Waterhouse LLP (n/k/a PricewaterhouseCoopers LLP), independent
accountants, whose report thereon also is incorporated herein by reference.
Page 1
<PAGE>
TABLE OF CONTENTS
Page
General Information About the Trust......................................... 3
- -----------------------------------
The Fund, Its Investment Objectives and Policies.............................3
- ------------------------------------------------
Classification...............................................................3
- --------------
Investment Strategies and Risks..............................................3
- -------------------------------
Fund Policies................................................................7
- -------------
Management of the Trust......................................................9
- -----------------------
Control Persons and Principal Holders of Securities.........................11
- ---------------------------------------------------
Investment Advisory and Other Services......................................12
- --------------------------------------
Underwriter.................................................................14
- -----------
Brokerage Allocation and Other Practices....................................16
- ----------------------------------------
Capital Stock...............................................................18
- -------------
Purchase, Redemption and Pricing of Securities..............................19
- ----------------------------------------------
Tax Matters.................................................................20
- -----------
Performance Information.....................................................22
- -----------------------
Financial Statements........................................................23
- --------------------
Page 2
<PAGE>
GENERAL INFORMATION ABOUT THE TRUST
- -----------------------------------
The Trust is a Massachusetts business trust organized pursuant to a Master Trust
Agreement dated April 10, 1985, as amended and restated by the First Amended and
Restated Master Trust Agreement dated as of March 1, 1996. The Fund is a series
or separate portfolio of the Trust. The Board of Trustees of the Trust is
authorized to create new series of shares without the necessity of a vote of
shareholders of the Trust.
THE FUND, ITS INVESTMENT OBJECTIVES AND POLICIES
- ------------------------------------------------
Classification
- --------------
The Fund is a diversified, open-end management investment company.
Investment Strategies and Risks
- -------------------------------
The types of money market instruments in which the Fund principally invests are
listed in the prospectus. The Fund may also invest in the following types of
securities and use the following strategies:
OBLIGATIONS OF DEPOSITORY INSTITUTIONS AND COMMERCIAL PAPER OF FOREIGN ISSUERS.
The Fund may invest in U.S. dollar-denominated obligations of U.S. and foreign
depository institutions, including commercial and savings banks and savings and
loan associations. The obligations may be issued by U.S. or foreign depository
institutions, foreign branches or subsidiaries of U.S. depository institutions
("Eurodollar" obligations), U.S. branches or subsidiaries of foreign depository
institutions ("Yankeedollar" obligations) or foreign branches or subsidiaries of
foreign depository institutions. Obligations of foreign depository institutions,
their branches and subsidiaries, and Eurodollar and Yankeedollar obligations may
involve investment risks in addition to the risks of obligations of U.S.
institutions. Such investment risks include adverse political and economic
developments, the possible imposition of withholding taxes on interest income
payable on such obligations, the possible seizure or nationalization of foreign
deposits and the possible establishment of exchange controls or other foreign
governmental laws or restrictions which might adversely affect the payment of
principal and interest. Generally, the issuers of such obligations are subject
to fewer regulatory requirements than are applicable to U.S. banks. Foreign
depository institutions, their branches or subsidiaries, and foreign branches or
subsidiaries of U.S. banks may be subject to less stringent reserve requirements
than U.S. banks. U.S. branches or subsidiaries of foreign banks are subject to
the reserve requirements of the state in which they are located. There may be
less publicly available information about a
Page 3
<PAGE>
foreign bank or a branch or subsidiary of a foreign bank than about a U.S.
institution, and such branches or subsidiaries may not be subject to the same
accounting, auditing and financial record keeping standards and requirements as
U.S. banks. Evidence of ownership of foreign depository and Eurodollar
obligations may be held outside of the United States and the Fund may be subject
to the risks associated with the holding of such property overseas. Foreign
depository and Eurodollar obligations of the Fund held overseas will be held by
foreign branches of the Fund's custodian or by other U.S. or foreign banks under
subcustodian arrangements complying with the requirements of the Investment
Company Act of 1940, as amended (the "1940 Act"). CIGNA Investments will
consider the above factors in making investments in foreign depository,
Eurodollar and Yankeedollar obligations and will not knowingly purchase
obligations which, at the time of purchase, are subject to exchange controls or
withholding taxes. Generally, the Fund will limit its foreign depository and
Yankeedollar investments to obligations of banks organized in Canada, France,
Germany, Japan, the Netherlands, Switzerland, the United Kingdom and other
western industrialized nations.
The Fund may also invest in U.S. dollar-denominated commercial paper and other
short-term obligations issued by foreign entities. Such investments are subject
to quality standards similar to those applicable to investments in comparable
obligations of domestic issuers. Investments in foreign entities in general
involve the same risks as those described above in connection with investments
in Eurodollar and Yankeedollar obligations and obligations of foreign depository
institutions and their foreign branches and subsidiaries.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may
purchase securities on a "when-issued" basis, that is, delivery of and placement
for the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). The Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. The Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable.
Investment in securities on a when-issued or delayed delivery basis may increase
the Fund's exposure to market fluctuation and may increase the possibility that
the Fund will incur short-term gains subject to Federal taxation or short-term
losses if the Fund must engage in portfolio transactions in order to honor a
when- issued or delayed delivery commitment. In a delayed delivery
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<PAGE>
transaction, the Fund relies on the other party to complete the transaction. If
the transaction is not completed, the Fund may miss a price or yield considered
to be advantageous. The Fund will employ techniques designed to reduce such
risks. If the Fund purchases a when-issued security, the Fund's custodian bank
will segregate cash or high grade securities in an amount equal to the
when-issued commitment. If the market value of the segregated securities
declines, additional cash or securities will be segregated on a daily basis so
that the market value of the segregated assets will equal the amount of the
Fund's when-issued commitments. To the extent cash and securities are
segregated, they will not be available for new investments or to meet
redemptions. Securities purchased on a delayed delivery basis may require a
similar segregation of cash or other high grade securities. For a more complete
description of when-issued securities and delayed delivery transactions see the
Statement of Additional Information.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
securities that are illiquid. Illiquid securities include securities that have
no readily available market quotations and cannot be disposed of promptly
(within seven days) in the normal course of business at approximately the price
at which they are valued. Illiquid securities may include securities that are
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933 (the "1933 Act"). Restricted securities may, in
certain circumstances, be resold pursuant to Rule 144A under the 1933 Act, and
thus may or may not constitute illiquid securities. To the extent that qualified
institutional buyers become uninterested in purchasing these restricted
securities the level of illiquidity in a Fund may increase. CIGNA Investments
determines the liquidity of the Fund's investments. Limitations on the resale of
restricted securities may have an adverse effect on their marketability, which
may prevent the Fund from disposing of them promptly at reasonable prices. The
Fund may have to bear the expense of registering such securities for resale, and
the risk of substantial delays in effecting such registrations.
INVESTMENTS IN FOREIGN SECURITIES. The Fund may invest up to 50% of its total
assets in Canadian and other foreign securities, although the Fund may only
invest in foreign securities denominated in U.S. dollars.
BORROWING. The Fund may borrow from banks or through reverse repurchase
agreements to the extent permitted by the 1940 Act. If the Fund borrows money,
its share price may be subject to greater fluctuation until the borrowing is
paid off. Under the 1940 Act as currently in effect, a fund may borrow from any
lender only for temporary purposes in an amount not exceeding 5% of its total
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assets, and may borrow from a bank in an amount not exceeding 33 1/3% of its
total assets.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income, the
Fund may lend its portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/dealers, banks, or
other institutions which CIGNA Investments has determined are creditworthy under
guidelines established by the Fund's Trustees and will receive collateral at all
times equal to at least 100% of the value of the securities loaned. There is the
risk that when lending portfolio securities, the securities may not be available
to the Fund on a timely basis and the Fund may, therefore, lose the opportunity
to sell the securities at a desirable price. In addition, in the event that a
borrower of securities would file for bankruptcy or become insolvent,
disposition of the securities may be delayed pending court action.
RATING AGENCIES. The Fund's investments in short-term corporate debt and bank
money instruments will be rated, or will be issued by issuers who have been
rated, in one of the two highest rating categories for short-term debt
obligations by a nationally recognized statistical rating organization (an
"NRSRO") or, if not rated, will be of comparable quality as determined by the
Trustees of the Trust. The Fund's investments in corporate bonds and debentures
(which must have maturities at the date of purchase of 397 days (13 months) or
less) will be in issuers who have received from an NRSRO a rating with respect
to a class of short-term debt obligations that is comparable in priority and
security with the investment in one of the two highest rating categories for
short-term obligations or if not rated, will be of comparable quality as
determined by the Trustees of the Trust. Currently, there are six NRSROs: Duff
and Phelps Inc., Fitch Investors Services, Inc., IBCA Limited and its affiliate
IBCA Inc., Thompson BankWatch, Inc., Moody's Investors Service Inc. and Standard
& Poor's Rating Group.
The rating applied to a security at the time the security is purchased by the
Fund may be changed while the Fund holds such security in its portfolio. This
change may affect, but will not necessarily compel, a decision to dispose of a
security. If the major rating services used by the Fund were to alter their
standards or systems for rating, the Fund would then employ ratings under the
revised standards or systems that would be comparable to those specified in its
current investment objective, policies and restrictions.
RULE 2A-7. The Board of Trustees has established procedures in compliance with
Rule 2a-7 under the 1940 Act that include reviews of portfolio holdings by the
Trustees at such intervals as they
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may deem appropriate to determine whether the net asset value of the Fund,
calculated by using available market quotations, deviates from $1.00 per share
and, if so, whether such deviation may result in material dilution or is
otherwise unfair to existing shareholders. In the event the Trustees determine
that a deviation having such a result exists, they intend to take such
corrective action as they deem necessary and appropriate, including the sale of
portfolio instruments prior to maturity in order to realize capital gains or
losses or to shorten average portfolio maturity; withholding dividends; or
establishing a net asset value per share by using available market quotations;
in which case, the net asset value could possibly be greater or less than $1.00
per share. If the Trustees deem it inadvisable to continue the practice of
maintaining the net asset value at $1.00 per share, they may alter this
procedure. The shareholders of the Fund will be notified promptly after any such
change.
Any increase in the value of a shareholder's investment in the Fund resulting
from the reinvestment of dividend income is reflected by an increase in the
number of shares in the shareholder's account.
FUND POLICIES
- -------------
The Fund is subject to the following restrictions which may not be changed
without approval of the lesser of (i) 67% or more of that Fund's shares present
at a meeting if the holders of more than 50% of the outstanding shares are
present in person or represented by proxy, or (ii) more than 50% of that Fund's
outstanding shares. Any investment restriction that involves a maximum or
minimum percentage of securities or assets shall not be considered to be
violated unless an excess over or a deficiency under the percentage occurs
immediately after, and is caused by, an acquisition or disposition of securities
or utilization of assets by the Fund.
The Fund may not:
1. Borrow money or issue senior securities except that the Fund may borrow
to the extent permitted by the 1940 Act for temporary or emergency
purposes to satisfy redemption requests.
2. Underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may
be deemed to be an underwriter under Federal securities laws.
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3. Concentrate 25% or more of its total assets in a particular industry,
except the Fund may invest up to 100% of its assets in the financial
services industry.
4. Purchase or sell mortgages or real estate, or invest in real estate
limited partnerships, although it may purchase securities of issuers
that deal in real estate and may purchase securities that are secured by
interests in real estate.
5. Lend any funds or other assets, except that the Fund may, consistent
with its investment objective and policies: (a) invest in debt
obligations including bonds, debentures or other debt securities,
bankers' acceptances and commercial paper, even though the purchase of
such obligations may be deemed to be the making of loans, (b) enter into
repurchase agreements, and (c) lend its portfolio securities in an
amount not to exceed one-third of the value of its total assets,
provided such loans are made in accordance with applicable guidelines
established by the Securities and Exchange Commission.
6. With respect to 75% of its assets, purchase the securities of any issuer
if such purchase would cause more than 5% of the value of its total
assets (taken at market value at the time of such investment) to be
invested in the securities of such issuer except (a) U.S. Government
securities including securities issued by its agencies and
instrumentalities (or repurchase agreements with respect thereto), and
(b) obligations issued by U.S. banks.
7. With respect to 75% of its assets, purchase the securities of any issuer
if such purchase would cause more than 5% of the voting securities, or
more than 10% of the securities of any class of such issuer (taken at
the time of such investment), to be held by the Fund.
In addition, the Fund may not change its investment objective of seeking to
provide as high a level of current income as is consistent with the preservation
of capital and liquidity and the maintenance of a stable $1.00 per share net
asset value without shareholder approval.
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<PAGE>
MANAGEMENT OF THE TRUST
- -----------------------
The Trust is managed by a Board of Trustees. The Trustees are responsible for
managing the Trust's business affairs and for exercising all of the Trust's
powers except those reserved for the shareholders.
The Trustees and the executive officers of the Trust are listed below, together
with information as to their principal occupations during the past five years
and other principal business affiliations. Each currently holds the equivalent
position as Trustee and/or officer of CIGNA High Income Shares, CIGNA
Institutional Funds Group and CIGNA Variable Products Group, and holds a similar
position as Director and/or executive officer of INA Investment Securities, Inc.
Correspondence with any Trustee or officer may be addressed to the Trust, 100
Front Street, Suite 300, Worcester, Massachusetts 01601.
R. BRUCE ALBRO*, 55, Trustee; Senior Managing Director and Division Head, CIGNA
Portfolio Advisers, a division of CIGNA Investments; Chairman of the Board and
President, CIGNA Funds Group, CIGNA Institutional Funds Group, CIGNA Variable
Products Group, CIGNA High Income Shares and INA Investment Securities, Inc. Mr.
Albro is also an officer or director of various other entities which are
subsidiaries or affiliates of CIGNA. Previously; Managing Director - Division
Head, CII. Managing Director, CII.
HUGH R. BEATH, 67, Trustee; Advisory Director, AdMedia Corporate Advisors, Inc.
(investment banking); previously Managing Director, Admedia Corporate Advisors,
Inc.; Chairman of the Board of Directors, Beath Advisors, Inc. (investment
advisor).
RUSSELL H. JONES, 54, Trustee; Vice President and Treasurer, Kaman Corporation
(helicopters and aircraft components, industrial products and services);
Trustee, Connecticut Policy and Economic Counsel; Corporator, Hartford Seminary;
Secretary, Bloomfield Chamber of Commerce.
THOMAS C. JONES*, 51, Trustee; President, CIGNA Investment Management; President
and Director, CIGNA Investment Group, Inc. and CII; Director, CIGNA
International Investment Advisors, Ltd. Mr. Jones is also an officer or director
of various other entities which are subsidiaries or affiliates of CIGNA.
Previously President, CIGNA Individual Insurance, a division of CIGNA;
President, CIGNA Reinsurance--Property & Casualty, a division of CIGNA;
Executive Vice President and Director, NAC RE Corporation (property and casualty
reinsurance).
PAUL J. MCDONALD, 54, Trustee; Senior Executive Vice President and Chief
Administrative Officer, Friendly Ice Cream Corporation
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(family restaurants/dairy products); Chairman, Dean's Advisory Council,
University of Massachusetts School of Management; Director, Springfield YMCA;
Trustee, Basketball Hall of Fame; Regional Director-Western Massachusetts, Bank
of Boston. Previously, Executive Vice President, Finance and Chief Financial
Officer, Friendly Ice Cream Corporation.
ALFRED A. BINGHAM III, 53, Vice President and Treasurer, CIGNA Funds Group,
CIGNA Institutional Funds Group, CIGNA Variable Products Group, CIGNA High
Income Shares and INA Investment Securities, Inc.; Assistant Vice President,
CII.
JEFFREY S. WINER, 40, Senior Counsel, CIGNA; Vice President and Secretary, CIGNA
Funds Group, CIGNA Institutional Funds Group, CIGNA Variable Products Group,
CIGNA High Income Shares and INA Investment Securities, Inc.; previously
Counsel, CIGNA.
*Trustees identified with an asterisk are considered interested persons of the
Funds within the meaning of the 1940 Act because of their affiliation with CIGNA
Corporation or its affiliates.
The Board has created an Audit Committee from among its members which meets
periodically with representatives of PricewaterhouseCoopers LLP, independent
accountants for the Trust, a Contracts Committee which, as part of its duties,
considers the terms and the renewal of the Master Investment Advisory Agreement
with CIGNA Investments, and a Nominating Committee which considers the
identification of new members of the Board and the compensation of Trustees. The
Nominating Committee, Audit Committee and Contracts Committee consist of
Trustees who are not affiliated with CIGNA Corporation or any of its
subsidiaries.
The Trust pays no compensation to any of its officers, other than the
reimbursement of the costs of the Office of the Treasurer and the Office of the
Secretary, or to any of their Trustees who are officers or employees of CIGNA
Corporation or its affiliates. The following table shows compensation paid by
the Trusts and other investment companies in the CIGNA fund complex to Trust
Trustees in 1997:
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<PAGE>
<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Compensation
Accrued As from Trust and
Aggregate Part of Estimated Annual CIGNA Fund
Name of Person, Compensation Trust Benefits Upon Complex Paid to
Position with Trust from Trust Expense Retirement Trustees(c)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
R. Bruce Albro, Trustee, $ - $ - $ - $ -
Chairman and President
Hugh R. Beath, Trustee (a) $ 2,800 - - $24,600
Russell H. Jones, Trustee $ 2,800 - - $24,600
Thomas C. Jones, Trustee - - - -
Paul J. McDonald, Trustee (b) $ 2,800 - - $24,600
Arthur C. Reeds, III, - - - -
Trustee(d)
$8,400 $ $ $73,800
========= =========== ------------ =======
</TABLE>
- ------------------------
(a) All but $403 of Mr. Beath's 1997 compensation was deferred under a plan
for all CIGNA funds in which he had an aggregate balance of $167,185 as
of December 31, 1997.
(b) All but $403 of Mr. McDonald's 1997 compensation was deferred under a
plan for all CIGNA funds in which he had an aggregate balance of $80,886
as of December 31, 1997.
(c) There were four (4) investment companies besides the Trust in the CIGNA
fund complex.
(d) Mr. Reeds retired from CIGNA Corporation and resigned from the Trust in
1997.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- ---------------------------------------------------
As of September 28, 1998, record and beneficial owners of five percent or more
of the shares of the Money Market Fund were as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHAREHOLDER ADDRESS OWNERSHIP
<S> <C> <C>
CIGNA Health Plan of California 505 North Brand Blvd. 27.5%
Glendale CA 91205
CIGNA Community Choice (Arizona 11001 N. Black Canyon Highway 5.8%
corporation) Phoenix, AZ 85029
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Healthsource North Carolina, Inc. 701 Corporate Center Drive 16.6%
Raleigh, NC 27607
Healthsource, Inc.(New Hampshire Two College Park Drive 8.7%
corporation) Hooksett, NH 03106
</TABLE>
The Trustees and officers do not own any Fund shares. By virtue of owning more
than 25% of the shares of the fund, Healthsource, Inc. is deemed to control the
Fund. This control does not affect the voting rights of other Fund
shareholders. Healthsource, Inc. is an indirect, wholly owned subsidiary of
CIGNA Corporation.
INVESTMENT ADVISORY AND OTHER SERVICES
- --------------------------------------
The investment adviser to the Fund is CIGNA Investments, an indirect,
wholly-owned subsidiary of CIGNA Corporation. CIGNA Investments also serves as
investment adviser for other investment companies sponsored by affiliates of
CIGNA Corporation, and for a number of pension, advisory, corporate and other
accounts. CIGNA Investments and other affiliates of CIGNA Corporation manage
combined assets of approximately $64 billion. CIGNA Investments's mailing
address is 900 Cottage Grove Road, Hartford, Connecticut 06152.
Pursuant to the Master Investment Advisory Agreements between the Trust and
CIGNA Investments, CIGNA Investments manages the investment and reinvestment of
the assets of the Funds.
Subject to the control and periodic review of the Board of Trustees of the
Trust, CIGNA Investments determines what investments shall be purchased, held,
sold or exchanged for the account of the Fund. Accordingly, the role of the
Trustees is not to approve specific investments, but rather to exercise a
control and review function.
The Trust pays all expenses not specifically assumed by CIGNA Investments
including compensation and expenses of Trustees who are not Directors, officers
or employees of CIGNA Investments or any other affiliates of CIGNA Corporation;
investment management fees; registration, filing and other fees in connection
with filings with regulatory authorities; the fees and expenses of independent
accountants; costs of printing and mailing registration statements,
prospectuses, proxy statements, and annual and periodic reports to shareholders;
custodian and transfer agent fees; brokerage commissions and securities
transactions costs incurred by the Trust; taxes and corporate fees; legal fees
incurred in connection with the affairs of the Trust; expenses of meetings of
the shareholders and Trustees; and any expenses allocated or allocable to a
specific class of shares.
CIGNA Investments, at its own expense, furnishes to the Trust office space and
facilities and, except with respect to the Office of the
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<PAGE>
Treasurer and Office of the Secretary as provided in the Master Investment
Advisory Agreement, all personnel for managing the affairs of the Trust and the
Fund. The Trust and other registered investment companies advised by CIGNA
Investments have agreed to reimburse CIGNA Investments for its costs of
maintaining the Office of the Treasurer and the cost of the Office of the
Secretary as provided in their respective investment advisory agreements. CIGNA
Investments has estimated that in 1998 the total expenses of the Office of the
Treasurer for all funds in the CIGNA fund complex will not exceed $392,000 and
the expenses of the Office of the Secretary are not expected to exceed $118,000.
The portion of these expenses allocated to the Fund for calendar year 1998 are
not expected to exceed $74,803 and $22,517, respectively.
In 1997 the costs reimbursed by the Fund for the Office of the Treasurer and the
Office of the Secretary totalled $88,822 ($64,233 Office of the Treasurer;
$17,589 - Office of the Secretary). The Board of Trustees of the Trust has
approved the method under which this cost will be allocated to the Trust, and
then to each Fund.
As full compensation for the investment management and all other services
rendered by CIGNA Investments, the Fund pays CIGNA Investments a separate fee
computed daily and paid monthly at annual rates based on 0.35% of the value of
the Fund's average daily net assets. Management fees for the Trusts other series
are also based on a percentage of the value of each series average daily net
assets. The management fee for each class of the Fund is based on 0.35% of each
class' average daily net assets.
Trust-wide expenses not identifiable to any particular series of the Trust will
be allocated among the series. CIGNA Investments has voluntarily agreed, until
April 30, 2000, to reimburse the Fund to the extent that the annual operating
expenses in any one year (excluding interest, taxes, amortized organizational
expense, transaction costs in acquiring and disposing of portfolio securities
and extraordinary expenses) of the Fund exceed a percentage of the value of the
Fund's average daily net assets, as follows:
Institutional Retail Retail Service
Class Class Class
------------- ------ --------------
Money Market Fund .45% .70% 1.00%
CIGNA Money Market Fund incurred a management fee of $446,085, $111,530 and
$26,892 in 1997, 1996 and 1995, respectively. However, due to the expense
limitation, CIGNA Investments waived $88,881 and $78,697 of this fee in 1997 and
1996, respectively and waived its management fees and reimbursed $23,194 to the
Fund in 1995.
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<PAGE>
The Master Investment Advisory Agreement provides that it will continue from
year to year as to the Fund provided that such continuance is specifically
approved at least annually: (a) by a vote of the "majority of the outstanding
voting securities" (as such term is defined in the 1940 Act) of that Fund or by
the Board of Trustees of the Trust, and (b) by a vote of a majority of the
Trustees who are not parties to the agreement or "interested persons" (as
defined in the 1940 Act) of any party thereto, cast in person at a meeting
called for the purpose of voting on such approval. The Master Investment
Advisory Agreement provides that it (i) may be terminated at any time without
penalty (a) upon 60 days' written notice by vote of the Trustees of the Trust,
or with respect to any series of the Trust, by vote of a majority of the
outstanding voting securities of that series, or (b) by CIGNA Investments upon
90 days' written notice to the Trust in the case of the Master Investment
Advisory Agreement and (ii) will automatically terminate in the event of its
"assignment" (as such term is defined in the 1940 Act).
Each Master Trust Agreement acknowledges CIGNA Corporation's control over the
name "CIGNA". The Trust and the Fund would be obliged to change their names to
eliminate the word "CIGNA" (to the extent they could lawfully do so) in the
event CIGNA Corporation were to withdraw its permission for use of such name.
CIGNA Corporation has agreed not to withdraw such permission from the Trust or a
series of the Trust so long as an affiliate of CIGNA Corporation shall be the
investment adviser for such series.
UNDERWRITER
- -----------
CIGNA Financial Services ("CFS") serves as the Trusts' distributor pursuant to a
distribution contract which is subject to annual approval by the Board of
Trustees. CFS is an indirect, wholly-owned subsidiary of CIGNA Corporation and,
along with CIGNA Investments, is under the control of CIGNA Corporation. CFS's
address is One Commercial Plaza, Hartford, CT 06103. The distribution contract
is terminable without penalty, at any time, by the Trust upon 60 days' written
notice to CFS or by CFS upon 60 days' notice, to the Trust. CFS is not obligated
to sell any specific amount of Trust shares. Pursuant to the distribution
contract, CFS continuously offers Fund shares. CFS received no compensation for
distributing Fund shares in 1997.
The Fund, on behalf of its Retail Class and Retail Services class, has entered
into agreements with CFS for CFS to provide shareholder services to shareholders
of these classes. These services include receiving, aggregating, and processing
shareholder or beneficial owner orders; providing and maintaining retirement
account and other records; communicating periodically with shareholders; acting
as the sole shareholder of record and nominee for shareholders; answering
questions and handling correspondence from shareholders about their accounts;
and performing similar account administration services.
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<PAGE>
The Fund will pay CFS 0.25% of the average daily net assets of the Retail
Service class per year or providing shareholder services to shareholders of this
class, and will pay CFS $20.16 for each account in the Retail class for
providing shareholder services to shareholders of this class. CFS will begin
providing these services in 1999.
The Trusts' Custodian and Transfer Agent is State Street Bank and Trust Company
("State Street"), Boston, Massachusetts 02107. Under its Custodian Agreement,
State Street maintains the portfolio securities of each Fund, administers the
purchases and sales of portfolio securities, collects interest and dividends and
other distributions made on the securities held in the portfolio, determines the
net asset value of shares of each Fund on a daily basis and performs such other
ministerial duties as are included in the Custodian Agreement and Agency
Agreement, copies of which are on file with the Securities and Exchange
Commission.
The Fund, on behalf of its Retail Service class, has adopted a plan under rule
12b-1 of the 1940 Act. The plan was adopted in October 1998 and activities for
which payment will be made under the plan will begin in 1999. The principal
types of activities that providers will furnish under the plan are answering
telephone inquiries and processing request for information; formulating and
implementing marketing and promotional activities; printing and distributing
prospectuses to prospective shareholders, and other support services primarily
intended to result in the sale of Retail Service class shares.
The plan reimburses CFS, the Fund's distributor, out of assets of the Retail
Service class for expenses and costs associated with activities primarily
intended to result in the sale of Retail Service class shares. These costs and
expenses may include those associated with CFS employees. The fee under the
12b-1 plan may not exceed 0.35% of the average daily net assets of the Retail
Service class of the Fund during any fiscal year.
The Fund anticipates that the plan will result in increased sales of Fund shares
and an increase in the amount of assets in the Fund, permitting various Fund
expenses (such as custodian fees, audit and legal fees, trustee fees) to be
spread across a larger shareholder base and amount of assets, permitting greater
economies of scale.
PricewaterhouseCoopers LLP acts as independent accountant for the Trust. Its
offices are at 160 Federal Street, Boston, Massachusetts 02110.
PricewaterhouseCoopers LLP representatives annually perform an audit of the
financial statements of the Trust's series and provide accounting advice and
services throughout the year. PricewaterhouseCoopers LLP reports its activities
and the results of its audit to the Audit Committee of the Board of Trustees.
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<PAGE>
PricewaterhouseCoopers LLP also provides certain tax advice to the Trust.
BROKERAGE ALLOCATION AND OTHER PRACTICES
- ----------------------------------------
With respect to Fund transactions, it is the policy of CIGNA Investments on
behalf of its clients, including the Fund, to have purchases and sales of
portfolio securities executed at the most favorable prices, considering all
costs of the transaction, including brokerage commissions and spreads, and
research services, consistent with obtaining best execution.
In seeking best execution, CIGNA Investments will select brokers/dealers on the
basis of their professional capability and the value and quality of their
brokerage services. Brokerage services include the ability to execute most
effectively large orders without adversely affecting markets and the positioning
of securities in order to effect orderly sales for clients.
The officers of CIGNA Investments will determine, generally without limitation,
the brokers/dealers through whom, and the commission rates or spreads at which,
securities transactions for client accounts are executed. The officers of CIGNA
Investments may select a broker/dealer who may receive a commission for
portfolio transactions exceeding the amount another broker/dealer would have
charged for the same transaction if they determine that such amount of
commission is reasonable in relation to the value of the brokerage or research
services performed or provided by the executing broker/dealer, viewed in terms
of either that particular transaction or CIGNA Investments' overall
responsibilities to the client for whose account such portfolio transaction is
executed and other accounts advised by CIGNA Investments or accounts advised by
other investment advisers which are related persons of CIGNA Investments.
Portfolio transactions placed through dealers serving as primary market makers
are effected at net prices, without commissions as such, but which include
compensation in the form of mark up or mark down.
If two or more brokers/dealers are considered able to offer the same favorable
price with the equivalent likelihood of best execution, the officers of CIGNA
Investments may prefer the broker/dealer who has furnished research services.
Research services include market information, analysis of specific issues,
presentation of special situations and trading opportunities on a timely basis,
advice concerning industries, economic factors and trends, portfolio strategy
and performance of accounts. Research services are used in advising all
accounts, including accounts advised by related persons of CIGNA Investments,
and not all such services are necessarily used by CIGNA Investments in
connection with the specific account that paid commissions to the broker/dealer
providing such services.
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<PAGE>
The overall reasonableness of brokerage commissions paid is evaluated
continually. Such evaluation includes review of what competing brokers/dealers
are willing to charge for similar types of services and what discounts are being
granted by brokerage firms. The evaluation also considers the timeliness and
accuracy of the research received.
In addition, CIGNA Investments may, if permitted by applicable law, use
brokerage commissions to pay for products or services (other than brokerage and
research services) obtained from broker/dealers and third parties in accordance
with SEC Release 34-23170 dated April 23, 1986. Pursuant to that Release,
products and services which provide lawful and appropriate assistance to CIGNA
Investments' investment decision-making process may be paid for with brokerage
commissions to the extent such products and services are used in that process.
Where the research service product has a mixed use, that is, the product may
serve a number of functions certain of which are not related to the making of
investment decisions, CIGNA Investments allocates the cost of the product on a
basis which they deem reasonable, according to the various uses of the product,
and maintains records documenting the allocation process followed. Only that
portion of the cost of the product allocable to research services is paid
through credit earned from the Fund's brokerage business. CIGNA Investments will
not acquire research services through the generation of credits with respect to
the Funds' principal transactions or transactions in financial futures, except
in new issue fixed price underwritings. CIGNA Money Market Fund paid no
brokerage commissions in 1995, 1996 or 1997.
As of December 31, 1997, Sanford C. Bernstein & Co., Inc. ("Sanford Bernstein"),
767 Fifth Avenue, New York, NY 10153, reported that it held 6,263,994 shares or
8.66% of the outstanding common stock of CIGNA for the accounts of discretionary
clients who have the right to receive dividends these shares and any proceeds
from the sale of these shares. Sanford Bernstein also reported sole voting power
as to 3,368,544, shared voting power ass to 749,963, and sole dispositive power
as to all of these shares. Wellington Management Company, LLP ("Wellington"), 75
State Street, Boston, MA 02109, reported that as of December 31, 1997 it held
4,276,700 shares, or 5.91% of the outstanding common stock of CIGNA for the
accounts of discretionary clients who have the right to receive dividends on
these shares and any proceeds from the sale of these shares. Wellington also
reported sole voting power as to none, shared voting power as to 323,700, and
shared dispositive power as to all of these shares. Swiss Bank Corporation
("Swiss Bank"), Aeschenplatz 6 CH- 4002, Basel, Switzerland, reported on a joint
basis with its subsidiaries, SBC Holding (USA), Inc. ("SBC"), Brinson Partners,
Inc. and Brinson Holdings, Inc. that as of December 31, 1997, Swiss Bank and SBC
had shared voting and dispositive power over 3,868,333 shares, or 5.35% of the
outstanding common stock of CIGNA. Brinson
Page 17
<PAGE>
Partners, Inc. and Brinson Holdings, Inc. reported shared voting and dispositive
power over 3,859,472 shares.
Neither the Trust nor CIGNA Investments presently allocate brokerage commissions
to, or place orders for portfolio transactions with, either directly or
indirectly, brokers or dealers based on their sales of Fund shares. Except as
noted, neither the Trust nor CIGNA Investments utilize an affiliated broker or
dealer in effecting Fund portfolio transactions and do not recapture commissions
paid in such transactions.
CAPITAL STOCK
- -------------
The capitalization of the Trust consists solely of an unlimited number of shares
of beneficial interest with a par value of $0.001 each.
The Institutional, Retail, and Retail Service class of the Fund represent
interests in Fund's assets and have identical voting, dividend, liquidation and
other rights on the same terms and conditions, except that each class of shares
bears differing class- specific expenses and exchange privileges, the Retail
class has exclusive voting rights on matters pertaining to its shareholder
services plan, and the Retail Service class has exclusive voting rights on
matters pertaining to its shareholder services plan and distribution plan.
Under Massachusetts law, the Trust's shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Trust's Master Trust Agreement disclaims liability of the
shareholders, Trustees or officers of the Trust for acts or obligations of the
Trust, which are binding only on the assets and property of the Trust, and
requires that notice of the disclaimer be given in each contract or obligation
entered into or executed by the Trust or the Trustees. The Master Trust
Agreement provides for indemnification out of Trust property for all loss and
expense of any shareholder held personally liable for the obligations of the
Trust. The risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations and thus should be considered remote.
Shares of the Fund will entitle their holders to one vote per share (with
proportionate voting for fractional shares), irrespective of the relative net
asset value of the shares of any other series of the Trust. On any matter
submitted to a vote of shareholders of the Trust, all shares of the Trust then
issued and outstanding shall be voted in the aggregate. However, on matters
affecting an individual series or class of shares, a separate vote of
shareholders of that series or class would be required. Shareholders of a series
or class would not be entitled to vote on any matter which does not affect
Page 18
<PAGE>
that series or class but which would require a separate vote of another series
or class.
When issued, shares of the Fund are fully paid and nonassessable, and have no
preemptive or subscription rights. There are no conversion rights. Shares do not
have cumulative voting rights, which means that in situations in which
shareholders elect Trustees, holders of more than 50% of the shares voting for
the election of Trustees can elect 100% of the Trustees of the Trust and the
holders of less than 50% of the shares voting for the election of Trustees will
not be able to elect any Trustees.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES
- ----------------------------------------------
Shares of the Fund are sold on a continuous basis without any initial sales
charge or contingent deferred charge at the Fund's net asset value per share.
The Fund does not issue share certificates.
Retirement and Savings Plan Participants
- ----------------------------------------
The Fund may be available as an investment option in employer-sponsored
retirement or savings plans. All orders to purchase shares must be made through
and in accordance with procedures established by the participant's employer or
plan administrator. The plan administrator can provide participants with
detailed information on how to participate in the plan and how to select the
Fund as an investment option.
Brokerage Account Purchases
- ---------------------------
All investors other than employer sponsored retirement or savings plan
participants must purchase shares through CFS, the Fund's underwriter, or a
dealer who has entered into a dealer agreement with CFS. Orders placed through a
brokerage representative are priced as of the close of business on the day the
order is received by CIGNA Funds Shareholder Services or the transfer agent,
provided the order is received by 4:00 p.m. Eastern Time. Brokerage
representatives are responsible for the prompt transmission of purchase and
redemption orders placed through them by shareholders.
The Fund reserves the right to revise its redemption procedures on 30-days'
notice. The Fund may suspend redemptions or postpone the date of payment during
any period when: (a) the New York Stock Exchange is closed for other than
customary weekend and holiday closings or trading on such Exchange is
restricted; (b) the Securities and Exchange Commission has by order permitted
such suspension for the protection of the Fund's shareholders; or (c) an
emergency exists as determined by the Securities and Exchange Commission making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable.
Page 19
<PAGE>
A fund's net asset value is calculated by dividing the number of outstanding
shares into the net assets of the fund. Net assets are the excess of a fund's
assets over its liabilities.
The investments of the Money Market Fund are valued at amortized cost. The
amortized cost of an instrument is determined by valuing it at cost originally
and thereafter amortizing any discount or premium from its face value at a
constant rate until maturity, regardless of the effect of fluctuating interest
rates or other factors on the market value of the instrument. The amortized cost
method may result at times in determinations of value that are higher or lower
than the price the Fund would receive if the instruments were sold. During
periods of declining interest rates, use by the Fund of the amortized cost
method of valuing its portfolio may result in a lower value than the market
value of the portfolio, which could be an advantage to new investors relative to
existing shareholders. The converse would apply in a period of rising interest
rates.
The valuation of the investments of the Money Market Fund at amortized cost is
permitted by the Securities and Exchange Commission, and the Fund is required to
adhere to certain conditions so long as they use this valuation method. The
Money Market Fund will maintain a dollar-weighted average portfolio maturity of
90 days or less, will purchase only instruments having remaining maturities of
397 days or less (except as permitted under Rule 2a-7 of the 1940 Act with
respect to variable and floating rate instruments) and will invest only in
securities determined by the Board of Trustees to be of high quality with
minimal credit risks. The Board of Trustees has also established procedures
reasonably designed, taking into account current market conditions and the
Fund's investment objective, to stabilize the Fund's price per share as computed
for the purpose of distribution, redemption and repurchase at $1.00. Such
procedures include a review of the Fund's portfolio holdings by the Board of
Trustees, at such intervals as they may deem appropriate, to determine whether
the Fund's net asset value, calculated by using readily available market
quotations, deviates from $1.00 per share, and, if so, whether such deviation
may result in material dilution or is otherwise unfair to existing shareholders.
In the event the Board of Trustees determines that such a deviation exists, it
will take such corrective action as it deems necessary and appropriate,
including selling portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; or establishing a net asset value per share by using
readily available market quotations in which case, the net asset value could
possibly be greater or less than $1.00 per share.
TAX MATTERS
- -----------
All shareholders should consult a qualified tax adviser regarding their
investment in a Fund.
Page 20
<PAGE>
The series of shares of the Trust is treated as a separate association taxable
as a corporation.
The Fund intends to qualify and elect to be treated under the Internal Revenue
Code of 1986 (the Code), as amended, as a regulated investment company (RIC) for
each taxable year. As of the date hereof, the Fund must, among other things meet
the following requirements: A. The Fund must generally derive at least 90% of
its gross income from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities, foreign
currencies, or other income derived with respect to its business of investing in
such stock, securities or currencies. B. The Fund must diversify its holdings so
that, at the end of each fiscal quarter: i) at least 50% of the market value of
the Fund's total assets is represented by cash, U.S. Government securities and
other securities, with such other securities limited, with respect to any one
issuer, to an amount not greater than 5% of the Fund's total assets and not more
than 10% of the outstanding voting securities of such issuer, and ii) not more
than 25% of the value of its total assets is invested in the securities of any
one issuer (other than U.S. Government securities).
The Fund intends to satisfy requirements under the Code relating to the
distribution of its net income so that, in general, the Fund will not be subject
to Federal income tax (FIT) on its investment company taxable income and net
capital gains designated by the Fund as capital gain dividends, if any, that it
distributes to shareholders on a timely basis. The Fund intends to distribute to
its shareholders, at least annually, substantially all of its investment company
taxable income and any net capital gains.
The Fund is subject to a nondeductible 4% excise tax if it does not meet certain
distribution requirements under the Code. To avoid this excise tax, during each
calendar year, a fund must distribute: 1) at least 98% of its ordinary income
(not taking into account any capital gains or losses) for the calendar year, 2)
at least 98% of its capital gains in excess of its capital losses for the twelve
month period ending on October 31 of the calendar year, and 3) all ordinary
income and capital gains from previous years that were not distributed during
such years.
Dividends declared to shareholders of record on a date in October, November or
December will be taxable to shareholders in the year declared as long as the
Fund pays the dividends no later than January of the following year.
Section 1092 of the Code affects the taxation of certain transactions involving
futures or options contracts. If a futures or options contract is part of a
"straddle" (which could include another futures or options contract or
underlying stock or securities), as defined in Section 1092 of the Code, then,
generally, losses are deferred first,
Page 21
<PAGE>
to the extent that the modified "wash sale" rules of the Section 1092
regulations apply, and second to the extent of unrecognized gains on offsetting
positions. Further, a fund may be required to capitalize, rather than deduct
currently, any interest expense on indebtedness incurred or continued to
purchase or carry any positions that are part of a straddle. Sections 1092 and
246 of the Code and the Regulations thereunder also suspend the holding periods
for straddle positions with possible adverse effects regarding long-term capital
gain treatment and the corporate dividends-received deduction. In certain cases,
the "wash sale" rules of Section 1091 of the Code may operate to defer
deductions for losses.
Section 1256 of the Code generally requires that certain futures and options be
"marked-to-market" at the end of each year for FIT purposes. Section 1256
further characterizes 60% of any gain or loss with respect to such futures and
options as long-term capital gain or loss and 40% as short-term capital gain or
loss. If such a future or option is held as an offsetting position and can be
considered a straddle under Section 1092 of the Code such a straddle will
constitute a mixed straddle. A mixed straddle will be subject to both Section
1256 and Section 1092 unless certain elections are made by the Fund.
Upon a sale or redemption of Fund shares, a shareholder who is not a dealer in
securities will realize gain or loss which will be treated as long-term capital
gain or loss if the shares have been held for more than one year, and otherwise
as short-term capital gain or loss. However, if a shareholder disposes of shares
held for six months or less, any loss realized will be characterized as
long-term capital loss to the extent of any capital gain dividends made to such
shareholder prior to such disposition. In addition, shareholders need to
consider the general wash sale rule which may impact shareholders who sell their
shares at a loss and purchase shares within a sixty-one day time frame.
PERFORMANCE INFORMATION
- -----------------------
Total return figures for the Fund are neither fixed nor guaranteed, and a Fund's
principal is not insured. Performance quotations reflect historical information
and should not be considered representative of a Fund's performance for any
period in the future. Performance is a function of a number of factors which can
be expected to fluctuate.
The standard formula for calculating annualized yield for the CIGNA Money Market
Fund is as follows:
Y = V1 - Vo x 365
------- ---
Vo 7
Where Y = 7 day annualized yield.
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<PAGE>
Vo = the value of a hypothetical pre-existing account in the
Fund having a balance of one share at the beginning of a
stated seven-day period.
V1 = the value of such an account at the end of the stated
period.
V1 - Vo = base period return.
-------
Vo
The annualized yield for the CIGNA Money Market Fund (Institutional class) for
the 7 days ended December 31, 1997 was 5.30%.
The standard formula for calculating effective annualized yield for the CIGNA
Money Market Fund is as follows:
EY = [(Y+1)/365/7/] - 1
Where EY = effective annualized yield.
Y = base period return.
The effective annualized yield for CIGNA Money Market Fund (Institutional class)
for the 7 days ended December 31, 1997 was 5.44%.
For the purpose of the annualized yield and effective annualized yield, the net
change in the value of the hypothetical CIGNA Money Market Fund account reflects
the value of additional shares purchased with dividends from the original shares
and any such additional shares, and all fees charged (if any), other than
non-recurring account charges, to all shareholder accounts in proportion to the
length of the base period and the Fund's average account size, but does not
include realized gains and losses or unrealized appreciation and depreciation.
FINANCIAL STATEMENTS.
- --------------------
The following Financial Statements are incorporated by reference from the Annual
Report to Shareholders of the Fund for the year ended December 31, 1997 and
filed electronically with the Securities and Exchange Commission on Form N-30D
on March 10, 1998:
Investments In Securities, December 31, 1997
Statement of Assets and Liabilities, December 31, 1997
Statement of Operations, For the Period Ended December 31, 1997
Statement of Changes in Net Assets, For the Period Ended December 31, 1997
Statement of Changes in Net Assets, For the Year Ended December 31, 1996
Notes to Financial Statements
Report of Independent Accountants
Page 23
<PAGE>
REGISTRATION STATEMENT
ON
FORM N-1A
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS.
- -----------------
* a. Second Amended and Restated Master Trust Agreement of
Registrant dated July 28, 1998.
b. The Amended and Restated By-Laws of Registrant dated April
29, 1997, incorporated by reference to Post-Effective
Amendment No. 55 to Registrant's Registration Statement filed
electronically April 30, 1997.
c. Relative to the rights of shareholders, Article IV and
Article V of Registrant's Second Amended and Restated Master
Trust Agreement dated July 28, 1998 as hereinbefore filed as
Exhibit a.
c. (i) Relative to the rights of shareholders, Article 9 of the
Amended and Restated By-Laws of Registrant dated April 29,
1997 as hereinbefore incorporated by reference in Exhibit b.
d. The First Amended and Restated Master Investment Advisory
Agreement dated as of April 30, 1996 between CIGNA Funds
Group and CIGNA Investments, Inc., incorporated by reference
to Post-Effective Amendment No. 54 to Registrant's
Registration Statement filed electronically June 28, 1996.
e. The Distribution Agreement dated as of December 1, 1997
between CIGNA Funds Group and CIGNA Financial Services, Inc.,
incorporated by reference to Post-Effective Amendment No. 56
to Registrant's Registration Statement filed electronically
April 30, 1998.
f. None.
g. The Custodian Contract dated as of October 15, 1987 between
CIGNA Annuity Funds Group (n/k/a CIGNA Funds Group) and State
Street Bank and Trust Company, incorporated by reference to
Post-Effective Amendment No. 56 to Registrant's Registration
Statement filed electronically April 30, 1998.
g. (i) Side Letter to the Custodian Contract between CIGNA Funds
Group and State Street Bank and Trust Company dated as of
April 30, 1996, incorporated by reference to Post-Effective
Amendment No. 54 to Registrant's Registration Statement filed
electronically June 28, 1996.
h. The Transfer Agency and Service Agreement dated as of July
30, 1985 between CIGNA Annuity Funds Group (n/k/a CIGNA Funds
Group) and State Street Bank and Trust Company, incorporated
by reference to Post-Effective Amendment No. 56 to
Registrant's Registration Statement filed electronically
April 30, 1998.
h. (i) Side Letter to the Transfer Agency and Service Agreement
between CIGNA Funds Group and State Street Bank and Trust
Company dated as of April 30, 1996, incorporated by reference
to Post-Effective Amendment No. 54 to Registrant's
Registration Statement filed electronically June 28, 1996.
h. (ii) The Agreement For Use Of The Term "CIGNA" dated April 30,
1985 between CIGNA Annuity Funds Group (n/k/a CIGNA Funds
Group) and CIGNA Corporation, incorporated by reference to
Post-Effective Amendment No. 56 to Registrant's Registration
Statement filed electronically April 30, 1998.
C-1
<PAGE>
h. (iii) Form of Trustees' Deferred Fee Agreement, incorporated by
reference to Post-Effective Amendment No. 53 to Registrant's
Registration Statement filed electronically April 15, 1996.
h. (iv) Form of Shareholder Services Plan between CIGNA Funds Group
and CIGNA Financial Services, Inc., incorporated by reference
to Post-Effective Amendment No. 56 to Registrant's
Registration Statement filed electronically April 30, 1998.
* h. (v) Form of Shareholder Services Plan of The Retail Service Class
of CIGNA Money Market Fund (A Series of CIGNA Funds Group).
* h. (vi) Form of Sub-Accounting Services Agreement For The Retail
Service Class of CIGNA Money Market Fund (A Series of CIGNA
Funds Group).
i. Consent of Counsel, to be filed by amendment.
j. Consent of PricewaterhouseCoopers LLP, to be filed by
amendment.
k. None.
l. None.
* m. Form of Rule 12b-1 Plan of CIGNA Money Market Fund (A Series
of CIGNA Funds Group).
n. Financial Data Schedule, to be filed by amendment.
o. The Dual Class Plan Pursuant to Rule 18f-3 for CIGNA Funds
Group dated as of April 30, 1996, incorporated by reference
to Post-Effective Amendment No. 54 to Registrant's
Registration Statement filed electronically June 28, 1996.
* o. (i) Form of Amendment to Dual Class Plan Pursuant to Rule 18f-3
for CIGNA Funds Group.
* o. (ii) Form of Multi Class Plan Pursuant to Rule 18f-3 for CIGNA
Money Market Fund.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
- --------------------------------------------------------------------
No person is directly or indirectly controlled by or under common control with
CIGNA Funds Group.
ITEM 25. INDEMNIFICATION.
- ------------------------
The Second Amended and Restated Master Trust Agreement, dated July 28, 1998 (the
"Master Trust Agreement"), provides, among other things, for the indemnification
out of Registrant's assets (or the assets of a series of Registrant where
applicable) of the Trustees and officers of Registrant against all liabilities
incurred by them in such capacity, except for liability by reason of wilful
misfeasance, bad faith, gross negligence or reckless disregard of their duties.
Trustees may consult counsel or other experts concerning the meaning and
operation of the Master Trust Agreement, and may rely upon the books and records
of Registrant. Trustees are not liable for errors of judgment, mistakes of fact
or law, or for the negligence of other Trustees or Registrant's officers or
agents.
- ----------------------
* Filed Herewith.
C-2
<PAGE>
Trustees are not required to give a bond or other security for the performance
of their duties. Payments in compromise of any action brought against a Trustee
or officer may be paid by Registrant if approved by either a majority of
disinterested Trustees or by independent legal counsel. The right of
indemnification under the Master Trust Agreement is not exclusive of any other
rights to which the Trustees or officers may be entitled.
The Master Trust Agreement also provides that shareholders shall be indemnified
and held harmless by the applicable series of Registrant with respect to actions
brought against them in their capacity as shareholders. Also, the Master Trust
Agreement provides that creditors of a series of Registrant may look only to the
assets of that series for payment; and neither shareholders nor Trustees shall
be personally liable therefor. All instruments executed on behalf of Registrant
are required to contain a statement to the effect of the foregoing.
CIGNA Investments, Inc., Registrant and other investment companies managed by
CIGNA Investments, Inc., their officers, trustees, directors and employees (the
"Insured Parties") are insured under an Investment Management Errors and
Omissions Insurance Policy in the amount of $10,000,000 offered by Lloyd's
Insurance Company, an affiliate of Lloyd's of London, on a joint policy basis
with CIGNA Investments, Inc. and CIGNA International Investment Advisors, Ltd.
In addition, Registrant and other investment companies managed by CIGNA
Investments, Inc. and CIGNA International Investment Advisors, Ltd. are insured
under a Lloyd's Insurance Company Investment Company Blanket Bond with a stated
maximum coverage of $10,000,000. Premiums and policy benefits are allocated
among participating companies pursuant to Rule 17g-1(d) under the Investment
Company Act of 1940, as amended.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
- -----------------------------------------------------------------
As of the date hereof, CIGNA Investments, Inc. ("CII") serves as investment
adviser to CIGNA Funds Group, to CIGNA Institutional Funds Group, to CIGNA
Variable Products Group and their series of shares and to CIGNA High Income
Shares (CIGNA Funds Group, CIGNA High Income Shares, CIGNA Institutional Funds
Group and CIGNA Variable Products Group, collectively known as the "Trusts") and
to INA Investment Securities, Inc. ("IIS"), all of which (except for IIS and
CIGNA High Income Shares) are open-end investment companies, and to certain
other clients, most of which are affiliated with CIGNA Corporation. For a
description of the business of CII, see its most recent Form ADV (File No.
801-18094) filed with the Securities and Exchange Commission. The principal
address of each of the foregoing companies is as follows:
CII - 900 Cottage Grove Road, Bloomfield, Connecticut 06002
The Trusts and each of their series of shares - 100 Front Street, Suite
300, Worcester, Massachusetts 01601
IIS - Two Liberty Place, 1601 Chestnut Street, Philadelphia, Pennsylvania
19192
Names of Officers and Directors Positions with the Adviser and
of the Investment Adviser Other Substantial Business Connections
- ------------------------------- --------------------------------------
Harold W. Albert Director and Counsel, CII; Director, CIGNA
International Investment Advisors, Ltd.**;
Chief Counsel, CIGNA Investment Management, a
division of CIGNA Corporation*; Counsel,
CIGNA Investment Advisory Company, Inc.*;
Director, Senior Vice President and Chief
Counsel, CIGNA Investment Group, Inc.*;
Director, Global Portfolio Strategies, Inc.*
C-3
<PAGE>
Robert W. Burgess Director and Senior Vice President, CII;
Director, CIGNA International Investment
Advisors, Ltd.**; Chief Financial Officer,
CIGNA Investment Management, a division of
CIGNA Corporation*; Director and Senior Vice
President, CIGNA Investment Group, Inc.*;
Director, CIGNA Financial Futures, Inc.* and
Global Portfolio Strategies, Inc.*
Thomas C. Jones President and Chief Investment Officer, CIGNA
Investment Management, a division of CIGNA
Corporation*; President and Director, CII and
CIGNA Investment Group, Inc.*; President,
CIGNA Investment Advisory Company, Inc.*;
Director, CIGNA International Investment
Advisors, Ltd.**, CIGNA Financial Futures,
Inc.* and Global Portfolio Strategies, Inc.*;
Trustee, the Trusts; Director, IIS.
Mary Louise Casey Senior Managing Director, CII and CIGNA
Investment Advisory Company, Inc.*
Richard H. Forde Senior Managing Director, CII and CIGNA
Investment Advisory Company, Inc.*;
President, Senior Managing Director and
Director, CIGNA International Investment
Advisors, Ltd.**; Vice President, CIGNA
Institutional Funds Group.
Malcolm S. Smith Senior Managing Director, CII; Director and
Senior Managing Director, CIGNA Investment
Advisory Company, Inc.*
Philip J. Ward Senior Managing Director, CII; Director and
Senior Managing Director, CIGNA Investment
Advisory Company, Inc.*
Kevin D. Barry Managing Director, CII.
Julia B. Bazenas Managing Director, CII.
Marguerite A. Boslaugh Managing Director, CII.
Susan B. Bosworth Managing Director, CII.
Thomas J. Bowen Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*
William C. Carlson Managing Director, CII; previously Vice
President, CII.
Antonio M. Caxide Managing Director, CII and CIIA**; previously
Vice President, CII and CIIA.**
Richard H. Chase Managing Director, CII.
Rosemary C. Clarke Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*
Rosemary S. Cleaves Managing Director, CII; President and
Director, Global Portfolio Strategies, Inc.*;
previously Vice President, CII.
C-4
<PAGE>
Dorothy Cunningham Managing Director, CII; previously Vice
President, CII.
Robert F. DeLucia Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*; Director, Global
Portfolio Strategies, Inc.*
Mark V. DePucchio Managing Director, CII; previously Vice
President, CII.
Michael Q. Doyle Managing Director, CII; previously Vice
President, CII.
Lawrence A. Drake Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*
Denise T. Duffee Managing Director, CII.
John G. Eisele Managing Director, CII.
Robert Fair Managing Director, CII.
John P. Feeney Managing Director, CII.
Thomas R. Foley Managing Director, CII; previously Vice
President, CII.
Keith A. Gollenberg Managing Director, CII; previously Vice
President, CII.
Maurice A. Gordon Managing Director, CII; previously Vice
President, CII.
William J. Grady Managing Director, CII.
Debra J. Height Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*; previously Vice
President, CII and CIGNA Investment Advisory
Company, Inc.*
David R. Johnson Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*
Richard H. Kupchunos Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*
James R. Kuzemchak Managing Director, CII.
Edward Lewis Managing Director, CII.
Timothy J. Lord Managing Director, CII; Vice President, CIGNA
Financial Futures, Inc.*
Richard B. McGauley Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*
Bret E. Meck Managing Director, CII.
Stephen J. Olstein Managing Director, CII.
C-5
<PAGE>
Stephen A. Osborn Managing Director, CII.
Alan C. Petersen Managing Director, CII; Vice President, CIGNA
High Income Shares.
Anthony J. Pierson Managing Director, CII.
Leon Pouncy Managing Director, CII.
Donald F. Rieger, Jr. Managing Director, CII.
Peter F. Roby Managing Director, CII; previously Vice
President, CII.
Frank Sataline, Jr. Managing Director, CII; previously Vice
President, CII.
James G. Schelling Managing Director, CII.
John A. Shaw Managing Director, CII; previously Vice
President, CII.
Joseph W. Springman Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*
Susan S. Sullivan Managing Director, CII.
William A. Taylor Managing Director, CII.
George Varga Managing Director, CII.
Victor J. Visockis, Jr. Managing Director, CII; previously Vice
President, CII.
Henry C. Wagner, III Managing Director, CII and CIGNA Investment
Advisory Company, Inc.*; President, CIGNA
Financial Futures, Inc.*; previously Vice
President, CII.
Deborah B. Wiacek Managing Director, CII; previously Vice
President, CII.
Stephen H. Wilson Managing Director, CII.
Victor E. Saliterman Senior Vice President, CII.
Jean M. Anderson Vice President, CII.
Thomas P. Au Vice President, CII.
Andrew Brown Vice President, CII.
Timothy C. Burns Vice president, CII and Global Portfolio
Strategies, Inc.*
John D. Carey Vice President, CII.
David M. Cass Vice President, CII.
C-6
<PAGE>
R. Thomas Clemmenson Vice President, CII.
Maryanne P. DePreaux Vice President, CII.
Eric C. DiMiceli Vice President, CII.
Kim L. DiPietro Vice President, CII.
Celia R. Dondes Vice President, CII.
Ronald J. Dupont Vice President, CII and CIGNA Investment
Advisory Company, Inc.*
Mark W. Everette Vice President, CII.
Daniel E. Feder Vice President, CII.
Richard L. Fletcher Vice President, CII.
Jonathan S. Frankel Vice President, CII.
Ivy B. Freedman Vice President, CII.
Susan M. Grayson Vice President, CII and Global Portfolio
Strategies, Inc.*; previously Director,
Global Portfolio Strategies, Inc.*
Dennis P. Hannigan Vice President, CII.
Amy F. Hatfield Vice President, CII.
John Hurley Vice President, CII.
Chuel D. Hwang Vice President, CII.
William H. Jefferis Vice president, CII.
Edward B. Johns Vice President, CII.
Thomas W. Johnson Vice President, CII.
Thomas J. Keene Vice President, CII.
Joseph R. Kennedy Vice President, CII.
Peter K. Kofoed Vice President, CII.
Mark S. Korinek Vice President, CII.
James R. Lagasse Vice President, CII.
Mary S. Law Vice President, CII.
C-7
<PAGE>
Margaret Y. Leong Vice President, CII.
Paul T. Martin Vice President, CII.
Daniel McDonough Vice President, CII, CIGNA International
Investment Advisors, Ltd.** and Global
Portfolio Strategies, Inc.*
Adrienne Milics Vice President, CII.
Dean M. Molinaro Vice President, CII
Linda L. Morel Vice President, CII.
Alpha O. Nicholson, III Vice President, CII; Senior Counsel, CIGNA
companies*.
Ann Marie O'Rourke Vice President, CII.
Pamela S. Peck Vice President, CII.
Elisabeth A. Perenick Vice President, CII.
Scott S. Piccone Vice President, CII.
Elisabeth Piker Vice President, CII.
Thomas J. Podgorski Vice President, CII.
Suresh Raghaven Vice President, CII.
Michael J. Riccio Vice President, CII.
Timothy F. Roberts Vice President and Compliance Officer, CII;
Vice President, International Finance/Global
Compliance, CIGNA Investment Management, a
division of CIGNA Corporation*; Vice
President - Finance and Compliance Officer,
CIGNA International Investment Advisors,
Ltd.**; Compliance Officer, CIGNA Investment
Advisory Company, Inc.*
Alexander Rybchinsky Vice President, CII.
Annette Sanderson Vice President, CII.
Kevin W. Schmitt Vice President, CII.
John R. Schumann Vice President, CII.
Thomas P. Shea, III Vice President, CII.
Philip Spak Vice President, CII.
C-8
<PAGE>
Marie E. Swartzwelder Vice President, CII and Global Portfolio
Strategies, Inc.*; previously Vice President,
Global Portfolio Strategies, Inc.*
Carlton C. Taylor Vice President, CII.
Patrick H. Thompson Vice President, CII.
Ruth D. Van Winkle Vice President, CII and CIGNA Investment
Advisory Company, Inc.*
Michael J. Walker Vice President, CII.
Carey A. White Vice President, CII.
William S. Woodsome Vice President, CII.
Alfred A. Bingham III Assistant Vice President, CII; Vice President
and Treasurer, the Trusts and IIS.
David C. Kopp Secretary, CII, CIGNA Investment Advisory
Company, Inc.*, CIGNA International
Investment Advisors, Ltd.**, CIGNA Investment
Group, Inc.*, Global Portfolio Strategies,
Inc.* and CIGNA Financial Services, Inc.*;
Assistant Corporate Secretary, CIGNA
Corporation*; Corporate Secretary,
Connecticut General Life Insurance Company*;
Assistant General Counsel, CIGNA companies*.
ITEM 27. PRINCIPAL UNDERWRITERS.
- --------------------------------
(a) CIGNA Financial Services, Inc. is the principal underwriter for CIGNA Funds
Group and CIGNA Institutional Funds Group and for their series.
(b) The officers and Directors of CIGNA Financial Services, Inc. as of September
17, 1998 are:
Name and Principal Positions and Offices Positions and Offices
Business Address* With Underwriter with Registrant
----------------- ---------------- ---------------
Willard S. Bashan Member Board of Directors --------
David J. Castellani Member Board of Directors --------
Byron D. Oliver Member Board of Directors --------
Mark A. Parsons Member Board of Directors --------
Kenneth A. Pouch, Jr. Member Board of Directors --------
David C. Scheinerman Member Board of Directors --------
Willard S. Bashan President --------
David J. Castellani Vice President --------
Walter R. Costenbader Vice President, Treasurer,
Chief Financial Officer
and Compliance Officer --------
Mark A. Parsons Vice President and --------
Chief Counsel
Julia M. Kozlowski Assistant Vice President --------
Robin A. Leavitt Assistant Vice President --------
David C. Kopp Secretary --------
C-9
<PAGE>
Thomas L. Pierce Assistant Secretary --------
David M. Porcello Assistant Secretary --------
Margaret I. Whiteman Assistant Secretary --------
Pamela S. Williams Assistant Secretary --------
VACANT Assistant Treasurer --------
Joy B. Erickson Assistant Compliance Officer --------
(c) Not Applicable
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
- ------------------------------------------
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 (15 U.S.C. 80a-30(a)) and the Rules (17 CFR
270.31a-1 to 31a-3) promulgated thereunder and records relating to shareholders
are maintained by State Street Bank and Trust Company, Boston, Massachusetts.
Registrant's corporate records and financial records are maintained c/o CIGNA
Investments, Inc., 900 Cottage Grove Road, Bloomfield, CT 06002.
ITEM 29. MANAGEMENT SERVICES.
- -----------------------------
None.
ITEM 30. UNDERTAKINGS.
- ----------------------
Not Applicable.
________________________
* 900 Cottage Grove Road, Bloomfield, CT
** Park House, 16 Finsbury Circus, London, England
C-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, Registrant, CIGNA Funds Group has duly caused this
Amendment No. 57 to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized in the City of Bloomfield, and State of
Connecticut on the 2nd day of October, 1998.
CIGNA Funds Group
R. Bruce Albro
Chairman of the Board of Trustees
and President
By: /s/ Jeffrey S. Winer
-----------------------------------
Jeffrey S. Winer
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Amendment No.
57 to the Registration Statement has been signed below by the following persons
in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
R. Bruce Albro Chairman of October 2, 1998.
the Board of
Trustees and
President (principal
By: /s/ Jeffrey S. Winer executive officer)
-------------------------------
Jeffrey S. Winer
Attorney-in-Fact
/s/ Alfred A. Bingham III
------------------------------- Treasurer October 2, 1998.
Alfred A. Bingham III (principal
financial officer
and principal
accounting officer
This Amendment to the Registration Statement has also been signed below by
Jeffrey S. Winer, Attorney-in-Fact, on behalf of the following Trustees on the
date indicated, such Trustees being all of the Trustees currently holding the
office of Trustee of Registrant.
R. Bruce Albro Thomas C. Jones
Hugh R. Beath Paul J. McDonald
Russell H. Jones
By: /s/ Jeffrey S. Winer
------------------------------- October 2, 1998.
Jeffrey S. Winer
C-11
<PAGE>
SECURITIES ACT FILE NO. 2-29020
INVESTMENT COMPANY ACT FILE NO. 811-1646
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment
Post-Effective Amendment No. 57 |X|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 57 |X|
CIGNA FUNDS GROUP
(Exact Name of Registrant as Specified in Charter)
100 FRONT STREET, SUITE 300, WORCESTER, MA 01601
(Address of Principal Executive Office)
EXHIBITS
<PAGE>
EXHIBIT INDEX
a. Second Amended and Restated Master Trust Agreement of
Registrant dated July 28, 1998.
h. (v) Form of Shareholder Services Plan of the Retail Service Class
of CIGNA Money Market Fund (A Series of CIGNA Funds Group).
h. (vi) Form of Sub-Accounting Services Agreement For the Retail
Service Class of CIGNA Money Market Fund (A Series of CIGNA
Funds Group).
m. Form of Rule 12b-1 Plan of CIGNA Money Market Fund (A Series
of CIGNA Funds Group).
o. (i) Form of Amendment to Dual Class Plan Pursuant to Rule 18f-3
For CIGNA Funds Group.
o. (ii) Form of Multi Class Plan Pursuant to Rule 18f-3 for CIGNA
Money Market Fund.
<PAGE>
Exhibit a.
SECOND AMENDED AND RESTATED CIGNA FUNDS GROUP
MASTER TRUST AGREEMENT
JULY 28, 1998
(C)1995 GOODWIN, PROCTER & HOAR
ALL RIGHTS RESERVED
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I - NAME, PRINCIPAL BUSINESS OFFICE AND DEFINITIONS.................. 1
Section 1.1 Name.............................................. 1
Section 1.2 Principal Business Office...........................1
Section 1.3 Definitions....................................... 1
(a) "By-Laws"......................................... 1
(b) "class"........................................... 1
(c) "Commission"...................................... 1
(d) "Declaration of Trust"............................ 2
(e) "1940 Act"........................................ 2
(f) "securities" or "security"........................ 2
(g) "Shareholder"..................................... 2
(h) "Shares".......................................... 2
(i) "Sub-Trust" or "Series"........................... 2
(j) "Trust"........................................... 2
(k) "Trustees"........................................ 2
ARTICLE II - PURPOSE OF TRUST................................................ 2
ARTICLE III - THE TRUSTEES................................................... 2
Section 3.1 Number, Designation, Election, Term, etc.......... 2
(a) Trustees.......................................... 2
(b) Number............................................ 2
(c) Election and Term................................. 3
(d) Resignation and Retirement........................ 3
(e) Removal........................................... 3
(f) Vacancies......................................... 3
(g) Effect of Death, Resignation, etc................. 3
(h) No Accounting..................................... 3
Section 3.2 Powers of Trustees................................ 4
(a) Investments....................................... 5
(b) Disposition of Assets............................. 5
(c) Ownership Powers.................................. 5
(d) Subscription...................................... 5
(e) Form of Holding................................... 5
(f) Reorganization, etc............................... 5
(g) Voting Trusts, etc................................ 5
(h) Compromise........................................ 5
(i) Partnerships, etc................................. 5
(j) Borrowing and Security............................ 5
(i)
<PAGE>
(k) Guarantees, etc................................... 6
(l) Insurance......................................... 6
(m) Pensions, etc..................................... 6
(n) Distribution Plans................................ 6
Section 3.3 Certain Contracts................................. 6
(a) Advisory.......................................... 7
(b) Administration.................................... 7
(c) Distribution...................................... 7
(d) Custodian and Depository.......................... 7
(e) Transfer and Dividend Disbursing Agency........... 7
(f) Shareholder Servicing............................. 7
(g) Accounting........................................ 7
Section 3.4 Payment of Trust Expenses and Compensation of
Trustees.......................................... 8
Section 3.5 Ownership of Assets of the Trust.................. 8
ARTICLE IV - SHARES........................................................... 8
Section 4.1 Description of Shares.............................. 8
Section 4.2 Establishment and Designation of Sub-Trusts and
Classes........................................... 10
(a) Assets Belonging to Sub-Trusts.................... 10
(b) Liabilities Belonging to Sub-Trusts............... 11
(c) Dividends......................................... 11
(d) Liquidation....................................... 12
(e) Voting............................................ 12
(f) Redemption by Shareholder......................... 12
(g) Redemption by Trust............................... 13
(h) Net Asset Value................................... 13
(i) Transfer.......................................... 13
(j) Equality.......................................... 13
(k) Fractions......................................... 14
(l) Conversion Rights................................. 14
(m) Class Differences................................. 14
(n) Termination of Sales...............................14
Section 4.3 Ownership of Shares............................... 14
Section 4.4 Investments in the Trust.......................... 14
Section 4.5 No Pre-emptive Rights............................. 14
Section 4.6 Status of Shares and Limitation of Personal
Liability......................................... 14
Section 4.7 No Appraisal Rights............................... 15
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS......................... 15
Section 5.1 Voting Powers..................................... 15
Section 5.2 Meetings.......................................... 15
Section 5.3 Record Dates...................................... 16
Section 5.4 Quorum and Required Vote.......................... 16
Section 5.5 Action by Written Consent......................... 16
Section 5.6 Inspection of Records............................. 17
(ii)
<PAGE>
Section 5.7 Additional Provisions............................. 17
Section 5.8 Shareholder Communications........................ 17
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION........................ 17
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice............................................ 17
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond
or Surety......................................... 18
Section 6.3 Indemnification of Shareholders................... 18
Section 6.4 Indemnification of Trustees, Officers, etc........ 18
Section 6.5 Compromise Payment................................ 19
Section 6.6 Indemnification Not Exclusive, etc................ 19
Section 6.7 Liability of Third Persons Dealing with Trustees.. 20
ARTICLE VII - MISCELLANEOUS.................................................. 20
Section 7.1 Duration and Termination of Trust................. 20
Section 7.2 Reorganization.................................... 20
Section 7.3 Amendments........................................ 21
Section 7.4 Filing of Copies; References; Headings............ 21
Section 7.5 Applicable Law.................................... 21
Section 7.6 Name of Trust..................................... 22
Section 7.7 Integration....................................... 22
(iii)
<PAGE>
SECOND AMENDED AND RESTATED MASTER TRUST AGREEMENT
SECOND AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST made at
Springfield, Massachusetts this 28th day of July, 1998, by the Trustees
hereunder, and by the holders of shares of beneficial interest to be issued
hereunder as hereinafter provided, which amends and restates the Master Trust
Agreement dated as of March 1, 1996, as amended.
W I T N E S S E T H:
WHEREAS the Trustees of CIGNA Funds Group (the "Trust") desire to amend
the First Amended And Restated Master Trust Agreement dated as of March 1, 1996,
as amended, (the "Master Trust Agreement") to change the address of the
principal business office of the Trust and to make certain other changes as set
forth herein.
NOW, THEREFORE, the Trustees hereby amend and restate the Master Trust
Agreement in its entirety by adopting this Second Amended And Restated Master
Trust Agreement, which shall supersede such Master Trust Agreement and be the
governing instrument of the Trust from and after the date hereof, and declare
that they will hold all cash, securities and other assets which they may from
time to time acquire in any manner as Trustees hereunder IN TRUST to manage and
dispose of the same upon the following terms and conditions for the benefit of
the holders from time to time of shares of beneficial interest in this Trust and
the Sub-Trusts created hereunder as hereinafter set forth.
ARTICLE I - NAME, PRINCIPAL BUSINESS OFFICE AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "CIGNA Funds Group" and
----
the Trustees shall conduct the business of the Trust under that name or any
other name or names as they may from time to time determine.
Section 1.2 Principal Business Office. The principal business office of
-------------------------
the Trust shall be located at 100 Front Street, Suite 300, Worcester,
Massachusetts 01601 or at such other location as the Trustees may from time to
time determine. In the event that the Trust changes the address of its principal
business office, the Trustees shall notify in the appropriate manner the
Secretary of The Commonwealth of Massachusetts and the Clerk of the city where
the Trust is to be located, as well as any other governmental office where such
filing may from time to time be required.
Section 1.3 Definitions. Whenever used herein, unless otherwise
-----------
required by the context or specifically provided:
(a) "By-Laws" shall mean the By-Laws of the Trust as
amended from time to time;
(b) "class" refers to any class of Shares of any Series
or Sub-Trust established and designated under or in accordance with the
provisions of Article IV;
(c) "Commission" shall have the meaning given it in the
1940 Act;
<PAGE>
(d) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to time;
(e) "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from time to time;
(f) "securities" or "security" shall mean and include, but
shall not be limited to, those securities described in Section 2(a)(36) of the
1940 Act;
(g) "Shareholder" means a record owner of Shares;
(h) "Shares" refers to the transferable units of interest into
which the beneficial interest in the Trust and each Sub-Trust of the Trust
and/or any class of any Sub-Trust (as the context may require) shall be divided
from time to time;
(i) "Sub-Trust" or "Series" refers to a series of Shares
established and designated under or in accordance with the provisions of Article
IV;
(j) "Trust" refers to the Massachusetts business trust
established by this Declaration of Trust, as amended from time to time,
inclusive of each and every Sub-Trust established hereunder; and
(k) "Trustees" refers to the Trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III.
ARTICLE II - PURPOSE OF TRUST
---------- ----------------
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
ARTICLE III - THE TRUSTEES
----------- ------------
Section 3.1 Number, Designation, Election, Term, etc.
-----------------------------------------
(a) Trustees. The initial Trustees hereof and of each
--------
Sub-Trust hereunder, as of the date of this Second Amended And Restated Master
Trust Agreement, shall be R. Bruce Albro, Hugh R. Beath, Russell H. Jones,
Thomas C. Jones and Paul J. McDonald.
(b) Number. The Trustees serving as such, whether named above
------
or hereafter becoming Trustees, may increase or decrease the number of Trustees
to a number other than the number theretofore determined. No decrease in the
number of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of such Trustee's term, but the number of Trustees may
be decreased in conjunction with the removal of a Trustee pursuant to subsection
(e) of this Section 3.1.
2
<PAGE>
(c) Election and Term. Trustees in addition to those named
-----------------
herein may become such by election by Shareholders or the Trustees in office
pursuant to Section 3.1(f). Each Trustee, whether named above or hereafter
becoming a Trustee, shall serve as a Trustee of the Trust and of each Sub-Trust
hereunder during the lifetime of this Trust and until its termination as
hereinafter provided except as such Trustee sooner dies, resigns, retires or is
removed. Subject to Section 16(a) of the 1940 Act, the Trustees may elect their
own successors and may, pursuant to Section 3.1(f) hereof, appoint Trustees to
fill vacancies.
(d) Resignation and Retirement. Any Trustee may resign or
--------------------------
retire as a Trustee, by written instrument signed by such Trustee and delivered
to the other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument and shall be effective as to the Trust and each
Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause
-------
at any time: (i) by written instrument, signed by at least two-thirds of the
number of Trustees in office immediately prior to such removal, specifying the
date upon which such removal shall become effective; or (ii) by vote of
Shareholders holding not less than two-thirds of the Shares then outstanding,
cast in person or by proxy at any meeting called for the purpose; or (iii) by a
written declaration signed by Shareholders holding not less than two-thirds of
the Shares then outstanding and filed with the Trust's custodian. Any such
removal shall be effective as to the Trust and each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting
---------
from any reason, including without limitation the death, resignation,
retirement, removal or incapacity of any of the Trustees, or resulting from an
increase in the number of Trustees by the other Trustees may (but so long as
there are at least two remaining Trustees, need not unless required by the 1940
Act) be filled by a majority of the remaining Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, through the appointment in writing
of such other person as such remaining Trustees in their discretion shall
determine and such appointment shall be effective upon the written acceptance of
the person named therein to serve as a Trustee and agreement by such person to
be bound by the provisions of this Declaration of Trust, except that any such
appointment in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees to be effective at a later date
shall become effective only at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted such appointment and shall have agreed in writing
to be bound by this Declaration of Trust and the appointment is effective, the
Trust estate shall vest in the new Trustee, together with the continuing
Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
----------------------------------
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or any Sub-Trust hereunder or to revoke
or terminate any existing agency or contract created or entered into pursuant to
the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940
-------------
Act or under circumstances which would justify removal for cause, no person
ceasing to be a Trustee as a result of death, resignation, retirement, removal
or incapacity (nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
3
<PAGE>
Section 3.2 Powers of Trustees. Subject to the provisions of this
------------------
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. The Trustees in all instances
shall act as principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any and all
acts and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall not be bound or limited by present or future laws or
customs with regard to investment by trustees or fiduciaries, but shall have
full authority and absolute power and control over the assets of the Trust and
the business of the Trust to the same extent as if the Trustees were the sole
owners of the assets of the Trust and the business in their own right, including
such authority, power and control to do all acts and things as they, in their
uncontrolled discretion, shall deem proper to accomplish the purposes of this
Trust. Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business and affairs of the Trust and may amend and repeal them to the extent
that such By-Laws do not reserve that right to the Shareholders; they may sue or
be sued in the name of the Trust; they may from time to time in accordance with
the provisions of Section 4.1 hereof establish Sub-Trusts, each such Sub-Trust
to operate as a separate and distinct investment medium and with separately
defined investment objectives and policies and distinct investment purposes;
they may from time to time in accordance with the provisions of Section 4.1
hereof establish classes of Shares of any Series or Sub-Trust or divide the
Shares of any Series or Sub-Trust into classes; they may as they consider
appropriate elect and remove officers and appoint and terminate agents and
consultants and hire and terminate employees, any one or more of the foregoing
of whom may be a Trustee, and may provide for the compensation of all of the
foregoing; they may appoint from their own number, and terminate, any one or
more committees consisting of two or more Trustees, including without implied
limitation an executive committee, which may, when the Trustees are not in
session and subject to the 1940 Act, exercise some or all of the power and
authority of the Trustees as the Trustees may determine; in accordance with
Section 3.3 they may employ one or more advisers, administrators, depositories
and custodians and may authorize any depository or custodian to employ
subcustodians or agents and to deposit all or any part of such assets in a
system or systems for the central handling of securities and debt instruments,
retain transfer, dividend, accounting or Shareholder servicing agents or any of
the foregoing, provide for the distribution of Shares by the Trust through one
or more distributors, principal underwriters or otherwise, and set record dates
or times for the determination of Shareholders or various of them with respect
to various matters; they may compensate or provide for the compensation of the
Trustees, officers, advisers, administrators, custodians, other agents,
consultants and employees of the Trust or the Trustees on such terms as they
deem appropriate; and in general they may delegate to any officer of the Trust,
to any committee of the Trustees and to any employee, adviser, administrator,
distributor, depository, custodian, transfer and dividend disbursing agent, or
any other agent or consultant of the Trust such authority, powers, functions and
duties as they consider desirable or appropriate for the conduct of the business
and affairs of the Trust, including without implied limitation, the power and
authority to act in the name of the Trust and any Sub-Trust and of the Trustees,
to sign documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust established
hereunder:
4
<PAGE>
(a) Investments. To invest and reinvest cash and other
-----------
property, and to hold cash or other property uninvested without in any event
being bound or limited by any present or future law or custom in regard to
investments by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
---------------------
mortgage, hypothecate, write options on and lease any or all of the assets of
the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any
----------------
rights of ownership, with respect to stock or other securities, debt instruments
or property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of
------------
subscription or otherwise which in any manner arise out of ownership of
securities or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
---------------
property in a form not indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of the Trust or of any
Sub-Trust or in the name of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any
-------------------
plan for the reorganization, consolidation or merger of any corporation or
issuer, any security or debt instrument of which is or was held in the Trust; to
consent to any contract, lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with respect to any
security or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
------------------
securities or debt instruments in acting through a committee, depositary, voting
trustee or otherwise, and in that connection to deposit any security or debt
instrument with, or transfer any security or debt instrument to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security or debt instrument (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to agree to
pay, and to pay, such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
----------
claims in favor of or against the Trust or any Sub-Trust or any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general
-----------------
or limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage
----------------------
and pledge the assets of the Trust or any part thereof to secure obligations
arising in connection with such borrowing;
5
<PAGE>
(k) Guarantees, etc. To endorse or guarantee the payment of
---------------
any notes or other obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof; and to mortgage
and pledge the Trust property or any part thereof to secure any of or all such
obligations;
(l) Insurance. To purchase and pay for entirely out of Trust
---------
property such insurance and/or bonding as they may deem necessary or appropriate
for the conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions and
principal on its portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, consultants, investment
advisers, managers, administrators, distributors, principal underwriters, or
independent contractors, or any thereof (or any person connected therewith), of
the Trust individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or position,
or by reason of any action alleged to have been taken or omitted by any such
person in any such capacity, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability; and
(m) Pensions, etc. To pay pensions for faithful service, as
-------------
deemed appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust.
(n) Distribution Plans. To adopt on behalf of the Trust or any
------------------
Sub-Trust with respect to any class thereof a plan of distribution and related
agreements thereto pursuant to the terms of Rule 12b-1 of the 1940 Act and to
make payments from the assets of the Trust or the relevant Sub-Trust or
Sub-Trusts pursuant to said Rule 12b-1 Plan.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
on behalf of or with respect to the Trust or any Sub-Trust or class thereof may
be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least one-half of the Trustees then in office, being
present), within or without Massachusetts, including any meeting held by means
of a conference telephone or other communications equipment by means of which
all persons participating in the meeting can hear each other at the same time,
and participation by such means shall constitute presence in person at a
meeting, or by written consents of a majority of the Trustees then in office (or
such larger or different number as may be required by the 1940 Act or other
applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
-----------------
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or morecontracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations, or individuals
(a "Contracting Party"), to provide for the performance and assumption of some
or all of the following services, duties and responsibilities to, for or on
behalf of the Trust and/or any Sub-Trust, and/or the Trustees, and to provide
for the performance and
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assumption of such other services, duties and responsibilities in addition to
those set forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the
--------
Trustees and in conformity with the stated policy of the Trustees with respect
to the investments of the Trust or of the assets belonging to any Sub-Trust of
the Trust (as that phrase is defined in subsection (a) of Section 4.2), to
manage such investments and assets, make investment decisions with respect
thereto, and to place purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) Administration. Subject to the general supervision of the
--------------
Trustees and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust (including each class thereof), to
supervise all or any part of the operations of the Trust and each Sub-Trust, and
to provide all or any part of the administrative and clerical personnel, office
space and office equipment and services appropriate for the efficient
administration and operations of the Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and
------------
each Sub-Trust (including any classes thereof), to be principal underwriter of
such Shares, and/or to act as agent of the Trust and each Sub-Trust in the sale
of Shares and the acceptance or rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to
------------------------
maintain custody of the property of the Trust and each Sub-Trust and accounting
records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain
---------------------------------------
records of the ownership of outstanding Shares, the issuance and redemption and
the transfer thereof, and to disburse any dividends declared by the Trustees and
in accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to
---------------------
the relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
----------
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into sub-contractual arrangements relating to
any of the matters referred to in Sections 3.3(a) through (g) hereof.
The fact that:
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(i) any of the Shareholders, Trustees or officers of
the Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or distributor or
agent of or for any Contracting Party, or of or for any parent or
affiliate of any Contracting Party or that the Contracting Party or any
parent or affiliate thereof is a Shareholder or has an interest in the
Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract
providing for the rendering of any similar services to one or more
other corporations, trusts, associations, partnerships, limited
partnerships or other organizations, or have other business or
interests, shall not affect the validity of any contract for the
performance and assumption of services, duties and responsibilities to,
for or of the Trust or any Sub-Trust and/or the Trustees or disqualify
any Shareholder, Trustee or officer of the Trust from voting upon or
executing the same or create any liability or accountability to the
Trust, any Sub-Trust or its Shareholders, provided that in the case of
any relationship or interest referred to in the preceding clause (i) on
the part of any Trustee or officer of the Trust either (x) the material
facts as to such relationship or interest have been disclosed to or are
known by the Trustees not having any such relationship or interest and
the contract involved is approved in good faith by a majority of such
Trustees not having any such relationship or interest (even though such
unrelated or disinterested Trustees are less than a quorum of all of
the Trustees), (y) the material facts as to such relationship or
interest and as to the contract have been disclosed to or are known by
the Shareholders entitled to vote thereon and the contract involved is
specifically approved in good faith by vote of the Shareholders, or (z)
the specific contract involved is fair to the Trust as of the time it
is authorized, approved or ratified by the Trustees or by the
Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
------------------------------------------------------
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly out
of income, and to charge or allocate the same to, between or among such one or
more of the Sub-Trusts and/or one or more classes of Shares thereof that may be
established and designated pursuant to Article IV, as the Trustees deem fair,
all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, any Sub-Trust and/or any class of Shares thereof, or
in connection with the management thereof, including, but not limited to, the
Trustees' compensation and such expenses and charges for the services of the
Trust's officers, employees, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, Shareholder servicing agent, and
such other agents, consultants, and independent contractors and such other
expenses and charges as the Trustees may deem necessary or proper to incur.
Without limiting the generality of any other provision hereof, the Trustees
shall be entitled to reasonable compensation from the Trust for their services
as Trustees and may fix the amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
--------------------------------
assets of the Trust and of each Sub-Trust shall at all times be considered as
vested in the Trustees.
ARTICLE IV - SHARES
---------- ------
Section 4.1 Description of Shares. The beneficial interest in the Trust
---------------------
shall be divided into Shares, all without par value, but the Trustees shall have
the authority from time to time to issue Shares in one or more Series (each of
which Series of Shares shall represent the beneficial interest
8
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in a separate and distinct Sub-Trust of the Trust, including without limitation
each Sub-Trust specifically established and designated in Section 4.2), as they
deem necessary or desirable. For all purposes under this Declaration of Trust or
otherwise, including, without implied limitation, (i) with respect to the rights
of creditors and (ii) for purposes of interpreting the relevant rights of each
Sub-Trust and the Shareholders of each Sub-Trust, each Sub-Trust established
hereunder shall be deemed to be a separate trust. The Trustees shall have
exclusive power without the requirement of Shareholder approval to establish and
designate such separate and distinct Sub-Trusts, and to fix and determine the
relative rights and preferences as between the shares of the separate Sub-Trusts
as to right of redemption and the price, terms and manner of redemption, special
and relative rights as to dividends and other distributions and on liquidation,
sinking or purchase fund provisions, conversion rights, and conditions under
which the several Sub-Trusts shall have separate voting rights or no voting
rights.
In addition, the Trustees shall have exclusive power, without the
requirement of Shareholder approval, to issue classes of Shares of any Sub-Trust
or divide the Shares of any Sub-Trust into classes, each class having such
different dividend, liquidation, voting and other rights as the Trustees may
determine, and may establish and designate the specific classes of Shares of
each Sub-Trust. The fact that a Sub-Trust shall have initially been established
and designated without any specific establishment or designation of classes
(i.e., that all Shares of such Sub-Trust are initially of a single class), or
that a Sub-Trust shall have more than one established and designated class,
shall not limit the authority of the Trustees to establish and designate
separate classes, or one or more further classes, of said Sub-Trust without
approval of the holders of the initial class thereof, or previously established
and designated class or classes thereof.
The number of authorized Shares and the number of Shares of each
Sub-Trust or class thereof that may be issued is unlimited, and the Trustees may
issue Shares of any Sub-Trust or class thereof for such consideration and on
such terms as they may determine (or for no consideration if pursuant to a Share
dividend or split-up), all without action or approval of the Shareholders. All
Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued and
reacquired of any Sub-Trust or class thereof into one or more Sub-Trusts or
classes thereof that may be established and designated from time to time. The
Trustees may hold as treasury Shares, reissue for such consideration and on such
terms as they may determine, or cancel, at their discretion from time to time,
any Shares of any Sub-Trust or class thereof reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Sub-Trust or of any class of
Shares of any Sub-Trust in addition to those established and designated in
Section 4.2 shall be effective (i) upon the execution by a majority of the then
Trustees of an instrument setting forth such establishment and designation of
the relative rights and preferences of the Shares of such Sub-Trust or class,
(ii) upon the execution of an instrument in writing by an officer of the Trust
pursuant to the vote of a majority of the Trustees, or (iii) as otherwise
provided in either such instrument. At any time that there are no Shares
outstanding of any particular Sub-Trust or class previously established and
designated, the
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Trustees may by an instrument executed by a majority of their number (or by an
instrument executed by an officer of the Trust pursuant to the vote of a
majority of the Trustees) abolish that Sub-Trust or class and the establishment
and designation thereof. Each instrument establishing and designating any
Sub-Trust shall have the status of an amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust (including any classes thereof) of the Trust to the same
extent as if such person were not a Trustee, officer or other agent of the
Trust; and the Trust may issue and sell or cause to be issued and sold and may
purchase Shares of any Sub-Trust (including any classes thereof) from any such
person or any such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Sub-Trust (including any classes thereof) generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without
-------------------------------------------
limiting the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Sub-Trusts, the Trustees hereby establish and designate
ten Sub-Trusts: CIGNA Income Fund, CIGNA Money Market Fund, CIGNA Developed
Markets Stock Fund, CIGNA Emerging Markets Stock Fund, CIGNA Global Bond Fund,
CIGNA Government Obligations Cash Fund, CIGNA Government Securities Fund, CIGNA
High Yield Fund, CIGNA S&P 500 Index Fund and CIGNA Treasury Obligations Cash
Fund, and the Shares of each Sub-Trust and any Shares of any further Sub-Trusts
that may from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further Sub-Trust
at the time of establishing and designating the same) have the following
relative rights and preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received
------------------------------
by the Trust for the issue or sale of Shares of a particular Sub-Trust or any
classes thereof, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Sub-Trust or class thereof and shall
irrevocably belong to that Sub-Trust (and be allocable to any classes thereof)
for all purposes, and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items (as
hereinafter defined) allocated to that Sub-Trust as provided in the following
sentence, are herein referred to as "assets belonging to" that Sub-Trust (and
allocable to any classes thereof). In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments which are
not readily identifiable as belonging to any particular Sub-Trust (collectively
"General Items"), the Trustees shall allocate such General Items to and among
any one or more of the Sub-Trusts established and designated from time to time
in such manner and on such basis as they, in their sole discretion, deem fair
and equitable; and any General Items so allocated to a particular Sub-Trust
shall belong to that Sub-Trust (and be allocable to any classes thereof). Each
such allocation by the Trustees shall be conclusive and binding upon the holders
of all Shares of all Sub-Trusts (including any classes thereof) for all
purposes.
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<PAGE>
(b) Liabilities Belonging to Sub-Trusts. The assets belonging
-----------------------------------
to each particular Sub-Trust shall be charged with the liabilities in respect of
that Sub-Trust and all expenses, costs, charges and reserves belonging to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one or
more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair and
equitable. In addition, the liabilities in respect of a particular class of
Shares of a particular Sub-Trust and all expenses, costs, charges and reserves
belonging to that class of Shares, and any general liabilities, expenses, costs,
charges or reserves of that particular Sub-Trust which are not readily
identifiable as belonging to any particular class of Shares of that Sub-Trust
shall be allocated and charged by the Trustees to and among any one or more of
the classes of Shares of that Sub-Trust established and designated from time to
time in such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Sub-Trust or class thereof are herein referred to
as "liabilities belonging to" that Sub-Trust or class thereof. Each allocation
of liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders, creditors and any other persons
dealing with the Trust or any Sub-Trust (including any classes thereof) for all
purposes. Any creditor of any Sub-Trust may look only to the assets of that
Sub-Trust to satisfy such creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a
---------
particular Sub-Trust or any class thereof may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Trustees may determine, to the holders of Shares of that Sub-Trust or class,
from such of the income and capital gains, accrued or realized, from the assets
belonging to that Sub-Trust, or in the case of a class, belonging to that
Sub-Trust and allocable to that class, as the Trustees may determine, after
providing for actual and accrued liabilities belonging to that Sub-Trust or
class. All dividends and distributions on Shares of a particular Sub-Trust or
class thereof shall be distributed pro rata to the holders of Shares of that
Sub-Trust or class in proportion to the number of Shares of that Sub-Trust or
class held by such holders at the date and time of record established for the
payment of such dividends or distributions, except that in connection with any
dividend or distribution program or procedure the Trustees may determine that no
dividend or distribution shall be payable on Shares as to which the
Shareholder's purchase order and/or payment have not been received by the time
or times established by the Trustees under such program or procedure. Such
dividends and distributions may be made in cash or Shares of that Sub-Trust or
class or a combination thereof as determined by the Trustees or pursuant to any
program that the Trustees may have in effect at the time for the election by
each Shareholder of the mode of the making of such dividend or distribution to
that Shareholder. Any such dividend or distribution paid in Shares will be paid
at the net asset value thereof as determined in accordance with subsection (h)
of Section 4.2.
The Trustees shall have full discretion to determine which items shall
be treated as income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
11
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(d) Liquidation. In the event of the liquidation or
-----------
dissolution of the Trust, the holders of Shares of each Sub-Trust or any class
thereof that has been established and designated shall be entitled to receive,
when and as declared by the Trustees, the excess of the assets belonging to that
Sub-Trust, or in the case of a class, belonging to that Sub-Trust and allocable
to that class, over the liabilities belonging to that Sub-Trust or class. The
assets so distributable to the holders of Shares of any particular Sub-Trust or
class thereof shall be distributed among such holders in proportion to the
number of Shares of that Sub-Trust or class thereof held by them and recorded on
the books of the Trust. The liquidation of any particular Sub-Trust or class
thereof may be authorized at any time by vote of a majority of the Trustees then
in office.
(e) Voting. On each matter submitted to a vote of the
------
Shareholders, each holder of a Share shall be entitled to one vote for each
whole Share standing and to a proportionate fractional vote for each fractional
share standing in such Shareholder's name on the books of the Trust irrespective
of the Series thereof or class thereof and all Shares of all Series and classes
thereof shall vote together as a single class; provided, however, that as to any
matter (i) with respect to which a separate vote of one or more Series or
classes thereof is required by the 1940 Act or the provisions of the writing
establishing and designating the Sub-Trust or class, such requirements as to a
separate vote by such Series or class thereof shall apply in lieu of all Shares
of all Series and classes thereof voting together; and (ii) as to any matter
which affects the interests of one or more particular Series or classes thereof,
only the holders of Shares of the one or more affected Series or classes shall
be entitled to vote, and each such Series or class shall vote as a separate
class.
(f) Redemption by Shareholder. Each holder of Shares of a
-------------------------
particular Sub-Trust or any class thereof shall have the right at such times as
may be permitted by the Trust to require the Trust to redeem all or any part of
such holder's Shares of that Sub-Trust or class thereof at a redemption price
equal to the net asset value per Share of that Sub-Trust or class thereof next
determined in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption, subject to any contingent deferred
sales charge or redemption charge in effect at the time of redemption. Payment
of the redemption price shall be in cash; provided, however, that if the
Trustees determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust may,
subject to the requirements of the 1940 Act, make payment wholly or partly in
securities or other assets belonging to the Sub-Trust of which the Shares being
redeemed are part at the value of such securities or assets used in such
determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust or class thereof to require the Trust to redeem Shares of that
Sub-Trust during any period or at any time when and to the extent permissible
under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust or class
-------------------
thereof that has been established and designated is subject to redemption by the
Trust at the redemption price which would be applicable if such Share was then
being redeemed by the Shareholder pursuant to subsection (f) of this Section
4.2: (i) at any time, if the Trustees determine in their sole discretion and by
majority vote that failure to so redeem may have materially adverse consequences
to the Trust or any Sub-Trust or to the holders of the Shares of the Trust or
any Sub-Trust thereof or class thereof, or (ii) upon such other conditions as
may from time to time be determined by the Trustees and set forth
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in the then current Prospectus of the Trust. Upon such redemption the holders of
the Shares so redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any
---------------
Sub-Trust shall be (i) in the case of a Sub-Trust whose Shares are not divided
into classes, the quotient obtained by dividing the value of the net assets of
that Sub-Trust (being the value of the assets belonging to that Sub-Trust less
the liabilities belonging to that Sub-Trust) by the total number of Shares of
that Sub-Trust outstanding, and (ii) in the case of a class of Shares of a
Sub-Trust whose Shares are divided into classes, the quotient obtained by
dividing the value of the net assets of that Sub-Trust allocable to such class
(being the value of the assets belonging to that Sub-Trust allocable to such
class less the liabilities belonging to such class) by the total number of
Shares of such class outstanding; all determined in accordance with the methods
and procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share of
any Sub-Trust at a designated constant dollar amount and in connection therewith
may adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Sub-Trust as dividends payable in
additional Shares of that Sub-Trust at the designated constant dollar amount and
for the handling of any losses attributable to that Sub-Trust. Such procedures
may provide that in the event of any loss each Shareholder shall be deemed to
have contributed to the capital of the Trust attributable to that Sub-Trust such
Shareholder's pro rata portion of the total number of Shares required to be
canceled in order to permit the net asset value per Share of that Sub-Trust to
be maintained, after reflecting such loss, at the designated constant dollar
amount. Each Shareholder of the Trust shall be deemed to have agreed, by making
an investment in any Sub-Trust with respect to which the Trustees shall have
adopted any such procedure, to make the contribution referred to in the
preceding sentence in the event of any such loss.
(i) Transfer. All Shares of each particular Sub-Trust or class
--------
thereof shall be transferable, but transfers of Shares of a particular Sub-Trust
or class thereof will be recorded on the Share transfer records of the Trust
applicable to that Sub-Trust or class only at such times as Shareholders shall
have the right to require the Trust to redeem Shares of that Sub-Trust or class
and at such other times as may be permitted by the Trustees.
(j) Equality. Except as provided herein or in the instrument
--------
designating and establishing any class of Shares or any Sub-Trust, all Shares of
each particular Sub-Trust or class thereof shall represent an equal
proportionate interest in the assets belonging to that Sub-Trust, or in the case
of a class, belonging to that Sub-Trust and allocable to that class, subject to
the liabilities belonging to that Sub-Trust or class, and each Share of any
particular Sub-Trust or class shall be equal to each other Share of that
Sub-Trust or class; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may exist
with respect to dividends and distributions on Shares of the same Sub-Trust or
class. The Trustees may from time to time divide or combine the Shares of any
particular Sub-Trust or class into a greater or lesser number of Shares of that
Sub-Trust or class without thereby changing the proportionate beneficial
interest in the assets belonging to that Sub-Trust or class or in any way
affecting the rights of Shares of any other Sub-Trust or class.
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(k) Fractions. Any fractional Share of any Sub-Trust or class,
---------
if any such fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Sub-Trust or class, including
rights and obligations with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the Trust or any
Sub-Trust.
(l) Conversion Rights. Subject to compliance with the
-----------------
requirements of the 1940 Act, the Trustees shall have the authority to provide
that holders of Shares of any Sub-Trust or class thereof shall have the right to
convert said Shares into Shares of one or more other Sub-Trust or class thereof
in accordance with such requirements and procedures as may be established by the
Trustees.
(m) Class Differences. The relative rights and preferences of
-----------------
the classes of any Sub-Trust may differ in such other respects as the Trustees
may determine to be appropriate in their sole discretion, provided that such
differences are set forth in the instrument establishing and designating such
classes and executed by a majority of the Trustees (or by an instrument executed
by an officer of the Trust pursuant to a vote of a majority of the Trustees).
(n) Termination of Sales. The Trustees shall have the
--------------------
authority to terminate the sales of Shares of any Sub-Trust at any time or for
such periods as the Trustees may from time to time decide.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
-------------------
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust and each class thereof that has been established and designated. No
certificates certifying the ownership of Shares need be issued except as the
Trustees may otherwise determine from time to time. The Trustees may make such
rules as they consider appropriate for the issuance of Share certificates, the
use of facsimile signatures, the transfer of Shares and similar matters. The
record books of the Trust as kept by the Trust or any transfer or similar agent,
as the case may be, shall be conclusive as to who are the Shareholders and as to
the number of Shares of each Sub-Trust and class thereof held from time to time
by each such Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept or reject
------------------------
investments in the Trust and each Sub-Trust from such persons and on such terms
and for such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize or determine. The Trustees may
authorize any distributor, principal underwriter, custodian, transfer agent or
other person to accept orders for the purchase of Shares that conform to such
authorized terms and to reject any purchase orders for Shares whether or not
conforming to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no
---------------------
pre-emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or any Sub-Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
-----------------------------------------------------
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust or any Sub-Trust thereof nor
entitle the representative of any deceased Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
only to the rights of said decedent under this Trust.
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Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor except as specifically provided herein to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay.
Section 4.7 No Appraisal Rights. Shareholders shall have no right to
-------------------
demand payment for their shares or to any other rights of dissenting
shareholders in the event the Trust participates in any transaction which would
give rise to appraisal or dissenters' rights by a shareholder of a corporation
organized under Chapter 156B of the General Laws of the Commonwealth of
Massachusetts, or otherwise.
ARTICLE V - SHAREHOLDERS' VOTING POWERS AND MEETINGS
--------- ----------------------------------------
Section 5.1 Voting Powers. The Shareholders shall have power to vote
-------------
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Section 3.3 as to which Shareholder approval is required by the 1940 Act, (iii)
with respect to any termination or reorganization of the Trust to the extent and
as provided in Sections 7.1 and 7.2, (iv) with respect to any amendment of this
Declaration of Trust to the extent and as provided in Section 7.3, (v) to the
same extent as the stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or any Sub-Trust thereof or the Shareholders (provided, however, that a
Shareholder of a particular Sub-Trust shall not be entitled to a derivative or
class action on behalf of any other Sub-Trust (or Shareholder of any other
Sub-Trust) of the Trust) and (vi) with respect to such additional matters
relating to the Trust as may be required by the 1940 Act, this Declaration of
Trust, the By-Laws or any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider necessary or
desirable. There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. Proxies may be given orally or in
writing or pursuant to any computerized or mechanical data gathering process
specifically approved by the Trustees. A proxy with respect to Shares held in
the name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the Trustees may exercise
all rights of Shareholders and may take any action required by law, this
Declaration of Trust or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
--------
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Written notice of any
meeting of Shareholders shall be given or caused to be given by the Trustees by
mailing such notice at least seven days before such meeting, postage prepaid,
stating the time, place and purpose of the meeting,
15
<PAGE>
to each Shareholder at the Shareholder's address as it appears on the records of
the Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the Trust
when requested to do so in writing by Shareholders holding not less than 10% of
the Shares then outstanding. If the Trustees shall fail to call or give notice
of any meeting of Shareholders for a period of 30 days after written application
by Shareholders holding at least 10% of the Shares then outstanding requesting a
meeting be called for any other purpose requiring action by the Shareholders as
provided herein or in the By-Laws, then Shareholders holding at least 10% of the
Shares then outstanding may call and give notice of such meeting, and thereupon
the meeting shall be held in the manner provided for herein in case of call
thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
------------
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 90 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action, even though such Shareholder has since that
date and time disposed of such Shareholder's Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for purposes
of such other action.
Section 5.4 Quorum and Required Vote. Except as otherwise provided by
------------------------
the 1940 Actor other applicable law, thirty percent of the Shares entitled to
vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any meeting
of shareholders, whether or not a quorum is present, may be adjourned for any
lawful purpose provided that no meeting shall be adjourned for more than six
months beyond the originally scheduled meeting date. Any adjourned session or
sessions may be held, within a reasonable time after the date set for the
original meeting without the necessity of further notice. A majority of the
Shares voted, at a meeting of which a quorum is present shall decide any
questions and a plurality shall elect a Trustee, except when a different vote is
required or permitted by any provision of the 1940 Act or other applicable law
or by this Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of the
-------------------------
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such larger proportion thereof as shall be required by the 1940 Act or by
any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
16
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Section 5.6 Inspection of Records. The records of the Trust shall be
---------------------
open to inspection by Shareholders for any lawful purpose reasonably related to
a Shareholder's interest as a Shareholder. The Trustees may from time to time
establish reasonable standards including standards governing what information
and documents are to be furnished, at what time and location and at whose
expense with respect to Shareholder inspection of Trust records to the same
extent as is permitted stockholders of a Massachusetts business corporation
under the Massachusetts Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
---------------------
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more
--------------------------
Shareholders of record who have been such for at least six months preceding the
date of application, and who hold in the aggregate either Shares having a net
asset value of at least $25,000 or at least 1% of the outstanding Shares,
whichever is less, shall apply to the Trustees in writing, stating that they
wish to communicate with other Shareholders with a view to obtaining signatures
to a request for a Shareholder meeting and accompanied by a form of
communication and request which they wish to transmit, the Trustees shall within
five business days after receipt of such application either (1) afford to such
applicants access to a list of the names and addresses of all Shareholders as
recorded on the books of the Trust or Sub-Trust, as applicable; or (2) inform
such applicants as to the approximate number of Shareholders of record, and the
approximate cost of mailing to them the proposed communication and form of
request.
If the Trustees elect to follow the course specified in clause (2)
above, the Trustees, upon the written request of such applicants, accompanied by
a tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
the Commission, together with a copy of the material to be mailed, a written
statement signed by at least a majority of the Trustees to the effect that in
their opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the basis
of such opinion. The Trustees shall thereafter comply with any order entered by
the Commission and the requirements of the 1940 Act and the Securities Exchange
Act of 1934.
ARTICLE VI - LIMITATION OF LIABILITY; INDEMNIFICATION
---------- ----------------------------------------
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable; Notice.
----------------------------------------------------------
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such person
dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, nor any other Sub-Trust
shall be personally liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Trust, any Sub-Trust or the Trustees or any of them
in connection with the Trust shall be conclusively deemed to have been executed
or done only by or for the Trust (or the Sub-Trust) or the Trustees and not
personally. Nothing in this
17
<PAGE>
Declaration of Trust shall protect any Trustee or officer against any liability
to the Trust or the Shareholders to which such Trustee or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or made
by or on behalf of the Trust or by them as Trustees or Trustee or as officers or
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, or the particular Sub-Trust in
question, as the case may be, but the omission thereof shall not operate to bind
any Trustees or Trustee or officers or officer or Shareholders or Shareholder
individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
------------------------------------------------------
Surety. The exercise by the Trustees of their powers and discretion hereunder
- ------
shall be binding upon everyone interested. A Trustee shall be liable for such
Trustee's own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. Subject to the foregoing, (a) the Trustees shall not be responsible
or liable in any event for any neglect or wrongdoing of any officer, agent,
employee, consultant, adviser, administrator, distributor or principal
underwriter, custodian or transfer, dividend disbursing, Shareholder servicing
or accounting agent of the Trust, nor shall any Trustee be responsible for the
act or omission of any other Trustee; (b) the Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of the
Trust and upon written reports made to the Trustees by any officer appointed by
them, any independent public accountant, and (with respect to the subject matter
of the contract involved) any officer, partner or responsible employee of a
Contracting Party appointed by the Trustees pursuant to Section 3.3. The
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
-------------------------------
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or held
to be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, said Sub-Trust (upon
proper and timely request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and the Shareholder or former
Shareholder (or such Shareholder's heirs, executors, administrators or other
legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets of
said Sub-Trust estate to be held harmless from and indemnified against all loss
and expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
------------------------------------------
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise [hereinafter referred to as
a "Covered
18
<PAGE>
Person"]) against all liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, except with respect
to any matter as to which it has been determined that such Covered Person had
acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office
(such conduct referred to hereafter as "Disabling Conduct"). A determination
that the Covered Person is entitled to indemnification may be made by (i) a
final decision on the merits by a court or other body before whom the proceeding
was brought that the person to be indemnified was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of the facts,
that the indemnitee was not liable by reason of Disabling Conduct by (a) a vote
of a majority of a quorum of Trustees who are neither "interested persons" of
the Trust as defined in section 2(a)(l9) of the 1940 Act nor parties to the
proceeding, or (b) an independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so incurred by any such Covered Person
(but excluding amounts paid in satisfaction of judgments, in compromise or as
fines or penalties), may be paid from time to time by the Sub-Trust in question
in advance of the final disposition of any such action, suit or proceeding,
provided that the Covered Person shall have undertaken to repay the amounts so
paid to the Sub-Trust in question if it is ultimately determined that
indemnification of such expenses is not authorized under this Article VI and (i)
the Covered Person shall have provided security for such undertaking, (ii) the
Trust shall be insured against losses arising by reason of any lawful advances,
or (iii) a majority of a quorum of the disinterested Trustees who are not a
party to the proceeding, or an independent legal counsel in a written opinion,
shall have determined, based on a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the Covered
Person ultimately will be found entitled to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
------------------
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not parties to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a) or
by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
----------------------------------
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators, an "interested Covered Person" is one against whom the
action, suit or other proceeding in question or another action, suit or other
proceeding on the same or similar
19
<PAGE>
grounds is then or has been pending or threatened, and a "disinterested" person
is a person against whom none of such actions, suits or other proceedings or
another action, suit or other proceeding on the same or similar grounds is then
or has been pending or threatened. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees and officers, and other persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No person
------------------------------------------------
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
ARTICLE VII - MISCELLANEOUS
----------- -------------
Section 7.1 Duration and Termination of Trust. Unless terminated as
---------------------------------
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust or class thereof shall operate to
terminate the Trust. The Trust may be terminated at any time by a majority of
the Trustees then in office subject to a favorable vote of a majority of the
outstanding voting securities, as defined in the 1940 Act, shares of each
Sub-Trust or class thereof voting separately by Sub-Trust or class thereof.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trust, or any one or more Sub-Trusts,
--------------
may, either as the successor, survivor, or non-survivor, (1) consolidate or
merge with one or more other trusts, sub-trusts, partnerships, associations or
corporations organized under the laws of the Commonwealth of Massachusetts or
any other state of the United States, to form a consolidated or merged trust,
partnership, limited liability company, association or corporation under the
laws of which any one of the constituent entities is organized, with the Trust
to be the survivor or non-survivor of such consolidation or merger or (2)
transfer a substantial portion of its assets to one or more other trusts,
sub-trusts, partnerships, limited liability companies, associations or
corporations organized under the laws of the Commonwealth of Massachusetts or
any other state of the United States, or have one or more such trusts,
sub-trusts, partnerships, limited liability companies, associations or
corporations transfer a substantial portion of its assets to it, any such
consolidation, merger or transfer to be upon such terms and conditions as are
specified in an agreement and plan of reorganization authorized and approved by
the Trustees and entered into by the Trust, or one or more Sub-Trusts as the
case may be, in connection therewith. Any such consolidation, merger or transfer
shall require the affirmative vote of the holders of a majority of the
outstanding voting Shares, as defined in the 1940 Act, of the Trust (or each
Sub-Trust affected thereby, as the case may be), except that such affirmative
vote ofthe holders of Shares shall not be required if the Trust (or Sub-Trust
affected thereby, as the case may be) shall be the survivor of such
consolidation or merger or transferee of such assets.
20
<PAGE>
Section 7.3 Amendments. All rights granted to the Shareholders under
----------
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not materially adversely affect the rights of any Shareholder
with respect to which such amendment is or purports to be applicable and so long
as such amendment is not in contravention of applicable law, including the 1940
Act, by an instrument in writing signed by a majority of the then Trustees (or
by an officer of the Trust pursuant to the vote of a majority of such Trustees).
Any amendment to this Declaration of Trust that materially adversely affects the
rights of Shareholders may be adopted at any time by an instrument in writing
signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to a vote of a majority of such Trustees) when authorized to do so by
the vote in accordance with subsection (e) of Section 4.2 of Shareholders as
specified in Section 5.4 hereof. Subject to the foregoing, any such amendment
shall be effective as of any prior or future time as provided in the instrument
containing the terms of such amendment or, if there is no provision therein with
respect to effectiveness, upon the execution of such instrument and of a
certificate (which may be a part of such instrument) executed by a Trustee or
officer of the Trust to the effect that such amendment has been duly adopted.
Section 7.4 Filing of Copies; References; Headings. The original or a
--------------------------------------
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this instrument. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.
Section 7.5 Applicable Law. This Declaration of Trust is made in The
--------------
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth,
including the Massachusetts Business Corporation Law as the same may be amended
from time to time, to which reference is made with the intention that matters
not specifically covered herein or as to which an ambiguity may exist shall be
resolved as if the Trust were a business corporation organized in Massachusetts,
but the reference to said Business Corporation Law is not intended to give the
Trust, the Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with an entity
organized in corporate form. The Trust shall be of the type referred to in
Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
21
<PAGE>
Section 7.6 Name of Trust. It is understood that the name "CIGNA", and
-------------
any logo associated with the name is the valuable property of the CIGNA
Corporation, a Delaware corporation, and that the trust or any Sub-Trust has the
right to include "CIGNA" as a part of its name only through permission of CIGNA
Corporation. If CIGNA Corporation withdraws the right to the use of its name,
the Trust (and any Sub-Trust) shall forthwith cease to use the CIGNA name and
logo and shall take such action as may be necessary to change its name (or the
name of any Sub- Trust) to eliminate all use of or reference to the word
"CIGNA". The Trust hereby stipulates that companies or trusts other than the
Trust may be formed with the word "CIGNA" in their titles.
Section 7.7 Integration. This Declaration of Trust constitutes the
-----------
entire agreement among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements and understandings pertaining
thereto.
22
<PAGE>
IN WITNESS WHEREOF, the undersigned hereunto have set their hands and
seals in the City of Springfield, Commonwealth of Massachusetts, for themselves
and their assigns, on the day and year first above written.
Senior Managing Director
CIGNA Investments, Inc.
S-306
900 Cottage Grove Road /s/ R. Bruce Albro
Hartford, CT 06152-2306 ----------------------------
R. Bruce Albro
44 Brook Hills Circle /s/ Hugh R. Beath
White Plains, NY 10605 ----------------------------
Hugh R. Beath
Vice President and Treasurer
Kaman Corporation
1332 Blue Hills Avenue /s/ Russell H. Jones
Bloomfield, CT 06002 ----------------------------
Russell H. Jones
President
CIGNA Investments, Inc.
S-211
900 Cottage Grove Road /s/ Thomas C. Jones
Hartford, CT 06152-2211 ----------------------------
Thomas C. Jones
Senior Executive Vice President and
Chief Administrative Officer
Friendly Ice Cream Corporation
1855 Boston Road /s/ Paul J. McDonald
Wilbraham, MA 01095 ----------------------------
Paul J. McDonald
23
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
HAMPDEN COUNTY, City of Springfield
Then personally appeared the within-named R. Bruce Albro, Hugh R.
Beath, Russell H. Jones, Thomas C. Jones and Paul J. McDonald who acknowledged
the execution of the foregoing instrument to be their free act and deed, before
me, this 28th day of July, 1998.
/s/ Geoffrey R.T. Kenyon
-------------------------------------------
Notary Public
[Notarial Seal appears here]
My commission expires: Geoffrey R.T. Kenyon,
----------------------
Notary Public
My Commission Expires
April 14, 2000
24
<PAGE>
Exhibit h(v)
SHAREHOLDER SERVICES PLAN
OF
THE RETAIL SERVICE CLASS OF
CIGNA MONEY MARKET FUND
(A SERIES OF CIGNA FUNDS GROUP)
WHEREAS, CIGNA Money Market Fund (the "Fund") is a series of CIGNA
Funds Group (the "Trust") a Massachusetts business trust engaged in business as
an open-end management investment company registered under the Investment
Company Act of 1940, as amended (the "Act");
WHEREAS, shares of the Fund are or may be issued in three classes,
designated the institutional class, the retail class and the retail service
class, respectively;
WHEREAS, on behalf of the Fund the Trust desires to appoint CIGNA
Financial Services, Inc. ("CFS") to provide certain services to holders of the
retail services class shares of the Fund under the terms and conditions
described herein;
NOW, THEREFORE, the Trust hereby adopts this Shareholder Services Plan
(the "Plan"), on behalf of the retail service class shares of the Fund, and CFS
hereby agrees to provide or cause to be provided the shareholders services
described herein, subject to the following terms and conditions:
1. The Fund is authorized to pay to CFS, as compensation for service
activities (as defined in Paragraph 3 hereof) rendered to holders of the retail
service class shares of the Fund by CFS, its affiliates or independent service
providers, a periodic fee computed at a rate of twenty-five one-hundredths of
one percent (.25%) of the average daily net assets of the retail service class
of the Fund during each fiscal year. However, the Fund's payment shall be
reduced to the extent necessary (if any) to cause the Fund to comply with the
Act and applicable Internal Revenue Service rules and regulations (as same may
be amended from time to time). Such payment shall be calculated daily and paid
monthly. CFS is authorized to pay its affiliates or independent third party
service providers for performing service activities consistent with this Plan.
2. The Plan shall not take effect with respect to a class of shares of
a Fund until it, together with any related agreements, has been approved by
votes of a majority of both (a) the Trustees of the Trust and (b) those Trustees
of the Trust who are not "interested persons" of the Trust (as defined in the
Act)
<PAGE>
and who have no direct or indirect financial interest in the operation of the
Plan or any agreements related to it (the "Plan Trustees").
3. CFS shall provide to the Board of Trustees of the Trust and the
Trustees shall review, at least quarterly, a written report of the amounts
expended in connection with its performance of "service activities," as defined
in this paragraph 3, and the purposes for which such expenditures were made. CFS
shall submit only information regarding amounts expended for "service
activities" to the Board of Trustees of the Trust in support of the amounts
payable hereunder.
For purposes of the Plan, "service activities" may include receiving,
aggregating, and processing shareholder or beneficial owner (collectively,
"shareholder") orders; providing and maintaining retirement account records;
communicating periodically with shareholders; acting as the sole shareholder of
record and nominee for shareholders; answering questions and handling
correspondence from shareholders about their accounts; and performing similar
account administrative services.
4. Amounts payable to CFS hereunder will be paid by the Fund to CFS
until the Plan is terminated or not renewed with respect to the Fund. If the
Plan is terminated or not renewed with respect to the Fund, any expenses
incurred by CFS, its affiliates or independent third party service providers, on
behalf of the Fund in excess of the payments of the amounts specified in
Paragraph 1 hereof which CFS has received or accrued through the termination
date are the sole responsibility and liability of CFS and are not obligations of
the Fund.
5. This Plan shall continue in full force and effect for so long as
such continuance is specifically approved at least annually in the manner
provided for approval of the Plan in Paragraph 2.
6. This Plan may be terminated at any time, without payment of any
penalty, by vote of a majority of the Plan Trustees or by a vote of a majority
of the outstanding voting securities of the affected class of the Fund on not
more than 30 days' written notice to CFS, or by notice upon 30 day's prior
written notice by CFS to the Trust.
7. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Paragraph 3 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may
<PAGE>
be, the first two years of which shall be in an easily accessible place.
8. The Plan may be amended at any time provided that any amendment to
increase materially the amount of the payment provided for in Paragraph 1 is
invalid and unenforceable unless such amendment is approved in the manner
provided for initial approval in Paragraph 2 hereof, and no material amendment
to the Plan shall be made unless approved in the manner provided for approval in
Paragraph 2 hereof.
9. Copies of the Master Trust Agreement establishing the Trust are on
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this document is executed on behalf of the Trust by an officer
of the Trust and not individually and that any obligations of or arising out of
this document are not binding upon any of the Trustees, officers, shareholders,
employees or agents of the Trust individually, but are binding only upon the
assets and property of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of the Fund, and CFS have
executed this Shareholder Services Plan as of the ____ day of ___________, ____.
CIGNA FUNDS GROUP
By:___________________________________
By:
Its:
CIGNA FINANCIAL SERVICES, INC.
By:___________________________________
By:
Its:
Page 3
<PAGE>
<PAGE>
Exhibit h(vi)
SUB-ACCOUNTING SERVICES AGREEMENT
FOR
THE RETAIL SERVICE CLASS OF
CIGNA MONEY MARKET FUND
(A SERIES OF CIGNA FUNDS GROUP)
Sub-Accounting Services Agreement made as of the ____ day of October,
1998 by and between CIGNA Funds Group (the "Trust") on behalf of its series
CIGNA Money Market Fund (the "Fund"), and CIGNA Financial Services, Inc.
("CFS"), a Connecticut corporation engaged in business as a broker/dealer.
WHEREAS, the Fund is a series of the Trust, a Massachusetts business
trust engaged in business as an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of the Fund are or may be issued in three classes,
designated the institutional class, the retail class and the retail service
class, respectively;
WHEREAS, beneficial owners of retail class shares of the Fund will own
their shares through omnibus accounts with the Fund;
WHEREAS, on behalf of the Fund the Trust desires to appoint CFS to
provide shareholder sub-accounting to holders of the retail services class
shares of the Fund under the terms and conditions described herein;
NOW, THEREFORE, the Trust, on behalf of the retail service class of the
Fund, and CFS agree as follows:
1. CFS shall provide or shall arrange to be provided shareholder
sub-accounting services to the retail service class of the Fund. The
sub-accounting services shall include the following:
a. Maintaining books and records with respect to each beneficial
owner of retail service class shares of the Fund having a
beneficial interest through an omnibus account.
b. Preparing and mailing summary monthly statements (or quarterly
statements if no activity in retail service class shares of
the Fund occurs during any month covered by the statement) to
every beneficial owner; and
Page 1
<PAGE>
c. Generating and mailing confirmations of each purchase or sale
of retail service class shares of the Fund for each beneficial
owner;
d. Such other services normally and customarily provided by
shareholder sub-accounting service providers on behalf of
mutual funds as may be agreed on by the Fund and CFS.
2. As full compensation for services provided under this agreement, the
Fund shall pay CFS a periodic fee computed at an annual rate of twelve and one
half one-hundredths of one percent (.125%) of the average daily net assets of
the retail service class of the Fund during each fiscal year. Subject to the
limitation set forth in the preceding sentence, such fee shall not exceed such
amounts as are set from time to time by the board of Trustees of the Trust and
shall not exceed the amounts of such fees and costs as are actually paid or
incurred to sub-accounting service providers by CFS. CFS will prepare reports to
the Board of Trustees of the Trust on a quarterly basis showing amounts paid or
incurred to the various service providers and the purpose for such payments or
costs.
3. This Agreement shall not take effect until it has been approved by
votes of a majority of both (a) the Trustees of the Trust and (b) those Trustees
of the Trust who are not "interested persons" of the Trust (as defined in the
Act) and who have no direct or indirect financial interest in the operation of
the Agreement (the "Independent Trustees").
4. This Agreement shall continue in full force and effect for so long
as such continuance is specifically approved at least annually in the manner
provided for approval of the Agreement in Paragraph 3.
5. This Agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of the Independent Trustees or by a vote of a
majority of the outstanding voting securities of the affected class of the Fund
on not more than 30 days' written notice to CFS, or by notice upon 30 day's
prior written notice by CFS to the Trust.
6. The Trust shall preserve copies of this Agreement and any related
agreements, for a period of not less than six years from the date of this
Agreement, the first two years of which shall be in an easily accessible place.
7. This Agreement may be amended at any time provided that no material
amendment to the Agreement shall be made unless approved in the manner provided
for approval in Paragraph 3 hereof.
Page 2
<PAGE>
8. Copies of the Master Trust Agreement establishing the Trust are on
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this document is executed on behalf of the Trust by an officer
of the Trust and not individually and that any obligations of or arising out of
this document are not binding upon any of the Trustees, officers, shareholders,
employees or agents of the Trust individually, but are binding only upon the
assets and property of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of the Fund, and CFS have
executed this Sub-Accounting Services Agreement as of the ___ day of __________,
_____.
CIGNA FUNDS GROUP
By:___________________________________
By:
Its:
CIGNA FINANCIAL SERVICES, INC.
By:___________________________________
By:
Its:
Page 3
<PAGE>
Exhibit m
RULE 12b-1 PLAN OF
CIGNA MONEY MARKET FUND
(A SERIES OF CIGNA FUNDS GROUP)
1. The Plan. CIGNA Funds Group, a Massachusetts business trust (the
--------
"Trust"), hereby adopts this Rule 12b-1 Plan (the "Plan") pursuant to the terms
of Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act"),
with respect to the retail service class shares of the Trust's series known as
CIGNA Money Market Fund (the "Fund"). In accordance with the terms of this Plan,
the Trust may act as the distributor of shares of the Fund.
2. Authorized Payments. During each fiscal year of the Fund, the Trust
-------------------
is hereby authorized to pay out of the assets of the retail service class of the
Fund on a monthly basis, a periodic fee computed at a rate of up to thirty-five
one-hundredths of one percent (.35%) of the average daily net assets of the
retail service class of the Fund during such fiscal year to CIGNA Financial
Services, Inc. ("CFS") to finance activities primarily intended to result in the
sale of the retail service class of the Fund's shares, which shall include, but
not be limited to: payments made to and expenses of persons (including employees
of CFS) who are engaged in, or provide support services in connection with, the
distribution of the retail service class of Fund shares, such as answering
routine telephone inquiries and processing prospective investor requests for
information; compensation paid to securities dealers, financial institutions and
other organizations which render distribution and administrative services in
connection with the distribution of the Fund's shares; costs related to the
formulation and implementation of marketing and promotional activities,
including direct mail promotions and television, radio, newspaper, magazine and
other mass media advertising; costs of printing and distributing prospectuses
and reports to prospective shareholders of the Fund; costs involved in
preparing, printing and distributing sales literature for the Fund; costs
involved in obtaining whatever information, analyses and reports with respect to
market and promotional activities on behalf of the retail service class of the
Fund that CFS deems advisable; and such other costs as may from time to time be
agreed upon by the Fund. Such fee shall not exceed the costs and expenses
associated with activities primarily intended to result in the sale of the
retail service class of the Fund's shares (including, without limitation,
payroll and other expenses of CFS employees) and in any event shall not exceed
.35% of the average daily net assets of the retail service class of the Fund
during any fiscal year.
3. Trustee Approval. This Plan shall not take effect until it has been
----------------
approved, together with any related agreements, by votes of a majority of both
(a) the Trustees of the Trust and (b)those Trustees of the Trust who are not
"interested persons" of the Trust and the Fund (as defined in the Act) and have
no direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Rule 12b-1 Trustees"), cast in person at a
meeting (or meetings) called for the purpose of voting on this Plan and such
related agreements.
4. Annual Reapproval. Unless sooner terminated pursuant to paragraph 5,
-----------------
this Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in paragraph 3.
5. Termination of Plan. This Plan may be terminated at any time by a
-------------------
vote of a majority of the Rule 12b-1 Trustees, or by vote of a majority of the
Fund's outstanding shares.
1
<PAGE>
6. Amendments. This Plan may not be amended to increase materially the
----------
amount of distribution expenses provided for in paragraph 2 hereof without
shareholder approval as provided in Rule 12b-1 under the Act (or any successor
provision), and no material amendment to the Plan shall be made unless approved
in the manner provided for approval in paragraph 3 hereof.
7. Quarterly Reports. Any person authorized to direct the disposition
-----------------
of monies paid or payable by the Fund pursuant to this Plan or any related
agreements shall provide to the Trustees of the Trust, and the Trustees shall
review at least quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made. Unless directed otherwise by the
Trustees with respect to a particular expenditure or type of expenditure, any
expenditure made by CFS which jointly promotes the sale of shares of the Fund
and the sale of shares of other investment companies for which CIGNA
Investments, Inc. serves as investment adviser, and which expenditures are not
readily identifiable as related to the Fund or one or more of such other
investment companies, shall be allocated to the Fund and such other investment
companies on a basis such that the Fund will be allocated only its proportional
share of such expenditures based upon the relative net assets of the Fund as
compared to the net assets of all such other investment companies thus promoted.
8. Selection and Nomination of Trustees. While this Plan is in effect,
------------------------------------
the selection and nomination of Trustees who are not interested persons (as
defined in the Act) of the Fund shall be committed to the discretion of the
Trustees who are not interested persons of the Fund.
9. Records. The Fund shall preserve copies of this Plan and any related
-------
agreements and all reports made pursuant to paragraph 7 hereof for a period of
not less than six years from the date of this Plan, or the agreements or such
reports, as the case may be, and shall preserve the Plan, agreement or report
the first two years in an easily accessible place.
10. Limitation on Personal Liability. NOTICE IS HEREBY GIVEN that the
--------------------------------
Trust is a business trust organized under the Massachusetts Business Trust Act
pursuant to a Declaration of Trust filed in the office of the Secretary of the
Commonwealth of Massachusetts. The Trust is a series trust and all debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular series shall be enforceable against the
assets held with respect to such series only, and not against the assets of the
Trust generally or against the assets held with respect to any other series and
further that no trustee, officer or holder of shares of beneficial interest of
the Trust shall be personally liable for any of the foregoing.
IN WITNESS WHEREOF, the Trust has executed this 12b-1 Plan with respect
to the Fund as of this ____ day of _________, _____ in Springfield,
Massachusetts.
ATTEST: CIGNA FUNDS GROUP
___________________________ By:_________________________________
2
<PAGE>
Exhibit o(i)
AMENDMENT
TO
DUAL CLASS PLAN PURSUANT TO RULE 18F-3
FOR
CIGNA FUNDS GROUP
The Dual Class Plan dated as of April 30, 1996 of CIGNA Funds Group is
hereby amended by removing CIGNA Money Market Fund.
Dated: _________, ____
CIGNA FUNDS GROUP
By:_________________________________
By:
Its:
<PAGE>
Exhibit o(ii)
MULTI CLASS PLAN PURSUANT TO RULE 18F-3
FOR
CIGNA MONEY MARKET FUND
WHEREAS, CIGNA Money Market Fund (the "Fund") is a series of CIGNA
Funds Group (the "Trust"), an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund desires to adopt a Multi Class Plan pursuant to Rule
18f-3 under the 1940 Act (the "Multi Class Plan");
NOW THEREFORE, the Fund hereby adopts this Multi Class Plan in
accordance with Rule 18f-3 under the 1940 Act, subject to the following terms
and conditions:
1. Features of the Classes. The Fund issues or shall issue its shares
-----------------------
of beneficial interest in three classes: the institutional class shares, the
retail service class shares and the retail class shares. Shares of each class of
the Fund, regardless of class designation, shall represent an equal pro rata
interest (based on relative net asset values) in the portfolio securities of the
Fund, and shall have identical voting, dividend, liquidation and other rights,
preferences, powers, restrictions, limitations, qualifications, designations and
terms and conditions, except that: (a) each class shall have a different
designation; (b) each class of shares shall bear any Class Expenses, as defined
in Section 3 below; and (c) each class shall have exclusive voting rights on any
matter submitted to shareholders that relates solely to its service or
distribution arrangement and each class shall have separate voting rights on any
matter submitted to shareholders in which the interests of one class differ from
the interests of any other class.
2.A. Shareholder Service Plans - Retail Class and Retail Service Class
------------------------------------------------------------------
Shares. The Fund has adopted Shareholder Services Plans with respect to its
- ------
retail class and retail service class shares. Under the terms of the Shareholder
Services Plans, the Fund is authorized to pay a periodic fee to CIGNA Financial
Services, Inc. ("CFS"), as compensation for service activities rendered to
holders of the retail class and retail service class shares of the Fund by CFS,
its affiliates or independent service providers. For the retail class, the fee
is Twenty Dollars and Sixteen Cents ($20.16) for each account in the Fund's
retail class per fiscal year. For the retail service class, the fee is at the
annual rate of .25% of the average daily net assets of the retail service class
of the Fund during the period. However, the Fund's payment shall be reduced to
the extent necessary (if any) to cause the Fund to comply with the 1940 Act and
applicable Internal Revenue Service rules and regulations (as same may be
amended from time to time). CFS is authorized to pay its affiliates or
independent third-party service providers for performing service activities
consistent with the Shareholder Services Plans.
Under the terms of the Shareholder Services Plan, the services may
include, but are not limited to, the following functions: receiving,
aggregating, and processing shareholder or beneficial owner (collectively
"shareholder") orders; providing and maintaining retirement account records;
communicating periodically with
Page 1
<PAGE>
shareholders; acting as the sole shareholder of record and nominee for
shareholders; answering questions and handling correspondence from shareholders
about their accounts; issuing confirmations for transactions by shareholders;
and performing similar account administrative services.
2.B. 12b-1 Fees - Retail Service Class. The Fund has adopted a 12b-1
---------------------------------
Plan with respect to its retail service class of shares. Under the terms of the
12b-1 Plan, the Fund is authorized to pay distribution expenses at the annual
rate of up to .35% of the average daily net assets of the retail service class
of the Fund during the period to finance activities primarily intended to result
in the sale of this class of Fund shares.
2.C. Shareholder Sub-Accounting Fees - Retail Service Class. The Fund
------------------------------------------------------
has contracted with CFS for CFS to provide shareholder sub-accounting services
for beneficial owners of the retail service class. Under the shareholder
sub-accounting agreement, the Fund will pay CFS at the annual rate of .125% of
the average daily net assets of the retail service class for providing these
services.
3. Allocation of Income and Expenses. (a) Income, realized gains and
---------------------------------
losses, unrealized appreciation and depreciation, and Series Expenses (as
defined below) shall be allocated to each class based on the net assets of that
class in relation to the Fund's net assets ("relative net assets"). Allocated
expenses to each class shall be subtracted from allocated gross income. These
expenses include:
(1) Expenses incurred by the Trust as a registered series investment
company and not attributable to a particular series or to a particular class of
shares thereof ("Trust Expenses"); and
(2) Expenses incurred by the Fund but not attributable to any
particular class of shares of the Fund ("Series Expenses").
(b) Expenses attributable to a particular class ("Class Expenses")
initially shall be limited to: (i) payments made pursuant to the Shareholder
Services Plans, the 12b-1 Plan or the shareholder sub-accounting agreement; (ii)
transfer agent fees attributable to a specific class; (iii) printing and postage
expenses related to preparing and distributing materials such as shareholder
reports, prospectuses and proxies to current shareholders of a specific class;
(iv) Blue Sky registration fees incurred by a class; (v) SEC registration fees
incurred by a class; (vi) the expense of administrative personnel and services
to support the shareholders of a specific class; (vii) litigation or other legal
expenses relating solely to one class; and (viii) Trustees' fees incurred as a
result of issues relating solely to one class. Expenses in category (i) above
must be allocated to the class for which such expenses are incurred. Some or all
other Class Expenses listed in categories (ii) - (viii) above may be allocated
to a class, but only if the Trust's President and Treasurer have approved such
allocation, subject to Board approval or ratification ("Approved Class
Expenses"). The Trust's determination of the extent to which Class Expenses will
be allocated by class will be consistent with applicable legal principles and
regulatory considerations under the 1940 Act and the Internal Revenue Code of
1986, as amended.
Page 2
<PAGE>
Therefore, expenses of the Fund shall be apportioned to each class of
shares depending upon the nature of the expense item. Trust Expenses and Series
Expenses will be allocated between the classes of shares based on the relative
net assets of the classes. Approved Class Expenses shall be allocated to the
particular class to which they are attributable. In addition, certain expenses
may be allocated differently if their method of imposition changes. Thus, if a
Class Expense can no longer be attributed to a class, it will be charged to the
Fund for allocation among classes, as determined by the Board of Trustees. Any
additional Class Expenses not specifically identified above which are
subsequently identified and determined to be properly attributable to one class
of shares shall not be so allocated until approved by the Board of Trustees of
the Trust in light of legal requirements and regulatory considerations under the
1940 Act and the Internal Revenue Code of 1986, as amended.
4. Exchange Privileges. Shareholders may exchange shares of one class
-------------------
of a series of the Trust for shares of an identical class of any other series of
the Trust or an identical class of any series of CIGNA Funds Group based upon
each series' net asset value per share.
5. Conversion Features. No conversion from one class of shares into
-------------------
another class of shares is currently offered.
6. Quarterly and Annual Reports. The Trustees shall receive quarterly
----------------------------
and annual statements concerning servicing expenditures pursuant to the
Shareholder Services Plan and distribution expenses pursuant to the 12b-1 Plan.
In the statements, only expenditures properly attributable to the servicing of
retail class or retail service class shares or the distribution of retail
service class shares will be used to justify any fee attributable to that class.
The statements, including the allocations upon which they are based, shall be
subject to the review and approval of the independent Trustees in the exercise
of their fiduciary duties.
7. Accounting Methodology. The following procedures shall be
----------------------
implemented in order to meet the objective of properly allocating income and
expenses among the Funds:
(1) On a daily basis, those persons providing accounting
services to the Trust ("Fund Accountant") shall calculate the payments pursuant
to the Shareholder Services Plan to be charged to the retail class and retail
service class of shares of the Fund in accordance with the provisions of the
Shareholder Services Plan and the payments pursuant to the 12b-1 Plan to be
charged to the retail service class of the Fund in accordance with the 12b-1
Plan.
(2) The Fund Accountant will allocate designated Class
Expenses, if any, to the respective classes.
(3) The Fund Accountant will allocate income and Trust and
Series Expenses between the classes of shares in accordance with the provisions
of Section 3 above (Allocation of Income and Expenses).
(4) The Fund Accountant shall then complete the appropriate
worksheets using the allocated income and expense calculations from Paragraph
(3) above, and the additional fees calculated from Paragraphs
Page 3
<PAGE>
(1), and (2) above. The Fund Accountant may make non-material changes
to the form of the worksheets as it deems appropriate.
(5) The Fund Accountant shall develop and use appropriate
internal control procedures to assure the accuracy of its calculations and
appropriate allocation of income and expenses in accordance with this Plan.
8. Waiver or Reimbursement of Expenses or Payment of Fees. Expenses may
------------------------------------------------------
be waived or reimbursed by the adviser to the Trust, by the Trust's underwriter
or any other provider of services to the Trust, and any of these providers may
pay fees to others furnishing administrative or distribution services to the
Fund without the prior approval of the Trust's Board of Trustees.
9. Effectiveness of Plan. This Multi Class Plan shall not take effect
---------------------
until it has been approved by votes of a majority of both (a) the Trustees of
the Trust and (b) those Trustees of the Trust who are not "interested persons"
of the Trust (as defined in the 1940 Act) and who have no direct or indirect
interest in the operation of the Plan.
10. Material Modification. This Multi Class Plan may not be amended to
---------------------
modify materially its terms unless such amendment is approved in the manner
provided for initial approval in Paragraph 9 hereof.
11. Limitation of Liability. The Trustees of the Trust and the
-----------------------
shareholders of the Fund shall not be liable for any obligations of the Trust or
the Fund under this Multi Class Plan, and any person, in asserting any rights or
claims under this Plan, shall look only to the assets and property of the Trust
or the Fund in settlement of such right or claim, and not to such Trustees or
shareholders.
Copies of the Master Trust Agreement establishing the Trust are on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this document is executed on behalf of the Trust by an officer of the
Trust and not individually and that any obligations of or arising out of this
document are not binding upon any of the Trustees, officers, shareholders,
employees or agents of the Trust individually, but are binding only upon the
assets and property of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of the Fund, has adopted this
Multi Class Plan on the ____ day of __________, _____.
CIGNA FUNDS GROUP
By:_______________________________________
By:
Its:
Page 4
